<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to __________________
Commission File Number: 001-15787
METLIFE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 63-0891252
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
One Madison Avenue
New York, New York 10010-3690
(212) 578-2211
(Address of principal executive offices, including zip code, and Registrant's
telephone number, including area code)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [ ] NO [X]
At May 16, 2000, 782,391,173 shares of the Registrant's Common Stock. $.01 par
value per share, were outstanding.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited Interim Condensed Consolidated Statements of Income for the three
months ended March 31, 2000 and 1999
Interim Condensed Consolidated Balance Sheets at March 31, 2000 (unaudited)
and December 31, 1999
Unaudited Interim Condensed Consolidated Statement of Equity for the three
months ended March 31, 2000
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2000 and 1999
Notes to Unaudited Interim Condensed Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
METROPOLITAN LIFE INSURANCE COMPANY
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
REVENUES
Premiums $ 3,860 $ 2,916
Universal life and investment-type product policy fees 469 339
Net investment income 2,784 2,310
Other revenues 665 454
Net realized investment losses (net of amounts
allocable to other accounts of $19 and $34, respectively) (112) (74)
------- -------
7,666 5,945
------- -------
EXPENSES
Policyholder benefits and claims (includes amounts
directly related to net realized investment
losses of $4 and $4, respectively) 4,047 3,141
Interest credited to policyholder account balances 697 610
Policyholder dividends 468 382
Other expenses (includes amounts directly related to
net realized investment losses of $15 and $30,
respectively) 1,979 1,401
------- -------
7,191 5,534
------- -------
Income before provision for income taxes and extraordinary item 475 411
Provision for income taxes 198 174
------- -------
Income before extraordinary item 277 237
Extraordinary item - demutualization expense 41 8
------- -------
Net income $ 236 $ 229
======= =======
</TABLE>
See accompanying notes to unaudited interim condensed consolidated financial
statements.
3
<PAGE> 4
METROPOLITAN LIFE INSURANCE COMPANY
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value $ 108,566 $ 96,981
Equity securities, at fair value 2,137 2,006
Mortgage loans on real estate 21,185 19,739
Real estate and real estate joint ventures 5,747 5,649
Policy loans 7,914 5,598
Other limited partnership interests 1,452 1,331
Short-term investments 1,578 3,055
Other invested assets 2,397 1,501
--------- ---------
150,976 135,860
Cash and cash equivalents 2,237 2,789
Accrued investment income 1,955 1,725
Premiums and other receivables 9,032 6,681
Deferred policy acquisition costs 10,582 9,069
Deferred income taxes 481 603
Other 4,675 3,564
Separate account assets 76,110 64,941
--------- ---------
$ 256,048 $ 225,232
========= =========
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits $ 79,934 $ 73,582
Policyholder account balances 52,405 45,901
Other policyholder funds 5,208 4,498
Policyholder dividends payable 986 974
Short-term debt 3,585 4,208
Long-term debt 2,793 2,514
Current income taxes payable 579 548
Other 20,314 14,376
Separate account liabilities 76,110 64,941
--------- ---------
241,914 211,542
--------- ---------
Commitments and contingencies (Note 6)
Company-obligated mandatorily redeemable
securities of subsidiary trust holding solely
junior subordinated debentures of its Parent 118 --
--------- ---------
Equity:
Retained earnings 14,336 14,100
Accumulated other comprehensive loss (320) (410)
--------- ---------
14,016 13,690
--------- ---------
$ 256,048 $ 225,232
========= =========
</TABLE>
See accompanying notes to unaudited interim condensed consolidated financial
statements.
4
<PAGE> 5
METROPOLITAN LIFE INSURANCE COMPANY
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(IN MILLIONS)
<TABLE>
<CAPTION>
Accumulated Other Comprehensive Loss
-----------------------------------------
Net Foreign Minimum
Unrealized Currency Pension
Comprehensive Retained Investment Translation Liability
Total Income Earnings Gains (Losses) Adjustment Adjustment
----- ------ -------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000 $13,690 $14,100 $ (297) $ (94) $ (19)
Comprehensive income:
Net income 236 $ 236 236
-------
Other comprehensive income:
Unrealized investment gains, net of related
offsets, reclassification adjustments and
income taxes 89 89
Foreign currency translation adjustments 1 1
-------
Other comprehensive income 90 90
-------
Comprehensive income $ 326
=======
------- ------- ------- ------- -------
Balance at March 31, 2000 $14,016 $14,336 $ (208) $ (93) $ (19)
======= ======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited interim condensed consolidated financial
statements.
5
<PAGE> 6
METROPOLITAN LIFE INSURANCE COMPANY
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,616 $ 454
CASH FLOWS FROM INVESTING ACTIVITIES
Sales, maturities and repayments of:
Fixed maturities 14,705 24,094
Equity securities 381 236
Mortgage loans on real estate 704 394
Real estate and real estate joint ventures 120 153
Other limited partnership interests 138 183
Purchases of:
Fixed maturities (18,854) (25,064)
Equity securities (314) (128)
Mortgage loans on real estate (467) (871)
Real estate and real estate joint ventures (80) (89)
Other limited partnership interests (170) (167)
Net change in short-term investments 1,750 390
Net change in policy loans (72) 137
Purchase of business, net of cash received (459) --
Net change in investment collateral 2,305 404
Other, net (289) (208)
-------- --------
Net cash used in investing activities (602) (536)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Policyholder account balances:
Deposits 6,416 4,190
Withdrawals (7,421) (5,635)
Net change in short-term debt (620) 466
Long-term debt issued 64 39
Long-term debt repaid (5) (125)
-------- --------
Net cash used in financing activities (1,566) (1,065)
-------- --------
Change in cash and cash equivalents (552) (1,147)
Cash and cash equivalents, beginning of period 2,789 3,301
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,237 $ 2,154
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 119 $ 74
======== ========
Income taxes $ 116 $ 23
======== ========
</TABLE>
See accompanying notes to unaudited interim condensed consolidated financial
statements.
6
<PAGE> 7
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS ARE IN MILLIONS UNLESS OTHERWISE STATED.)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
On April 7, 2000, pursuant to an order by the New York Superintendent of
Insurance ("Superintendent") approving its plan of reorganization (the "plan")
as amended, Metropolitan Life Insurance Company ("Metropolitan Life") converted
from a mutual life insurance company to a stock life insurance company and
became a wholly-owned subsidiary of MetLife, Inc., a Delaware corporation.
Metropolitan Life and its subsidiaries (the "Company") is a leading
provider of insurance and financial services to a broad section of institutional
and individual customers. The Company offers life insurance, annuities and
mutual funds to individuals and group insurance, reinsurance and retirement and
savings products and services to corporations and other institutions.
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America ("GAAP"). The New York State Insurance Department (the
"Department") recognizes only statutory accounting practices for determining and
reporting the financial condition and results of operations of an insurance
company for determining solvency under the New York Insurance Law. No
consideration is given by the Department to financial statements prepared in
accordance with GAAP in making such determination.
The accompanying condensed consolidated financial statements reflect all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the consolidated financial position of the Company at March 31,
2000 and its consolidated results of operations and cash flows for the three
months ended March 31, 2000 and 1999. Interim results are not necessarily
indicative of full year performance. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements of the Company and the notes thereto for the year ended December 31,
1999 included in MetLife, Inc.'s Registration Statement on Form S-1
(registration no. 333-91517) filed with the Securities and Exchange Commission.
PRINCIPLES OF CONSOLIDATION
The accompanying condensed consolidated financial statements include the
accounts of Metropolitan Life and its subsidiaries, partnerships and joint
ventures in which Metropolitan
7
<PAGE> 8
Life has a majority voting interest or general partner interest with limited
removal rights from limited partners. All material intercompany accounts and
transactions have been eliminated.
EXTRAORDINARY ITEM - DEMUTUALIZATION EXPENSE
The accompanying condensed consolidated statements of income include an
extraordinary charge of $41 (net of income tax benefit of $14) and $8 (net of
income tax benefit of $1) for the three months ended March 31, 2000 and 1999,
respectively, related to costs associated with the demutualization.
FEDERAL INCOME TAXES
Federal income taxes for interim periods have been computed using an
estimated annual effective tax rate. This rate is revised, if necessary, at the
end of each successive interim period to reflect the current estimate of the
annual effective tax rate.
APPLICATION OF ACCOUNTING PRONOUNCEMENTS
Effective January 1, 2000, the Company adopted Statement of Position
("SOP") 98-7, Accounting for Insurance and Reinsurance Contracts That Do Not
Transfer Insurance Risk ("SOP 98-7"). SOP 98-7 provides guidance on the method
of accounting for insurance and reinsurance contracts that do not transfer
insurance risk, defined in the SOP as the deposit method. SOP 98-7 classifies
insurance and reinsurance contracts for which the deposit method is appropriate
into those that 1) transfer only significant timing risk, 2) transfer only
significant underwriting risk, 3) transfer neither significant timing or
underwriting risk and 4) have an indeterminate risk. Adoption of SOP 98-7 did
not have a material effect on the Company's condensed consolidated financial
statements.
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, Accounting for Derivative Instruments
and Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133
("SFAS 137"). SFAS 137 defers the provisions of Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("SFAS 133") until January 1, 2001. SFAS 133 requires, among other
things, that all derivatives be recognized in the consolidated balance sheets as
either assets or liabilities and measured at fair value. The corresponding
derivative gains and losses should be reported based upon the hedge
relationship, if such a relationship exists. Changes in the fair value of
derivatives that are not designated as hedges or that do not meet the hedge
accounting criteria in SFAS 133 are required to be reported in income. The
Company is in the process of quantifying the impact of SFAS 133 on its
consolidated financial statements.
8
<PAGE> 9
2. DEMUTUALIZATION
On April 7, 2000, the date the plan became effective, each policyholder's
membership interest was extinguished and each eligible policyholder received, in
exchange for that interest, trust interests representing shares of common stock
of MetLife, Inc. to be held in a trust, cash or an adjustment to their policy
values in the form of policy credits, as provided in the plan. In addition,
Metropolitan Life's Canadian branch made cash payments to holders of certain
policies transferred to Clarica Life Insurance Company in connection with the
sale of a substantial portion of Metropolitan Life's Canadian operations in
1998, as a result of a commitment made in connection with obtaining Canadian
regulatory approval of that sale. The amount of the payments, which will be
recorded in other expenses in the second quarter of 2000, has been determined in
a manner that is consistent with the treatment of, and fair and equitable to,
eligible policyholders of Metropolitan Life.
The plan required an initial public offering of common stock and provided
for other capital raising transactions on the effective date of the plan. On the
plan effective date, MetLife, Inc. conducted an initial public offering of
202,000,000 shares and concurrent private placements of 60,000,000 shares of its
common stock at an initial public offering price of $14.25 per share. The shares
of common stock issued in the offerings are in addition to 493,903,472 shares of
common stock of MetLife, Inc. distributed to the Metropolitan Life policyholder
trust for the benefit of policyholders of Metropolitan Life in connection with
the demutualization. On April 10, 2000, MetLife, Inc. issued 30,300,000
additional shares of common stock as a result of the exercise of over-allotment
options granted to underwriters in the initial public offering.
In addition to the issuance of common stock, MetLife, Inc. formed MetLife
Capital Trust I, a Delaware statutory business trust. MetLife Capital Trust I
issued two classes of trust securities: capital securities, which are a
component of equity security units, and common securities, which were issued to
MetLife, Inc. MetLife, Inc. owns all the beneficial interests represented by the
common securities of MetLife Capital Trust I. Concurrently with the initial
public offering of common stock noted above, on April 7, 2000 MetLife Capital
Trust I issued 17,500,000 8.00% equity security units. On April 14, 2000,
MetLife Capital Trust I issued an additional 2,625,000 8.00% equity security
units as a result of the exercise of over-allotment options granted to
underwriters in connection with the offering of the equity security units. Each
equity security unit contains a purchase contract under which the holder agrees
to purchase, for $50.00, shares of common stock of MetLife, Inc. on May 15,
2003. The number of shares to be purchased at such date will be determined based
on the average trading price of MetLife, Inc. common stock. The proceeds from
the sale of the capital securities were used to acquire $1,037 of 8.00%
debentures of MetLife, Inc. ("MetLife, Inc. debentures"). The capital securities
represent undivided beneficial ownership interests in MetLife Capital Trust I's
assets, which consist solely of the MetLife, Inc. debentures. Although, upon
issuance of the capital securities, a holder is the beneficial owner of the
related capital securities, those capital securities are pledged with the
collateral agent to collateralize the obligations of the unit holder under the
related purchase contracts. Holders of the capital securities are entitled to
receive cumulative cash distributions accruing from April 7, 2000, the effective
date of the plan, and payable quarterly in arrears
9
<PAGE> 10
commencing August 15, 2000 at an annual rate of 8.00% of the stated liquidation
amount of $50.00 per capital security. MetLife, Inc. irrevocably guarantees, on
a senior and unsecured basis, the payment in full of distributions on the
capital securities to the extent of available trust funds and the stated
liquidation amount of the capital securities to the extent of available trust
funds. Holders of the capital securities generally have no voting rights.
The MetLife, Inc. debentures bear interest at an annual rate of 8.00% of
the principal amount, payable quarterly in arrears commencing August 15, 2000
and mature on May 15, 2005. These debentures are unsecured and rank equally in
right of payment to all other senior unsecured debt of MetLife, Inc. Because
MetLife, Inc. is a holding company, its right to participate in the distribution
of assets of any subsidiary upon the subsidiary's liquidation, reorganization or
otherwise, is subject to the prior claims of creditors of the subsidiary, except
to the extent MetLife, Inc. may be recognized as a creditor of that subsidiary.
Accordingly, MetLife, Inc.'s obligations under the debentures will effectively
be subordinate to all existing and future liabilities of its subsidiaries.
In connection with the contribution of the net proceeds from the initial
public offering, the private placements and the equity security units offering
to Metropolitan Life, Metropolitan Life issued to MetLife, Inc. a $1,006 8.00%
mandatorily convertible note due 2005 having the same interest and payment terms
as set forth in the debentures of MetLife, Inc. issued to the MetLife Capital
Trust I. The principal amount of the capital note is mandatorily convertible
into common stock of Metropolitan Life upon maturity or acceleration of the
capital note and without any further action by MetLife, Inc. or Metropolitan
Life. As required by New York Insurance Law, the terms of the capital note were
approved on April 4, 2000 by the Superintendent as not adverse to the interests
of Metropolitan Life's policyholders. In addition, the capital note provides
that Metropolitan Life may not make any payment of principal or interest on the
capital note so long as specified payment restrictions exist and have not been
waived by the Superintendent. Payment restrictions would exist if Metropolitan
Life fails to exceed certain thresholds relative to the level of its statutory
risk-based capital or the amount of its outstanding capital notes, surplus notes
or similar obligations. At March 31, 2000, Metropolitan Life's statutory total
adjusted capital exceeded these limitations. If the payment of interest is
prevented by application of the payment restrictions described above, the
interest on the capital note will not be available as a source of liquidity for
MetLife, Inc.
10
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3. PRO FORMA CONSOLIDATED INFORMATION
The pro forma consolidated financial information presented below gives
effect to:
- - the demutualization, including the issuance of 493,903,472 shares of
MetLife, Inc. common stock to the Metropolitan Life policyholder trust in
connection therewith;
- - the establishment of the closed block;
- - the sale of 232,300,000 shares of MetLife, Inc. common stock in the initial
public offering at $14.25 per share;
- - the private placements of 60,000,000 shares of MetLife, Inc. common stock
at $14.25 per share; and
- - the sale of 20,125,000 equity units at $50.00 per unit;
as if they had occurred at March 31, 2000, for the purposes of the pro forma
consolidated balance sheet, and at January 1, 2000 for the purposes of the pro
forma consolidated statement of income for the three months ended March 31,
2000. This pro forma information is presented to depict only the effects of the
demutualization, the establishment of the closed block, the initial public
offering, the private placements and the sale of the equity security units.
The pro forma information is based on available information and on
assumptions management believes are reasonable and that reflect the effects of
these transactions. This information is provided for informational purposes only
and does not necessarily indicate the consolidated financial position or results
of operations had the demutualization, the establishment of the closed block,
the initial public offering, the private placements and the sale of equity units
been consummated on the dates assumed. The pro forma information also does not
project or forecast the consolidated financial position or results of operations
for any future date or period.
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<PAGE> 12
Pro Forma Interim Condensed Consolidated Statement of Income
For the Three Months Ended March 31, 2000
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Establishment
of the The
Historical Closed Block(A) Demutualization
---------- --------------- ---------------
<S> <C> <C> <C>
Revenues
Premiums $ 3,860 $ (894) $ --
Universal life and investment-type product policy fees 469 -- --
Net investment income 2,784 (631) --
Other revenues 665 -- --
Net realized investment losses (net of amounts
allocable to other accounts of $19) (112) 21 --
Contribution from the closed block -- 24 --
------- -------- -----
7,666 (1,480) --
------- -------- -----
Expenses
Policyholder benefits and claims (includes amounts
directly related to net realized investment losses
of $4) 4,047 (926) --
Interest credited to policyholder account balances 697 -- --
Policyholder dividends 468 (380) --
Other expenses (includes amounts directly related
to net realized investment losses of $15) 1,979 (174) --
------- -------- -----
7,191 (1,480) --
------- -------- -----
Income before provision for income taxes and
extraordinary item 475 -- --
Provision for income taxes 198 -- (30)(I)
------- -------- -----
Income before extraordinary item $ 277 $ -- $ 30
======= ======== =====
Per share data:
Income before extraordinary item per share-
basic and diluted
Number of shares used in calculation of per share data-
basic and diluted
</TABLE>
<TABLE>
<CAPTION>
The GenAm
Unit Debt
Offering Repayment Pro Forma
-------- --------- ---------
<S> <C> <C> <C>
Revenues
Premiums $ -- $ -- $ 2,966
Universal life and investment-type product policy fees -- -- 469
Net investment income -- -- 2,153
Other revenues -- -- 665
Net realized investment losses (net of amounts --
allocable to other accounts of $19) -- -- (91)
Contribution from the closed block -- -- 24
----- ----- -----------
-- -- 6,186
----- ----- -----------
Expenses
Policyholder benefits and claims (includes amounts
directly related to net realized investment losses
of $4) -- -- 3,121
Interest credited to policyholder account balances -- -- 697
Policyholder dividends -- 88
Other expenses (includes amounts directly related --
to net realized investment losses of $15) 22(G) (14)(J) 1,813
----- ----- -----------
22 (14) 5,719
----- ----- -----------
Income before provision for income taxes and
extraordinary item (22) 14 467
Provision for income taxes (8)(G) 5(J) 165
----- ----- -----------
Income before extraordinary item $ (14) $ 9 $ 302
===== ===== ===========
Per share data:
Income before extraordinary item per share-
basic and diluted $ 0.38
-----------
Number of shares used in calculation of per share data-
basic and diluted 786,203,472(B)(C)
===========
</TABLE>
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Pro Forma Interim Condensed Consolidated Balance Sheet
At March 31, 2000
(In millions)
<TABLE>
<CAPTION>
The
Establishment Common
of the The Stock
Historical Closed Block(A) Demutualization Offering
---------- --------------- --------------- --------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value $108,566 $(23,939) $ -- $ --
Equity securities, at fair value 2,137 -- -- --
Mortgage loans on real estate 21,185 (4,744) -- --
Real estate and real estate joint ventures 5,747 -- -- --
Policy loans 7,914 (3,762) -- --
Other limited partnership interests 1,452 -- -- --
Short-term investments 1,578 (167) -- --
Other invested assets 2,397 (325) -- --
-------- -------- -------- ------
150,976 (32,937) -- --
Cash and cash equivalents 2,237 (327) (2,871)(B) 3,147(E)
Accrued investment income 1,955 (246) -- --
Premiums and other receivables 9,032 (245) -- --
Deferred policy acquisition costs 10,582 (3,954) -- --
Deferred income taxes 481 (5) -- --
Other 4,675 (22) -- --
Closed block assets -- 37,736 -- --
Separate account assets 76,110 -- -- --
-------- -------- -------- ------
$256,048 $ -- $ (2,871) $3,147
======== ======== ======== ======
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits $ 79,934 $(38,662) $ 408(B) $ --
Policyholder account balances 52,405 (3) -- --
Other policyholder funds 5,208 (318) -- --
Policyholder dividends payable 986 (747) -- --
Short-term debt 3,585 -- -- --
Long-term debt 2,793 (57) -- --
Current income taxes payable 579 (46) (35)(D) --
Other 20,314 (2,138) 135(D) --
Closed block liabilities -- 41,971 -- --
Separate account liabilities 76,110 -- -- --
-------- -------- -------- ------
241,914 -- 508 --
-------- -------- -------- ------
Company-obligated mandatorily
redeemable securities of
subsidiary trusts holding solely
junior subordinated debentures
of their Parents 118 -- -- --
-------- -------- -------- ------
Equity:
Preferred stock -- -- -- --
Common stock -- -- 5(B)(H) 2(E)
Additional paid-in capital -- -- 10,952(B)(H) 3,145(E)
Retained earnings 14,336 -- (14,336)(H) --
Accumulated other comprehensive loss (320) -- -- --
-------- -------- -------- ------
14,016 -- (3,379) 3,147
-------- -------- -------- ------
$256,048 $ -- $ (2,871) $3,147
======== ======== ======== ======
</TABLE>
<TABLE>
<CAPTION>
The The
Private Unit
Placements Offering Pro Forma
---------- -------- ---------
<S> <C> <C> <C>
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value $ -- $ -- $ 84,627
Equity securities, at fair value -- -- 2,137
Mortgage loans on real estate -- -- 16,441
Real estate and real estate joint ventures -- -- 5,747
Policy loans -- -- 4,152
Other limited partnership interests -- -- 1,452
Short-term investments -- -- 1,411
Other invested assets -- -- 2,072
------ ------ --------
-- -- 118,039
Cash and cash equivalents 855(F) 966(G) 4,007
Accrued investment income -- -- 1,709
Premiums and other receivables -- -- 8,787
Deferred policy acquisition costs -- -- 6,628
Deferred income taxes -- -- 476
Other -- -- 4,653
Closed block assets -- -- 37,736
Separate account assets -- -- 76,110
------ ------ --------
$ 855 $ 966 $258,145
====== ====== ========
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits $ -- $ -- $ 41,680
Policyholder account balances -- -- 52,402
Other policyholder funds -- -- 4,890
Policyholder dividends payable -- -- 239
Short-term debt -- -- 3,585
Long-term debt -- -- 2,736
Current income taxes payable -- -- 498
Other -- -- 18,311
Closed block liabilities -- -- 41,971
Separate account liabilities -- -- 76,110
------ ------ --------
-- -- 242,422
------ ------ --------
Company-obligated mandatorily
redeemable securities of
subsidiary trusts holding solely
junior subordinated debentures
of their Parents -- 961(G) 1,079
------ ------ --------
Equity:
Preferred stock -- -- --
Common stock 1(F) -- 8
Additional paid-in capital 854(F) 5(G) 14,956
Retained earnings -- -- --
Accumulated other comprehensive loss -- -- (320)
------ ------ --------
855 5 14,644
------ ------ --------
$ 855 $ 966 $258,145
====== ====== ========
</TABLE>
13
<PAGE> 14
(A) The plan requires that Metropolitan Life establish and operate a closed
block for the benefit of holders of certain individual life insurance policies
of Metropolitan Life. On the plan effective date, assets were allocated to the
closed block in an amount that is expected to produce cash flows which, together
with anticipated revenues from the policies included in the closed block, are
reasonably expected to be sufficient to support obligations and liabilities
relating to these policies, including, but not limited to, provisions for the
payment of claims and certain expenses and taxes, and for the continuation of
policyholder dividend scales in effect for 1999, if the experience underlying
such dividend scales continues, and for appropriate adjustments in such scales
if the experience changes. The closed block assets, the cash flows generated by
the closed block assets and the anticipated revenues from the policies in the
closed block will benefit only the holders of policies included in the closed
block. To the extent that, over time, cash flows from the assets allocated to
the closed block and claims and other experience relating to the closed block
are, in the aggregate, more or less favorable than assumed in establishing the
closed block, total dividends paid to the closed block policyholders in the
future may be greater than or less than that which would have been paid to these
policyholders if the policyholder dividend scales in effect for 1999 had been
continued. Any cash flows in excess of amounts assumed will be available for
distribution over time to closed block policyholders and will not be available
to stockholders. The closed block will continue in effect until the last policy
in the closed block is no longer in force.
The accounting principles to account for the participating policies
included in the closed block are those used prior to the date of the
demutualization. However, a policyholder dividend obligation will be established
for earnings that will be paid to policyholders as additional dividends in the
amounts described below, unless these earnings are offset by future unfavorable
experience in the closed block. Although all of the cash flows of the closed
block are for the benefit of the closed block policyholders, the excess of the
closed block liabilities over closed block assets at the effective date will
represent the estimated maximum future contributions from the closed block
expected to be reported in income as the contribution from the closed block
after income taxes. Such estimated future contributions from the closed block
will inure to the stockholders of the Company. The contribution from the closed
block will be recognized in income over the period the policies and contracts in
the closed block remain in force. Management believes that over time the actual
cumulative contributions from the closed block will approximately equal the
expected cumulative contributions, due to the effect of dividend changes. If,
over the period the closed block remains in existence, the actual cumulative
contribution from the closed block is greater than the expected cumulative
contribution from the closed block, the expected cumulative contribution will be
recognized in income with the excess recorded as a policyholder dividend
obligation, because the excess of the actual cumulative contribution from the
closed block over the expected cumulative contribution will be paid to closed
block policyholders as additional policyholder dividends unless offset by future
unfavorable experience of the closed block. If over such period, the actual
cumulative contribution from the closed block is less than the expected
cumulative contribution from the closed block, the actual contribution will be
recognized in income. However, dividends in the future may be changed, which
would be intended to increase future actual contribution until the actual
contribution equals the expected cumulative contribution.
14
<PAGE> 15
The demutualization will be accounted for using the historical carrying
values of the assets and liabilities. The Company established accounting records
to specifically segregate the assets, liabilities, revenues and expenses of the
closed block, as if the closed block had been formed on January 1, 2000. These
pro forma amounts include all new individual participating policies issued
during 2000 and the revenues and expenses associated with individual
participating policies eligible to be included in the closed block. The closed
block was formed on April 7, 2000, the effective date of the plan and,
accordingly, the actual assets and liabilities assigned to the closed block and
their carrying values were finalized at that date.
The closed block amounts in the pro forma consolidated statement of income
for the three months ended March 31, 2000 reflect new individual participating
policies issued during the period, which are included in the closed block if
such policies remained in force as of the effective date of the plan. Closed
block amounts were determined as follows: (1) premiums and benefits related to
the policies to be included within the closed block were used; (2) net
investment income for the three months ended March 31, 2000 reflects the actual
income of assets set aside for assignment to the closed block; (3) policyholder
dividends were based on dividend scales of policies to be included within the
closed block; (4) maintenance expenses were based on per policy charges provided
in the plan; (5) realized investment losses of the closed block for the three
months ended March 31, 2000 reflect the actual losses from the assets set aside
for assignment to the closed block.
Deferred policy acquisition costs on business included in the closed block
has been reported as an asset of the closed block in the pro forma consolidated
balance sheet. Amortization of closed block deferred policy acquisition costs
has been included in other expenses in the closed block.
(B) The number of shares of MetLife, Inc. common stock used in the calculation
of pro forma income before extraordinary item per share - basic and diluted is
as follows:
<TABLE>
<S> <C>
Shares allocated to eligible policyholders 701,520,307
Less shares allocated to eligible policyholders who
received cash or policy credits 207,616,835
-----------
Shares issued to the Metropolitan Life policyholder trust 493,903,472
Shares issued in the initial public offering 232,300,000
Shares issued in the private placements 60,000,000
-----------
Total shares of common stock outstanding 786,203,472
===========
</TABLE>
15
<PAGE> 16
MetLife, Inc. contributed $4,628 of the aggregate net proceeds of the
offerings and the private placements to Metropolitan Life, of which:
- - $408 was used to reimburse Metropolitan Life for the crediting of policy
credits to certain policyholders in the demutualization in lieu of
28,660,022 allocated shares of MetLife, Inc. common stock;
- - $2,550 was used to reimburse Metropolitan Life for cash payments to certain
policyholders in the demutualization in lieu of 178,956,813 allocated
shares of MetLife, Inc. common stock;
- - $321 was used to reimburse Metropolitan Life for cash payments made by its
Canadian branch to certain holders of policies included in its Canadian
business sold to Clarica Life Insurance Company in 1998;
- - $370 was used to reimburse Metropolitan Life for the payment of fees and
expenses incurred in connection with the demutualization; and
- - $979 was used for general corporate purposes, of which $900 was used to
repay short-term debt incurred in connection with Metropolitan Life's
acquisition of GenAmerica.
The amounts used to fund policy credits have been reflected as an increase
in future policy benefits and a reduction of retained earnings in the pro forma
consolidated balance sheet. The amounts used to make the cash payments have been
reflected as a reduction in retained earnings in the pro forma consolidated
balance sheet.
In connection with the contribution of the net proceeds from the initial
public offering, the private placements and the offering of equity security
units to Metropolitan Life as described above, Metropolitan Life issued to
MetLife, Inc. its $1,006 8.00% mandatorily convertible capital note due 2005.
(C) Each unit in the equity unit offering consists of (1) a contract to purchase
shares of MetLife, Inc. common stock and (2) an 8.00% capital security of
MetLife Capital Trust I. Before the issuance of shares of MetLife, Inc. common
stock upon settlement of the purchase contracts, the units will be reflected in
MetLife, Inc.'s diluted earnings per share calculations using the treasury stock
method. Under this method, the number of shares of MetLife, Inc. common stock
used in calculating earnings per share for any period is deemed to be increased
by the excess, if any, of the number of shares issuable upon settlement of the
purchase contracts over the number of shares that could be purchased by MetLife,
Inc. in the market, at the average market price during that period, using the
proceeds received upon settlement. Consequently, there will be no dilutive
effect on MetLife, Inc.'s earnings per share except during periods when the
average market price of its common stock is above $16.82 per share.
(D) The pro forma consolidated balance sheet reflects estimated additional
nonrecurring expenses of $100 (net of income tax benefit of $35) related to the
demutualization assumed to be incurred at the date of the pro forma consolidated
balance sheet. The pro forma consolidated statement of income does not reflect
such nonrecurring expenses since they will be reported as an extraordinary item.
16
<PAGE> 17
(E) Represents gross proceeds of $3,310 from the issuance of 232,300,000 shares
of MetLife, Inc. common stock, less an underwriting discount and estimated
offering expenses aggregating $163.
(F) Represents proceeds of $855 from the issuance of 60,000,000 shares of
MetLife, Inc. common stock at an initial public offering price of $14.25 in the
private placements.
(G) Represents gross proceeds of $1,006 from the issuance of the equity security
units, less an underwriting discount and estimated offering expenses aggregating
$40. The financial statements of the trust will be consolidated in MetLife,
Inc.'s consolidated financial statements, with the capital securities shown
under the caption "Company-obligated mandatorily redeemable securities of
subsidiary trusts holding solely junior subordinated debentures of their
Parents". The proceeds from the units were allocated to the underlying purchase
contracts and capital securities based on their relative fair values of $5 and
$961, respectively. The forward contracts will be reported in additional paid-in
capital and subsequent changes in fair value will not be recognized. The notes
to MetLife, Inc.'s consolidated financial statements will disclose that the sole
asset of the trust is the debentures. Distributions on the capital securities
will be reported as a charge to minority interest in MetLife, Inc.'s
consolidated statement of income, whether paid or accrued. The charge to other
expenses in the pro forma consolidated statement of income reflects
distributions on the capital securities at a rate of 8.00% ($20) and the
accretion of the discount ($2) on the carrying value of the Company-obligated
mandatorily redeemable securities of subsidiary trusts holding solely debentures
of their Parents. The income tax benefit related to such charges is $8.
(H) Represents the reclassification of the retained earnings of Metropolitan
Life to reflect the demutualization as follows:
<TABLE>
<S> <C>
Historical retained earnings $14,336
Less net proceeds of offerings used to fund policy credits and cash
payments to certain eligible policyholders 2,958
Less cash payments made by Metropolitan Life Canadian branch to
certain holders of policies included in its Canadian business sold to
Clarica Life Insurance Company 321
Less additional demutualization expenses (net of income tax benefit of $35) 100
-------
Retained earnings related to eligible policyholders receiving common stock $10,957
=======
</TABLE>
(I) Represents the elimination of the surplus tax. As a stock life insurance
company, Metropolitan Life will no longer be subject to the surplus tax.
(J) Represents the elimination of $14 of interest expense related to the
repayment of $900 of short-term debt incurred in connection with Metropolitan
Life's acquisition of GenAmerica. The related income tax benefit was $5.
17
<PAGE> 18
4. GENAMERICA ACQUISITION
On January 6, 2000, the Company completed its acquisition of GenAmerica
Corporation ("GenAmerica") for $1.2 billion plus costs of the acquisition. In
connection with this transaction, the Company acquired assets of $23,686 and
assumed liabilities of $22,406. GenAmerica is a holding company which includes
General American Life Insurance Company, 48.3% of the outstanding shares of
Reinsurance Group of America ("RGA") common stock, a provider of reinsurance,
and 61.0% of the outstanding shares of Conning Corporation ("Conning") common
stock, an asset manager. The Company owned 9.6% of the outstanding shares of RGA
common stock prior to the completion of the GenAmerica acquisition. Subsequent
to the acquisition, the Company's ownership percentage of the outstanding shares
of RGA common stock was 57.9%.
In connection with the acquisition of GenAmerica, the Company obtained
GenAmerica Capital I, a wholly-owned subsidiary trust of GenAmerica. In June
1997, GenAmerica Capital I issued $125 million of 8.525% capital securities.
GenAmerica has fully and conditionally guaranteed, on a subordinated basis, the
obligation of the trust under the capital securities and is obligated to
mandatorily redeem the securities on June 30, 2027. GenAmerica may prepay the
securities at any time after June 30, 2007.
On April 18, 2000, Metropolitan Life completed its tender offer for all
outstanding shares of Conning common stock not already owned by Metropolitan
Life, at a price of $12.50 per share. Under the tender offer, 5,348,876 Conning
shares were tendered. These shares, aggregated with the number of Conning shares
that Metropolitan Life already beneficially owned, represent approximately 98%
of the outstanding Conning shares. Metropolitan Life acquired the remaining 2%
of outstanding Conning shares through a cash merger consummated on April 19,
2000.
As part of the GenAmerica acquisition, General American Life Insurance
Company agreed to pay the Company a fee of $120 in connection with the
assumption of certain funding agreements. The fee has been considered as part of
the purchase price of GenAmerica. The Company also agreed to make a capital
contribution of $120 to General American Life after the completion of the
acquisition in three installments of $40. At March 31, 2000, $80 of the total
contribution had been paid.
The Company's total revenues, income before extraordinary items and net
income for the three months ended March 31, 1999 on both an historical and pro
forma basis as if the acquisition of GenAmerica had occurred on January 1, 1999
were as follows:
<TABLE>
<CAPTION>
Income Before
Total Revenues Extraordinary Item Net Income
-------------- ------------------ ----------
<S> <C> <C> <C>
Historical $ 5,945 $ 237 $ 229
Pro forma $ 6,863 $ 245 $ 237
</TABLE>
18
<PAGE> 19
5. NET REALIZED INVESTMENT GAINS (LOSSES)
Net realized investment gains (losses), including changes in valuation
allowances, for the three months ended March 31, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Fixed maturities $(169) $(105)
Equity securities 68 (29)
Mortgage loans on real estate 1 10
Real estate and real estate joint ventures 13 62
Other limited partnership interests 4 5
Other (48) (51)
----- -----
(131) (108)
Amounts allocable to:
Deferred policy acquisition costs 15 30
Participating pension contracts 4 4
----- -----
$(112) $ (74)
===== =====
</TABLE>
Realized investment gains (losses) have been reduced by (1) deferred policy
acquisition amortization to the extent that such amortization results from
realized investment gains and losses and (2) additions to participating
contractholder accounts when amounts equal to such investment gains and losses
are credited to the contractholders' accounts. This presentation may not be
comparable to presentations made by other insurers.
6. COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is currently a defendant in approximately 500 lawsuits raising
allegations of improper marketing and sales of individual life insurance
policies or annuities. These lawsuits are generally referred to as "sales
practices claims".
On December 28, 1999, after a fairness hearing, the United States District
Court for the Western District of Pennsylvania approved a class action
settlement resolving a multidistrict litigation proceeding involving alleged
sales practices claims. The settlement class includes most of the owners of
permanent life insurance policies and annuity contracts or certificates issued
pursuant to individual sales in the United States by Metropolitan Life,
Metropolitan Insurance and Annuity Company or Metropolitan Tower Life Insurance
Company between January 1, 1982 and December 31, 1997. The class includes owners
of approximately six million in-force or terminated insurance policies and
approximately one million in-force or terminated annuity contracts or
certificates.
19
<PAGE> 20
In addition to dismissing the consolidated class actions, the District
Court's order also bars sales practices claims by class action members for sales
by the defendant insurers during the class period, effectively resolving all
pending class actions against these insurers. The defendants are in the process
of having these claims dismissed.
Under the terms of the order, only those class members who excluded
themselves from the settlement may continue an existing, or start a new, sales
practices lawsuit against Metropolitan Life, Metropolitan Insurance and Annuity
Company or Metropolitan Tower Life Insurance Company for sales that occurred
during the class period. Approximately 20,000 class members elected to exclude
themselves from the settlement. Over 400 of the approximately 500 lawsuits noted
above are brought by individuals who have elected not to participate in the
class action settlement.
The settlement provides three forms of relief. General relief, in the form
of free death benefits, is provided automatically to class members who did not
exclude themselves from the settlement or who did not elect the claim evaluation
procedures set forth in the settlement. The claim evaluation procedures permit a
class member to have a claim evaluated by a third party under procedures set
forth in the settlement. Claim awards made under the claim evaluation procedures
will be in the form of policy adjustments, free death benefits or, in some
instances, cash payments. In addition, class members who have or had an
ownership interest in specified policies will also automatically receive
deferred acquisition cost tax relief in the form of free death benefits. The
settlement fixes the aggregate amounts that are available under each form of
relief.
The Company expects that the total cost of the settlement will be
approximately $957. This amount is equal to the amount of the increase in
liabilities for the death benefits and policy adjustments and the present value
of expected cash payments to be provided to included class members, as well as
attorneys' fees and expenses and estimated other administrative costs, but does
not include the cost of litigation with policyholders who are excluded from the
settlement. The Company believes that the cost to it of the settlement will be
substantially covered by available reinsurance and the provisions made in its
consolidated financial statements, and thus will not have a material adverse
effect on its business, results of operations or financial position. The Company
has not yet made a claim under those reinsurance agreements and, although there
is a risk that the carriers will refuse coverage for all or part of the claim,
the Company believes this is very unlikely to occur. The Company believes it has
made adequate provision in its consolidated financial statements for all
probable losses for sales practices claims, including litigation costs involving
policyholders who are excluded from the settlement.
The class action settlement does not resolve nine purported or certified
class actions currently pending against New England Mutual Life Insurance
Company with which the Company merged in 1996. Eight of those actions have been
consolidated as a multidistrict proceeding for pre-trial purposes in the United
States District Court of Massachusetts. The Court certified a mandatory class as
to those claims. Following an appeal of that certification, the United States
Court of Appeals remanded the case to the District Court for further
consideration. New England has agreed to a tentative
20
<PAGE> 21
settlement with class counsel which is being presented to the District Court for
preliminary approval.
The class action settlement also does not resolve three putative sales
practices class action lawsuits which have been brought against General American
Life Insurance Company. These lawsuits have been consolidated in a single
proceeding in the United States District Court for the Eastern District of
Missouri. General American Life Insurance Company and counsel for plaintiffs
have negotiated a settlement in principle of this consolidated proceeding.
General American Life Insurance Company has not reached agreement with
plaintiffs' counsel on the attorneys' fees to be paid. However, negotiations are
ongoing.
In addition, the class action settlement does not resolve two putative
class actions involving sales practices claims filed against Metropolitan Life
in Canada. A certified class action with conditionally certified subclasses
against Metropolitan Life, Metropolitan Insurance and Annuity Company,
Metropolitan Tower Life Insurance Company and various individual defendants
alleging improper sales abroad is pending in a New York federal court and
settlement discussions are continuing.
In the past, the Company has resolved some individual sales practices
claims through settlement, dispositive motion, or, in a few instances, trial.
Most of the current cases seek substantial damages, including in some cases
punitive and treble damages and attorneys' fees. Additional litigation relating
to the Company's marketing and sales of individual life insurance may be
commenced in the future.
See Note 9 of Notes to Consolidated Financial Statements for the year ended
December 31, 1999 included in MetLife, Inc.'s Registration Statement on Form S-1
(registration no. 333-91517) filed with the Securities and Exchange Commission
for information regarding reinsurance contracts related to sales practices
claims.
Regulatory authorities in a small number of states, including both
insurance departments and one state attorney general, as well as the National
Association of Securities Dealers, Inc., have ongoing investigations or inquires
relating to the Company's sales of individual life insurance policies or
annuities, including investigations of alleged improper replacement transactions
and alleged improper sales of insurance with inaccurate or inadequate
disclosures as to the period for which premiums would be payable. Over the past
several years, the Company has resolved a number of investigations by other
regulatory authorities for monetary payments and certain other relief, and may
continue to do so in the future.
Metropolitan Life is also a defendant in numerous lawsuits seeking
compensatory and punitive damages for personal injuries allegedly caused by
exposure to asbestos or asbestos-containing products. Metropolitan Life has
never engaged in the business of manufacturing, producing, distributing or
selling asbestos or asbestos-containing products. Rather, these lawsuits,
currently numbering in the thousands, have principally been based upon
allegations relating to certain research, publication and other activities
21
<PAGE> 22
of one or more of Metropolitan Life's employees during the period from the 1920s
through approximately the 1950s and alleging that Metropolitan Life learned or
should have learned of certain health risks posed by asbestos and, among other
things, improperly publicized or failed to disclose those health risks. Legal
theories asserted against Metropolitan Life have included negligence,
intentional tort claims and conspiracy claims concerning the health risks
associated with asbestos. While Metropolitan Life believes it has meritorious
defenses to these claims, and has not suffered any adverse judgments in respect
of these claims, most of the cases have been resolved by settlements.
Metropolitan Life intends to continue to exercise its best judgment regarding
settlement or defense of such cases. The number of such cases that may be
brought or the aggregate amount of any liability that Metropolitan Life may
ultimately incur is uncertain.
Significant portions of amounts paid in settlement of such cases have been
funded with proceeds from a previously resolved dispute with the Metropolitan
Life's primary, umbrella and first level excess liability insurance carriers.
Metropolitan Life is presently in litigation with several of its excess
liability insurers regarding amounts payable under its policies with respect to
coverage for these claims. The trial court has granted summary judgment to these
insurers. Metropolitan Life has appealed. There can be no assurances regarding
the outcome of this litigation or the amount and timing of recoveries, if any,
from these excess liability insurers. Metropolitan Life's asbestos-related
litigation with these insurers should have no effect on its recoveries under
excess insurance policies.
See Note 9 of Notes to Consolidated Financial Statements for the year ended
December 31, 1999 included in MetLife, Inc.'s Registration Statement on Form S-1
(registration no. 333-91517) filed with the Securities and Exchange Commission
for information regarding insurance policies related to asbestos-related claims.
A purported class action suit involving policyholders in 32 states has been
filed in a Rhode Island state court against the Metropolitan Life's subsidiary,
Metropolitan Property and Casualty Insurance Company, with respect to claims by
policyholders for the alleged diminished value of automobiles after
accident-related repairs. The trial court recently denied a motion be
Metropolitan Property and Casualty Insurance Company for summary judgment. A
similar "diminished value" allegation was made recently in a Texas Deceptive
Trade Practices Act letter and lawsuit which involve a Metropolitan Property and
Casualty Company policyholder. A purported class action has been filed against
Metropolitan Property and Casualty Insurance Company and its subsidiary,
Metropolitan Casualty Insurance Company, in Florida by a policyholder alleging
breach of contract and unfair trade practices with respect to allowing the use
of parts not made by the original manufacturer to repair damaged automobiles.
These suits are in the early stages of litigation and Metropolitan Property and
Casualty Insurance Company and Metropolitan Casualty Insurance Company intend to
vigorously defend themselves against these suits. Similar suits have been filed
against several other personal lines property and casualty insurers.
The United States, the Commonwealth of Puerto Rico and various hotels and
individuals have sued MetLife Capital Corporation, a former subsidiary of the
Company, seeking
22
<PAGE> 23
damages for clean up costs, natural resource damages, personal injuries and lost
profits and taxes based upon, among other things, a release of oil from a barge
which was being towed by the M/V Emily S. In connection with the sale of MetLife
Capital, the Company acquired MetLife Capital's potential liability with respect
to the M/V Emily S lawsuit. MetLife Capital had entered into a sale and
leaseback financing arrangement with respect to the M/V Emily S. The plaintiffs
have taken the position that MetLife Capital, as the owner of record of the M/V
Emily S, is responsible for all damages caused by the barge, including the oil
spill. The governments of the United States and Puerto Rico have claimed damages
in excess of $150. At a mediation, the action brought by the United States and
Puerto Rico was conditionally settled, provided that the governments have access
to additional sums from a fund contributed to by oil companies to help remediate
oil spills. The Company can provide no assurance that this action will be
settled in this manner.
Metropolitan Life has completed a tender offer to purchase the shares of
Conning Corporation that it had not already owned. After Metropolitan Life had
announced its intention to make a tender offer, three putative class actions
were filed by Conning shareholders alleging that the prospective offer was
inadequate and constituted a breach of fiduciary duty. The parties to the
litigation have reached an agreement in principle providing for a settlement of
the actions.
In addition, several lawsuits have been brought challenging the fairness of
Metropolitan Life's plan and the adequacy and accuracy of Metropolitan Life's
disclosures to policyholders regarding the plan. These actions name as
defendants some or all of Metropolitan Life, MetLife, Inc., the individual
directors and the New York State Superintendent of Insurance. The five
previously disclosed purported class actions pending in the Supreme Court of the
State of New York for New York County have been consolidated within the
commercial part. There remains a separate purported class action in Kings
County. In addition, a new purported class action was filed on April 21, 2000 in
state court in New York County. The plaintiffs in the state court class actions
seek injunctive, declaratory and compensatory relief, as well as an accounting.
On or about April 14, 2000, some of the plaintiffs in the above described
actions also brought a proceeding under Article 78 of New York's Civil Practice
Law and Rules challenging the Opinion and Decision of the New York
Superintendent of Insurance that approved the plan. In this action, petitioners
seek to vacate the Superintendent's Opinion and Order and enjoin him from
granting final approval to the plan. Finally, on April 18, 2000, a purported
class action was filed in United States District Court for the Eastern District
of New York claiming violation of the Securities Act of 1933. The plaintiff in
this action claims that the Policyholder Information Booklets relating to the
plan failed to disclose certain material facts and seeks rescission and
compensatory damages. Metropolitan Life, MetLife, Inc. and the individual
defendants believe they have meritorious defenses to the plaintiffs' claims and
intend vigorously to contest all of the plaintiffs' claims in these actions.
Various litigation, claims and assessments against the Company, in addition
to those discussed above and those otherwise provided for in the Company's
consolidated financial statements, have arisen in the course of the Company's
business, including, but not limited
23
<PAGE> 24
to, in connection with its activities as an insurer, employer, investor,
investment advisor and taxpayer. Further, state insurance regulatory authorities
and other Federal and state authorities regularly make inquiries and conduct
investigations concerning the Company's compliance with applicable insurance and
other laws and regulations.
In some of the matters referred to above, very large and/or indeterminate
amounts, including punitive and treble damages, are sought. While it is not
feasible to predict or determine the ultimate outcome of all pending
investigations and legal proceedings or provide reasonable ranges of potential
losses, it is the opinion of the Company's management that their outcomes, after
consideration of available insurance and reinsurance and the provisions made in
the Company's consolidated financial statements, are not likely to have a
material adverse effect on the Company's consolidated financial position.
However, given the large and/or indeterminate amounts sought in certain of these
matters and the inherent unpredictability of litigation, it is possible that an
adverse outcome in certain matters could, from time to time, have a material
adverse effect on the Company's operating results or cash flows in particular
quarterly or annual periods.
7. BUSINESS SEGMENT INFORMATION
<TABLE>
<CAPTION>
Auto
&
For the three months ended March 31, 2000 Individual Institutional Home International Reinsurance
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Premiums $ 1,118 $ 1,593 $ 645 $ 146 $ 358
Universal life and investment-type
product policy fees 319 137 -- 13 --
Net investment income 1,578 928 36 65 88
Other revenues 214 183 13 3 2
Net realized investment gains (losses) (39) (16) 5 1 (1)
Income (loss) before provision for income taxes
and extraordinary item 270 201 16 16 40
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Asset Consolidation/
For the three months ended March 31, 2000 Management Corporate Elimination Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Premiums $ -- $ -- $ -- $ 3,860
Universal life and investment-type
product policy fees -- -- -- 469
Net investment income 21 136 (68) 2,784
Other revenues 216 21 13 665
Net realized investment gains (losses) -- (62) -- (112)
Income (loss) before provision for income taxes
and extraordinary item 22 (73) (17) 475
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Auto
&
For the three months ended March 31, 1999 Individual Institutional Home International Reinsurance
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Premiums $ 1,018 $ 1,427 $ 357 $ 114 $ --
Universal life and investment-type
product policy fees 204 127 -- 8 --
Net investment income 1,272 914 22 48 --
Other revenues 101 133 5 2 --
Net realized investment gains (losses) (18) (12) -- 4 --
Income (loss) before provision for income taxes
and extraordinary item 240 232 8 1 --
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Asset Consolidation/
For the three months ended March 31, 1999 Management Corporate Elimination Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Premiums $ -- $ -- $ -- $ 2,916
Universal life and investment-type
product policy fees -- -- -- 339
Net investment income 18 116 (80) 2,310
Other revenues 207 6 -- 454
Net realized investment gains (losses) -- (30) (18) (74)
Income (loss) before provision for income taxes
and extraordinary item 24 (57) (37) 411
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
At March 31, At December 31,
2000 1999
----------- --------------
<S> <C> <C>
Assets
Individual $ 132,407 $ 109,401
Institutional 91,277 88,127
Auto & Home 4,457 4,443
International 5,228 4,381
Reinsurance 6,196 --
Asset Management 1,135 1,036
Corporate 19,384 20,499
Consolidation/Elimination (4,036) (2,655)
--------- ---------
Total $ 256,048 $ 225,232
========= =========
</TABLE>
24
<PAGE> 25
The Individual segment includes an equity ownership interest in Nvest
Companies, L.P. ("Nvest") under the equity method of accounting. Nvest has been
included within the Asset Management segment due to the types of products and
strategies employed by the entity. The Individual segment's equity in earnings
of Nvest, which is included in net investment income, was $12 and $13 for the
three months ended March 31, 2000 and 1999, respectively. The investment in
Nvest was $195 and $224 at March 31, 2000 and 1999, respectively.
The Reinsurance segment includes the life reinsurance business of RGA
combined with Exeter, a previously existing ancillary life reinsurance business.
Exeter has been reported as a component of the Individual segment rather than as
a separate segment for periods prior to January 1, 2000 due to its
immateriality.
The Consolidation/Elimination column includes the elimination of all
intersegment amounts and the Individual segment's ownership interest in Nvest.
The principal component of the intersegment amounts related to intersegment
loans, which bore interest at rates commensurate with related borrowings.
Revenues derived from any one customer did not exceed 10% of consolidated
revenues. Revenues from U.S. operations were $7,438 and $5,769 for the three
months ended March 31, 2000 and 1999, respectively, which represented 97% of
consolidated revenues for both 2000 and 1999.
25
<PAGE> 26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
For purposes of this discussion, the term "Company" refers, at all times
prior to the plan effective date (as hereinafter defined), to Metropolitan Life,
a mutual life insurance company organized under the laws of the State of New
York ("Metropolitan Life"), and its subsidiaries, and at all times on and after
the plan effective date, to MetLife, Inc. ("MetLife"), a Delaware corporation,
and its subsidiaries, including Metropolitan Life on and after the plan
effective date. Set forth below is a summary of certain significant matters
relevant to an understanding of the financial condition and results of
operations of the Company. Following this summary is a discussion addressing the
consolidated results of operations and financial condition of the Company for
the periods indicated. This discussion should be read in conjunction with the
Company's unaudited interim condensed consolidated financial statements included
elsewhere herein.
Statements, analyses, and other information contained in this report
relating to trends in the Company's operations and financial results, the
markets for the Company's products, the future development of the Company's
business, and the risks and uncertainties to which the Company may be subject,
other than with respect to historical information, constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are not guarantees of future performance.
Actual results may differ materially from those anticipated in the forward
looking statements as a result of risks and uncertainties including: changes in
interest rates, decline in securities markets and the effect of sales on
investment products and on the Company's investment portfolio, competition,
litigation, failure to attract and retain sales representatives, differences
between actual claims experience and underwriting and reserving assumptions,
occurrence of catastrophes, downgrade of the Company's or its affiliates'
ratings, changes in state and federal regulation, and risks related to the
demutualization of Metropolitan Life, including a challenge to the plan of
reorganization or the order of the New York Superintendent of Insurance.
Readers are also directed to other risks and uncertainties discussed, as
well as to further discussion of the risks described above, in other documents
filed by the Company with the Securities and Exchange Commission, including the
Company's Registration Statement on Form S-1 (registration no. 333-91517). The
Company specifically disclaims any obligation to update or revise any
forward-looking statement, whether as a result of new information, future
developments or otherwise.
THE DEMUTUALIZATION
On April 7, 2000, pursuant to an order by the New York Superintendent of
Insurance ("Superintendent") approving its plan of reorganization (the "plan")
as amended, Metropolitan Life converted from a mutual life insurance company to
a stock life insurance company and became a wholly-owned subsidiary of MetLife.
In conjunction
26
<PAGE> 27
therewith, each policyholder's membership interest was extinguished and each
eligible policyholder received, in exchange for that interest, trust interests
representing shares of common stock of MetLife to be held in a trust, cash or an
adjustment to their policy values in the form of policy credits, as provided in
the plan. In addition, Metropolitan Life's Canadian branch made cash payments to
holders of certain policies transferred to Clarica Life Insurance Company in
connection with the sale of a substantial portion of Metropolitan Life's
Canadian operations in 1998, as a result of a commitment made in connection with
obtaining Canadian regulatory approval of that sale. The payments, which were
recorded in other expenses in the 2000 second quarter, were determined in a
manner that was consistent with the treatment of, and fair and equitable to,
eligible policyholders of Metropolitan Life.
On the plan effective date, MetLife, Inc. conducted an initial public
offering of 202,000,000 shares and concurrent private placements of an aggregate
of 60,000,000 shares of its common stock at an initial public offering price of
$14.25 per share. The shares of common stock issued in the offerings are in
addition to 493,903,472 shares of common stock of MetLife, Inc. distributed to
the Metropolitan Life policyholder trust for the benefit of policyholders of
Metropolitan Life in connection with the demutualization. On April 10, 2000,
MetLife, Inc. issued 30,300,000 additional shares as a result of the exercise of
over-allotment options granted to underwriters in the initial public offering.
Concurrently with these offerings, the Company and a trust it owns, sold
20,125,000 8.00% equity security units for an aggregate offering of $1,006
million. Each unit consists of (a) a contract to purchase shares of common stock
and (b) a capital security of MetLife Capital Trust I, a Delaware statutory
business trust wholly-owned by us.
On the plan effective date, the Company established the closed block for
the benefit of holders of certain individual life insurance policies of
Metropolitan Life. Assets have been allocated to the closed block in an amount
that produces cash flows which, together with anticipated revenue from the
policies included in the closed block, are reasonably expected to be sufficient
to support obligations and liabilities relating to these policies, including,
but not limited to, provisions for the payment of claims and certain expenses
and taxes, and to provide for the continuation of policyholder dividend scales
in effect for 1999, if the experience underlying such dividend scales continues,
and for appropriate adjustments in such scales if the experience changes. The
closed block assets, the cash flows generated by the closed block assets and the
anticipated revenue from the policies in the closed block will benefit only the
holders of the policies in the closed block. To the extent that, over time, cash
flows from the assets allocated to the closed block and claims and other
experience relating to the closed block are, in the aggregate, more or less
favorable than assumed in establishing the closed block, total dividends paid to
closed block policyholders in the future may be greater than or less than the
total dividends that would have been paid to these policyholders if the
policyholder dividend scales in effect for 1999 had been continued. Any cash
flows in excess of amounts assumed will be available for distribution over time
to closed block policyholders and will not be available to stockholders. The
closed block will continue in effect as long as any policy in the closed block
remains in force. Its expected life is over 100 years.
27
<PAGE> 28
The Company does not expect the closed block to affect its net income or
its liquidity. The Company will use the same accounting principles to account
for the participating policies included in the closed block as it used prior to
the date of demutualization. However, the Company will establish a policyholder
dividend obligation for earnings that will be paid to policyholders as
additional dividends in the amounts described below, unless these earnings are
offset by future unfavorable experience of the closed block. The excess of
closed block liabilities over closed block assets at the effective date of the
demutualization represents the estimated maximum future contributions from the
closed block expected to result from operations attributed to the closed block
after income taxes. Contributions are recognized from the closed block in income
over the period the policies and contracts in the closed block remain in force.
Management believes that over time the actual cumulative contributions from the
closed block will approximately equal the expected cumulative contributions, due
to the effect of dividend changes. If, over the period the closed block remains
in existence, the actual cumulative contribution from the closed block is
greater than the expected cumulative contribution from the closed block, the
Company will recognize only the expected cumulative contribution in income with
the excess recorded as a policyholder dividend obligation, because it will pay
the excess of the actual cumulative contribution from the closed block over the
expected cumulative contribution to closed block policyholders as additional
policyholder dividends unless offset by future unfavorable experience of the
closed block. If over such period, the actual cumulative contribution from the
closed block is less than the expected cumulative contribution from the closed
block, the Company will recognize only the actual contribution in income.
However, the Company may change dividends in the future, which would be intended
to increase future actual contributions until the actual cumulative
contributions equal the expected cumulative contributions.
ACQUISITIONS
On January 6, 2000, the Company completed its acquisition of GenAmerica
Corporation ("GenAmerica") for $1.2 billion plus costs of the acquisition.
GenAmerica is a holding company which includes General American Life Insurance
Company, 48.3% of the outstanding shares of Reinsurance Group of America ("RGA")
common stock, a provider of reinsurance, and 61.0% of the outstanding shares of
Conning Corporation ("Conning") common stock, an asset manager. The Company
owned 9.6% of the outstanding shares of RGA common stock prior to the completion
of the GenAmerica acquisition. Subsequent to the acquisition, the Company's
ownership percentage of the outstanding shares of RGA common stock was 57.9%.
On April 18, 2000, Metropolitan Life completed its tender offer for all of
the outstanding shares of Conning common stock not already owned by Metropolitan
Life, at a price of $12.50 per share. Under the tender offer, 5,348,876 Conning
shares were tendered. These shares, aggregated with the number of Conning shares
that Metropolitan Life already beneficially owns, represents approximately 98%
of the total Conning shares outstanding. Metropolitan Life acquired the
remaining 2% of outstanding Conning shares through a cash merger consummated on
April 19, 2000.
28
<PAGE> 29
RESULTS OF OPERATIONS
The following table presents summary consolidated financial information for
the periods indicated:
<TABLE>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
2000 1999
------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C>
REVENUES
Premiums............................................................... $3,860 $2,916
Universal life and investment-type product policy fees................. 469 339
Net investment income.................................................. 2,784 2,310
Other revenues......................................................... 665 454
Net realized investment losses (net of amounts allocable
to other accounts of $19 and $34, respectively)................... (112) (74)
------ ------
7,666 5,945
------ ------
EXPENSES
Policyholder benefits and claims (includes amounts
directly related to net realized investment
losses of $4 and $4, respectively)................................ 4,047 3,141
Interest credited to policyholder account balances..................... 697 610
Policyholder dividends................................................. 468 382
Other expenses (includes amounts directly related
to net realized investment losses of $15 and $30,
respectively).................................................... 1,979 1,401
------ ------
7,191 5,534
------ ------
Income before provision for income taxes and
extraordinary item............................................... 475 411
Provision for income taxes............................................ 198 174
------ ------
Income before extraordinary item...................................... 277 237
Extraordinary item - demutualization expense.......................... 41 8
------ ------
Net income............................................................ $ 236 $ 229
====== ======
</TABLE>
29
<PAGE> 30
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1999
Premiums increased by $944 million, or 32%, to $3,860 million for the three
months ended March 31, 2000 from $2,916 million for the comparable 1999 period,
primarily due to the acquisition of GenAmerica on January 6, 2000. Excluding the
impact of this acquisition, premiums increased by $460 million, or 16%. This
increase was attributable to Auto & Home, Institutional Business, and
International. The increase of $288 million, or 81%, in Auto & Home was
primarily due to the acquisition of the standard personal lines property and
casualty insurance operations of The St. Paul Companies ("St. Paul"),
representing $259 million of the premiums, as well as growth in this segment's
standard auto and homeowners insurance businesses. The increase of $143 million,
or 10%, in Institutional Business was primarily due to an increase in
non-medical health premiums due to higher sales and improved policyholder
retention in this segment's dental and disability businesses. The increase of
$32 million, or 28%, in International was primarily due to overall growth in
Spain, Taiwan, Korea and Mexico.
Universal life and investment-type product policy fees increased by $130
million, or 38%, to $469 million for the three months ended March 31, 2000 from
$339 million for the comparable 1999 period. Excluding the impact of the
GenAmerica acquisition, universal life and investment-type product policy fees
increased by $69 million, or 20%. This increase was almost entirely attributable
to a $65 million, or 32%, increase in Individual Business, which was primarily
due to the continued growth in deposits for investment products, stock market
appreciation and the acceleration of the recognition of unearned fees in
connection with a universal life product replacement program.
Net investment income increased by $474 million, or 21%, to $2,784 million
for the three months ended March 31, 2000 from $2,310 million in 1999. Excluding
the impact of the GenAmerica acquisition, net investment income increased by
$198 million, or 9%. This increase was primarily due to higher income from (i)
fixed maturities of $134 million, or 8%, (ii) mortgage loans on real estate of
$41 million, or 12%, (iii) real estate and real estate joint ventures income,
after investment expenses and depreciation, of $44 million, or 40% and (iv) cash
and short-term investments of $17 million, or 47%. These increases were
partially offset by reduced income in (i) other limited partnership interests of
$29 million, or 66%, and (ii) other investment income of $8 million, or 38%, as
well as higher investment expenses of $9 million, or 15%.
Other revenues increased by $211 million, or 46%, to $665 million for the
three months ended March 31, 2000 from $454 million for the comparable 1999
period. Excluding the impact of the GenAmerica acquisition, other revenues
increased by $115 million, or 25%, primarily due to growth of $55 million, or
54%, in Individual Business and $48 million, or 36%, in Institutional Business.
The increase in Individual Business was primarily attributable to continued
growth in the Nathan & Lewis and MetLife Securities, Inc. subsidiaries. The
increase in Institutional Business was primarily due to strong growth in this
segment's dental and disability administrative services businesses.
30
<PAGE> 31
The Company's realized investment gains and losses are net of related
policyholder amounts. The amounts netted against realized investment gains and
losses are (i) amortization of deferred policy acquisition costs attributable to
the increase or decrease in product gross margins or profits resulting from
realized investment gains and losses, (ii) additional policyholder liabilities,
which are required when investment gains are realized and the Company reinvests
the proceeds in lower yielding assets ("loss recognition"), and (iii)
liabilities for those participating contracts in which the policyholders'
accounts are increased or decreased by the related investment gains or losses.
Net realized investment losses increased by $38 million, or 51%, to $112
million for the three months ended March 31, 2000 from $74 million for the
comparable 1999 period. Excluding the impact of the GenAmerica acquisition, net
realized investment losses increased by $37 million, or 50%. This increase
reflected total gross realized investment losses of $130 million, an increase of
$22 million, or 20%, from $108 million in 1999, before the offsets for the
amortization of deferred policy acquisition costs of $15 million and $30 million
and credits to participating contracts of $4 million related to assets sold in
2000 and 1999, respectively. The increase in net realized investment losses
reflects the continuation of the Company's strategy to reposition its investment
portfolio in order to provide a higher operating return on its invested assets.
The Company believes the policy of netting related policyholder amounts
against realized investment gains and losses provides important information in
evaluating its operating performance. Realized investment gains and losses are
often excluded by investors when evaluating the overall financial performance of
insurers. The Company believes its presentation enables readers of its
consolidated statements of income to easily exclude realized investment gains
and losses and the related effects on the consolidated statements of income when
evaluating its operating performance. The Company's presentation of realized
investment gains and losses net of policyholder amounts may be different from
the presentation used by other insurance companies and, therefore, amounts in
its consolidated statements of income may not be comparable with amounts
reported by other insurers.
Policyholder benefits and claims increased by $906 million, or 29%, to
$4,047 million for the three months ended March 31, 2000 from $3,141 million for
the comparable 1999 period. This increase reflected total gross policyholder
benefits and claims of $4,043 million, an increase of $906 million from $3,137
million in 1999, before the offset for participating contractholder accounts of
$4 million directly related to net realized investment gains and losses for the
three months ended March 31, 2000 and 1999, respectively. Excluding the impact
of the GenAmerica acquisition, policyholder benefits and claims increased $462
million, or 15%. This increase was primarily due to increases of $238 million,
or 14%, in Institutional Business and $205 million, or 75%, in Auto & Home. The
Institutional Business increase was primarily due to overall premium growth
within this segment's group dental and disability businesses as well as the
acquisition of the individual disability income business of Lincoln National in
November 1999. The increase in Auto & Home was primarily due to a 7% increase in
the number
31
<PAGE> 32
of policies in force, the St. Paul acquisition ($169 million), unfavorable
claims development and higher costs attributable to the increased use of
original manufacturer parts within this segment's auto business.
Interest credited increased by $87 million, or 14%, to $697 million for the
three months ended March 31, 2000 from $610 million for the comparable 1999
period. Excluding the impact of the GenAmerica acquisition, interest credited
decreased by $7 million, or 1%. This decrease was primarily due to a decrease in
Institutional Business of $16 million, or 6%, partially offset by and increase
in Individual Business of $9 million, or 3%. The decrease in Institutional
Business was primarily due to a decrease in retirement and savings products of
$26 million, or 26%, due to a continued shift in customers' investment
preferences from guaranteed interest products to separate account alternatives,
partially offset by an increase in group life of $10 million, or 11%, due to
growth in this segment's bank-owned life insurance business and increases in the
cash values of executive and corporate-owned universal life plans. The increase
in Individual Business was primarily due to an increase in insurance products of
$17 million, or 18%, due to higher policyholder account balances, partially
offset by an $8 million, or 3%, decrease in annuity investment products due to a
shift in investor preferences to separate account alternatives.
Policyholder dividends increased by $86 million, or 23%, to $468 million
for the three months ended March 31, 2000 from $382 million for the comparable
1999 period. Excluding the acquisition of GenAmerica, policyholder dividends
increased by $34 million, or 9%. This increase was primarily due to an increase
in Individual Business of $25 million, or 7%, due to growth in cash values of
policies associated with the Company's large block of traditional life insurance
business. Policyholder dividends vary from period to period based on
participating contract experience.
Other expenses increased by $578 million, or 41%, to $1,979 million for the
three months ended March 31, 2000 from $1,401 million for the comparable 1999
period. Excluding the net capitalization of deferred acquisition costs, other
expenses increased by $653 million, or 45%, to $2,093 in 2000 from $1,440 in
1999. Excluding the impact of the GenAmerica acquisition, other expenses
increased by $323 million, or 22%. This increase was primarily attributable to
increases in Individual Business of $149 million, or 24%, Auto & Home of $124
million, or 121%, and International of $22 million, or 35%. The increase in
Individual Business was primarily due to a $44 million increase in the Nathan &
Lewis and MetLife Securities, Inc. subsidiaries commensurate with the increase
in other revenues discussed above, a $41 million increase in expenses associated
with the Company's securities lending program, a $21 million increase in
commission expense arising from increased sales of variable annuities, and
higher general and administrative expenses. The increase in Auto & Home was
primarily due to the St. Paul acquisition. The increase in International was
primarily due to higher business development costs.
Deferred acquisition costs are principally amortized in proportion to gross
margins or profits, including realized investment gains or losses. The
amortization is allocated to
32
<PAGE> 33
realized investment gains and losses to provide consolidated statement of income
information regarding the impact of investment gains and losses on the amount of
the amortization, and other expenses to provide amounts related to gross margins
or profits originating from transactions other than investment gains and losses.
Capitalization of deferred acquisition costs increased to $386 million for
the three months ended March 31, 2000 from $239 million for the 1999 comparable
period while amortization of such costs increased to $287 million in 2000 from
$230 million in 1999. Excluding the impact of the GenAmerica acquisition,
capitalization of deferred acquisition costs increased to $335 million in 2000
from $239 in 1999 while amortization of such costs increased to $288 million in
2000 from $230 million in 1999. Amortization of deferred acquisition costs of
$272 million and $200 million was allocated to other expenses in 2000 and 1999,
respectively, while the remainder of the amortization in each year was allocated
to realized investment losses. Excluding the impact of the GenAmerica
acquisition, amortization of deferred acquisition costs of $276 million and $200
million was allocated to other expenses in 2000 and 1999, respectively, while
the remainder of the amortization in each year was allocated to realized
investment losses. The increase in amortization of deferred acquisition costs
allocated to other expenses was primarily attributable to the Individual
Business segment, which increased to $190 million in 2000 from $150 million in
1999, primarily due to refinements in the calculation of estimated gross margins
as well as the acceleration of the recognition of unearned fees in connection
with the product replacement program discussed above.
Income tax expense for the three months ended March 31, 2000 was $198
million, or 42% of income before provision for income taxes and extraordinary
item compared with $174, or 42%, for the comparable 1999 period. The effective
rates differ from the corporate tax rate of 35% primarily due to the impact of
surplus tax. The Company is subject to surplus tax imposed on mutual life
insurance companies under Section 809 of the Internal Revenue Code. The surplus
tax results from the disallowance of a portion of a mutual life insurance
company's policyholder dividends as a deduction from taxable income. Subsequent
to the plan effective date, the Company will no longer be subject to the surplus
tax.
Demutualization expenses, net of income taxes, were $41 million and $8
million for the three months ended March 31, 2000 and 1999, respectively. These
costs related to the Company's demutualization efforts.
33
<PAGE> 34
INDIVIDUAL BUSINESS
The following table presents summary consolidated financial information for
Individual Business for the periods indicated:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
2000 1999
---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C>
REVENUES
Premiums $1,118 $1,018
Universal life and investment-type
product policy fees 319 204
Net investment income 1,578 1,272
Other revenues 214 101
Net realized investment losses (39) (18)
------ ------
3,190 2,577
------ ------
EXPENSES
Policyholder benefits and claims 1,185 1,057
Interest credited to policyholder
account balances 412 337
Policyholder dividends 438 361
Other expenses 885 582
------ ------
2,920 2,337
------ ------
Income before provision for income taxes 270 240
Provision for income taxes 97 77
------ ------
Net income $ 173 $ 163
====== ======
</TABLE>
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1999 - INDIVIDUAL BUSINESS
Premiums increased by $100 million, or 10%, to $1,118 million for the three
months ended March 31, 2000 from $1,018 million for the 1999 comparable period.
Excluding the impact of the GenAmerica acquisition, premiums decreased by $9
million, or 1%. Premiums from insurance products decreased by $16 million, or
2%, to $986 million in 2000 compared with $1,002 million in 1999. This decrease
was primarily due to a decline in sales of traditional life insurance policies,
which reflected a continued shift in policyholders' preferences from those
policies to variable life products. Premiums from annuity and investment
products increased by $7 million, or 44%, to $23 million in 2000 from $16
million in 1999, primarily due to the increased sales of supplementary contracts
with life contingencies.
34
<PAGE> 35
Universal life and investment-type product policy fees increased by $115
million, or 56%, to $319 million for the three months ended March 31, 2000 from
$204 million for the comparable 1999 period. Excluding the impact of the
GenAmerica acquisition, universal life and investment-type product policy fees
increased by $65 million, or 32%. Policy fees from insurance products increased
by $43 million, or 33%, to $172 million in 2000 from $129 million in 1999. This
increase was due to increased sales of variable life products and continued
growth in separate accounts, reflecting a continued shift in customer
preferences from traditional life products. The increase also reflects the
acceleration of the recognition of unearned fees in connection with a product
replacement program related to universal life policies. Policy fees from annuity
and investment products increased by $22 million, or 29%, to $97 million in 2000
from $75 million in 1999, primarily due to continued growth in deposits for
investment products and stock market appreciation.
Other revenues increased by $113 million, or 112%, to $214 million for the
three months ended March 31, 2000 from $101 million for the comparable 1999
period. Excluding the impact of the GenAmerica acquisition, other revenues
increased by $55 million, or 54%. Other revenues for insurance products
increased by $52 million, or 54%, to $148 million in 2000 from $96 million in
1999. This increase was primarily attributable to continued growth in the Nathan
& Lewis and MetLife Securities, Inc. subsidiaries, as well as higher commission
and fee income associated with increased sales of proprietary and
non-proprietary products. Other revenues for annuity and investment products
increased by $3 million, or 60%, to $8 million for the three months ended March
31, 2000 from $5 million for the comparable 1999 period. This increase was
primarily due to investment advisory fees associated with the growth of variable
annuity separate accounts.
Policyholder benefits and claims increased $128 million, or 12%, to $1,185
million for the three months ended March 31, 2000 from $1,057 million for the
comparable 1999 period. Excluding the impact of the GenAmerica acquisition,
policyholder benefits and claims decreased $7 million, or 1%. Policyholder
benefits and claims for insurance products decreased by $40 million, or 4%, to
$1,004 million in 2000 from $1,044 million in 1999. This decrease was primarily
due to improved mortality and morbidity experience in the existing block of
traditional life policyholder liabilities. Policyholder benefits and claims for
annuity and investment products increased by $33 million, or 254%, to $46
million in 2000 from $13 million in 1999 consistent with the increase in
premiums discussed above.
Interest credited to policyholder account balances increased by $75
million, or 22%, to $412 million for the three months ended March 31, 2000 from
$337 million for the comparable 1999 period. Excluding the impact of the
GenAmerica acquisition, interest credited to policyholder account balances
increased by $9 million, or 3%. Interest on insurance products increased by $17
million, or 18%, to $109 million in 2000 from $92 million in 1999. This increase
was primarily due to higher policyholder account balances. Interest on annuity
and investment products decreased by $8 million, or 3%, to
35
<PAGE> 36
$237 million in 2000 from $245 million in 1999, primarily due to the shift in
investor preferences to separate account alternatives.
Policyholder dividends increased by $77 million, or 21%, to $438 million
for the three months ended March 31, 2000 from $361 million for the comparable
1999 period. Excluding the impact of the GenAmerica acquisition, policyholder
dividends increased by $25 million, or 7%. This increase was due to growth in
cash values of policies associated with this segment's large block of
traditional individual life insurance business.
Other expenses increased by $303 million, or 52%, to $885 million for the
three months ended March 31, 2000 from $582 million for the comparable 1999
period. Excluding the net capitalization of deferred acquisition costs as
discussed below, other expenses increased by $302 million, or 50%, to $912
million in 2000 from $610 million in 1999. Excluding the impact of the
GenAmerica acquisition, other expenses increased $149 million, or 24%. Other
expenses related to insurance products increased by $113 million, or 24%, to
$580 million in 2000 from $467 million in 1999. This increase was primarily due
to a $44 million increase in the broker dealer and other subsidiaries
commensurate with the increase in other revenues discussed above, a $29 million
increase in expenses associated with the Company's securities lending program,
and higher general and administrative expenses. Other expenses related to
annuity and investment products increased $36 million, or 25%, to $179 million
in 2000 from $143 million in 1999. This increase was primarily due to a $21
million increase in commission expense, arising from higher sales of variable
annuities and a $12 million increase in expenses associated with the Company's
securities lending program.
Deferred acquisition costs are principally amortized in proportion to gross
margins or gross profits, including realized investment gains or losses. The
amortization is allocated to realized investment gains and losses to provide
consolidated statement of income information regarding the impact of investment
gains and losses on the amount of the amortization, and other expenses to
provide amounts related to gross margins or profits originating from
transactions other than investment gains and losses.
Capitalization of deferred acquisition costs increased $34 million to $212
million in 2000 from $178 million in 1999 while total amortization of such costs
increased $50 million to $170 million in 2000 from $120 million in 1999.
Excluding the impact of the GenAmerica acquisition, capitalization of deferred
acquisition costs increased $18 million, while total amortization of such costs
increased $52 million. Amortization of deferred acquisition costs of $185
million and $150 million were allocated to other expenses in 2000 and 1999,
respectively, while the remainder of the amortization in each year was allocated
to realized investment gains and losses. Excluding the impact of the GenAmerica
acquisition, amortization of deferred acquisition costs of $190 million and $150
million were allocated to other expenses in 2000 and 1999, respectively, while
the remainder of the amortization in each year was allocated to realized
investment gains and losses. Amortization of deferred acquisition costs
allocated to other expenses related to insurance products increased $25 million
to $143 million in 2000 from $118 in 1999 due to refinements in the calculation
of estimated gross margin as well as the acceleration of
36
<PAGE> 37
the recognition of unearned fees in connection with the product replacement
program discussed above. Amortization of annuity products deferred acquisition
costs allocated to other expenses increased $15 million to $47 million in 2000
compared to $32 million in 1999. This change was related to refinements in the
calculation of estimated gross margin.
INSTITUTIONAL BUSINESS
The following table presents summary consolidated financial information for
Institutional Business for the periods as indicated:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
2000 1999
------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C>
REVENUES
Premiums $1,593 $1,427
Universal life and investment-type product policy fees 137 127
Net investment income 928 914
Other revenues 183 133
Net realized investment losses (16) (12)
------ ------
2,825 2,589
------ ------
EXPENSES
Policyholder benefits and claims 1,973 1,708
Interest credited to policyholder account balances 247 258
Policyholder dividends 18 16
Other expenses 386 375
------ ------
2,624 2,357
------ ------
Income before provision for income taxes 201 232
Provision for income taxes 71 88
------ ------
Net income $ 130 $ 144
====== ======
</TABLE>
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1999 -- INSTITUTIONAL BUSINESS
Premiums increased by $166 million, or 12%, to $1,593 million for the three
months ended March 31, 2000 from $1,427 million for the comparable 1999 period.
Excluding the impact of the GenAmerica acquisition, premiums increased by $143
million, or 10%, to $1,570 million in 2000 from $1,427 million in 1999. Group
insurance premiums increased by $97 million, or 7%, to $1,417 million in 2000
from $1,320 million in 1999. Group life
37
<PAGE> 38
premiums decreased by $22 million, or 2%, to $910 million in 2000 from $932
million in 1999, primarily due to a large retrospective premium received from an
existing customer in 1999. Non-medical health premiums increased $119 million,
or 31%, to $507 million in 2000 from $388 million in 1999. This increase was
primarily due to strong sales and continued favorable policyholder retention in
this segment's dental and disability businesses. In addition, premiums increased
by $13 million in 2000 as a result of the acquisition of the individual
disability income business of Lincoln National Life Insurance Company in
November 1999. Retirement and savings premiums increased by $46 million, or 43%,
to $153 million in 2000 from $107 million in 1999, primarily due to a
significant premium received from an existing customer in 2000.
Universal life and investment-type product policy fees increased by $10
million, or 8%, to $137 million for the three months ended March 31, 2000 from
$127 million for the comparable 1999 period. Excluding the impact of the
GenAmerica acquisition, universal life and investment-type product policy fees
were essentially unchanged at $126 million in 2000 compared with $127 million in
1999.
Other revenues increased by $50 million, or 38%, to $183 million for the
three months ended March 31, 2000 from $133 million for the comparable 1999
period. Excluding the impact of the GenAmerica acquisition, other revenues
increased by $48 million, or 36%, to $181 million in 2000 from $133 million in
1999. Group insurance increased by $40 million, or 70%, to $97 million in 2000
from $57 million in 1999. This increase was primarily due to strong sales growth
in this segment's dental and disability administrative services businesses and
higher management fees from group life insurance separate accounts. Retirement
and savings increased by $8 million, or 11%, to $84 million in 2000 from $76
million in 1999. This increase reflected higher administrative fees from
separate accounts and defined contribution record-keeping services.
Policyholder benefits and claims increased by $265 million, or 16%, to
$1,973 million for the three months ended March 31, 2000 from $1,708 million for
the comparable 1999 period. Excluding the impact of the GenAmerica acquisition,
policyholder benefits and claims increased by $238 million, or 14%, to $1,946
million in 2000 from $1,708 million in 1999. Group life increased by $32
million, or 3%, to $964 million in 2000 from $932 million in 1999, primarily due
to increased claim volume and higher average insurance coverage amounts per
life. Non-medical health increased by $142 million, or 45%, to $456 million in
2000 from $314 million in 1999, due to significant growth in this segment's
dental and disability insurance businesses as well as the acquisition of the
Lincoln National's individual disability income business discussed above.
Retirement and savings increased by $64 million, or 14%, to $526 million in 2000
from $462 million in 1999, commensurate with the premium variance discussed
above.
Interest credited to policyholder account balances decreased by $11
million, or 4%, to $247 million for the three months ended March 31, 2000 from
$258 million for the comparable 1999 period. Excluding the impact of the
GenAmerica acquisition, interest credited to policyholder account balances
decreased by $16 million, or 6%, to $242 million
38
<PAGE> 39
in 2000 from $258 million in 1999. Group life insurance increased by $10
million, or 11%, to $104 million in 2000 from $94 million in 1999. This increase
was primarily due to growth in the bank-owned life insurance business and
increases in the cash values of executive and corporate-owned universal life
plans. Retirement and savings decreased by $26 million, or 16%, to $138 million
in 2000 from $164 million in 1999, due to a continued shift in customers'
investment preferences from guaranteed interest products to separate account
alternatives.
Policyholder dividends increased by $2 million, or 13%, to $18 million for
the three months ended March 31, 2000 from $16 million for the comparable 1999
period. Policyholder dividends vary from period to period based on participating
group insurance contract experience.
Other expenses increased by $11 million, or 3%, to $386 million for the
three months ended March 31, 2000 from $375 million for the comparable 1999
period. Excluding the impact of the GenAmerica acquisition, expenses remained
essentially unchanged at $376 million in 2000 compared with $375 million in
1999.
REINSURANCE
As a result of the acquisition of GenAmerica on January 6, 2000, MetLife
beneficially owns approximately 58% of Reinsurance Group of America,
Incorporated ("RGA"). RGA, through its subsidiaries RGA Reinsurance Company and
RGA Life Reinsurance Company of Canada, is among the largest providers of life
reinsurance in North America. In addition to its North American operations, RGA
has subsidiary companies or branch offices in Argentina, Australia, Barbados,
Bermuda, Hong Kong, Japan, Taiwan, South Africa, and the United Kingdom.
Worldwide, RGA has over $450 billion of life reinsurance in force and assets of
$5.4 billion.
MetLife has designated the life reinsurance business of RGA, combined with
an existing ancillary life reinsurance business, as its Reinsurance segment. The
existing ancillary life reinsurance business was an immaterial component of
MetLife's Individual segment for periods prior to January 1, 2000. Life
reinsurance is an arrangement under which an insurance company, the "reinsurer,"
agrees to indemnify another insurance company, the "ceding company," for all or
a portion of the insurance risks underwritten by the ceding company. Life
reinsurance is designed to (i) reduce the net liability on individual risks,
thereby enabling the ceding company to increase the volume of business it can
underwrite, as well as increase the maximum risk it can underwrite on a single
life or risk; (ii) stabilize operating results by leveling fluctuations in the
ceding company's loss experience; (iii) assist the ceding company to meet
applicable regulatory requirements; and (iv) enhance the ceding company's
financial strength and surplus position.
39
<PAGE> 40
The following table presents summary consolidated financial information for
Reinsurance for the three months ended March 31, 2000 (Dollars in millions):
<TABLE>
<S> <C>
REVENUES
Premiums $358
Net investment income 88
Other revenues 2
Net realized investment losses (1)
----
447
----
EXPENSES
Policyholder benefits and claims 285
Interest credited to policyholder account balances 23
Policyholder dividends 5
Other expenses 85
----
398
----
Income before provision for income taxes 49
Provision for income taxes 19
Minority interest 9
----
Net income $ 21
====
</TABLE>
THREE MONTHS ENDED MARCH 31, 2000 - REINSURANCE
Revenues for the three months ended March 31, 2000 were $447 million.
Reinsurance revenues are primarily derived from renewal premiums from existing
reinsurance treaties, new business premiums from existing or new reinsurance
treaties and income earned on invested assets. Premium levels are significantly
influenced by large transactions and reporting practices of ceding companies
and, as a result, can fluctuate from period to period.
Expenses for the three months ended March 31, 2000 were $398 million.
Policy benefits and claims were 79.6% of premiums for the three months ended
March 31, 2000. Mortality is expected to vary from period to period, but
generally remains fairly constant over the long-term. Underwriting, acquisition
and insurance expenses, which are included in other expenses, were 15.4% of
premiums for the three months ended March 31, 2000. This percentage fluctuates
depending on the mix of the underlying insurance products being reinsured.
Interest credited to policyholder account balances related to amounts credited
on the Company's deposit type contracts and cash value products in this segment,
which have a significant mortality component. This amount fluctuates with the
changes in cash values and changes in interest crediting rates.
Minority interest reflects third-party ownership interests in RGA.
40
<PAGE> 41
AUTO & HOME
The following table presents summary consolidated financial information for
Auto & Home for the periods indicated:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
2000 1999
------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C>
REVENUES
Premiums $ 645 $ 357
Net investment income 36 22
Other revenues 13 5
Net realized investment gains 5 --
------ ------
699 384
------ ------
EXPENSES
Policyholder benefits and claims 479 274
Other expenses 204 102
------ ------
683 376
------ ------
Income before provision for income taxes 16 8
Provision for income taxes 5 1
------ ------
Net income $ 11 $ 7
====== ======
</TABLE>
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1999 - AUTO & HOME
Premiums increased by $288 million, or 81%, to $645 million for the three
months ended March 31, 2000 from $357 million for the 1999 comparable period.
Excluding the impact of the St. Paul acquisition, premiums increased by $29
million, or 8%. Auto premiums increased by $13 million, or 4%, to $312 million
in 2000 from $299 million in 1999. This increase was primarily due to growth in
the standard auto insurance book of business which was attributable to increased
new business production and improved retention in this segment's existing
business. Policyholder retention in the standard auto business increased by 1%
to 88%. Homeowners increased by $11 million, or 20%, to $65 million in 2000 from
$54 million in 1999 due to higher new business production and an increase in
policyholder retention to 90% in 2000 from 89% in 1999. Other personal lines
increased to $9 million in 2000 from $4 million in 1999.
Other revenues increased by $8 million, or 160%, to $13 million for the
three months ended March 31, 2000 from $5 million for the comparable 1999
period, primarily due to
41
<PAGE> 42
a revision of an estimate of amounts recoverable from reinsurers related to the
disposition of this segment's reinsurance business in 1990.
Expenses increased by $307 million, or 82%, to $683 million for the three
months ended March 31, 2000 from $376 million for the comparable 1999 period.
Excluding the impact of the St. Paul acquisition, expenses increased by $48
million or 13%, which resulted in an increase in the combined ratio to 109.5% in
2000 from 105.2% in 1999. This increase was primarily due to higher overall loss
costs in the auto and homeowners lines, as discussed below.
Policyholder benefits and claims increased by $205 million, or 75%, to $479
million for the three months ended March 31, 2000 from $274 million for the
comparable 1999 period. The auto loss ratio decreased to 76.0% in 2000 from
77.4% in 1999 while the homeowners loss ratio decreased to 73.0% from 74.2% in
1999. Excluding the impact of the St. Paul acquisition, policyholder benefits
and claims increased by $36 million, or 13%. Auto policyholder benefits and
claims increased by $27 million, or 12%, to $259 million in 2000 from $232
million in 1999, due to a 7% increase in the number of policies in force, as
well as unfavorable claims development due to higher claim frequencies, which
were primarily related to poorer road conditions in 2000 compared with 1999, as
well as increased costs due to an increase in the use of original equipment
manufacturer parts and higher labor rates. Correspondingly, the auto loss ratio
increased to 82.8% in 2000 from 77.4% in 1999. Homeowners benefits and claims
increased $8 million, or 20%, to $48 million in 2000 from $40 million in 1999
due to the increased volume of this book of business. The homeowners loss ratio
increased by .7% to 74.9% in 2000 from 74.2% in 1999. Other personal lines
benefits and claims increased by $1 million to $3 million in 2000 from $2
million in 1999.
Other expenses increased by $102 million, or 100%, to $204 million for the
three months ended March 31, 2000 from $102 million for the comparable 1999
period, which resulted in an increase in the expense ratio to 31.7% in 2000 from
28.5% in 1999. Excluding the impact of the St. Paul acquisition, operating
expenses increased $12 million, or 12%, resulting in a slight increase in the
expense ratio to 29.3% in 2000 from 28.5% in 1999. This increase was primarily
due to higher staff and service expenses.
42
<PAGE> 43
ASSET MANAGEMENT
The following table presents summary consolidated financial information for
Asset Management for the periods indicated:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
2000 1999
------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C>
REVENUES
Net investment income $ 21 $ 18
Other revenues 216 207
------ ------
237 225
OTHER EXPENSES 202 186
------ ------
Income before provision for income taxes
and minority interest 35 39
Provision for income taxes 11 10
Minority interest 13 15
------ ------
Net income $ 11 $ 14
====== ======
</TABLE>
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1999 - ASSET MANAGEMENT
Other revenues, which are primarily comprised of management and advisory
fees, increased by $9 million, or 4%, to $216 million for the three months ended
March 31, 2000 from $207 million for the comparable 1999 period, reflecting an
overall increase in assets under management of $29 billion, or 15%, to $219
billion in 2000 from $190 billion in 1999. Excluding the impact of Conning,
which was acquired as part of the GenAmerica acquisition, assets under
management increased $3 billion, or 2%, to $193 billion in 2000 from $190
billion in 1999, primarily due to overall market appreciation of $5 billion,
partially offset by net cash outflows from customers' accounts of $2 billion.
Despite the increase in assets under management, other revenues decreased by $10
million, or 5%, to $197 million in 2000 from $207 million in 1999, primarily due
to a change in asset mix from value style products to fixed income and other
retail equity products. Management and advisory fees are typically calculated
based on a percentage of assets under management, and are not necessarily
proportionate to average assets managed due to changes in account mix.
43
<PAGE> 44
Other expenses increased by $16 million, or 9%, to $202 million for the
three months ended March 31, 2000 from $186 million for the comparable 1999
period. Excluding the impact of Conning, other expenses decreased by $2 million,
or 1%, to $184 million in 2000 from $186 million in 1999. Total compensation and
benefits of $106 million consisted of approximately 59% base compensation and
41% variable compensation. Base compensation increased by $7 million, or 13%, to
$63 million in 2000 from $56 million in 1999, primarily due to annual salary
increases and higher staffing levels. Variable compensation decreased by $7
million, or 14%, to $43 million in 2000 from $50 million in 1999. Variable
incentive payments are based on profitability, investment portfolio performance,
new business sales and growth in revenues and profits. The variable compensation
plans reward the employees for growth in their businesses, but also require them
to share in the impact of any declines. In addition, general and administrative
expenses decreased by $2 million, or 3%, to $78 in 2000 from $80 million in
1999, primarily due to lower discretionary spending.
Minority interest, reflecting third-party ownership interests in Nvest and
Conning, decreased by $2 million, or 13%, to $13 million for the three months
ended March 31, 2000 from $15 million for the comparable 1999 period.
INTERNATIONAL
The following table presents summary consolidated financial information for
International for the periods indicated:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
2000 1999
---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C>
REVENUES
Premiums $146 $114
Universal life and investment-type product policy fees 13 8
Net investment income 65 48
Other revenues 3 2
Net realized investment gains 1 4
---- ----
228 176
---- ----
EXPENSES
Policyholder benefits and claims 125 102
Interest credited to policyholder account balances 15 15
Policyholder dividends 7 5
Other expenses 65 53
---- ----
212 175
---- ----
Income before provision for income taxes 16 1
Provision for income taxes 6 (4)
---- ----
Net income $ 10 $ 5
==== ====
</TABLE>
44
<PAGE> 45
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1999 - INTERNATIONAL
Premiums increased by $32 million, or 28%, to $146 million for the three
months ended March 31, 2000 from $114 million for the three months ended March
31, 1999. Mexico's premiums increased by $7 million primarily due to one large
group customer obtained in 2000. Taiwan's premiums increased by $8 million
primarily due to a large group customer obtained in the third quarter of 1999.
Korea's premiums increased by $7 million due to improved policyholder retention,
which increased 8% to 81% in 2000 from 73% in 1999, and a shift in customers'
preferences towards whole life policies from investment-type products. Spain's
premiums increased by $8 million primarily due to increased sales from its joint
venture partnership, specifically in the agency and direct auto business.
Brazil's premiums increased by $2 million, primarily due to expanded business
operations.
Universal life and investment type-product policy fees increased by $5
million, or 63%, to $13 million for the three months ended March 31, 2000 from
$8 million for the comparable 1999 period, due to growth in all countries with
the most significant increases in Spain and Argentina. Spain increased by $2
million due to increased sales of its unit-linked product that was introduced in
the second quarter of 1999. This unit-linked product is similar to a variable
universal life product in the United States and its strong sales are
attributable to its favorable tax advantages and the current strong economic
environment in Spain. Argentina increased by $1 million, primarily due to
expanded business operations.
Other revenues were essentially unchanged at $3 million for the three
months ended March 31, 2000 compared with $2 million for the comparable 1999
period.
Policyholder benefits and claims increased by $23 million, or 23%, to $125
million for the three months ended March 31, 2000 from $102 million for the
comparable 1999 period. Taiwan and Korea increased by $11 million and $4
million, respectively, primarily due to the overall premium growth discussed
above. Spain increased by $3 million primarily due to increases in auto
premiums, partially offset by an improved loss ratio, which improved 25% to 75%
in 2000 from 100% in 1999. The remainder of the increase was primarily due to
minor increases in several countries.
Interest credited to policyholder account balances was stable at $15
million for the three months ended March 31, 2000 and 1999.
Policyholder dividends were essentially unchanged at $7 million for the
three months ended March 31, 2000 compared with $5 million for the comparable
1999 period. These dividends vary from period to period based on the claims
experience of participating insurance contracts.
45
<PAGE> 46
Other expenses increased by $12 million, or 23%, to $65 million for the
three months ended March 31, 2000 from $53 million for the comparable 1999
period. This increase was primarily due to higher business development costs.
CORPORATE
Total revenues for the Corporate segment, which consisted of net investment
income and realized investment losses that were not allocated to other business
segments, increased by $3 million, or 3%, to $95 million for the three months
ended March 31, 2000 from $92 million for the comparable 1999 period. Excluding
the impact of the GenAmerica acquisition, total revenues decreased by $11
million, or 12%. This decrease was primarily due to a $32 million increase in
realized investment losses, partially offset by a $20 million increase in net
investment income. These variances reflect the continuation of the Company's
strategy to reposition its investment portfolio in order to provide a higher
operating return on its invested assets. Total Corporate expenses increased by
$19 million, or 13%, to $168 million in 2000 from $149 million in 1999.
Excluding the impact of the GenAmerica acquisition, total expenses were
essentially unchanged at $147 million in 2000 compared with $149 million in
1999. The Company incurred a net loss of $120 million for the three months ended
March 31, 2000, compared with a net loss of $77 million for the comparable 1999
period, which was primarily attributable to a $33 million after-tax increase in
demutualization expenses.
LIQUIDITY AND CAPITAL RESOURCES
METLIFE, INC.
Following the plan effective date, Metropolitan Life became a wholly-owned
subsidiary and the principal asset of MetLife, Inc. The primary uses of
liquidity of MetLife, Inc. will include the payment of common stock dividends,
interest payments on debentures issued to MetLife Capital Trust I and other debt
servicing, contributions to subsidiaries and payment of general operating
expenses. The primary source of the Company's liquidity will be dividends it may
receive from Metropolitan Life and the interest received from Metropolitan Life
under the capital note described below. In addition, the Company retained $340
million from the proceeds of the offerings and the private placements at
MetLife, Inc., which will be available to pay dividends to stockholders, make
contributions to subsidiaries, make payments on the debentures issued to MetLife
Capital Trust I and meet other obligations. MetLife's ability, on a continuing
basis, to meet its cash needs depends primarily on the receipt of dividends and
the interest on the capital note from Metropolitan Life.
Under the New York Insurance Law, Metropolitan Life will be permitted to
pay a stockholder dividend to MetLife, Inc. only if it files notice of its
intention to declare such a dividend and the amount thereof with the New York
Superintendent of Insurance and the New York Superintendent does not disapprove
the distribution. Under the New York
46
<PAGE> 47
Insurance Law, the New York Superintendent has broad discretion in determining
whether the financial condition of a stock life insurance company would support
the payment of dividends to its stockholders. The New York Insurance Department
has established informal guidelines for such determinations. The guidelines,
among other things, focus on the insurer's overall financial condition and
profitability under statutory accounting practices. Management of the Company
cannot provide assurance that Metropolitan Life will have statutory earnings to
support payment of dividends to MetLife, Inc. in an amount sufficient to fund
its cash requirements and pay cash dividends or that the Superintendent will not
disapprove any dividends that Metropolitan Life may seek to pay. MetLife's other
insurance subsidiaries are also subject to restrictions on the payment of
dividends.
The dividend limitation is based on statutory financial results. Statutory
accounting practices differ in certain respects from accounting principles used
in financial statements prepared in conformity with generally accepted
accounting principles. The significant differences relate to deferred
acquisition costs, deferred income taxes, required investment reserves, reserve
calculation assumptions and surplus notes. Furthermore, although the impact
cannot be determined at this time, the recent adoption of the Codification of
Statutory Accounting Principles by the NAIC may reduce statutory surplus,
thereby making the dividend limitation more restrictive.
In connection with the contribution of the net proceeds from the initial
public offering, the private placements and the offering of equity security
units to Metropolitan Life as described in Note 3 of Notes to Unaudited Interim
Condensed Consolidated Financial Statements, Metropolitan Life issued to MetLife
a $1,006 8.00% mandatorily convertible capital note due 2005.
The Superintendent approved the issuance of the capital note on April 4,
2000. If the payment of interest is prevented by application of the payment
restrictions described above, the interest on the capital note will not be
available as a source of liquidity for MetLife.
Based on the historic cash flows and the current financial results of
Metropolitan Life, subject to any dividend limitations which may be imposed upon
Metropolitan Life or its subsidiaries by regulatory authorities, management
believes that cash flows from operating activities, together with the $340
million of proceeds from the offerings and the private placements retained by
MetLife. and the interest received on the capital note from Metropolitan Life,
will be sufficient to enable MetLife to make dividend payments on its common
stock, to pay all operating expenses, make payments on the debentures issued to
MetLife Capital Trust I and meet its other obligations.
47
<PAGE> 48
METROPOLITAN LIFE INSURANCE COMPANY
LIQUIDITY SOURCES. Metropolitan Life's principal cash inflows from its
insurance activities come from life insurance premiums, annuity considerations
and deposit funds. A primary liquidity concern with respect to these cash
inflows is the risk of early contract holder and policyholder withdrawal.
Metropolitan Life seeks to include provisions limiting withdrawal rights from
general account institutional pension products (generally group annuities,
including guaranteed interest contracts and certain deposit fund liabilities)
sold to employee benefit plan sponsors.
Metropolitan Life's principal cash inflows from its investment activities
result from repayments of principal and proceeds from maturities and sales of
invested assets, investment income, as well as dividends and distributions from
subsidiaries. The primary liquidity concerns with respect to these cash inflows
are the risks of default by debtors, interest rate and other market volatilities
and potential illiquidity of subsidiaries. Metropolitan Life closely monitors
and manages these risks.
Additional sources of liquidity to meet unexpected cash outflows are
available from Metropolitan Life's portfolio of liquid assets. These liquid
assets include substantial holdings of U.S. treasury securities, short-term
investments, common stocks and marketable fixed maturity securities.
Metropolitan Life's available portfolio of liquid assets was approximately $97
billion and $88 billion at March 31, 2000 and December 31, 1999, respectively.
Sources of liquidity also include facilities for short- and long-term
borrowing as needed, primarily arranged through MetLife Funding, Inc., a
subsidiary of Metropolitan Life. See "--Financing".
LIQUIDITY USES. Metropolitan Life's principal cash outflows primarily
relate to the liabilities associated with its various life insurance, annuity
and group pension products, operating expenses, income taxes, contributions to
subsidiaries, as well as principal and interest on its outstanding debt
obligations. Liabilities arising from its insurance activities primarily relate
to benefit payments under the above-named products, as well as payments for
policy surrenders, withdrawals and loans.
The Company's management believes that its sources of liquidity are more
than adequate to meet its current cash requirements.
LITIGATION. Various litigation claims and assessments against the Company
have arisen in the course of the Company's business, including in connection
with its activities as an insurer, employer, investor, investment advisor and
taxpayer. Further, state insurance regulatory authorities and other authorities
regularly make inquiries and conduct investigations concerning the Company's
compliance with applicable insurance and other laws and regulations.
48
<PAGE> 49
In some of these matters, very large and/or indeterminate amounts,
including punitive and treble damages, are sought. While it is not feasible to
predict or determine the ultimate outcome of all pending investigations and
legal proceedings or to provide reasonable ranges of potential losses, it is the
opinion of the Company's management that their outcomes, after consideration of
available insurance and reinsurance and the provisions made in the Company's
consolidated financial statements, are not likely to have a material adverse
effect on its consolidated financial condition. However, given the large and/or
indeterminate amounts sought in certain of these matters and the inherent
unpredictability of litigation, it is possible that an adverse outcome in
certain matters could, from time to time, have a material adverse effect on the
Company's operating results or cash flows in particular quarterly or annual
periods. See Note 6 in Notes to Unaudited Interim Condensed Consolidated
Financial Statements.
RISK-BASED CAPITAL. Section 1322 of the New York Insurance Law requires
that New York life insurers report their risk-based capital ("RBC") based on a
formula calculated by applying factors to various asset, premium and statutory
reserve items. The formula takes into account the risk characteristics of the
insurer, including asset risk, insurance risk, interest rate risk and business
risk. Section 1322 gives the Superintendent explicit regulatory authority to
require various actions by, or take various actions against, insurers whose
total adjusted capital does not exceed certain RBC levels. At March 31, 2000,
Metropolitan Life's total adjusted capital was in excess of each of those RBC
levels.
Each of the U.S. insurance subsidiaries of Metropolitan Life is subject to
these same RBC requirements. At March 31, 2000, the total adjusted capital of
each of these insurance subsidiaries was in excess of each of these RBC levels.
The NAIC has recently adopted the Codification of Statutory Accounting
Principles for life insurers, which is to become effective on January 1, 2001.
Prior to implementation by Metropolitan Life, the Codification requires adoption
by the New York Insurance Department. Based on a study commissioned by the NAIC,
the overall impact to life insurers resulting from adoption of the Codification
is not expected to be materially adverse; however, a detailed analysis will be
necessary to determine the actual impact of the Codification on the statutory
results of operations and statutory financial position of Metropolitan Life and
its U.S. insurance subsidiaries.
FINANCING. MetLife Funding, Inc. serves as a centralized finance unit for
Metropolitan Life. Pursuant to a support agreement, Metropolitan Life has agreed
to cause MetLife Funding to have a tangible net worth of at least one dollar. At
March 31, 2000 and December 31, 1999, MetLife Funding had a tangible net worth
of $10.6 million and $10.5 million, respectively. MetLife Funding raises funds
from various funding sources and uses the proceeds to extend loans to
Metropolitan Life and its other subsidiaries. MetLife Funding manages its
funding sources to enhance the financial flexibility and liquidity of MetLife.
At March 31, 2000 and December 31, 1999, MetLife Funding had total outstanding
liabilities of $3.5 billion and $4.2 billion, respectively, consisting primarily
of commercial paper.
49
<PAGE> 50
In connection with the Company's acquisition of the stock of GenAmerica,
the Company incurred $900 million of short-term debt, consisting primarily of
commercial paper. In April 2000, the entire debt was repaid with proceeds from
the offerings and the private placements. The Company also incurred
approximately $3.2 billion of short-term debt, consisting primarily of
commercial paper, in connection with its October 1, 1999 exchange offer to
holders of General American Life funding agreements. Through March 31, 2000,
$2.0 billion of this debt was repaid. The remaining $1.2 billion was included in
the outstanding liabilities of MetLife Funding at March 31, 2000, $690 million
of which was repaid during April 2000.
MetLife Funding and Metropolitan Life also maintained $7 billion ($5
billion of which served as back-up for the commercial paper incurred in
connection with the exchange offer to holders of General American Life funding
agreements and $2 billion in committed credit facilities) at March 31, 2000 and
December 31, 1999, respectively, which served as back-up for its commercial
paper program and for general corporate purposes. These credit facilities were
not utilized for the three months ended March 31, 2000 or for the year ended
December 31, 1999.
SUPPORT AGREEMENTS. In addition to its support agreement with MetLife
Funding, Metropolitan Life has entered into a net worth maintenance agreement
with New England Life Insurance Company ("NELICO"), whereby it is obligated to
maintain NELICO's statutory capital and surplus at the greater of $10 million or
the amount necessary to prevent certain regulatory action by Massachusetts, the
state of domicile of this subsidiary. The capital and surplus of NELICO at March
31, 2000 and 1999, respectively, was significantly in excess of the amount that
would trigger such an event. Furthermore, Metropolitan Life has never been
called upon to provide support to NELICO.
In connection with the Company's acquisition of GenAmerica, Metropolitan
Life entered into a net worth maintenance agreement with General American Life
Insurance Company ("General American Life"), whereby Metropolitan Life is
obligated to maintain General American Life's statutory capital and surplus at
the greater of $10 million or the amount necessary to maintain the capital and
surplus of General American Life at a level not less than 180% of the NAIC Risk
Based Capitalization Model. The capital and surplus of General American Life at
March 31, 2000 was in excess of the required amount.
Metropolitan Life has also entered into arrangements with some of its other
subsidiaries and affiliates to assist such subsidiaries and affiliates in
meeting various jurisdictions' regulatory requirements regarding capital and
surplus. In addition, Metropolitan Life has entered into a support arrangement
with respect to reinsurance obligations of its wholly-owned subsidiary,
Metropolitan Insurance and Annuity Company. Management does not anticipate that
these arrangements will place any significant demands upon MetLife's liquidity
resources.
CONSOLIDATED CASH FLOWS. Net cash provided by operating activities was
$1,616 million and $454 million for the three months ended March 31, 2000 and
1999, respectively. The increase in cash provided by the Company's operations in
2000
50
<PAGE> 51
compared with 1999 was primarily due to strong sales and continued favorable
policyholder retention in the Institutional segment's dental and disability
businesses as well as timing in the settlement of other receivables and
payables. Operating cash flows in the periods presented have been more than
adequate to meet liquidity requirements.
Net cash used in investing activities was $602 million and $536 million for
the three months ended March 31, 2000 and 1999, respectively. Purchases of
investments exceeded sales, maturities and repayments by $3,837 million and
$1,259 million in 2000 and 1999, respectively. These increases were primarily
attributable to the investment of collateral received in connection with our
securities lending program. In addition, cash flows from investing activities
also increased by $2,305 million and $404 million in 2000 and 1999,
respectively, as a result of activity from the Company's securities lending
program.
Net cash used in financing activities was $1,566 million and $1,065 million
for the three months ended March 31, 2000 and 1999, respectively. Withdrawals
from policyholders' account balances exceeded deposits by $1,005 million and
$1,445 million in 2000 and 1999, respectively. Short-term financing decreased by
$620 million in 2000 compared with a $466 million increase in 1999, while net
additions in long-term debt were $59 million in 2000 compared with net
reductions of $86 million in 1999.
The operating, investing and financing activities described above resulted
in a decrease in cash and cash equivalents of $552 million and $1,147 million
for the three months ended March 31, 2000 and 1999, respectively.
INSOLVENCY ASSESSMENTS
Most of the jurisdictions in which the Company is admitted to transact
business require life insurers doing business within the jurisdiction to
participate in guaranty associations, which are organized to pay contractual
benefits owed pursuant to insurance policies issued by impaired, insolvent or
failed life insurers. These associations levy assessments, up to prescribed
limits, on all member insurers in a particular state on the basis of the
proportionate share of the premiums written by member insurers in the lines of
business in which the impaired, insolvent or failed insurer engaged. Some states
permit member insurers to recover assessments paid through full or partial
premium tax offsets. Assessments levied against the Company from January 1, 1999
through March 31, 2000 aggregated $5 million. The Company maintained a liability
of $58 million at March 31, 2000 for future assessments in respect of currently
impaired, insolvent or failed insurers.
51
<PAGE> 52
EFFECTS OF INFLATION
The Company does not believe that inflation has had a material effect on
consolidated results of operations, except insofar as inflation may affect
interest rates.
INVESTMENTS
The Company had total cash and invested assets at March 31, 2000 of $153.2
billion. In addition, the Company had $76.1 billion held in its separate
accounts, for which the Company generally does not bear investment risk.
The Company's primary investment objective is to maximize after-tax
operating income consistent with acceptable risk parameters. The Company is
exposed to three primary sources of investment risk:
- credit risk, relating to the uncertainty associated with the
continued ability of a given obligor to make timely payments of
principal and interest;
- interest rate risk, relating to the market price and cash flow
variability associated with changes in market interest rates;
and
- market valuation risk for equity holdings.
The Company manages credit risk through in-house fundamental analysis of
the underlying obligors, issuers, transaction structures and real estate
properties. The Company also manages credit risk and valuation risk through
industry and issuer diversification and asset allocation. For real estate and
agricultural assets, the Company manages credit risk and valuation risk through
geographic, property type, and product type diversification and asset
allocation. The Company manages interest rate risk as part of its asset and
liability management strategies, product design, such as the use of market value
adjustment features and surrender charges, and proactive monitoring and
management of certain non-guaranteed elements of its products, such as the
resetting of credited interest and dividend rates for policies that permit such
adjustments.
52
<PAGE> 53
The following table summarizes the Company's cash and invested assets at
March 31, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
INVESTED ASSETS
AT MARCH 31, AT DECEMBER 31,
2000 1999
------------------- --------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
-------- ----- -------- -----
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
Fixed maturities available-for-sale, at fair value $108,566 70.8% $ 96,981 69.9%
Equity securities, at fair value 2,137 1.4 2,006 1.5
Mortgage loans on real estate 21,185 13.8 19,739 14.2
Equity real estate and real estate joint ventures 5,747 3.8 5,649 4.1
Policy loans 7,914 5.2 5,598 4.0
Other limited partnership interests 1,452 0.9 1,331 1.0
Short-term investments 1,578 1.0 3,055 2.2
Other invested assets 2,397 1.6 1,501 1.1
Cash and cash equivalents 2,237 1.5 2,789 2.0
-------- ----- -------- -----
Total cash and invested assets $153,213 100.0% $138,649 100.0%
======== ===== ======== =====
</TABLE>
INVESTMENT RESULTS
The annualized yields on general account cash and invested assets,
excluding net realized investment gains and losses, were 7.2% and 6.9% for the
three months ended March 31, 2000 and 1999, respectively.
The following table illustrates the annualized yields on average assets for
each of the components of the Company's investment portfolio for the three
months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
AT OR FOR THE THREE MONTHS ENDED MARCH 31,
---------------------------------------------
2000 1999
------------------- ---------------------
YIELD(1) AMOUNT YIELD(1) AMOUNT
------- ------- -------- ------
(DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
FIXED MATURITIES:(2)
Investment income 7.6% $ 2,039 7.1% $ 1,722
Net realized losses (169) (105)
-------- -------
Total $ 1,870 $ 1,617
Ending assets $108,566 $99,946
-------- -------
MORTGAGE LOANS:(3)
Investment income 7.9% $ 419 8.1% $ 347
Net realized gains 2 10
-------- -------
Total $ 421 $ 357
-------- -------
Ending assets $ 21,185 $17,305
-------- -------
</TABLE>
53
<PAGE> 54
<TABLE>
<CAPTION>
AT OR FOR THE THREE MONTHS ENDED MARCH 31,
---------------------------------------------
2000 1999
----------------- ---------------------
YIELD(1) AMOUNT YIELD(1) AMOUNT
-------- ------ -------- ------
(DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
EQUITY REAL ESTATE AND REAL ESTATE JOINT
VENTURES:(4)
Investment income, net of expenses 10.8% $ 155 7.1% $ 111
Net realized gains 13 62
------ ------
Total $ 168 $ 173
------ ------
Ending assets $5,747 $6,182
------ ------
POLICY LOANS:
Investment income 6.3% $ 125 6.0% $ 82
------ ------
Ending assets $7,914 $5,463
------ ------
CASH, CASH EQUIVALENTS AND SHORT-TERM
INVESTMENTS:
Investment income 4.8% $ 62 3.7% $ 36
Net realized losses (2) --
------ ------
Total $ 60 $ 36
------ ------
Ending assets $3,815 $3,133
------ ------
EQUITY SECURITIES:
Investment income 2.8% $ 14 1.9% $ 11
Net realized gains (losses) 68 (29)
------ ------
Total $ 82 $ (18)
------ ------
Ending assets $2,137 $2,275
------ ------
OTHER LIMITED PARTNERSHIP INTERESTS:
Investment income 4.2% $ 15 17.3% $ 44
Net realized gains 4 5
------ ------
Total $ 19 $ 49
------ ------
Ending assets $1,452 $1,060
------ ------
OTHER INVESTED ASSETS:
Investment income 4.1% $ 24 4.0% $ 16
Net realized losses (47) (51)
------ ------
Total $ (23) $ (35)
------ ------
Ending assets $2,397 $1,634
------ ------
TOTAL INVESTMENTS:
Investment income before expenses and fees 7.4% $2,853 7.1% $2,369
Investment expenses and fees (0.2%) (69) (0.2%) (59)
----- ------ ----- ------
Net investment income 7.2% $2,784 6.9% $2,310
Net realized losses (131) (108)
Adjustments to realized losses (5) 19 34
------ ------
Total $2,672 $2,236
====== ======
</TABLE>
(1) Yields are based on average asset carrying values for the three months
ended March 31, 2000 and 1999, excluding unrealized gains and losses,
and for yield calculation purposes, average assets exclude fixed
maturities associated with the Company's
54
<PAGE> 55
securities lending program. For assets acquired through the GenAmerica
acquisition, yields are based on March 31, 2000 asset carrying values,
excluding unrealized gains and losses. Fixed maturity investment income
has been reduced by rebates paid under the program.
(2) Included in fixed maturities are equity linked notes of $760 million
and $1,073 million at March 31, 2000 and 1999, respectively, which
include an equity component as part of the notes' return. Investment
income for fixed maturities includes prepayment fees and income from
the securities lending program.
(3) Investment income from mortgage loans includes prepayment fees.
(4) Equity real estate and real estate joint venture income is shown net of
depreciation of $55 million and $67 million in 2000 and 1999,
respectively.
(5) Adjustments to realized losses include amortization of deferred
acquisition costs and charges to participating contracts.
FIXED MATURITIES
Fixed maturities consist principally of publicly traded and privately
placed debt securities, and represented 70.8% and 69.9% of total cash and
invested assets at March 31, 2000 and December 31, 1999, respectively.
Based on estimated fair value, public fixed maturities and private fixed
maturities comprised 84.0% and 16.0% of total fixed maturities at March 31,
2000, respectively, and 82.6% and 17.4% at December 31, 1999, respectively. The
Company invests in privately placed fixed maturities to enhance the overall
value of the portfolio, increase diversification and obtain higher yields than
can ordinarily be obtained with comparable public market securities. Generally,
private placements provide the Company with protective covenants, call
protection features and, where applicable, a higher level of collateral.
However, the Company may not freely trade its private placements because of
restrictions imposed by federal and state securities laws and illiquid trading
markets.
The Securities Valuation Office of the NAIC evaluates the bond investments
of insurers for regulatory reporting purposes and assigns securities to one of
six investment categories called "NAIC designations". The NAIC designations
parallel the credit ratings of the Nationally Recognized Statistical Rating
Organizations for marketable bonds. NAIC designations 1 and 2 include bonds
considered investment grade (rated "Baa3" or higher by Moody's, or rated "BBB-"
or higher by S&P) by such rating organizations. NAIC designations 3 through 6
include bonds considered below investment grade (rated "Ba1" or lower by
Moody's, or rated "BB+" or lower by S&P).
55
<PAGE> 56
The following tables present the Company's public, private and total fixed
maturities by NAIC designation and the equivalent ratings of the Nationally
Recognized Statistical Rating Organizations at March 31, 2000 and December 31,
1999, as well as the percentage, based on estimated fair value, that each
designation comprises:
<TABLE>
<CAPTION>
PUBLIC FIXED MATURITIES BY CREDIT QUALITY
AT MARCH 31, 2000 AT DECEMBER 31, 1999
---------------------------------------- --------------------------------------
ESTIMATED ESTIMATED
NAIC RATING AGENCY AMORTIZED FAIR % OF AMORTIZED FAIR % OF
RATING EQUIVALENT DESIGNATION COST VALUE TOTAL COST VALUE TOTAL
- ------ ---------------------- --------- --------- ----- --------- --------- -----
(Dollars in millions)
<C> <S> <S> <S> <S> <S> <S> <S>
1 Aaa/Aa/A $61,803 $61,481 67.4% $55,258 $54,511 68.1%
2 Baa 23,087 22,308 24.5 19,908 19,106 23.8
3 Ba 4,934 4,743 5.2 4,355 4,232 5.3
4 B 2,711 2,593 2.8 2,184 2,153 2.7
5 Caa and lower 74 63 0.1 64 54 0.1
6 In or near default 18 13 0.0 23 23 0.0
------- ------ ----- ------- ------- -----
Total public fixed
maturities $92,627 $91,201 100.0% $81,792 $80,079 100.0%
======= ======= ===== ======= ======= =====
PRIVATE FIXED MATURITIES BY CREDIT QUALITY
AT MARCH 31, 2000 AT DECEMBER 31, 1999
---------------------------------------- --------------------------------------
ESTIMATED ESTIMATED
NAIC RATING AGENCY AMORTIZED FAIR % OF AMORTIZED FAIR % OF
RATING EQUIVALENT DESIGNATION COST VALUE TOTAL COST VALUE TOTAL
- ------ ---------------------- --------- --------- ------ --------- --------- -----
(Dollars in millions)
<C> <S> <S> <S> <S> <S> <S> <S>
1 Aaa/Aa/A $ 7,588 $ 7,767 44.7% $ 7,597 $ 7,696 45.5%
2 Baa 6,928 6,811 39.2 6,975 6,845 40.5
3 Ba 1,825 1,748 10.1 1,453 1,404 8.3
4 B 912 883 5.1 833 816 4.8
5 Caa and lower 117 103 0.6 104 87 0.5
6 In or near default 21 19 0.1 45 44 0.3
------ ------ ----- ------- ------- -----
Subtotal 17,391 17,331 99.8 17,007 16,892 99.9
Redeemable preferred stock 34 34 0.2 10 10 0.1
------ ------ ----- ------- ------- -----
Total private fixed maturities $17,425 $17,365 100.0% $17,017 $16,902 100.0%
======= ======= ===== ======= ======= =====
</TABLE>
56
<PAGE> 57
TOTAL FIXED MATURITIES BY CREDIT QUALITY
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
------------------------------------ -----------------------------
ESTIMATED ESTIMATED
NAIC RATING AGENCY AMORTIZED FAIR % OF AMORTIZED FAIR % OF
RATING EQUIVALENT DESIGNATION COST VALUE TOTAL COST VALUE TOTAL
- ------- ---------------------- --------- --------- --------- ---------- ---------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
1 Aaa/Aa/A $ 69,391 $ 69,248 63.8% $62,855 $62,207 64.2%
2 Baa 30,015 29,119 26.8 26,883 25,951 26.8
3 Ba 6,759 6,491 6.0 5,808 5,636 5.8
4 B 3,623 3,476 3.2 3,017 2,969 3.1
5 Caa and lower 191 166 0.2 168 141 0.1
6 In or near default 39 32 0.0 68 67 0.0
--------- --------- --------- ---------- ---------- --------
Subtotal 110,018 108,532 100.0 98,799 96,971 100.0
Redeemable preferred stock 34 34 0.0 10 10 0.0
--------- --------- --------- ---------- ---------- --------
Total fixed maturities $110,052 $108,566 100.0% $98,809 $96,981 100.0%
========= ========= ========= ========== ========== ========
</TABLE>
Based on estimated fair values, total investment grade public and private
placement fixed maturities comprised 90.6% and 91.0% of total fixed maturities
in the general account at March 31, 2000 and December 31, 1999, respectively.
The following table shows the amortized cost and estimated fair value of
fixed maturities, by contractual maturity dates (excluding scheduled sinking
funds) at March 31, 2000 and December 31, 1999:
FIXED MATURITIES BY CONTRACTUAL MATURITY DATES
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
--------------------------- ----------------------------
ESTIMATED ESTIMATED
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- ------------ ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Due in one year or less $ 3,378 $ 3,374 $ 3,180 $ 3,217
Due after one year through five years 20,350 20,155 18,152 18,061
Due after five years through ten years 25,058 24,423 23,755 23,114
Due after ten years 29,423 29,426 26,316 25,918
--------- ------------ ---------- ----------
Subtotal 78,209 77,378 71,403 70,310
Mortgage-backed and other asset-backed
securities 31,809 31,154 27,396 26,661
--------- ------------ ---------- ----------
Subtotal 110,018 108,532 98,799 96,971
Redeemable preferred stock 34 34 10 10
--------- ------------ ---------- ----------
Total fixed maturities $110,052 $108,566 $98,809 $96,981
========= ============ ========== ==========
</TABLE>
PROBLEM, POTENTIAL PROBLEM AND RESTRUCTURED FIXED MATURITIES. The Company
monitors fixed maturities to identify investments that management considers to
be problems or potential problems. The Company also monitors investments that
have been restructured.
57
<PAGE> 58
The Company defines problem securities in the fixed maturities category as
securities as to which principal or interest payments are in default or are to
be restructured pursuant to commenced negotiations, or as securities issued by a
debtor that has subsequently entered bankruptcy.
The Company defines potential problem securities in the fixed maturity
category as securities of an issuer deemed to be experiencing significant
operating problems or difficult industry conditions. The Company uses various
criteria, including the following, to identify potential problem securities:
- debt service coverage or cash flow falling below certain
thresholds which vary according to the issuer's industry and
other relevant factors;
- significant declines in revenues or margins;
- violation of financial covenants;
- public securities trading at a substantial discount as a result
of specific credit concerns; and
- other subjective factors.
The Company defines restructured securities in the fixed maturities
category as securities to which the Company has granted a concession that it
would not have otherwise considered but for the financial difficulties of the
obligor. The Company enters into a restructuring when it believes it will
realize a greater economic value under the new terms than through liquidation or
disposition. The terms of the restructuring may involve some or all of the
following characteristics: a reduction in the interest rate, an extension of the
maturity date, an exchange of debt for equity or a partial forgiveness of
principal or interest.
58
<PAGE> 59
The following table presents the estimated fair value of the Company's
total fixed maturities classified as performing, problem, potential problem and
restructured fixed maturities at March 31, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
PROBLEM, POTENTIAL PROBLEM AND RESTRUCTURED FIXED MATURITIES
At March 31, 2000 At December 31, 1999
------------------- --------------------
Estimated % of Estimated % of
Fair Value Total Fair Value Total
---------- ----- ---------- -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Performing $107,542 99.0% $96,464 99.5%
Problem 83 0.1 20 0.0
Potential Problem 928 0.9 482 0.5
Restructured 13 0.0 15 0.0
-------- ----- ------- -----
Total $108,566 100.0% $96,981 100.0%
======== ===== ======= =====
</TABLE>
The Company classifies all of its fixed maturities as available-for-sale
and marks them to market. The Company writes down to management's expectations
of ultimate realizable value fixed maturities that the Company deems to be other
than temporarily impaired. The Company records write-downs as realized losses
and includes them in earnings and adjusts the cost basis of the fixed maturities
accordingly. The Company does not change the revised cost basis for subsequent
recoveries in value. Such write-downs were $71 million and $33 million for the
three months ended March 31, 2000 and 1999, respectively. Cumulative write-downs
on fixed maturities owned were $71 million and $76 million at March 31, 2000 and
December 31, 1999, respectively.
59
<PAGE> 60
FIXED MATURITIES BY SECTOR. The Company diversifies its fixed maturities by
security sector. The following tables set forth the estimated fair value of the
Company's fixed maturities by sector, as well as the percentage of the total
fixed maturities holdings that each security sector comprised at March 31, 2000
and December 31, 1999, and show by security type the relative amounts of
publicly traded and privately placed securities:
<TABLE>
<CAPTION>
FIXED MATURITIES BY SECTOR
AT MARCH 31, 2000
---------------------------------------------------------------
Publicly Traded Privately Placed Total
------------------ ------------------ -------------------
Estimated % of Estimated % of Estimated % of
Fair Value Total Fair Value Total Fair Value Total
---------- ----- ---------- ----- ---------- -----
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C>
U.S. treasuries/agencies $ 6,658 7.3% $ 1 0.0% $ 6,659 6.1%
Corporate securities 45,310 49.6 15,719 90.6 61,029 56.3
Foreign government securities 4,698 5.2 110 0.6 4,808 4.4
Mortgage-backed securities 23,269 25.5 282 1.6 23,551 21.7
Asset-backed securities 6,802 7.5 801 4.6 7,603 7.0
Other fixed income assets 4,465 4.9 451 2.6 4,916 4.5
------- ----- ------- ----- -------- -----
Total $91,202 100.0% $17,364 100.0% $108,566 100.0%
======= ===== ======= ===== ======== =====
</TABLE>
<TABLE>
<CAPTION>
FIXED MATURITIES BY SECTOR
AT DECEMBER 31, 1999
--------------------------------------------------------------
Publicly Traded Privately Placed Total
------------------ ------------------ ------------------
Estimated % of Estimated % of Estimated % of
Fair Value Total Fair Value Total Fair Value Total
---------- ----- ---------- ----- ---------- -----
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C>
U.S. treasuries/agencies $ 6,298 7.9% $ 1 0.0% $ 6,299 6.5%
Corporate securities 40,207 50.2 15,336 90.7 55,543 57.3
Foreign government securities 4,095 5.1 111 0.7 4,206 4.3
Mortgage-backed securities 20,032 25.0 247 1.5 20,279 20.9
Asset-backed securities 5,715 7.1 667 3.9 6,382 6.6
Other fixed income assets 3,732 4.7 540 3.2 4,272 4.4
------- ----- ------- ----- ------- -----
Total $80,079 100.0% $16,902 100.0% $96,981 100.0%
======= ===== ======= ===== ======= =====
</TABLE>
60
<PAGE> 61
CORPORATE FIXED MATURITIES. The table below shows the major industry types
that comprise the corporate bond holdings at the dates indicated:
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
--------------------- --------------------
ESTIMATED % OF ESTIMATED % OF
FAIR VALUE TOTAL FAIR VALUE TOTAL
---------- ------- ---------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Industrial $28,658 47.1% $26,480 47.6%
Utility 7,102 11.6 6,487 11.7
Finance 13,761 22.5 11,631 21.0
Yankee/Foreign(1) 10,815 17.7 10,423 18.8
Other 693 1.1 522 0.9
---------- ------- ---------- --------
Total $61,029 100.0% $55,543 100.0%
========== ======= ========== ========
</TABLE>
(1) Includes publicly traded, dollar-denominated debt obligations of
foreign obligors, known as Yankee bonds, and other foreign
investments.
The Company diversifies its corporate bond holdings by industry and issuer.
The portfolio has no significant exposure to any single issuer. At March 31,
2000, the Company's combined holdings in the ten issuers to which it had the
greatest exposure totaled $3,202 million, which was less than 3% of the
Company's total invested assets at such date. The exposure to the largest single
issuer of corporate bonds the Company held at March 31, 2000 was $398 million,
which was less than 1% of its total invested assets at such date.
At March 31, 2000, investments of $4,212 million, or 38.9% of the
Yankee/Foreign sector, represented exposure to traditional "Yankee" bonds, which
are dollar-denominated debt obligations of foreign obligors. The balance of this
exposure was primarily dollar-denominated, foreign private placements and
project finance loans. The Company diversifies the Yankee/Foreign portfolio by
country and issuer.
The Company does not have material exposure to foreign currency risk in its
invested assets. In the Company's international insurance operations, both its
assets and liabilities are denominated in local currencies. Foreign currency
denominated securities supporting U.S. dollar liabilities are generally swapped
back into U.S. dollars.
61
<PAGE> 62
MORTGAGE-BACKED SECURITIES. The following table shows the types of
mortgage-backed securities the Company held at March 31, 2000 and December 31,
1999:
MORTGAGE-BACKED SECURITIES
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
--------------------- --------------------
ESTIMATED % OF ESTIMATED % OF
FAIR VALUE TOTAL FAIR VALUE TOTAL
----------- ------ ---------- ------
<S> <C> <C> <C> <C>
Pass-through securities $ 9,961 42.3% $ 8,478 41.8%
------- ------ ------- -----
Collateralized mortgage obligations
Planned amortization class 4,141 17.6 3,974 19.6
Sequential pay class 4,310 18.3 3,359 16.5
Other 529 2.2 361 1.8
------- ------ ------- -----
Subtotal 8,980 38.1 7,694 37.9
Commercial mortgage-backed securities 4,610 19.6 4,107 20.3
------- ------ ------- -----
Total $23,551 100.0% $20,279 100.0%
======= ====== ======== =====
</TABLE>
At March 31, 2000, pass-through and collateralized mortgage obligations
totaled $18,941 million, or 80.4% of total mortgage-backed securities, and a
majority of this amount represented agency-issued pass-through and
collateralized mortgage obligations guaranteed or otherwise supported by the
Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or
Government National Mortgage Association. Other types of mortgage-backed
securities comprised the balance of such amounts reflected in the table. At
March 31, 2000, approximately $2,890 million, or 62.7% of the commercial
mortgage-backed securities and $17,344 million, or 91.6% of the pass-through
securities and collateralized mortgage obligations were rated Aaa/AAA by Moody's
or S&P.
Mortgage-backed securities are purchased to diversify the portfolio risk
characteristics from primarily corporate credit risk to a mix of credit risk and
cash flow risk. The majority of the mortgage-backed securities in the Company's
investment portfolio have relatively low cash flow variability.
The principal risks inherent in holding mortgage-backed securities are
prepayment and extension risks, which will affect the timing of when cash flow
will be received. The Company's active monitoring of its mortgage-backed
securities mitigates exposure to losses from cash flow risk associated with
interest rate fluctuations.
Mortgage-backed pass-through certificates are the most liquid assets in the
mortgage-backed sector. Pass-through securities represented 42.3% and 41.8% of
the Company's mortgage-backed securities at March 31, 2000 and December 31,
1999, respectively. Pass-through securities distribute, on a pro rata basis to
their holders, the monthly cash flows of principal and interest, both scheduled
and prepayments, generated by the underlying mortgages.
62
<PAGE> 63
The Company also invested 38.1% and 37.9% of its mortgage-backed securities
at March 31, 2000 and December 31, 1999, respectively, in collateralized
mortgage obligations ("CMOs") which have a greater degree of cash flow stability
than pass-throughs.
Planned Amortization Class bonds ("PAC") represented 17.6% and 19.6% of the
Company's mortgage-backed securities at March 31, 2000 and December 31, 1999,
respectively. These bonds or tranches are structured to provide more certain
cash flows to the investor and therefore are subject to less prepayment and
extension risk than other mortgage-backed securities. PAC tranches derive their
stability from having a specified principal payment schedule, provided
prepayments of the underlying securities remain within their expected range. The
other tranches of a CMO absorb prepayment variations so that PACs maintain a
better defined maturity profile than other mortgage-backed securities. By buying
PACs, the Company accepts a lower yield in return for more certain cash flow.
The principal risk of holding PACs is that prepayments may differ significantly
from expectations and the Company will not receive the expected yield on the
PAC. In contrast, Sequential Pay Class tranches receive principal payments in a
prescribed sequence without a pre-determined prepayment schedule. In addition to
the Company's PACs and Sequential Pay Class tranches, the Company had
approximately $85 million invested in interest-only or principal-only securities
at March 31, 2000.
ASSET-BACKED SECURITIES. The following table below shows the types of
asset-backed securities the Company held at March 31, 2000 and December 31,
1999:
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
--------------------- --------------------
ESTIMATED % OF ESTIMATED % OF
FAIR VALUE TOTAL FAIR VALUE TOTAL
---------- ------- ---------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Credit card receivables $1,734 22.8% $1,960 30.7%
Automobile receivables 1,043 13.7 1,070 16.8
Home equity loans 1,867 24.6 1,541 24.1
Other 2,959 38.9 1,811 28.4
------ ------- ------ ------
Total $7,603 100.0% $6,382 100.0%
====== ======= ====== ======
</TABLE>
Asset-backed securities are purchased both to diversify the overall risks
of the Company's fixed maturities assets and to provide attractive returns. The
Company's asset-backed securities are diversified both by type of asset and by
issuer. Credit card receivables constitute the largest exposure in the Company's
asset-backed securities investments. Except for asset-backed securities backed
by home equity loans, the asset-backed securities investments generally have
little sensitivity to changes in interest rates. At March 31, 2000,
approximately $3,518 million, or 46.3%, of the total was rated Aaa/AAA by
Moody's or S&P.
63
<PAGE> 64
The principal risks in holding asset-backed securities are structural,
credit and capital market risks. Structural risks include the security's
priority in the issuer's capital structure, the adequacy of and ability to
realize proceeds from the collateral and the potential for prepayments. Credit
risks include consumer or corporate credits such as credit card holders,
equipment lessees, and corporate obligors. Capital market risks include the
general level of interest rates and the liquidity for these securities in the
market place.
MORTGAGE LOANS
The Company's mortgage loans are collateralized by commercial, agricultural
and residential properties. Mortgage loans comprised 13.8% and 14.2% of the
Company's total cash and invested assets at March 31, 2000 and December 31,
1999, respectively. The carrying value of mortgage loans is stated at original
cost net of repayments, amortization of premiums, accretion of discounts and
valuation allowances. The following table shows the carrying value of the
Company's mortgage loans by such types at March 31, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
MORTGAGE LOANS BY PORTFOLIO
AT MARCH 31, 2000 AT DECEMBER 31, 1999
----------------- --------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
-------- ------- -------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Commercial $16,363 77.3% $14,862 75.3%
Agricultural 4,732 22.3 4,798 24.3
Residential 90 0.4 79 0.4
-------- ------- -------- -------
Total $21,185 100.0% $19,739 100.0%
======== ======== ======== =======
</TABLE>
64
<PAGE> 65
COMMERCIAL MORTGAGE LOANS. The Company diversifies its commercial mortgage
loans by both geographic region and property type, and manages these investments
through a network of regional offices overseen by its investment department. The
following table presents the distribution across geographic regions and property
types for commercial mortgage loans at March 31, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
----------------- --------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
-------- ------- -------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
REGION
South Atlantic $ 4,491 27.4% $ 4,098 27.6%
Middle Atlantic 2,806 17.1 2,703 18.2
Pacific 2,898 17.7 2,596 17.5
East North Central 1,842 11.3 1,865 12.5
New England 1,092 6.7 1,095 7.4
West South Central 1,163 7.1 1,012 6.8
West North Central 768 4.7 652 4.4
Mountain 807 4.9 490 3.3
East South Central 158 1.0 149 1.0
International 338 2.1 202 1.3
-------- ------- -------- -------
Total $16,363 100.0% $14,862 100.0%
======== ======= ======== =======
PROPERTY TYPE
Office $ 7,246 44.4% $ 6,789 45.7%
Retail 3,984 24.3 3,620 24.4
Apartments 2,640 16.1 2,382 16.0
Industrial 1,491 9.1 1,136 7.6
Hotel 884 5.4 843 5.7
Other 118 0.7 92 0.6
-------- ------- -------- -------
Total $16,363 100.0% $14,862 100.0%
======== ======= ======== =======
</TABLE>
65
<PAGE> 66
The following table presents the scheduled maturities for the Company's
commercial mortgage loans at March 31, 2000 and December 31, 1999:
COMMERCIAL MORTGAGE LOAN SCHEDULED MATURITIES
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
----------------- --------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
-------- ------ -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Due in 1 year or less $ 840 5.1% $ 806 5.4%
Due after 1 year through 2 years 689 4.2 482 3.2
Due after 2 years through 3 years 833 5.1 708 4.8
Due after 3 years through 4 years 1,133 6.9 787 5.3
Due after 4 years through 5 years 1,144 7.0 1,608 10.8
Due after 5 years 11,724 71.7 10,471 70.5
------- ----- ------- -----
Total $16,363 100.0% $14,862 100.0%
======= ===== ======= =====
</TABLE>
The Company monitors its mortgage loan investments on a continual basis.
Through this monitoring process, the Company reviews loans that are
restructured, delinquent or under foreclosure and identifies those that
management considers to be potentially delinquent. These loan classifications
are generally consistent with those used in industry practice.
The Company defines restructured mortgage loans, consistent with industry
practice, as loans in which the Company, for economic or legal reasons related
to the debtor's financial difficulties, grants a concession to the debtor that
it would not otherwise consider. This definition provides for loans to exit the
restructured category under certain conditions. The Company defines delinquent
mortgage loans, consistent with industry practice, as loans in which two or more
interest or principal payments are past due. The Company defines mortgage loans
under foreclosure, consistent with industry practice, as loans in which
foreclosure proceedings have formally commenced. The Company defines potentially
delinquent loans as loans that, in management's opinion, have a high probability
of becoming delinquent.
The Company reviews all mortgage loans on an annual basis. These reviews
may include an analysis of the property financial statement and rent roll, lease
rollover analysis, property inspections, market analysis and tenant
creditworthiness. The Company also reviews loan-to-value ratios and debt
coverage ratios for restructured loans, delinquent loans, loans under
foreclosure, potentially delinquent loans, loans with an existing valuation
allowance, loans maturing within two years and loans with a loan-to-value ratio
greater than 90% as determined in the prior year.
66
<PAGE> 67
The Company establishes valuation allowances for loans that it deems
impaired, as determined through its annual review process. The Company defines
impaired loans consistent with Statement of Financial Accounting Standards No.
114, Accounting by Creditors for Impairment of a Loan, as loans which it
probably will not collect all amounts due according to applicable contractual
terms of the agreement. The Company bases valuation allowances upon the present
value of expected future cash flows discounted at the loan's original effective
interest rate or the value of the loan's collateral. The Company records
valuation allowances as realized losses and includes them in earnings. The
Company records subsequent adjustments to allowances as realized gains or losses
and includes them in earnings.
The following table presents the amortized cost and valuation allowances
for commercial mortgage loans distributed by loan classification at March 31,
2000 and December 31, 1999:
<TABLE>
<CAPTION>
COMMERCIAL MORTGAGE LOAN DISTRIBUTION AND VALUATION ALLOWANCE BY LOAN CLASSIFICATION
AT MARCH 31, 2000 AT DECEMBER 31, 1999
------------------------------------------- -------------------------------------------
% OF % OF
AMORTIZED % OF VALUATION AMORTIZED AMORTIZED % OF VALUATION AMORTIZED
COST(1) TOTAL ALLOWANCE COST COST(1) TOTAL ALLOWANCE COST
--------- ------ --------- --------- --------- ------ --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Performing $15,608 95.0% $ 13 0.1% $14,098 94.5% $ 11 0.1%
Restructured 728 4.4 48 6.6% 810 5.4 52 6.4%
Delinquent or under
foreclosure 58 0.4 11 19.0% 17 0.1 4 25.0%
Potentially delinquent 41 0.2 -- 0.0% 6 0.0 2 33.3%
------- ----- ---- ------ ----- ----
Total $16,435 100.0% $ 72 0.4% $14,931 100.0% $ 69 0.5%
======= ===== ==== ======= ===== ====
</TABLE>
(1) Amortized cost is equal to carrying value before valuation allowances.
The following table presents the changes in valuation allowances for
commercial mortgage loans for the three months ended March 31, 2000:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 2000
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
Balance, beginning of period $ 69
Additions 29
Deductions for writedowns and dispositions (26)
-----
Balance, end of period $ 72
=====
</TABLE>
The principal risks in holding commercial mortgage loans are property
specific, supply and demand, financial and capital market risks. Property
specific risks include the geographic location of the property, the physical
condition of the property, the diversity of tenants and the rollover of their
leases and the ability of the property manager to attract
67
<PAGE> 68
tenants and manage expenses. Supply and demand risks include changes in the
supply and/or demand for rental space which cause changes in vacancy rates
and/or rental rates. Financial risks include the overall level of debt on the
property and the amount of principal repaid during the loan term. Capital market
risks include the general level of interest rates, the liquidity for these
securities in the marketplace and the capital available for refinancing of a
loan.
AGRICULTURAL MORTGAGE LOANS. The Company diversifies its agricultural
mortgage loans by both geographic region and product type. The Company manages
these investments through a network of regional offices and field professionals
overseen by its investment department. The following table presents the
distribution across geographic regions and product types for agricultural
mortgage loans at March 31, 2000 and December 31, 1999:
AGRICULTURAL MORTGAGE LOAN DISTRIBUTION
BY GEOGRAPHIC REGION AND BY PRODUCT TYPE
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
--------------------- ---------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
-------- ----- -------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
REGION
Pacific $1,134 24.0% $1,184 24.7%
West North Central 1,034 21.8 1,053 21.9
South Atlantic 838 17.7 840 17.5
East North Central 732 15.5 737 15.4
West South Central 407 8.6 405 8.5
Mountain 373 7.9 371 7.7
East South Central 195 4.1 189 3.9
New England 19 0.4 19 0.4
------ ----- ------ -----
Total $4,732 100.0% $4,798 100.0%
====== ===== ====== =====
PROPERTY TYPE
Annual Crop $2,214 46.7% $2,276 47.4%
Permanent 968 20.5 932 19.5
Agribusiness 719 15.2 761 15.8
Livestock 658 13.9 655 13.7
Timer 173 3.7 174 3.6
------ ----- ------ -----
Total $4,732 100.0% $4,798 100.0%
====== ===== ====== =====
</TABLE>
68
<PAGE> 69
The following table presents the scheduled maturities for the Company's
agricultural mortgage loans at March 31, 2000 and December 31, 1999:
AGRICULTURAL MORTGAGE LOAN MATURITY PROFILE
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
----------------- --------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
--------- ------ --------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Due in 1 year or less $ 126 2.7% $ 99 2.1%
Due after 1 year through 2 years 60 1.3 74 1.5
Due after 2 year through 3 years 98 2.1 97 2.0
Due after 3 year through 4 years 134 2.8 135 2.8
Due after 4 year through 5 years 113 2.4 134 2.8
Due after 5 years 4,201 88.7 4,259 88.8
------ ------ ------ ------
Total $4,732 100.0% $4,798 100.0%
====== ====== ====== ======
</TABLE>
Approximately 60% of the $4,732 million of agricultural mortgage loans
outstanding at March 31, 2000 was subject to rate resets prior to maturity. A
substantial portion of these loans were successfully renegotiated and remain
outstanding to maturity. The process and policies for monitoring the
agricultural mortgage loans and classifying them by performance status are
generally the same as those for the commercial loans.
The following table presents the amortized cost and valuation allowances
for agricultural mortgage loans distributed by loan classification at March 31,
2000 and December 31, 1999:
AGRICULTURAL MORTGAGE LOAN DISTRIBUTION AND
VALUATION ALLOWANCE BY LOAN CLASSIFICATION
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
------------------------------------------------- -------------------------------------------------
% OF % OF
AMORTIZED % OF VALUATION AMORTIZED AMORTIZED % OF VALUATION AMORTIZED
COST(1) TOTAL ALLOWANCE COST COST(1) TOTAL ALLOWANCE COST
---------- -------- ---------- --------- --------- ------- --------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Performing $4,495 94.6% $ - 0.0% $4,616 95.8% $ 1 0.0%
Restructured 151 3.2 7 4.6% 165 3.4 11 6.7%
Delinquent or under
foreclosure 99 2.1 10 10.1% 27 0.6 2 7.4%
Potentially
delinquent 5 0.1 1 20.0% 8 0.2 4 50.0%
------ ------ --- ------ ----- ---
Total $4,750 100.0% $18 0.4% $4,816 100.0% $18 0.4%
====== ====== === ====== ===== ===
</TABLE>
(1) Amortized cost is equal to carrying value before valuation allowances.
69
<PAGE> 70
The following table presents the changes in valuation allowances for
agricultural mortgage loans for the three months ended March 31, 2000:
CHANGES IN AGRICULTURAL MORTGAGE LOAN VALUATION ALLOWANCES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 2000
--------------------
(DOLLARS IN MILLIONS)
<S> <C>
Balance, beginning of period $ 18
Additions 1
Deductions for writedowns and dispositions (1)
----
Balance, end of period $ 18
====
</TABLE>
The principal risks in holding agricultural mortgage loans are property
specific, supply and demand, financial and capital market risks. Property
specific risks include the location of the property, soil types, weather
conditions and the other factors that may impact the borrower's personal
guaranty. Supply and demand risks include the supply and demand for the
commodities produced on the specific property and the related price for those
commodities. Financial risks include the overall level of debt on the property
and the amount of principal repaid during the loan term. Capital market risks
include the general level of interest rates, the liquidity for these securities
in the marketplace and the capital available for refinancing of a loan.
70
<PAGE> 71
EQUITY REAL ESTATE AND REAL ESTATE JOINT VENTURES
The Company's equity real estate and real estate joint venture investments
consist of commercial and agricultural properties located throughout the U.S.
and Canada. The Company manages these investments through a network of regional
offices overseen by its investment department. At March 31, 2000 and December
31, 1999, the carrying value of the Company's equity real estate and real estate
joint ventures was $5,747 million and $5,649 million, respectively, or 3.8% and
4.1% of total cash and invested assets. The carrying value of equity real estate
was stated at depreciated cost net of impairments and valuation allowances. The
carrying value of real estate joint ventures was stated at the Company's equity
in the real estate joint ventures net of impairments and valuation allowances.
These holdings consist of equity real estate, interests in real estate joint
ventures and real estate acquired upon foreclosure of commercial and
agricultural mortgage loans. The following table presents the carrying value of
the Company's equity real estate and real estate joint ventures at March 31,
2000 and December 31, 1999:
EQUITY REAL ESTATE AND REAL ESTATE JOINT VENTURES
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
------------------------- ---------------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
-------- ----- -------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
TYPE
Equity real estate $5,292 92.1% $5,271 93.3%
Real estate joint ventures 395 6.9 331 5.9
------ ----- ------ -----
Subtotal 5,687 99.0 5,602 99.2
Foreclosed real estate 60 1.0 47 0.8
------ ----- ------ -----
Total $5,747 100.0% $5,649 100.0%
====== ===== ====== =====
</TABLE>
71
<PAGE> 72
These investments are diversified by geographic location and property
types. The following table presents the distribution across geographic regions
and property types for equity real estate and real estate joint ventures at
March 31, 2000 and December 31, 1999:
EQUITY REAL ESTATE AND REAL ESTATE JOINT VENTURES
DISTRIBUTION BY GEOGRAPHIC REGION AND PROPERTY TYPE
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
------------------------- ---------------------------
CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL
-------- ----- -------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
REGION
East $1,853 32.3% $1,863 33.0%
West 1,807 31.4 1,657 29.3
South 1,383 24.1 1,416 25.1
Midwest 558 9.7 544 9.6
International 146 2.5 169 3.0
------ ----- ------ -----
Total $5,747 100.0% $5,649 100.0%
====== ===== ====== =====
PROPERTY TYPE
Office $3,826 66.7 $3,846 68.1%
Retail 604 10.5 587 10.4
Apartments 468 8.1 474 8.4
Land 305 5.3 258 4.6
Industrial 174 3.0 160 2.8
Hotel 172 3.0 151 2.7
Agriculture 93 1.6 96 1.7
Other 105 1.8 77 1.3
------ ----- ------ -----
Total $5,747 100.0 $5,649 100.0%
====== ===== ====== =====
</TABLE>
Office properties representing 66.7% and 68.1% of the Company's equity real
estate and real estate joint venture holdings at March 31, 2000 and December 31,
1999, respectively, are well diversified geographically. The average occupancy
level of office properties was 93% and 92% at March 31, 2000 and December 31,
1999, respectively.
72
<PAGE> 73
The Company classifies equity real estate and real estate joint ventures as
held for investment or held for sale. The following table presents the carrying
value of equity real estate and real estate joint ventures by such
classifications at March 31, 2000 and December 31, 1999:
EQUITY REAL ESTATE AND REAL ESTATE JOINT VENTURES
CLASSIFICATION BY HELD FOR INVESTMENT AND HELD FOR SALE
<TABLE>
<CAPTION>
At March 31, 2000 At December 31, 1999
----------------- --------------------
Carrying % of Carrying % of
Value Total Value Total
-------- ----- -------- -----
(Dollars in Millions)
<S> <C> <C> <C> <C>
Equity real estate and real estate joint ventures held for investment $5,129 89.2% $5,151 91.2%
Equity real estate and real estate joint ventures held for sale 618 10.8 498 8.8
------ ----- ------ -----
Total $5,747 100.0% $5,649 100.0%
====== ===== ====== =====
</TABLE>
Ongoing management of these investments includes quarterly appraisals as
well as an annual market update and review of each property's budget, financial
returns, lease rollover status and the Company's exit strategy. In addition to
individual property reviews, the Company employs an overall strategy of
selective dispositions and acquisitions as market opportunities arise.
The Company adjusts the carrying value of equity real estate and real
estate joint ventures held for investment for impairments whenever events or
changes in circumstances indicate that the carrying value of the property may
not be recoverable. The Company writes down impaired real estate to estimated
fair value, which it generally computes using the present value of future cash
flows from the property, discounted at a rate commensurate with the underlying
risks. The Company records write-downs as realized losses through earnings and
reduces the cost basis of the properties accordingly. The Company does not
change the new cost basis for subsequent recoveries in value. Cumulative
write-downs on equity real estate and real estate joint ventures that are held
for investment, excluding real estate acquired upon foreclosure of commercial
and agricultural mortgage loans, were $289 million at both March 31, 2000 and
December 31, 1999.
The Company records real estate acquired upon foreclosure of commercial and
agricultural mortgage loans at the lower of estimated fair value or the carrying
value of the mortgage loan at the date of foreclosure.
Once the Company identifies a property to be sold and commences a firm plan
for marketing the property, the Company establishes and periodically revises, if
necessary, a valuation allowance to adjust the carrying value of the property to
its expected sales value, less associated selling costs, if it is lower than the
property's carrying value. The Company records allowances as realized losses and
includes them in earnings. The Company records subsequent adjustments to
allowances as realized gains or losses and includes them in earnings.
73
<PAGE> 74
The Company's carrying value of equity real estate and real estate joint
ventures held for sale, including real estate acquired upon foreclosure of
commercial and agricultural mortgage loans, in the amounts of $618 million and
$498 million at March 31, 2000 and December 31, 1999, respectively, are net of
impairments of $186 million and $187 million and net of valuation allowances of
$33 million and $34 million, respectively.
EQUITY SECURITIES AND OTHER LIMITED PARTNERSHIP INTERESTS
The Company's equity securities primarily consist of investments in common
stocks. Substantially all of the common stock is publicly traded on major
securities exchanges. The other limited partnership interests primarily
represent ownership interests in pooled investment funds that make private
equity investments in companies in the U.S. and overseas. The Company classifies
its investments in common stocks as available-for-sale and marks them to market
except for non-marketable private equities which are generally carried at cost.
The Company accounts for its investments in limited partnership interests in
which it does not have a controlling interest in accordance with the equity
method of accounting. The Company's investments in equity securities represented
1.4% and 1.5% of cash and invested assets at March 31, 2000 and December 31,
1999, respectively.
The following table presents the carrying values of the Company's
investments in equity securities and other limited partnership interests at
March 31, 2000 and December 31, 1999:
INVESTMENTS IN EQUITY SECURITIES AND OTHER LIMITED PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
At March 31, 2000 At December 31, 1999
----------------- --------------------
Carrying % of Carrying % of
Value Total Value Total
-------- ----- -------- -----
(Dollars in Millions)
<S> <C> <C> <C> <C>
Equity securities $2,137 59.5% $2,006 60.1%
Other limited partnership interests 1,452 40.5 1,331 39.9
------ ----- ------ -----
Total $3,589 100.0% $3,337 100.0%
====== ===== ====== =====
</TABLE>
Equity securities include, at March 31, 2000 and December 31, 1999, $268
million and $237 million, respectively, of private equity securities. The
Company may not freely trade its private equity securities because of
restrictions imposed by federal and state securities laws and illiquid trading
markets.
At March 31, 2000 and December 31, 1999, approximately $362 million and
$380 million, respectively, of the Company's equity securities holdings were
effectively fixed at a minimum value of $353 million and $355 million in these
respective periods, primarily through the use of convertible securities and
other derivatives. The exchangeable
74
<PAGE> 75
subordinated debt securities mature through 2002 and the Company may terminate
them earlier at its discretion.
PROBLEM AND POTENTIAL PROBLEM EQUITY SECURITIES AND OTHER LIMITED PARTNERSHIP
INTERESTS
The Company monitors its equity securities and other limited partnership
interests on a continual basis. Through this monitoring process, the Company
identifies investments that management considers to be problems or potential
problems.
Problem equity securities and other limited partnership interests are
defined as securities (1) in which significant declines in revenues and/or
margins threaten the ability of the issuer to continue operating or (2) where
the issuer has subsequently entered bankruptcy.
Potential problem equity securities and other limited partnership interests
are defined as securities issued by a company that is experiencing significant
operating problems or difficult industry conditions. Criteria generally
indicative of these problems or conditions are (1) cash flows falling below
varying thresholds established for the industry and other relevant factors, (2)
significant declines in revenues and/or margins, (3) public securities trading
at a substantial discount as a result of specific credit concerns and (4) other
information that becomes available.
Equity securities or other limited partnership interests which are deemed
to be other than temporarily impaired are written down to management's
expectation of ultimate realizable value. Write-downs are recorded as realized
investment losses and are included in earnings and the cost basis of the equity
securities and other limited partnership interests are adjusted accordingly. The
new cost basis is not changed for subsequent recoveries in value. For the three
months ended March 31, 2000 and 1999, such write-downs were $3 million and $1
million, respectively. Cumulative write-downs on equity securities and other
limited partnership interests owned at March 31, 2000 were $34 million.
OTHER INVESTED ASSETS
The Company's other invested assets consisted principally of leveraged
leases, which were recorded net of non-recourse debt. The Company participates
in lease transactions which are diversified by geographic area. The Company
regularly reviews residual values and writes down residuals to expected values
as needed. The Company's other invested assets represented 1.6% and 1.1% of cash
and invested assets at March 31, 2000 and December 31, 1999, respectively.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative instruments to manage market risk through one
of four principal risk management strategies: the hedging of invested assets,
liabilities, portfolios of assets or liabilities and anticipated transactions.
The Company's derivative strategy
75
<PAGE> 76
employs a variety of instruments including financial futures, financial forwards
foreign exchange contracts, foreign currency swaps, interest rate swaps,
interest rate caps and options.
The Company held the following positions in derivative financial
instruments at March 31, 2000 and December 31, 1999:
DERIVATIVE FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
AT MARCH 31, 2000 AT DECEMBER 31, 1999
----------------- --------------------
NOTIONAL % OF NOTIONAL % OF
AMOUNT TOTAL AMOUNT TOTAL
-------- ------ -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Financial futures $ 2,725 8.5% $ 3,140 15.1%
Foreign exchange contracts 114 0.4 -- 0.0
Foreign currency swaps 4,135 12.9 4,002 19.2
Interest rate swaps 16,083 50.2 1,316 6.3
Interest rate caps 8,968 28.0 12,376 59.4
------- ----- ------- -----
Total $32,025 100.0% $20,834 100.0%
======= ===== ======= =====
</TABLE>
SECURITIES LENDING
Pursuant to the Company's securities lending program, it lends securities
to major brokerage firms. The Company's policy requires a minimum of 102% of the
fair value of the loaned securities as collateral, calculated on a daily basis.
The Company's securities on loan at March 31, 2000 and December 31, 1999 had
estimated fair values of $9,123 million and $6,391 million, respectively.
SEPARATE ACCOUNT ASSETS
The Company manages each separate account's assets in accordance with the
prescribed investment policy that applies to that specific separate account. The
Company establishes separate accounts on a single client and multi-client
commingled basis in conformity with insurance laws. Generally, separate accounts
are not chargeable with liabilities that arise from any other business of the
Company. Separate account assets are subject to the Company's general account's
claims only to the extent that the value of such assets exceeds the separate
account liabilities, as defined by the account's contract. If the Company uses a
separate account to support a contract providing guaranteed benefits, the
Company must comply with the asset maintenance requirements stipulated under
Regulation 128 of the New York Insurance Department. The Company monitors these
requirements at least monthly and in addition performs cash flow analyses,
similar to that conducted for the general account, on an annual basis. The
Company reports separately as assets and liabilities investments held in
separate accounts and liabilities of the separate accounts. The Company reports
substantially all separate account assets at their fair market
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<PAGE> 77
value. Investment income and gains or losses on the investments of separate
accounts accrue directly to contract holders, and, accordingly, the Company does
not reflect them in its consolidated statements of income and cash flows. The
Company reflects in its revenues fees charged to the separate accounts by the
Company, including mortality charges, risk charges, policy administration fees,
investment management fees and surrender charges.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has material exposure to interest rate, equity market and
foreign exchange risk. The Company analyzes interest rate risk using various
models including multi-scenario cash flow projection models that forecast cash
flows of the liabilities and their supporting investments, including derivative
instruments. There have been no material changes in market risk exposures from
December 31, 1999.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following should be read in conjunction with Note 6 to Unaudited
Interim Condensed Consolidated Financial Statements in Part I of this Report
("Note 6").
Eight of the nine purported or certified class actions currently pending
against New England Mutual Life Insurance Company ("New England") have been
consolidated as a multidistrict proceeding for pre-trial purposes in the United
States District Court in Massachusetts. That Court certified a mandatory class
as to those claims. Following an appeal of that certification, the United States
Court of Appeals remanded the case to the District Court for further
consideration. New England has agreed to a tentative settlement with class
counsel which is being presented to the District Court for preliminary approval.
As previously disclosed, a purported class action suit involving
policyholders in 32 states has been filed in a Rhode Island state court against
Metropolitan Life's subsidiary, Metropolitan Property and Casualty Insurance
Company, with respect to claims by policyholders for the alleged diminished
value of automobiles after accident-related repairs. The trial court recently
denied a motion by Metropolitan Property and Casualty Insurance Company for
summary judgment.
Metropolitan Life has completed a tender offer to purchase the shares of
Conning Corporation that it had not already owned. After Metropolitan Life had
announced its intention to make a tender offer, three putative class actions
were filed by Conning shareholders alleging that the prospective offer was
inadequate and constituted a breach of fiduciary duty. The parties to the
litigation have reached an agreement in principle providing for a settlement of
the actions.
In addition, several lawsuits have been brought challenging the fairness of
Metropolitan Life's plan and the adequacy and accuracy of Metropolitan Life's
disclosures to policyholders regarding the plan. These actions name as
defendants some
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<PAGE> 78
or all of Metropolitan Life, MetLife, Inc., the individual directors and the New
York State Superintendent of Insurance. The five previously disclosed purported
class actions pending in the Supreme Court of the State of New York for New York
County have been consolidated within the commercial part. There remains a
separate purported class action in Kings County. In addition, a new purported
class action was filed on April 21, 2000 in state court in New York County. The
plaintiffs in the state court class actions seek injunctive, declaratory and
compensatory relief, as well as an accounting. On or about April 14, 2000, some
of the plaintiffs in the above described actions also brought a proceeding under
Article 78 of New York's Civil Practice Law and Rules challenging the Opinion
and Decision of the New York Superintendent of Insurance that approved the plan.
In this action, petitioners seek to vacate the Superintendent's Opinion and
Order and enjoin him from granting final approval to the plan. Finally, on April
18, 2000, a purported class action was filed in United States District Court for
the Eastern District of New York claiming violation of the Securities Act of
1933. The plaintiff in this action claims that the Policyholder Information
Booklets relating to the plan failed to disclose certain material facts and
seeks rescission and compensatory damages. Metropolitan Life, MetLife, Inc. and
the individual defendants believe they have meritorious defenses and intend
vigorously to contest all of the claims in these actions.
Various litigation, claims and assessments against the Company, in addition
to those discussed above and those otherwise provided for in the Company's
consolidated financial statements, have arisen in the course of its business,
including, but not limited to, in connection with its activities as an insurer,
employer, investor, investment advisor and taxpayer. Further, state insurance
regulatory authorities and other federal and state authorities regularly make
inquiries and conduct investigations concerning the Company's compliance with
applicable insurance and other laws and regulations.
In some of the matters referred to above and in Note 6, very large and/or
indeterminate amounts, including punitive and treble damages, are sought. While
it is not feasible to predict or determine the ultimate outcome of all pending
investigations and legal proceedings or provide reasonable ranges of potential
losses, it is the opinion of the Company's management that their outcomes, after
consideration of available insurance and reinsurance and the provisions made in
its consolidated financial statements, are not likely to have a material adverse
effect on our consolidated financial condition. However, given the large and/or
indeterminate amounts sought in certain of these matters and the inherent
unpredictability of litigation, it is possible that an adverse outcome in
certain matters could, from time to time, have a material adverse effect on the
Company's operating results or cash flows in particular quarterly or annual
periods.
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<PAGE> 79
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) The Initial Public Offerings
On April 4, 2000, the Securities and Exchange Commission declared effective
(i) the Registration Statement on Form S-1 (Registration No. 333-91517) of
MetLife with respect to the MetLife's common stock, par value $.01 per share
(the "Common Stock"); and (ii) the Registration Statement on Form S-1
(Registration Nos. 333-32074 and 333-32074-01) of MetLife and MetLife Capital
Trust I with respect to 8.00% Equity Security Units (the "Units"). The Units are
comprised of a purchase contract, which constitutes the holder's agreement to
purchase shares of the Registrant's Common Stock at a future date, and a capital
security of MetLife Capital Trust I. The offerings of the securities registered
on the registration statements referred to in (i) and (ii) above are
collectively referred to as the "Public Offerings."
The lead managing underwriters for the U.S. offerings of Common Stock and
Units were Credit Suisse First Boston and Goldman, Sachs & Co. The managing
underwriters for the International offering of the Common Stock were Credit
Suisse First Boston and Goldman Sachs International. Each of the Public
Offerings commenced on April 4, 2000. The offerings of the Common Stock
terminated upon the sale of all the 232,300,000 shares of Common Stock
(including 30,300,000 shares sold pursuant to the underwriters' over-allotment
options). The offering of the Units terminated upon the sale of all the
20,125,000 Units (including 2,625,000 Units sold pursuant to the underwriters'
over-allotment options).
The aggregate offering price of the Common Stock sold was $3,310,275,000
(including $431,775,000 of gross proceeds attributable to the shares of Common
Stock sold pursuant to exercise of the underwriters' over-allotment options).
MetLife incurred the following expenses in connection with the offering of
Common Stock:
<TABLE>
<S> <C>
Underwriting discounts and commissions $148,672,000
Other expenses (legal and accounting fees, printing and
Engraving expenses, filing and listing fees, transfer
agent and registrar fees and miscellaneous 14,603,000 *
------------
Total $163,275,000
</TABLE>
The net proceeds to MetLife from the offering of Common Stock, after
deducting the foregoing expenses, were approximately $3,147,000,000.
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<PAGE> 80
The aggregate offering price of the Units sold was $1,006,250,000
(including $131,250,000 of gross proceeds attributable to the Units sold
pursuant to exercise of the underwriters' over-allotment options). MetLife
incurred the following expenses in connection with the offering of the Units:
<TABLE>
<S> <C>
Underwriting discounts and commissions $35,218,750
Other expenses (legal and accounting fees, printing and
Engraving expenses, filing and listing fees, transfer
agent and registrar fees and miscellaneous 5,031,250 *
-----------
Total $40,250,000
</TABLE>
The net proceeds to MetLife from the offering of the Units, after deducting
the foregoing expenses, were approximately $966,000,000.
- ------------------
* Estimated
The Private Placements
Contemporaneously with the Public Offerings and in reliance upon the
exemption from registration provided under Section 4(2) of the Securities Act of
1933, MetLife conducted private placements (referred to collectively as the
"Private Placements" and, together with the Initial Public Offerings, as the
"Offerings") to (i) Credit Suisse First Boston and Winterthur Life
(collectively, "CSFB") and (ii) Banco Santander Central Hispano ("Banco
Santander"). Each of CSFB and Banco Santander purchased 30,000,000 shares of
Common Stock, at $14.25 per share, the initial public offering price of the
Common Stock. The Private Placements were completed on April 7, 2000.
The net proceeds to MetLife from the Private Placements were $855,000,000.
The total net proceeds to MetLife from the Initial Public Offerings and the
Private Placements were approximately $4,968,000,000.
In connection with the Initial Public Offerings and the Private Placements,
except as otherwise noted below, the Company did not make any direct or indirect
payments to directors or officers of MetLife or, to MetLife's knowledge, their
associates, persons owning 10% or more of any class of equity securities of
MetLife, or affiliates of the Company. Approximately $340 million of the net
proceeds were retained by MetLife and the balance of approximately $4.6 billion
was contributed to Metropolitan Life.
Of the net proceeds contributed by MetLife to Metropolitan Life,
approximately $408,000,000 was used to reimburse Metropolitan Life for the
crediting of policy credits to certain policyholders in the demutualization of
Metropolitan Life (the "Demutualization"); (ii) approximately $2,550,000,000 was
used to reimburse
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<PAGE> 81
Metropolitan Life for the payment of cash to certain policyholders in the
Demutualization; (iii) approximately $321,000,000 was used to reimburse
Metropolitan Life for the payment of cash to be made by its Canadian branch to
certain holders of policies included in the Canadian business previously sold;
(iv) approximately $370,000,000 was used to reimburse Metropolitan Life for the
payment of fees and expenses incurred in connection with the Demutualization;
(v) approximately $900,000,000 was used to repay short-term debt incurred in
connection with the acquisition of GenAmerica Corporation and (vi) approximately
$79,000,000 is expected to be used for general corporate purposes. Certain
officers and directors of the Registrant are policyholders of Metropolitan Life
and, as such, have or will receive consideration indirectly from MetLife, in
connection with the Demutualization, in consideration of their membership
interests in Metropolitan Life. In addition, an affiliate of MetLife served as a
co-manager of the Initial Public Offerings and received compensation indirectly
from MetLife for providing such services.
The net proceeds retained by MetLife will be available for general
corporate purposes, including the payment of dividends on the Common Stock,
contributions to the Company's subsidiaries, payments on the debentures issued
by MetLife to MetLife Capital Trust I in connection with the offering of the
Units and to pay the fees and expenses of the trustee and custodian of the
Metropolitan Life Policyholder Trust.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 2000 Annual Meeting of Shareholders of MetLife was held on April 3,
2000. At the Meeting, the following matters were approved by Metropolitan Life,
the then sole shareholder of the Registrant: (i) the election of Robert H.
Benmosche, Gerald Clark, John J. Phelan, Jr., Hugh B. Price and Ruth J. Simmons
as Class I directors, each to hold office until the Registrant's 2003 Annual
Meeting of Shareholders and (ii) the amendment and restatement of the 2000 Stock
Incentive Plan and the 2000 Directors Stock Plan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Amended and Restated Aggregate Excess of Loss Reinsurance
Agreement, dated as of March 1, 2000, between American International Life
Assurance Company of New York and Metropolitan Life.
10.2 Amended and Restated Aggregate Excess of Loss Reinsurance
Agreement, dated as of March 1, 2000, between Stockwood Reinsurance Company Ltd.
and Metropolitan Life.
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<PAGE> 82
10.3 Employment Continuation Agreement, dated as of March 10, 2000,
between James M. Benson and Metropolitan Life (incorporated herein by reference
to Exhibit 10.5 of the Registrant's Registration Statement on Form S-1,
Registration No. 333-91517 (the "S-1")).
10.4 Employment Continuation Agreement, dated as of March 3, 2000,
between Catherine A. Rein and Metropolitan Property and Casualty Insurance
Company (incorporated herein by reference to Exhibit 10.10 of the S-1).
10.5 Amended and Restated Employment Continuation Agreement, dated as
of March 3, 2000, between Catherine A. Rein and Metropolitan Life (incorporated
herein by reference to Exhibit 10.9 of the S-1).
10.6 Employment Continuation Agreement, dated as of March 16, 2000,
between Lisa M. Weber and Metropolitan Life (incorporated herein by reference to
Exhibit 10.50 of the S-1).
10.7 MetLife, Inc. 2000 Stock Incentive Plan, as amended and restated
(incorporated herein by reference to Exhibit 10.7 of the S-1).
10.8 MetLife, Inc. 2000 Directors Stock Plan, as amended and restated
(incorporated herein by reference to Exhibit 10.8 of the S-1).
10.9 Metropolitan Life Long Term Performance Compensation Plan (for
performance periods starting on or after January 1, 2000)(incorporated herein by
reference to Exhibit 10.24 of the S-1).
10.10 Metropolitan Life Annual Variable Incentive Plan (for performance
periods starting on or after January 1, 2000)(incorporated herein by reference
to Exhibit 10.28 of the S-1).
10.11 New England Financial Long Term Performance Compensation Plan
(for performance periods starting on or after January 1, 2000)(incorporated
herein by reference to Exhibit 10.36 of the S-1).
10.12 New England Financial Annual Variable Incentive Plan (for
performance periods starting on or after January 1, 2000)(incorporated herein by
reference to Exhibit 10.35 of the S-1).
10.13 New England Life Insurance Company Select Employees Supplemental
401(k) Plan, as amended and restated effective January 1, 2000 (incorporated
herein by reference to Exhibit 10.37 of the S-1).
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<PAGE> 83
10.14 New England Life Insurance Company Supplemental Retirement Plan,
as amended and restated effective January 1, 2000 (incorporated herein by
reference to Exhibit 10.38 of the S-1).
10.15 New England Life Insurance Company Select Employees Supplemental
Retirement Plan, as amended and restated effective January 1, 2000 (incorporated
herein by reference to Exhibit 10.39 of the S-1).
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Registrant during the
quarter covered by this Report.
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<PAGE> 84
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
METLIFE, INC.
By: /s/ Virginia M. Wilson
-------------------------------
Virginia M. Wilson
Senior Vice-President and
Controller
(Authorized signatory and
principal accounting
officer)
Date: May 19, 2000
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<PAGE> 85
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
<S> <C> <C>
10.1 Amended and Restated Aggregate Excess of Loss Reinsurance
Agreement, dated as of March 1, 2000, between American
International Life Assurance Company of New York and
Metropolitan Life.
10.2 Amended and Restated Aggregate Excess of Loss Reinsurance
Agreement, dated as of March 1, 2000, between Stockwood
Reinsurance Company Ltd. and Metropolitan Life.
10.3 Employment Continuation Agreement, dated as of March 10, 2000,
between James M. Benson and Metropolitan Life (incorporated
herein by reference to Exhibit 10.5 of the Registrant's
Registration Statement on Form S-1, Registration No.
333-91517 (the "S-1")).
10.4 Employment Continuation Agreement, dated as of March 3, 2000,
between Catherine A. Rein and Metropolitan Property and Casualty
Insurance Company (incorporated herein by reference to Exhibit
10.10 of the S-1).
10.5 Amended and Restated Employment Continuation Agreement, dated as
of March 3, 2000, between Catherine A. Rein and Metropolitan
Life (incorporated herein by reference to Exhibit 10.9 of the
S-1).
10.6 Employment Continuation Agreement, dated as of March 16, 2000,
between Lisa M. Weber and Metropolitan Life (incorporated herein
by reference to Exhibit 10.50 of the S-1).
10.7 MetLife, Inc. 2000 Stock Incentive Plan, as amended and restated
(incorporated herein by reference to Exhibit 10.7 of the S-1).
10.8 MetLife, Inc. 2000 Directors Stock Plan, as amended and restated
(incorporated herein by reference to Exhibit 10.8 of the S-1).
10.9 Metropolitan Life Long Term Performance Compensation Plan (for
performance periods starting on or after January 1,
2000)(incorporated herein by reference to Exhibit 10.24 of the
S-1).
10.10 Metropolitan Life Annual Variable Incentive Plan (for
performance periods starting on or after January 1,
2000)(incorporated herein by reference to Exhibit 10.28 of the
S-1).
</TABLE>
85
<PAGE> 86
<TABLE>
<S> <C> <C>
10.11 New England Financial Long Term Performance Compensation Plan
(for performance periods starting on or after January 1,
2000)(incorporated herein by reference to Exhibit 10.36 of the
S-1).
10.12 New England Financial Annual Variable Incentive Plan (for
performance periods starting on or after January 1,
2000)(incorporated herein by reference to Exhibit 10.35 of the
S-1).
10.13 New England Life Insurance Company Select Employees Supplemental
401(k) Plan, as amended and restated effective January 1, 2000
(incorporated herein by reference to Exhibit 10.37 of the S-1).
10.14 New England Life Insurance Company Supplemental Retirement Plan,
as amended and restated effective January 1, 2000 (incorporated
herein by reference to Exhibit 10.38 of the S-1).
10.15 New England Life Insurance Company Select Employees Supplemental
Retirement Plan, as amended and restated effective January 1,
2000 (incorporated herein by reference to Exhibit 10.39 of the
S-1).
27.1 Financial Data Schedule
</TABLE>
86
<PAGE> 1
AMENDED AND RESTATED AGGREGATE EXCESS OF LOSS
REINSURANCE AGREEMENT
amended as of the 1st day of March, 2000 (the "Amendment Date")
between
METROPOLITAN LIFE INSURANCE COMPANY
One Madison Avenue
New York, New York 10010
(hereinafter referred to as the "Company")
AND
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
70 Pine Street
New York, New York 10270
(hereinafter referred to as the "Reinsurer")
WHEREAS, the Company and the Reinsurer are parties to that certain
Restatement of the Aggregate Excess of Loss Reinsurance Agreement dated as of
December 31, 1998;
WHEREAS, the Company and the Reinsurer desire to amend certain
provisions of the Agreement effective as of the Amendment Date, and as a result
of such amendments and for the sake of clarity, to restate the Agreement in its
entirety by this Agreement;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree that the Agreement shall be
amended and restated as follows:
TYPE: Aggregate Excess of Loss Reinsurance.
EFFECTIVE DATE: The Effective Date of this Agreement shall
be 12:01 a.m., New York City Time, December
31, 1998.
TERM: This Agreement shall remain in force and the
Term of this Agreement shall be from the
Effective Date of this Agreement until the
earlier of (A) the later of March 31, 2005,
or the exhaustion of the Part A Aggregate
Sublimit; or (B) the Effective Date of
Commutation of this Agreement.
COVERAGE: Part A Coverage:
The Reinsurer shall indemnify the Company
for Part A Covered Losses.
<PAGE> 2
Part B Coverage:
The Reinsurer shall indemnify the Company
for Part B Covered Losses.
Part C Coverage:
The Reinsurer shall indemnify the Company
for Part C Covered Losses.
BUSINESS
COVERED: Part A Business Covered:
Amounts paid or to be paid by the Company as
life insurance benefits, cash values or
otherwise (but excluding all benefits that
are included in Part C Business Covered) to
its life insurance policyholders and annuity
contract holders, or beneficiaries or proper
assignees thereof, where such amounts arise
out of policies or contracts issued by the
Company but are in addition to the amounts
anticipated at the time the policies or
contracts were issued; and, where such
amounts are payable pursuant to judgments
in, or settlements of, lawsuits or other
proceedings (including without limitation
administrative proceedings) alleging that
the Company or its agents engaged in
improper sales practices.
Part B Business Covered:
Except as otherwise provided in this
section, Part B Business Covered shall mean
all death benefits for policies listed in
the Company's Notice Business Policy Master
File (NBPMF) that were issued and delivered
in the Part B Subject Territory prior to
January 1, 1997, and were in force as of the
Effective Date with a policy account code
of: (1) premium paying (Policy Account Code
= 1), (2) fully paid up (Policy Account Code
=2), or (3) single premium (Policy Account
Code =9). Policies on (a) the nonforfeiture
reduced paid up option (Policy Account Code
=3) as of the Effective Date or on any other
date during the Term of this Agreement and
policies on (b) the nonforfeiture extended
term insurance option (Policy Account Code
=5) as of the Effective Date or on any other
date during the Term of this Agreement are
excluded from coverage under this Part B
Business Covered subsection. Policy forms
identified by the Company's plan code
"Estate Saver" are also excluded from
coverage under this Part B Business Covered
subsection. All other policy riders and
benefits are covered under this Part B
Business Covered subsection except for the
Accidental Death Benefit (ADB), Disability
Waiver of Premium Benefit (DW), Applicant's
Waiver of Premium Benefit (AWB), and
Additional Insurance (AI).
<PAGE> 3
Part C Business Covered:
Amounts paid by the Company as death
benefits (other than benefits paid pursuant
to agreements providing accidental death
benefits), where such amounts meet all of
the following criteria: (1) such amounts
arise out of policies or contracts issued by
the Company but are in addition to the
amounts anticipated at the time the policies
or contracts were issued; and (2) such
amounts are payable pursuant to the
Stipulation of Settlement with exhibits,
dated August 18, 1999, as amended and in
effect on the Amendment Date (or as amended
in the future if the Reinsurer provides its
written consent to the corresponding changes
in coverage resulting from such amendment)
of the Metropolitan Life Insurance Company
sales practices litigation, MDL No. 1091, in
the United States District Court for Western
Pennsylvania (as so in effect, the
"Settlement Order") ; and (3) the amount of
the benefit is determined as set forth in
the settlement agreement or determined by
the claims evaluator prior to the date of
death of the measuring life.
SUBJECT
TERRITORY: Part A and Part C Subject Territory:
The Reinsurer's liability shall be limited
to policies or contracts issued for delivery
in the fifty (50) States of the United
States of America, the District of Columbia,
or Canada for losses occurring in the fifty
(50) States of the United States of America,
the District of Columbia, or Canada.
Part B Subject Territory:
The Reinsurer's liability shall be limited
to policies issued for delivery in the fifty
(50) States of the United States of America
and the District of Columbia for losses
occurring in the fifty (50) States of the
United States of America and the District of
Columbia.
SUBJECT LOSSES: Part A Subject Losses:
Part A Subject Losses shall mean all Part A
Ultimate Net Loss with Claim Dates on or
after December 31, 1998 arising from claims
made against the Company on or prior to
December 31, 1999 in respect of the Part A
Business Covered hereunder.
Part B Subject Losses:
Part B Subject Losses shall mean all Part B
Ultimate Net Loss paid by the Company on or
after December 31, 1998 as a result of
deaths occurring on or after December 31,
1998 and on or prior to December 31, 1999 in
respect of the Part B Business Covered
hereunder.
<PAGE> 4
Part C Subject Losses:
Part C Subject Losses shall mean all Part C
Ultimate Net Loss paid by the Company in
respect of the Part C Business Covered
hereunder.
COVERED LOSSES: Part A Covered Losses:
Subject to the Combined Aggregate Limit and
the Part A Aggregate Sublimit, Part A
Covered Losses shall mean Fifty Percent
(50%) of Part A Subject Losses in excess of
the Part A Aggregate Retention.
Part B Covered Losses:
Subject to the Combined Aggregate Limit and
the Part B Sublimit, Part B Covered Losses
shall mean Fifty Percent (50%) of Part B
Subject Losses in excess of the Part B
Aggregate Retention.
Part C Covered Losses:
Part C Covered Losses shall mean Fifty
Percent (50%) of Part C Subject Losses.
RETENTIONS: Part A Aggregate Retention:
The Part A Aggregate Retention shall be
equal to Three Hundred Eighty Five Million
Dollars ($385,000,000) in the aggregate.
Part B Aggregate Retention:
The Part B Aggregate Retention shall be
equal to Five Hundred Six Million Dollars
($506,000,000), PLUS the Company's statutory
policy reserves released upon death of an
insured or otherwise.
Part C Aggregate Retention:
The Part C Aggregate Retention shall be
equal to zero (0).
SUBLIMITS: Part A Aggregate Sublimit:
The maximum amount of Part A Covered Losses
indemnified under this Agreement shall be
limited to Two Hundred Seventy Five Million
Dollars ($275,000,000), LESS the aggregate
amount of Mortality Cover Purchase Charges
paid or due to be paid by the Company to the
Reinsurer. However, the Part A Aggregate
Sublimit shall never be less than zero.
<PAGE> 5
This Part A Aggregate Sublimit is the
maximum amount payable by the Reinsurer for
Part A Covered Losses under this Agreement.
Under no circumstances will the Reinsurer be
obligated to pay more than this amount in
respect of Part A Covered Losses.
Part B Sublimit
The maximum amount of Part B Covered Losses
indemnified under this Agreement shall be
limited to Two Million Five Hundred Thousand
Dollars ($2,500,000) for any individual
insured.
COMBINED
AGGREGATE
LIMIT: The Combined Aggregate Limit for the sum of
Part A Covered Losses and Part B Covered
Losses under this Agreement shall equal
Three Hundred Twenty Five Million Dollars
($325,000,000), LESS the aggregate amount of
Mortality Cover Purchase Charges paid or due
to be paid by the Company to the Reinsurer.
However, the Combined Aggregate Limit shall
never be less than zero.
This Combined Aggregate Limit is the maximum
amount payable by the Reinsurer under this
Agreement for Part A Covered Losses and Part
B Covered Losses. Under no circumstances
will the Reinsurer be obligated to pay more
than this amount in respect of Part A
Covered Losses and Part B Covered Losses
combined.
REINSURANCE
PREMIUM: The Reinsurance Premium shall equal Two
Hundred Sixty Four Million Five Hundred
Thousand Dollars ($264,500,000) and shall be
payable in full and without deduction by the
Company on or before December 31, 1998. The
date the Reinsurance Premium is paid shall
be referred to as the "Premium Payment
Date". The Reinsurance Premium shall be
payable in cash by federal wire transfer in
immediately available non-reversible United
States Federal Funds to an account specified
by the Reinsurer.
The Reinsurance Premium shall be considered
fully earned when received in the account
specified by the Reinsurer.
The Reinsurance Premium is a net amount and
includes no allowance for commissions,
brokerage, taxes or any other costs which
may arise in connection with this Agreement
or the Business Covered hereunder. Any such
amounts shall remain the sole responsibility
of the Company.
If the Company fails to pay the Reinsurance
Premium in full and in accordance with the
terms of this Reinsurance Premium Section,
this Agreement shall not come into effect
and shall not in any way bind the Reinsurer.
<PAGE> 6
MORTALITY
COVER
PURCHASE
CHARGES: For coverage of Part C Covered Losses, the
Company shall pay to the Reinsurer the
Mortality Cover Purchase Charges for each
calendar quarter. Such payment shall be due
and payable on the Settlement Date for the
calendar quarter in which the amount of the
settlement death benefit and the specifics
of the measuring life are first determinable
by the Company. Payment of the Mortality
Cover Purchase Charges shall be made first
by a reduction in the Part A Aggregate
Sublimit until the available Part A
Aggregate Sublimit is exhausted, and then in
cash to the Reinsurer. The Tabular Mortality
Cost for each calendar quarter shall be
equal to the amounts defined in Schedule 3.
The Mortality Cover Purchase Charges for
each calendar quarter shall equal the
minimum statutory reserve (as of the date
that the benefits and the specifics of the
measuring life are first determinable by the
Company) as required by New York State for
the benefits associated with the Mortality
Cover Purchase Charges LESS 31.00% of the
Tabular Mortality Cost for such benefits.
For purposes of calculating the Mortality
Cover Purchase Charges pursuant to the prior
sentence, such reserves shall be calculated
based under the applicable regulations as in
effect as of the date that the benefits and
the specifics of the measuring life are
first determinable by the Company regardless
of when such reserves are actually
calculated.
If any of the Mortality Cover Purchase
Charges due to be paid by the Company under
this Agreement are paid later than indicated
herein, interest at rates equal to the
actual effective yield on the three (3)
month United States Treasury Bill maturing
closest to the due date shall be computed
from the date such amounts are due to the
date such amounts are received. Such
interest computed shall be paid as an
integral part of the payment made. If the
Company fails to pay in full the Mortality
Cover Purchase Charges or interest in
accordance with this paragraph for a
calendar quarter, then the mortality
benefits associated with the Mortality Cover
Purchase Charges shall be excluded from Part
C Business Covered
REINSURER'S
MARGIN: The Reinsurer's Margin for each calendar
quarter shall be equal to three quarters of
one percent (0.75%) of the Tabular Mortality
Cost for that calendar quarter.
DEFFERED ACQUISITION
COST ("DAC") TAX
REIMBURSEMENT
<PAGE> 7
AMOUNT: The initial DAC Tax Reimbursement Amount is
Ten Million Eight Hundred Forty Five
Thousand Four Hundred Thirty Three Dollars
($10,845,433) and all subsequent settlements
will be calculated on a similar basis to
that set forth hereafter.
For purposes of determining DAC Tax
Reimbursement Amounts, a Contract Payment
shall be any payment (other than a DAC Tax
Reimbursement Amount) made under this
reinsurance agreement either by the Company
to the Reinsurer or by the Reinsurer to the
Company in accordance with the principles
set forth in Treas. Reg. Section 1.848
defining net consideration.
SETTLEMENT
DATES: The first Settlement Date, which shall cover
the period from December 31, 1998 through
December 31, 1999, shall be March 31, 2000
(the "First Settlement Period"). The
Settlement Date for each calendar quarter
beginning January 1, 2000 and thereafter
shall be the later of (a) the first Business
Day on or after sixty (60) days after the
end of that calendar quarter, or (b) the
first Business Day on or after the tenth
(10th) Business Day after the Reinsurer's
receipt of the Company's Loss Report for the
prior calendar quarter.
BUSINESS DAYS: Business Day shall mean any day other than a
Saturday, a Sunday or a day on which banking
institutions in New York, New York, or the
Islands of Bermuda are authorized or
obligated by law, regulation or executive
order to be closed.
EXPERIENCE
BALANCE: The Reinsurer shall establish and maintain a
notional Experience Balance during the time
that this Agreement is in effect and whose
balance shall be determined on each
Settlement Date in accordance with this
Experience Balance section.
The Experience Balance at the Premium
Payment Date shall be equal to Two Hundred
Sixty One Million Five Hundred Thousand
United States Dollars ($261,500,000).
The Experience Balance at the Settlement
Date for the period from December 31, 1998
through December 31, 1999 shall be equal to:
The Experience Balance at the
Premium Payment Date MULTIPLIED BY
(1.0 plus the annual compounding
yield on the one (1) year United
States Treasury Bill as of the close
of business on the Premium Payment
Date) raised to the power of
four-hundred-fifty six (456) days
divided by three-hundred-sixty-
six (366) days,
LESS
<PAGE> 8
Covered Losses due from the
Reinsurer for the period from
December 31, 1998 through December
31, 1999.
The Experience Balance at the Settlement
Date for each calendar quarter commencing on
or after Jan. 1, 2000 shall be equal to:
(A) The Experience Balance at the end of
the prior Settlement Date MULTIPLIED
BY (1.0 plus the actual / 365 annual
compounding yield determined as of
the prior Settlement Date on the
three (3) month United States
Treasury Bill maturing closest to
the Settlement Date for the contract
quarter) raised to the power of the
actual number of days from the prior
Settlement Date to the first
Business Day on or after sixty (60)
days after the end of the contract
quarter DIVIDED BY three-hundred-
sixty-five (365),
MULTIPLIED BY,
for such first Business Day on or
after 60 days after the end of the
contract quarter, and for each
subsequent Business Day during that
settlement period up to but
excluding the Settlement Date, M.
Where, M = 1 + [F x (1 + ND) / 360];
F = Federal Reserve
Discount Rate for such Business Day,
which is the percentage rate
reported for such Business Day as
"Discount Window Borrowing" in the
Federal Reserve H.15 Statistical
release;
ND = number of calendar
days that is not a Business Day
subsequent to such Business Day. For
example, ND for a Monday during a
normal working day week would be
zero; ND for the Friday during such
week would be two; and ND for the
Friday when the next Monday is not a
Business Day would be three. In
general, for a normal Business Day
other than Friday, M = 1 + [F x (1 +
0) / 360], and for Fridays, M = 1 +
[F x (1 + 2) / 360].
PLUS
(B) The Mortality Cover Purchase Charges
paid to the Reinsurer in cash by the
Company for that calendar quarter
that are not paid by a reduction in
the Part A Aggregate Sublimit,
LESS
(C) Covered Losses due from the
Reinsurer for that calendar quarter,
LESS
<PAGE> 9
(D) Reinsurer's Margin for that calendar
quarter.
ULTIMATE NET LOSS: (a) Part A Ultimate Net Loss:
Part A Ultimate Net Loss as used
herein shall mean the actual sum of
all Claim Amounts with Claim Dates
on or after the Effective Date in
settlement of all losses arising in
respect of the Part A Business
Covered after making deductions for
all recoveries, all salvage, and all
claims upon other reinsurances,
which inure to the benefit of the
Reinsurer under this Agreement,
whether collectable or not, and
shall include Allocated Loss
Adjustment Expenses paid by the
Company. Part A Ultimate Net Loss
shall also include Allocated Loss
Adjustment Expenses paid by the
Company in connection with Part C
Business Covered.
Part B Ultimate Net Loss:
Part B Ultimate Net Loss as used
herein shall mean the actual sum
paid by the Company on or after the
Effective Date in settlement of all
death claims arising in respect of
the Part B Business Covered after
making deductions for all
recoveries, all salvage, and all
claims upon other reinsurances,
which inure to the benefit of the
Reinsurer under this Agreement,
whether collectable or not.
Part C Ultimate Net Loss:
Part C Ultimate Net Loss as used
herein shall mean the actual sum of
all claims paid by the Company
arising in respect of the Part C
Business Covered after making
deductions for all recoveries, all
salvage, and all claims upon other
reinsurances, which inure to the
benefit of the Reinsurer under this
Agreement, whether collectable or
not. For purposes of this Agreement,
Allocated Loss Adjustment Expenses
paid by the Company in connection
with Part C Business Covered shall
be included in Part A Ultimate Net
Loss and not in Part C Ultimate Net
Loss.
(b) All salvages, recoveries,
reinsurance or payments recovered or
received subsequent to a loss
settlement under this Agreement
shall be applied as if recovered or
received prior to the aforesaid
settlement and all necessary
adjustments shall be made by the
parties hereto.
(c) Nothing in this definition shall be
construed to mean that losses are
not recoverable hereunder until the
Part A Ultimate Net Loss and Part B
Ultimate Net Loss and Part C
Ultimate Net Loss of the Company has
been ascertained.
<PAGE> 10
CLAIM AMOUNT: Claim Amount as used herein shall
mean for each claim, the sum of the
amount paid by the Company on the
Claim Date plus the amount reserved
by the Company on the Claim Date on
the basis of New York State
statutorily prescribed mortality,
morbidity or interest rates, arising
in respect of the Part A Business
Covered.
CLAIM DATE: Claim Date as used herein shall mean
the date of judgment in, or
settlement of, a lawsuit or other
proceeding (including without
limitation administrative
proceedings) arising in respect of
the Part A Business Covered.
CLAIMS HANDLING: (a) The Company shall have the sole and
absolute authority with respect to
the administration, defense,
settlement and payment of Part A
Covered Losses, subject to the terms
and conditions of this Agreement.
(b) The Company shall retain the sole
and absolute authority with respect
to the administration, defense,
settlement and payment of Part B
Covered Losses and Part C Covered
Losses.
(c) In furtherance of the commonality of
interest evidenced by the execution
of this Agreement, the Company
agrees that the Company or the
Company's designated counsel shall
provide the Reinsurer with updated
information concerning the present
and future handling of the Part A
Covered Losses on a quarterly basis
to allow the Reinsurer to properly
reserve and project payments under
this Agreement and as otherwise
reasonably required by the
Reinsurer.
ALLOCATED
LOSS ADJUSTMENT
EXPENSES: Allocated Loss Adjustment Expenses
as used herein shall mean all
allocated expenses incurred by the
Company on or after the Effective
Date in connection with the
investigation, settlement, defense
or mitigation of any claim or loss
which is the subject matter of the
Part A Business Covered or the Part
C Business Covered, and shall
exclude salaries and fees of
adjusters, attorneys or other
persons who are employees of the
Company, or its designated claims
adjusters, attorneys on permanent
retainer, office expenses, overhead
or other unallocated expenses.
COMMUTATION: This Agreement may be irrevocably
commuted by the Company at the end
of any calendar quarter
("Effective Date of Commutation")
after December 31, 1999 in the event
that the Experience Balance at the
Settlement Date
<PAGE> 11
for that calendar quarter is
positive subject to the
Company providing written notice to
the Reinsurer on or prior to the end
of such calendar quarter of its
intent to commute the Agreement
provided that the Experience Balance
is positive. If it is determined on
the Settlement Date for that
calendar quarter that the Experience
Balance is positive, then upon
receipt from the Company of a full
release in form and substance
reasonably satisfactory to the
Reinsurer, the Reinsurer shall pay
to the Company a Commutation
Settlement equal to Ninety Nine
Percent (99%) multiplied by the
positive Experience Balance, if any,
at the Settlement Date first
following the Effective Date of
Commutation, less all amounts due
and payable by the Company to the
Reinsurer, under this or any related
agreement and the Reinsurer and the
Company shall be fully and finally
released from all liability and
obligations under or in connection
with this Agreement. If it is
determined on the Settlement Date
for the calendar quarter that the
Experience Balance is not positive,
then this Agreement shall not be
commuted as of the end of that
calendar quarter.
REPORTS AND
REMITTANCES: Within sixty (60) days after the end
of each calendar quarter during the
Term of this Agreement, the Company
shall provide the Reinsurer with
copies of all loss reports received
or prepared by the Company in
connection with the Business
Covered during that calendar
quarter. In addition to the above,
within sixty (60) days after the end
of each calendar quarter, the
Company shall provide to the
Reinsurer a written Loss Report,
providing, in a format acceptable
to the Reinsurer and the Company,
the following information in respect
of the Business Covered hereunder,
for Part A Business Covered:
(1) The amount of Subject
Losses paid by the Company
during that calendar
quarter.
(2) The net amount of Subject
Losses payable but unpaid
by the Company as at the
end of the calendar quarter
(the "Net Subject Loss").
(3) The Company's estimate of
reserves for Net Subject
Loss and Allocated Loss
Adjustment Expenses, as at
the end of that calendar
quarter.
(4) And such other information
as may be agreed to by the
Company and the Reinsurer,
including but not limited
to the updated information
referred to in
<PAGE> 12
subsection (c) of the
section entitled "Claims
Handling".
In addition to the above, within sixty (60)
days after the end of each calendar quarter,
the Company shall provide to the Reinsurer a
written Loss Report, providing, in a format
acceptable to the Reinsurer, the following
information in respect of the Business
Covered hereunder, separately for Part B
Business Covered, and for Part C Business
Covered:
(1) The face amount of
death claims paid during
the calendar quarter.
(2) The face amount of
death claims reported but
not paid as of the end of
that calendar quarter.
(3) Statutory reserves
released in the calendar
quarter on death claims
paid.
(4) Statutory reserves
released in the calendar
quarter on death claims
reported but not paid.
(5) The face amount of
death claims during the
calendar quarter ceded to
other reinsurers.
(6) Statutory reserves
released in the calendar
quarter on death claims
ceded to other reinsurers.
(7) Policy level
detail (as detailed in
items (1) through (6)
above) for individual
insureds with Subject
Losses in excess of Five
Million Dollars
($5,000,000).
(8) The Company's
estimate of IBNR losses as
at the end of that calendar
quarter.
(9) The terms of any
death benefits covered by
Part C Business Covered for
which the amount of the
settlement death benefits
and the specifics of the
measuring life are first
determinable by the Company
during the calendar
quarter.
(10) Statutory
Mortality Reserves as at
the end of that calendar
quarter.
Each Loss Report shall provide both the
cumulative position from the Effective Date
through the end of that calendar quarter and
the changes within the calendar quarter. The
first such quarterly Loss Report shall be
due by June 1, 1999 for the First Settlement
Period.
<PAGE> 13
Within sixty (60) days after the end of each
calendar quarter, the Company shall furnish
the Reinsurer with a written Report,
providing, in a format acceptable to the
Reinsurer, the Subject Losses paid by the
Company for that calendar quarter in respect
of the Business Covered hereunder separately
for Part A Business Covered, Part B Business
Covered, and Part C Business Covered.
On each Settlement Date, Covered Losses due
from the Reinsurer shall be paid by the
Reinsurer to the Company, and Mortality
Cover Purchase Charges due from the Company
that are not paid by a reduction in the Part
A Aggregate Sublimit shall be paid by the
Company to the Reinsurer as provided in the
Mortality Cover Purchase Charges section.
Remittances shall be net of these items.
All remittances shall be made by federal
wire transfer in immediately available
non-reversible United States Federal Funds
to an account specified by the receiving
party.
INSOLVENCY: 1. Reinsurer's Obligation:
In the event of the insolvency of the
Company, the reinsurance afforded by this
Agreement shall be payable by the Reinsurer
on the basis of the liability of the Company
under the Business Covered, without
diminution because of such insolvency,
directly to the Company or its liquidator,
receiver, conservator, or statutory
successor, except (a) where this Agreement
specifically provides another payee of such
reinsurance in the event of the insolvency
of the Company and (b) where the Reinsurer,
with the consent of the direct insured or
insureds, has assumed such policy
obligations of the Company as direct
obligations of the Reinsurer to the payees
under such policies and in substitution for
the obligations of the Company to such
payees.
2. Reinsurer's Notice and Defense of Claims:
The Reinsurer shall be given written notice
of the pendency of each claim or loss which
may involve the reinsurance afforded by this
Agreement within a reasonable time after
such claim or loss is filed in the
insolvency proceedings. The Reinsurer shall
have the right to investigate each such
claim or loss and interpose at its own
expense, in the proceeding where the claim
or loss is to be adjudicated, any defense
which it may deem available to the Company
or its liquidator, receiver, conservator, or
statutory successor. If more than one
Reinsurer is involved, they may designate
one Reinsurer to act for all.
3. Defense Expense:
The expense thus incurred by the Reinsurer
shall be chargeable, subject to court
approval, against the insolvent Company as
part of
<PAGE> 14
the expense of liquidation to the extent of
a proportionate share of the benefit which
may accrue to the Company solely as a result
of the defense undertaken by the Reinsurer.
4. Offset:
Any debts or credits, liquidated or
unliquidated, in favor of or against either
party under this Agreement on the date of
the receivership or liquidation order
(except where the obligation was purchased
by or transferred to be used as an offset)
are deemed mutual debts or credits and shall
be set off with the balance only to be
allowed or paid. Although such claim on the
part of either party may be unliquidated or
undetermined in amount on the date of the
entry of the receivership or liquidation
order, such claim will be regarded as being
in existence as of such date and any credits
or claims then in existence and held by the
other party may be offset against it.
5. Rights of Parties:
Nothing hereinabove set forth in this
Insolvency Article shall in any way change
the relationship or status of the parties
hereto, nor enlarge the obligations of
either party to each other except as
specifically hereinabove provided, to wit,
to pay the statutory successor on the basis
of the amount of liability determined in the
liquidation or receivership proceeding,
rather than on the basis of the actual
amount of loss (dividends) paid by the
liquidator, receiver, conservator, or
statutory successor to allowed claimants.
Nor, except as hereinabove specifically
provided, shall anything in this Insolvency
Article in any manner create any obligation
or establish any right against the Reinsurer
in favor of any third parties or any other
persons not parties to this Agreement.
ARBITRATION: Except as otherwise agreed upon by the
parties:
1. Resolution of Disputes: Any dispute
between the Company and the
Reinsurer arising out of the
provisions of this Agreement, or
concerning its interpretation or
validity, whether arising before or
after termination of this Agreement,
shall be submitted to arbitration in
the manner set forth in this
Article. Either party may initiate
arbitration of any such dispute by
giving written notice to the other
party, by registered or certified
mail, return receipt requested, of
its intention to arbitrate and of
its appointment of an arbitrator in
accordance with subsection (3) of
this Article.
2. Composition of Panel: Unless the
parties agree upon a single
arbitrator within fifteen (15) days
after the receipt of a notice of
intention to arbitrate, all disputes
shall be
<PAGE> 15
submitted to an arbitration panel
composed of two arbitrators and an
umpire, chosen in accordance with
subsections (3) and (4) of this
Article.
3. Appointment of Arbitrators: The
members of the arbitration panel
shall be chosen from disinterested
persons having knowledge of the
insurance, reinsurance and financial
issues relevant to the matters in
dispute. The party requesting
arbitration (hereinafter referred to
as the "requesting party") shall
appoint an arbitrator and give
written notice thereof, by
registered or certified mail, return
receipt requested, to the other
party (hereinafter referred to as
the "respondent") together with its
notice of intention to arbitrate.
Unless a single arbitrator is agreed
upon within fifteen (15) days after
the receipt of the notice of
intention to arbitrate, the
respondent shall, within thirty (30)
days after receiving such notice,
also appoint an arbitrator and
notify the requesting party thereof
in a like manner. Before instituting
a hearing, the two arbitrators so
appointed shall choose an umpire.
If, within twenty (20) days after
they are both appointed, the
arbitrators fail to agree upon the
appointment of an umpire, the umpire
shall be appointed by the President
of the American Arbitration
Association.
4. Failure of Party to Appoint
Arbitrator: If the respondent fails
to appoint an arbitrator within
thirty (30) days after receiving a
notice of intention to arbitrate,
such arbitrator shall be appointed
by the President of the American
Arbitration Association, and shall
then, together with the arbitrator
appointed by the requesting party,
choose an umpire as provided in
subsection (3) of this Article.
5. Involvement of Other Reinsurers:
(a) If more than one reinsurer of
this Agreement is involved in the
same dispute, all such reinsurers
shall constitute and act as one
party for purposes of this Article
and communication shall be made by
the Company to each of the reinsurer
constituting the one party;
provided, however, nothing herein
shall impair the right of such
reinsurers to assert several, rather
than joint, defenses or claims, nor
be construed as changing the
liability of the reinsurers under
the terms of this Agreement from
several to joint.
(b) If the Company is involved in a
dispute under the terms of this
Agreement and in one or more
separate disputes with one or more
other insurers or reinsurers in
which common questions of law or
fact are in issue, the Company or
Reinsurer, at their option, may join
with such
<PAGE> 16
other insurers or reinsurers in a
common arbitration proceeding under
the terms of this Article. If the
Company and such other insurers or
reinsurers have commenced
arbitration, the reinsurers may at
their option join such proceeding
for the determination of the dispute
between the Company and Reinsurer.
6. Choice of Law and Forum: Any
arbitration instituted pursuant to
this Article shall be held in
Wilmington, Delaware. Any action to
enforce any arbitration award or to
compel arbitration shall be brought
only in the state courts of the
State of Delaware situated in New
Castle County, to the exclusion of
all other courts. The substantive
laws of the State of Delaware,
without regard to its conflict of
laws rules, shall govern any action
or suit brought to compel any such
arbitration or to enforce any award
rendered pursuant to such
arbitration.
7. Submission of Dispute to Panel:
Unless otherwise extended by the
arbitration panel, or agreed to by
the parties, each party shall submit
its case to the panel within thirty
(30) days after the selection of an
umpire.
8. Procedure Governing Arbitration: All
proceedings before the panel shall
be informal and the panel shall not
be bound by the formal rules of
evidence. The panel shall have the
power to fix all procedural rules
relating to the arbitration
proceeding. In reaching any
decision, the panel shall give due
consideration to the customs and
usage of the insurance, reinsurance
and finance business.
9. Arbitration Award: The arbitration
panel shall render its decision
within sixty (60) days after
conclusion of the hearing, which
decision shall be in writing,
stating the reasons therefor. The
decision of the majority of the
panel shall be final and binding on
the parties to the proceeding.
Judgment on the award may be entered
in any court of competent
jurisdiction, and execution of any
monetary judgment may occur in any
jurisdiction.
10. Cost of Arbitration: Unless
otherwise allocated by the panel,
each party shall bear the expense
of its own arbitrator and its own
witnesses and shall jointly and
equally bear with the other
parties the expense of the umpire
and the arbitration.
11. Limit of Authority of Arbitration
Panel: The arbitration panel does
not have the authority to award
punitive, multiplied, or exemplary
damages, other similar damages or
any extra contractual damages of any
nature or
<PAGE> 17
description whatsoever except to the
extent claimed as Subject Loss under
this Agreement, and each of the
Company and the Reinsurer expressly
waives all rights to punitive,
multiplied, or exemplary damages,
other similar damages or any extra
contractual damages of any nature or
description whatsoever except to the
extent claimed as a Subject Loss
under this Agreement.
WAIVER OF PUNITIVE
DAMAGES: The Company and the Reinsurer agree
that in no event shall either party
be entitled to any award against the
other of punitive, multiplied, or
exemplary damages, other similar
damages or any extra contractual
damages of any nature or description
whatsoever, and each of the Company
and the Reinsurer both expressly
waives all rights to punitive,
multiplied, or exemplary damages,
other similar damages or any extra
contractual damages of any nature or
description whatsoever except to the
extent claimed as a Subject Loss
under this Agreement.
EXCLUSIONS: (A) Ex Gratia Payments: Part B Covered
Losses and Part C Covered Losses
under this Agreement shall exclude
any Ex Gratia Payments except to the
extent consented to by the
Reinsurer. "Ex Gratia Payments" as
used herein with respect to Part B
Covered Losses means a claim payment
not required by the terms of the
underlying insurance policies
covered by this Agreement. "Ex
Gratia Payments" as used herein with
respect to Part C Covered Losses
means a claim payment not required
by the terms of the Settlement
Order.
(B) Insolvency Funds: The Reinsurer
shall not be obligated to pay to the
Company any share of any liability
of the Company arising, by contract,
operation of law, or otherwise, from
participation or membership of the
Company or any of its affiliates,
whether voluntary or involuntary, in
any insolvency fund or from
reimbursement of any person for any
such liability. "Insolvency Fund"
includes any guaranty or insolvency
fund, plan, pool, association, or
other arrangement howsoever
denominated, established or
governed, which provides for any
assessment of or payment or
assumption by any person of part or
all of any claim, debt, charge, fee,
or other obligation of any insurer,
or its successors or assigns which
has been declared to be insolvent,
or which is otherwise deemed unable
to meet any claim, debt, charge, fee
or other obligation in whole or in
part.
(C) Assessments: This Agreement does not
cover assessments of any nature
whatsoever levied against the
Company.
<PAGE> 18
(D) Dividends: The Reinsurer shall not
participate in the determination of,
nor reimburse the Company for, any
policyholder or other dividends paid
by the Company.
(E) Assumed Reinsurance: This Agreement
does not cover reinsurance assumed
by the Company.
(F) Noncontractual Damages: Part B
Covered Losses and Part C Covered
Losses under this Agreement shall
exclude Noncontractual Damages.
"Noncontractual Damages" as used
herein with respect to Part B
Covered Losses means those
liabilities of the Company or its
affiliates, or their agents,
brokers, or representatives arising
from actual or alleged misconduct in
their handling of claims or losses
on Part B Business Covered. Such
liabilities shall include, but are
not limited to, punitive, exemplary,
compensatory, and consequential
damages. "Noncontractual Damages"
as used herein with respect to Part
C Covered Losses means those
liabilities of the Company or its
affiliates, or their agents,
brokers, or representatives arising
from actual or alleged misconduct in
their handling of the benefits
agreed to be provided by the Company
pursuant to the Settlement Order.
Such liabilities shall include, but
are not limited to, punitive,
exemplary, compensatory, and
consequential damages.
AMENDMENTS: This Agreement may be amended only by mutual
consent of the parties expressed in a
written addendum executed by the parties
with the same formalities as this Agreement,
and such addendum shall be deemed to be an
integral part of this Agreement and binding
on the parties hereto. From time to time at
the request of either party, the parties
shall negotiate in good faith, and attempt
to reach agreement upon, any amendments to
this Agreement (including, without
limitation, reasonable adjustments to
applicable pricing terms relating to such
amendments) necessary to comply with
applicable law or as required by the New
York State Department of Insurance.
ACCESS TO RECORDS: The Reinsurer shall have the right to
examine, at any reasonable time, all papers,
books, accounts, documents and other records
of the Company or any agent or employee of
the Company including any claims adjuster or
any other person acting on behalf of the
Company relating to the business covered
hereunder. Upon the Reinsurer's request, the
Company shall supply the Reinsurer, at the
Reinsurer's expense, with copies of the
whole or any part of such papers, books,
accounts, documents and other records
relating to the business covered hereunder.
The Reinsurer's right of inspection under
this Access to Records section shall
continue to exist after termination of this
Agreement as long as one of the parties
hereto has a claim against any other arising
from this Agreement.
<PAGE> 19
CAPTIONS AND
CATCHLINES: Captions and catchlines used in this
Agreement are intended solely as aids to
convenient reference. They shall not be
considered part of this Agreement nor limit
or otherwise affect its meaning, and no
inference as to the meaning or intent of any
provision of this Agreement may be drawn
from them.
COUNTERPARTS: This Agreement may be executed in two or
more counterparts, each of which shall be
deemed an original, but all of which
together shall constitute one and the same
instrument.
CURRENCY: All payments hereunder shall be made in
United States Dollars. All monetary amounts
herein are in United States Dollars. All
reports and accounts hereunder shall be
rendered in United States Dollars. For the
purpose of this Agreement, where the Company
pays amounts in currencies other than United
States Dollars, such amounts shall be
converted into United States Dollars at the
actual rate of exchange at which such
amounts are entered in the Company's books.
DISCLOSURES
AND APPROVALS: The Company represents and warrants with
respect to this Agreement and the
transactions hereunder and with respect to
any insurance and reinsurance which is
covered by this Agreement and all
transactions thereunder, that all
disclosures, approvals and expiry of waiting
periods which are necessary or appropriate
under any applicable law or regulation have
been made or obtained, or will be made or
obtained in a timely manner.
ERRORS AND
OMISSIONS: Inadvertent errors and omissions of any
nature made by either party shall neither
increase nor reduce the liability of either
party from what that liability would have
been had no such error or omission taken
place. Upon discovery, the party committing
an error or omission shall correct such
error or supply such omission retroactively
to the extent possible to the time such
error or omission occurred, and advise the
other party thereof as soon as possible.
NON TRANSFERABILITY: This Agreement confers no rights, powers, or
obligations on any person or organization
other than the Reinsurer and the Company.
Neither this Agreement nor any of the
rights, powers, or obligations of the
Reinsurer or the Company under this
Agreement may be in any way transferred or
assigned to any other person or organization
without the express written consent of the
Reinsurer and the Company. The granting of
such consent shall be at the sole and
absolute discretion of each of the parties.
OTHER REINSURANCES: The existence or collectibility of any other
reinsurance of the Company (past, present,
or future) shall in no way cause any
<PAGE> 20
liability of the Reinsurer hereunder to be
payable earlier or to be greater than would
have been the case in the absence of such
reinsurance and the risk of uncollectibility
of reinsurance shall be with the Company.
PARTIES TO THIS
AGREEMENT: This is an Agreement for indemnity
reinsurance solely between the Company and
the Reinsurer. The acceptance of reinsurance
hereunder shall not create any right or
legal relationship whatsoever between the
Reinsurer and the policyholder, the insured
or the beneficiary under any policy
reinsured hereunder. The Company shall be
and remain solely liable to the
policyholder, the insured or the beneficiary
under any policy reinsured hereunder.
RIGHT OF OFFSET: Both the Company and the Reinsurer shall
have, and may exercise, at any time the
right to offset any balance or balances due
the other. Such offset may only include
balances due under this Agreement and any
other agreements heretofore or hereafter
entered into between the Company and the
Reinsurer, regardless of whether such
balances are in respect of premiums, or
losses or otherwise, and regardless of the
capacity of any party, whether as reinsurer
or reinsured, under the various agreements
involved.
SALVAGE,
SUBROGATION,
AND OTHER
RECOVERIES: In the event of the payment of any indemnity
by the Reinsurer under this Agreement, the
Reinsurer shall be subrogated, to the extent
of such payment, to all of the rights of the
Company against any person or entity legally
responsible for damages for the losses paid
by the Company. The Company agrees to
enforce such rights, but in case the Company
refuses or neglects to do so, the Reinsurer
is hereby authorized and empowered to bring
any appropriate action in the name of the
Company or the Company's policyholders or
otherwise to enforce such rights. In
determining the amount of salvage,
subrogation and other recoveries, there
shall first be deducted from any amount
recovered the expenses incurred in
effecting the recovery. The whole of the
balance shall then be applied in reduction
of the original losses paid by the Company
and the Covered Losses and the Experience
Balance shall be determined or
redetermined accordingly. Any overpayment
made by the Reinsurer because of the
computation of loss before the application
of such a recovery shall be refunded
promptly by the Company but no later than
three (3) Business Days after receipt of
notice of such overpayment.
TAXES: The Company shall be liable for all taxes,
except income and profit taxes of the
Reinsurer, on amounts paid to the Reinsurer
under the terms of this Agreement, and shall
indemnify and hold the
<PAGE> 21
Reinsurer harmless for any taxes which the
Reinsurer may become obligated to pay on the
Company's behalf.
DAC TAXES: The Company and the Reinsurer agree to elect
jointly under Treas. Reg. Section
1.848-2(g)(8) that:
(a) The party with the net positive
consideration under this Agreement is
required to capitalize specified policy
acquisition expenses without regard to
the general deductions limitation of
Section 848(c)(1) of the Internal
Revenue Code of 1986, as amended.
(b) This joint election shall be effective
for all taxable years under this
Agreement. The first year for which the
joint election is effective is 1998.
The parties agree to exchange information
pertaining to the amount of net
consideration as determined under Treas.
Reg. Sections 1.848-2(f) or 1.848-2(g)(2)
and 1.848-3, whichever is applicable, under
this Agreement to insure consistency or as
is otherwise required by the Internal
Revenue Service.
The parties agree to take all items of net
consideration into account for the same
taxable year as required under Treas. Reg.
Section 1.848-2(f)(4). The parties also
agree to exchange such information as may be
necessary to implement this requirement.
The parties represent and warrant that they
are subject to U.S. taxation under
subchapter L of chapter 1 of the Internal
Revenue Code.
DAC TAX
REIMBURSEMENT
AMOUNT: In addition to and simultaneously with any
Contract Payment under this Agreement, the
party making the payment agrees to pay the
party receiving the payment an amount to
compensate the party receiving the payment
on an after-tax basis for any DAC tax
incurred. Under the current tax law, the
amount shall be X divided by Y where
X = The product of the Contract Payment
multiplied by 7.7% multiplied by 95%
multiplied by 35%, and
Y = 65% minus the product of 7.7% multiplied
by 95% multiplied by 35%.
The initial DAC Tax Reimbursement Amount
corresponding to the Contract Payment
consisting solely of the Reinsurance Premium
is $10,845,433. If the Internal Revenue
Code is
<PAGE> 22
amended to change the DAC tax, the
formula for determining DAC Tax
Reimbursement shall be appropriately
adjusted.
Commencing one year after the payment of any
DAC Tax Reimbursement Amount generated by a
Contract Payment as described above, the
party that received such payment shall pay
the other party an amount so that on an
after-tax basis the other party is
compensated for the tax cost of the DAC
amortization. Under current law a party that
made payment of a DAC Tax Reimbursement
Amount generated by a Contract Payment will
be entitled to receive payments of DAC Tax
Reimbursement Amounts equal to the product
of the original DAC Tax Reimbursement Amount
multiplied by 10% divided by 95% in each of
the nine years following the Contract
Payment and by 5% divided by 95% in the
tenth year following Contract Payment.
FEDERAL EXCISE
TAX: In the event that any Federal Excise Tax is
due with respect to any amounts due under
this Agreement, the Company agrees to pay
such tax in addition to any amounts due
under this Agreement and agrees to remit
such tax to the United States Internal
Revenue Service and shall indemnify and hold
the Reinsurer harmless for any such taxes
which the Reinsurer may become obligated to
pay.
NO WAIVER: No consent or waiver, express or implied, by
any other party to or of any breach or
default by any other party in the
performance of its obligations hereunder
shall be construed to be a consent or waiver
to or of any other breach or default in the
performance of obligations by such other
party hereunder. Failure on the part of any
party to complain of any act or failure to
act of any other party or to declare any
other party in default, irrespective of how
long such failure continues, shall not
constitute a waiver by such first party of
its rights hereunder.
GOVERNING LAW: It is agreed that, subject to the express
provisions of this Agreement to the
contrary, this Agreement shall be governed
by the substantive laws of the State of
Delaware, without regard to its principles
of conflict of laws.
REPRESENTATIONS: The Company acknowledges that, at the
Reinsurer's request, it has provided the
Reinsurer with the Company Data described in
Schedule 1 prior to December 31, 1998. The
Company also acknowledges that, at the
Reinsurer's request, it has provided the
Reinsurer with the Company Data described in
Schedule 2 prior to April 24, 2000. The
Company represents that all factual
information contained in the Company Data is
substantially complete and accurate as of
the date the document containing the
information was prepared. The Company
further represents that any assumptions made
in preparing the Company Data were based
upon informed judgment and are consistent
with sound actuarial
<PAGE> 23
principles. The Company further represents
that it is not aware of any omissions,
errors, changes or discrepancies which would
materially affect the Company Data. The
Reinsurer has relied on such data and the
foregoing representations in entering into
this Agreement.
DATES AND TIMES: All dates and times contained in this
Agreement, unless otherwise specified, are
New York, New York time.
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Agreement to be executed by their duly authorized representatives as of the
Amendment Date.
METROPOLITAN LIFE INSURANCE COMPANY
BY:
-------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
BY:
-------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
<PAGE> 25
DRAFT
FOR DISCUSSION PURPOSES ONLY
3/29/2000
SCHEDULE 1
The Company Data includes the following information:
(A) The following e-mails and attachments thereto:
December 14, 1998 e-mail from Joseph Dunn to Mary Rohe, "Re: Revised
Traditional Ordinary Calendar Year Exposure and Paid Death Claims"
December 15, 1998 e-mail from Ronald Rubnich to Mary Rohe, "Trad Ord
Exposure"
December 22, 1998 e-mail from Richard Daillak to Mary Rohe, "Net amount
at risk basis data"
December 23, 1998 e-mail from Richard Daillak to Mary Rohe, "MetLife
Business Definition"
December 23, 1998 e-mail from Richard Daillak to Mary Rohe, "Re:
MetLife Business Definition"
December 23, 1998 e-mail from Richard Daillak to Mary Rohe, "9 mos of
1998, exposure by attained age and sex"
December 28, 1998 e-mail from Richard Daillak to Mary Rohe, "Metromatic
& COLI"
December 28, 1998 e-mail from Richard Daillak to Mary Rohe, "9 mos 1998
exposure and death experience"
(B) The following facsimile transmission:
December 14, 1998 facsimile from Paul Schmieder to Mary Rohe, "Re
Information on Traditional Ordinary Large-sized Policies"
<PAGE> 26
DRAFT
FOR DISCUSSION PURPOSES ONLY
3/29/2000
SCHEDULE 2
The Company Data provided to AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF
NEW YORK includes the following information:
The following e-mails and attachments thereto:
November 5, 1999, 6:17 p.m. e-mail from Joseph Dunn to Cindy Harm, Re:
Calculation of SDB
April 24, 2000, 6:23 p.m. e-mail from Joseph Dunn to Rick Molen, "Re:
Spreadsheets for Supplemental Death Benefit Calculation"
February 7, 2000, 8:56 a.m. e-mail from Joseph Dunn to Cindy Harm, Re:
SDB Calculations and Statutory Series Strain
February 10, 2000, 7:50 a.m. e-mail from Joseph Dunn to Cindy Harm, Re:
Tower Series Mortality Comparisons
March 2, 2000, 5:02 p.m. e-mail from Joseph Dunn to Rick Molen, Re:
Settlement Death Benefit Mortality Study Status Report
March 2, 2000, 5:13 p.m. e-mail from Marian Zeldin to Joseph Dunn with
copy to Cindy Harm and Rick Molen, Re: Settlement Death Benefit
Mortality Study Status Report
March 8, 2000, 4:07 p.m. e-mail from Marissa Limjoco to Rick Molen, Re:
Settlement Death Benefit
March 15, 2000, 1:38 p.m. e-mail from Marissa Limjoco to Rick Molen,
"Re: Settlement Death Benefit"
March 14, 2000 access database, "1995-1999 CY SDB data", from Marissa
Limjoco to Rick Molen (as referenced in the March 15, 2000 e-mail from
Marissa Limjoco to Rick Molen)
March 23, 2000, 9:37 p.m. e-mail from Joseph Dunn to Cindy Harm and
Rick Molen, Re: Settlement Death Benefit
April 24, 2000, 5:47 p.m. e-mail from Joseph Dunn to Rick Molen, "Re:
Selection Factors for SDB Policies"
March 29, 2000, 11:04 a.m. e-mail from Joseph Dunn to Rick Molen, Re:
Reserve Methodology for Settlement Death Benefits
April 6, 2000, 11:11 a.m. e-mail from Joseph Dunn to Rick Molen, Re:
MetLife Mortality Tables for SDB
<PAGE> 27
DRAFT
FOR DISCUSSION PURPOSES ONLY
3/29/2000
April 21, 2000, 3:06 p.m. e-mail from Joseph Dunn to Rick Molen, Re:
Mortality Table corrections
April 21, 2000, 1:32 p.m. e-mail from Marissa Limjoco to Doug Turner,
Re: Tower Pricing Mortality
-2-
<PAGE> 28
SCHEDULE 3
SCHEDULE 3
The Tabular Mortality Cost for a given measuring life shall equal:
[FORMULA]
where
FaceAmount(t) is the average face amount of settlement death benefit
that is potentially recoverable as a Part C Covered Loss under this
Agreement during the year commencing at March 24th in calendar year
1999+t;
t(0) is the number of policy years that have elapsed as of the
anniversary of the underlying policy in calendar year 2000;
d is the number of days from March 24, 2000 to the Settlement Date at
which the mortality cover purchase charge is paid by the Company;
x is the age of the measuring life as of the last birthday on or before
the issue date of the underlying policy;
q[x]+t-1 is the mortality rate for an individual of issue age x and
policy year t as shown in the attached tables;
1
V = ----- ;
1 + i
i = 4.6%;
margin is the Reinsurer's Margin defined in the Agreement; and
the product over s is defined to be 1 when s ranges from 1 to 0.
<PAGE> 29
Schedule 3
Mortality Rates Per Thousand - Traditional Life Male
<TABLE>
<CAPTION>
Select Mortality by
Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.990287 0.516932 0.478486 0.430236 0.401286 0.366445 0.361451
1 0.506927 0.461132 0.430236 0.401286 0.362686 0.356695 0.312051
2 0.452207 0.414632 0.401286 0.362686 0.353036 0.307945 0.272531
3 0.406607 0.386732 0.362686 0.353036 0.304786 0.268945 0.252771
4 0.379247 0.349532 0.353036 0.304786 0.266186 0.249445 0.203371
5 0.342767 0.340232 0.304786 0.266186 0.246886 0.200695 0.203371
6 0.333647 0.293732 0.266186 0.246886 0.198636 0.200695 0.292291
7 0.288047 0.256532 0.246886 0.198636 0.198636 0.288445 0.440491
8 0.251567 0.237932 0.198636 0.198636 0.285486 0.434695 0.588691
9 0.233327 0.191432 0.198636 0.285486 0.430236 0.580945 0.687491
10 0.187727 0.191432 0.285486 0.430236 0.574986 0.678445 0.806724
11 0.187727 0.275132 0.430236 0.574986 0.671486 0.796109 1.009830
12 0.269807 0.414632 0.574986 0.671486 0.787944 0.996543 1.145930
13 0.406607 0.554132 0.671486 0.787944 0.986322 1.130852 1.168269
14 0.543407 0.647132 0.787944 0.986322 1.119253 1.152897 1.160509
15 0.634607 0.759365 0.986322 1.119253 1.141072 1.145239 1.152255
16 0.730787 0.950549 1.119253 1.141072 1.133493 1.137094 1.122036
17 0.908643 1.078658 1.141072 1.133493 1.125431 1.107272 1.080626
18 1.019506 1.089044 1.127620 1.119600 1.091373 1.064219 1.047316
19 1.027556 1.070065 1.112603 1.083423 1.050001 1.032430 1.007920
20 1.008985 1.050791 1.076609 1.036876 1.018608 0.994577 0.975584
21 0.990146 1.011876 1.030313 1.001596 0.982260 0.964622 0.966546
22 0.952822 0.962501 0.995216 0.960706 0.951667 0.955663 0.978872
23 0.905626 0.923977 0.953521 0.925758 0.942802 0.968822 1.003994
24 0.868688 0.878594 0.918782 0.912134 0.956762 0.994688 1.049587
25 0.828301 0.842051 0.905209 0.919577 0.982281 1.040912 1.099723
26 0.794219 0.824087 0.911537 0.937820 1.022479 1.087187 1.159103
27 0.776600 0.824102 0.929548 0.974771 1.065535 1.144614 1.228033
28 0.781892 0.837524 0.966097 1.015392 1.120466 1.211316 1.303520
29 0.794096 0.865258 1.005135 1.064926 1.183027 1.285663 1.379812
30 0.819718 0.893454 1.055267 1.123875 1.254071 1.359349 1.444779
31 0.844450 0.927282 1.112302 1.188140 1.322807 1.421700 1.529382
32 0.881401 0.968282 1.174404 1.249724 1.381695 1.503183 1.619210
33 0.898843 0.994466 1.236569 1.301686 1.457334 1.589580 1.718923
34 0.923040 1.031936 1.286300 1.368911 1.539034 1.687264 1.844610
35 0.939851 1.070891 1.352537 1.439685 1.629532 1.808441 1.969831
36 0.952416 1.124931 1.423999 1.521517 1.744141 1.926681 2.084706
37 0.995572 1.179984 1.502894 1.621569 1.855482 2.034140 2.213274
38 1.040547 1.244031 1.601475 1.719557 1.960589 2.159172 2.354831
39 1.091321 1.324181 1.700139 1.811189 2.078019 2.291614 2.498492
40 1.155393 1.402399 1.785906 1.910793 2.207325 2.428152 2.685526
41 1.219008 1.473315 1.888661 2.022942 2.335302 2.594491 2.911903
42 1.273349 1.554210 1.999236 2.135536 2.497388 2.799653 3.158805
43 1.337801 1.641006 2.107399 2.281939 2.690704 3.029434 3.429313
44 1.406577 1.730375 2.245525 2.462902 2.903657 3.284468 3.724553
45 1.482776 1.838903 2.413380 2.659290 3.131793 3.562430 4.032731
46 1.584005 1.974283 2.594604 2.873420 3.383242 3.851953 4.352597
47 1.710165 2.120245 2.791211 3.110194 3.638728 4.156805 4.680851
48 1.843535 2.274465 3.003534 3.351338 3.905790 4.464145 5.023591
49 1.992603 2.444638 3.226185 3.599552 4.193262 4.784373 5.406375
50 2.154524 2.623593 3.453964 3.857368 4.486808 5.148028 5.853484
51 2.322297 2.801325 3.684003 4.119228 4.814068 5.565944 6.333818
52 2.495087 2.979708 3.926686 4.410795 5.203097 6.014154 6.855588
53 2.670902 3.168188 4.196557 4.758095 5.612714 6.500711 7.418505
54 2.853120 3.371108 4.518479 5.129501 6.057114 7.024370 8.027054
55 3.056051 3.614783 4.854440 5.516732 6.542649 7.589561 8.694939
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.311103 0.273082 0.255841 0.205841 0.205841 0.295841 0.445841
1 0.271703 0.253282 0.205841 0.205841 0.295841 0.445841 0.595841
2 0.252003 0.203782 0.205841 0.295841 0.445841 0.595841 0.695841
3 0.202753 0.203782 0.295841 0.445841 0.595841 0.695841 0.816522
4 0.202753 0.292882 0.445841 0.595841 0.695841 0.816522 1.022095
5 0.291403 0.441382 0.595841 0.695841 0.816522 1.022095 1.159848
6 0.439153 0.589882 0.695841 0.816522 1.022095 1.159848 1.182458
7 0.586903 0.688882 0.816522 1.022095 1.159848 1.182458 1.174604
8 0.685403 0.808357 1.022095 1.159848 1.182458 1.174604 1.166250
9 0.804274 1.011874 1.159848 1.182458 1.174604 1.166250 1.135664
10 1.006764 1.148249 1.182458 1.174604 1.166250 1.135664 1.093751
11 1.142450 1.170634 1.174604 1.166250 1.135664 1.093751 1.063265
12 1.164722 1.162858 1.166250 1.135664 1.093751 1.063265 1.026395
13 1.156985 1.154588 1.135664 1.093751 1.063265 1.026395 0.996510
14 1.148757 1.124307 1.093751 1.063265 1.026395 0.996510 0.989300
15 1.118629 1.082813 1.063265 1.026395 0.996510 0.989300 1.005002
16 1.077344 1.052632 1.026395 0.996510 0.989300 1.005002 1.033980
17 1.047316 1.016131 0.996510 0.989300 1.005002 1.033980 1.084284
18 1.008946 0.984552 0.987321 1.003997 1.033980 1.084284 1.139609
19 0.977577 0.975449 0.999977 1.031912 1.084284 1.139609 1.207399
20 0.968524 0.988922 1.026742 1.079946 1.139609 1.207399 1.285898
21 0.982892 1.016402 1.073441 1.133911 1.207399 1.285898 1.373572
22 1.009164 1.063682 1.125934 1.200155 1.285898 1.373572 1.461666
23 1.056092 1.115677 1.189288 1.276897 1.373572 1.461666 1.538636
24 1.107700 1.179629 1.264038 1.361210 1.461666 1.538636 1.637454
25 1.171177 1.253751 1.346100 1.447049 1.538636 1.637454 1.742960
26 1.242178 1.333738 1.428047 1.518634 1.634179 1.741217 1.862322
27 1.320003 1.414892 1.498631 1.612892 1.734246 1.858597 2.009379
28 1.398814 1.483245 1.589968 1.711587 1.849286 2.003351 2.157537
29 1.464781 1.571956 1.704615 1.823213 1.989285 2.148907 2.298463
30 1.552306 1.668013 1.797141 1.963163 2.131647 2.286971 2.459194
31 1.643612 1.774793 1.933022 2.101441 2.263986 2.444438 2.634039
32 1.748720 1.906900 2.069078 2.231808 2.417387 2.615601 2.813617
33 1.876760 2.038872 2.197331 2.380499 2.581358 2.791108 3.034493
34 2.006509 2.165153 2.343611 2.544482 2.751718 3.007183 3.301477
35 2.126079 2.306724 2.507605 2.709513 2.958631 3.268462 3.593635
36 2.259999 2.465461 2.672936 2.916148 3.202433 3.543324 3.906912
37 2.412780 2.627919 2.879734 3.169418 3.482232 3.844276 4.245052
38 2.571646 2.831182 3.126499 3.446296 3.789470 4.172523 4.602875
39 2.767458 3.073675 3.399579 3.750322 4.125593 4.519440 4.970093
40 3.001043 3.338487 3.699431 4.082929 4.477722 4.889768 5.352640
41 3.259427 3.628965 4.023200 4.431368 4.849606 5.271375 5.747082
42 3.542841 3.946405 4.366474 4.794383 5.228034 5.677067 6.194017
43 3.848278 4.283038 4.719078 5.168440 5.624555 6.124704 6.709256
44 4.171790 4.628713 5.087175 5.560375 6.067994 6.654487 7.270510
45 4.508226 4.984240 5.472856 5.998682 6.586025 7.218471 7.887959
46 4.854216 5.356164 5.897863 6.510717 7.151565 7.823436 8.557119
47 5.210299 5.778142 6.401178 7.062356 7.750848 8.495809 9.291981
48 5.614312 6.264254 6.943411 7.654063 8.408223 9.215895 10.090679
49 6.086254 6.787296 7.516951 8.294362 9.120788 10.018307 10.919458
50 6.586576 7.347578 8.154225 8.997149 9.914919 10.829955 11.866045
51 7.129812 7.970295 8.844977 9.770176 10.718075 11.768683 13.181556
52 7.725055 8.635741 9.594416 10.561443 11.646980 13.073400 14.692195
53 8.369441 9.366962 10.371248 11.476595 12.924685 14.571519 16.119672
54 9.077475 10.113925 11.269700 12.735411 14.405591 15.987272 17.681882
55 9.789473 10.989783 12.492059 14.194410 15.805222 17.536501 19.416647
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.595841 15 0.695841
1 0.695841 16 0.816522
2 0.816522 17 1.022095
3 1.022095 18 1.159848
4 1.159848 19 1.182458
5 1.182458 20 1.174604
6 1.174604 21 1.166250
7 1.166250 22 1.135664
8 1.135664 23 1.093751
9 1.093751 24 1.063265
10 1.063265 25 1.026395
11 1.026395 26 0.996510
12 0.996510 27 0.989300
13 0.989300 28 1.005002
14 1.005002 29 1.033980
15 1.033980 30 1.084284
16 1.084284 31 1.139609
17 1.139609 32 1.207399
18 1.207399 33 1.285898
19 1.285898 34 1.373572
20 1.373572 35 1.461666
21 1.461666 36 1.538636
22 1.538636 37 1.637454
23 1.637454 38 1.742960
24 1.742960 39 1.862322
25 1.862322 40 2.009379
26 2.009379 41 2.157537
27 2.157537 42 2.298463
28 2.298463 43 2.459194
29 2.459194 44 2.634039
30 2.634039 45 2.813617
31 2.813617 46 3.034493
32 3.034493 47 3.301477
33 3.301477 48 3.593635
34 3.593635 49 3.914741
35 3.914741 50 4.266384
36 4.266384 51 4.635323
37 4.635323 52 5.020296
38 5.020296 53 5.417652
39 5.417652 54 5.834601
40 5.834601 55 6.301136
41 6.301136 56 6.846180
42 6.846180 57 7.434059
43 7.434059 58 8.065398
44 8.065398 59 8.758566
45 8.758566 60 9.510728
46 9.501217 61 10.338810
47 10.318133 62 11.187970
48 11.154406 63 12.170303
49 12.145962 64 13.519545
50 13.451947 65 15.084389
51 14.993882 66 16.549971
52 16.434121 67 18.172540
53 18.027160 68 19.955444
54 19.775845 69 21.917407
55 21.698233 70 24.131461
</TABLE>
<PAGE> 30
Schedule 3
Mortality Rates Per Thousand - Traditional Life Male
<TABLE>
<CAPTION>
Select Mortality by
Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 3.286166 3.873145 5.218313 5.947066 7.056960 8.219354 9.375519
57 3.538612 4.137549 5.622999 6.410231 7.630042 8.849684 10.162203
58 3.798802 4.431834 6.058334 6.906325 8.200782 9.590198 11.261781
59 4.055216 4.745853 6.534128 7.417624 8.872151 10.599323 12.520043
60 4.289338 5.097033 7.026045 8.008059 9.801670 11.780908 13.686826
61 4.580093 5.437353 7.618609 8.828263 10.875844 12.875877 14.974173
62 4.833203 5.829575 8.395637 9.774684 11.849779 14.065546 16.403375
63 5.148038 6.394745 9.261815 10.641631 12.938849 15.385647 17.950356
64 5.529494 7.059494 10.112032 11.594081 14.128454 16.810651 19.691272
65 6.079009 7.646087 11.012559 12.631796 15.429854 18.436436 21.610548
66 6.537239 8.286678 11.993222 13.764131 16.892023 20.228323 23.817919
67 7.050946 8.940039 13.084692 15.033900 18.500543 22.232016 26.270418
68 7.603024 9.687494 14.285825 16.427206 20.323058 24.514722 29.036959
69 8.197110 10.521317 15.629769 18.032309 22.368871 27.055529 32.021013
70 8.880378 11.456514 17.121883 19.800352 24.641786 29.827793 35.540352
71 9.595827 12.481647 18.824966 21.759706 27.116176 33.052527 39.359683
72 10.396478 13.622903 20.714952 23.926037 30.031597 36.548277 43.370398
73 11.314487 14.914766 22.729735 26.433137 33.144996 40.260823 47.698515
74 12.284867 16.309582 25.144799 29.149840 36.442045 44.209847 52.263485
75 13.398581 17.947878 27.719476 31.968621 39.999385 48.426419 57.230161
76 14.615970 19.630518 30.441110 35.006981 43.729321 52.945162 62.465550
77 15.980623 21.439706 33.262646 38.238347 47.716010 57.770687 68.153205
78 17.348159 23.337987 36.253658 41.615333 52.041363 62.930737 74.040561
79 18.826778 25.337867 39.509147 45.277577 56.576734 68.345133 80.267247
80 20.309987 27.453047 43.049506 49.178238 61.415696 73.973799 92.708229
81 23.676437 31.272562 46.741087 54.201488 70.981832 92.708229 120.415645
82 30.476822 40.387084 53.347174 70.259634 92.149746 120.415645 129.238995
83 39.081467 52.113164 69.124750 91.479566 120.415645 129.238995 138.125663
84 50.024841 67.370838 90.250903 120.415645 129.238995 138.125663 150.249337
85 63.863015 87.905273 120.415645 129.238995 138.125663 150.249337 162.699579
86 81.091777 120.415645 129.238995 138.125663 150.249337 162.699579 167.574508
87 120.415645 129.238995 138.125663 150.249337 162.699579 167.574508 174.934780
88 129.238995 138.125663 150.249337 162.699579 167.574508 174.934780 186.912763
89 138.125663 150.249337 162.699579 167.574508 174.934780 186.912763 206.366225
90 150.249337 162.699579 167.574508 174.934780 186.912763 206.366225 232.642809
91 162.699579 167.574508 174.934780 186.912763 206.366225 232.642809 260.804543
92 167.574508 174.934780 186.912763 206.366225 232.642809 260.804543 296.008348
93 174.934780 186.912763 206.366225 232.642809 260.804543 296.008348 338.260607
94 186.912763 206.366225 232.642809 260.804543 296.008348 338.260607 1000.000000
95 206.366225 232.642809 260.804543 296.008348 338.260607 1000.000000 1000.000000
96 232.642809 260.804543 296.008348 338.260607 1000.000000 1000.000000 1000.000000
97 260.804543 296.008348 338.260607 1000.000000 1000.000000 1000.000000 1000.000000
98 296.008348 338.260607 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 338.260607 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 10.624674 12.181110 13.922891 15.556973 17.336603 19.237048 21.325637
57 11.775523 13.560865 15.259073 17.064015 19.017538 21.128380 23.455780
58 13.108334 14.861874 16.718737 18.718206 20.865371 23.238597 25.836965
59 14.348825 16.282596 18.339053 20.536610 22.973151 25.597734 28.516892
60 15.701075 17.840167 20.120179 22.587048 25.278759 28.252575 31.570020
61 17.201592 19.550327 22.104418 24.853459 27.900152 31.244891 34.945224
62 18.848970 21.501132 24.321834 27.430255 30.854736 34.620990 38.680427
63 20.704794 23.630722 26.842883 30.334530 34.152651 38.281660 43.048251
64 22.753541 26.049931 29.684272 33.576235 37.803139 42.648422 47.793900
65 25.080768 28.806424 32.819689 37.125235 42.070891 47.300671 52.862787
66 27.700986 31.846987 36.287823 41.315659 46.659473 52.317248 58.224669
67 30.586077 35.211152 40.382725 45.820984 51.608046 57.623174 64.039309
68 33.775589 39.138812 44.785203 50.626075 56.841231 63.311589 70.230414
69 37.539497 43.354838 49.425888 55.758541 62.451557 69.504143 76.948009
70 41.579214 47.898377 54.435253 61.326900 68.487363 76.072695 84.168772
71 45.879881 52.690919 59.805305 67.252702 75.038234 83.211320 94.923796
72 50.465390 57.886772 65.582279 73.605903 81.992744 94.923796 103.171268
73 55.372832 63.403466 71.696128 80.426004 94.923796 103.171268 111.696662
74 60.643635 69.308910 78.337017 87.614664 103.171268 111.696662 120.415645
75 66.285099 75.725783 85.336493 103.171268 111.696662 120.415645 129.238995
76 72.331179 82.393855 92.647799 111.696662 120.415645 129.238995 138.125663
77 78.691827 89.449489 111.696662 120.415645 129.238995 138.125663 150.249337
78 85.425810 111.696662 120.415645 129.238995 138.125663 150.249337 162.699579
79 92.261443 120.415645 129.238995 138.125663 150.249337 162.699579 167.574508
80 120.415645 129.238995 138.125663 150.249337 162.699579 167.574508 174.934780
81 129.238995 138.125663 150.249337 162.699579 167.574508 174.934780 186.912763
82 138.125663 150.249337 162.699579 167.574508 174.934780 186.912763 206.366225
83 150.249337 162.699579 167.574508 174.934780 186.912763 206.366225 232.642809
84 162.699579 167.574508 174.934780 186.912763 206.366225 232.642809 260.804543
85 167.574508 174.934780 186.912763 206.366225 232.642809 260.804543 296.008348
86 174.934780 186.912763 206.366225 232.642809 260.804543 296.008348 338.260607
87 186.912763 206.366225 232.642809 260.804543 296.008348 338.260607 1000.000000
88 206.366225 232.642809 260.804543 296.008348 338.260607 1000.000000 1000.000000
89 232.642809 260.804543 296.008348 338.260607 1000.000000 1000.000000 1000.000000
90 260.804543 296.008348 338.260607 1000.000000 1000.000000 1000.000000 1000.000000
91 296.008348 338.260607 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 338.260607 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 23.793621 71 26.581239
57 26.102777 72 29.368581
58 28.722472 73 32.512894
59 31.797610 74 36.026004
60 35.233432 75 39.876729
61 38.959564 76 44.425440
62 43.403655 77 49.322911
63 48.188484 78 54.553960
64 53.244665 79 60.149451
65 58.705864 80 66.156310
66 64.568559 81 72.627108
67 70.811431 82 79.573949
68 77.584600 83 87.041130
69 84.865101 84 94.923796
70 94.923796 85 103.171268
71 103.171268 86 111.696662
72 111.696662 87 120.415645
73 120.415645 88 129.238995
74 129.238995 89 138.125663
75 138.125663 90 150.249337
76 150.249337 91 162.699579
77 162.699579 92 167.574508
78 167.574508 93 174.934780
79 174.934780 94 186.912763
80 186.912763 95 206.366225
81 206.366225 96 232.642809
82 232.642809 97 260.804543
83 260.804543 98 296.008348
84 296.008348 99 338.260607
85 338.260607 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 31
Schedule 3
Mortality Rates Per Thousand - Traditional Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.782117 0.379053 0.335419 0.306469 0.277519 0.270644 0.254493
1 0.371717 0.323253 0.306469 0.277519 0.267869 0.251144 0.224853
2 0.316997 0.295353 0.277519 0.267869 0.248569 0.221894 0.205093
3 0.289637 0.267453 0.267869 0.248569 0.219619 0.202394 0.175453
4 0.262277 0.258153 0.248569 0.219619 0.200319 0.173144 0.165573
5 0.253157 0.239553 0.219619 0.200319 0.171369 0.163394 0.165573
6 0.234917 0.211653 0.200319 0.171369 0.161719 0.163394 0.185333
7 0.207557 0.193053 0.171369 0.161719 0.161719 0.182894 0.234733
8 0.189317 0.165153 0.161719 0.161719 0.181019 0.231644 0.284133
9 0.161957 0.155853 0.161719 0.181019 0.229269 0.280394 0.313773
10 0.152837 0.155853 0.181019 0.229269 0.277519 0.309644 0.334270
11 0.152837 0.174453 0.229269 0.277519 0.306469 0.329871 0.344150
12 0.171077 0.220953 0.277519 0.306469 0.326488 0.339621 0.326382
13 0.216677 0.267453 0.306469 0.326488 0.336138 0.322088 0.338122
14 0.262277 0.295353 0.326488 0.336138 0.318784 0.333673 0.348213
15 0.289637 0.314647 0.336138 0.318784 0.330251 0.343631 0.358006
16 0.302805 0.323947 0.318784 0.330251 0.340107 0.353295 0.368395
17 0.309665 0.307222 0.330251 0.340107 0.349672 0.363547 0.376310
18 0.290374 0.315193 0.338345 0.347860 0.358327 0.370597 0.394150
19 0.297397 0.321075 0.345686 0.355717 0.365645 0.388548 0.396280
20 0.302748 0.326481 0.353480 0.361075 0.383346 0.391034 0.405363
21 0.307639 0.332226 0.358790 0.376944 0.386191 0.400809 0.415467
22 0.312837 0.335175 0.374543 0.377717 0.395426 0.410790 0.424865
23 0.315369 0.347732 0.374892 0.384660 0.405261 0.420503 0.435629
24 0.326925 0.345433 0.381762 0.392079 0.415269 0.431591 0.439130
25 0.325660 0.349880 0.389102 0.399129 0.426207 0.435500 0.441675
26 0.330005 0.354232 0.395640 0.406916 0.427788 0.436641 0.455208
27 0.333820 0.357690 0.403327 0.407828 0.427945 0.449518 0.466322
28 0.339369 0.363398 0.404199 0.407806 0.440035 0.459974 0.480633
29 0.344555 0.362010 0.403687 0.418223 0.449231 0.474049 0.521828
30 0.342957 0.358833 0.414429 0.426770 0.462400 0.514089 0.556004
31 0.339152 0.364167 0.422375 0.438090 0.500269 0.547122 0.614838
32 0.346148 0.367686 0.433025 0.472630 0.531727 0.604306 0.661739
33 0.341318 0.366679 0.467655 0.500936 0.585874 0.649629 0.739565
34 0.340343 0.390265 0.495015 0.550326 0.628972 0.725944 0.812158
35 0.355440 0.412118 0.543744 0.588370 0.701105 0.796234 0.901626
36 0.366524 0.452242 0.581960 0.654631 0.767923 0.881876 0.975908
37 0.400237 0.482236 0.646619 0.713956 0.849287 0.952237 1.064974
38 0.425251 0.535243 0.705109 0.787071 0.917806 1.038941 1.162895
39 0.469540 0.583020 0.778184 0.847868 0.999892 1.131676 1.259232
40 0.508705 0.641903 0.836032 0.919428 1.090051 1.223781 1.369770
41 0.557962 0.689699 0.908778 0.998997 1.176985 1.323337 1.482647
42 0.596090 0.747848 0.987290 1.076303 1.273809 1.425493 1.601281
43 0.643718 0.810384 1.062122 1.163918 1.370019 1.535700 1.735627
44 0.694615 0.872103 1.145345 1.254030 1.471940 1.662318 1.878923
45 0.747314 0.937944 1.228815 1.348064 1.585047 1.797137 2.026970
46 0.807932 1.005241 1.315273 1.454281 1.706742 1.936105 2.199515
47 0.870761 1.074808 1.412673 1.568997 1.828932 2.100574 2.378764
48 0.934536 1.151141 1.515191 1.684482 1.973728 2.268636 2.580203
49 1.008486 1.233245 1.621576 1.818976 2.130976 2.457336 2.792924
50 1.086891 1.318695 1.745405 1.960277 2.304502 2.659462 3.003028
51 1.167255 1.415605 1.872175 2.115707 2.486939 2.855511 3.227659
52 1.260852 1.514259 2.016814 2.278609 2.669358 3.064761 3.487114
53 1.357327 1.627236 2.167934 2.441058 2.860191 3.306605 3.763927
54 1.465412 1.741508 2.318127 2.613949 3.080968 3.563954 4.084594
55 1.578751 1.854501 2.473781 2.806101 3.319544 3.861974 4.420958
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.224170 0.205508 0.177584 0.167584 0.167584 0.187584 0.237584
1 0.204470 0.175808 0.167584 0.167584 0.187584 0.237584 0.287584
2 0.174920 0.165908 0.167584 0.187584 0.237584 0.287584 0.317584
3 0.165070 0.165908 0.187584 0.237584 0.287584 0.317584 0.338330
4 0.165070 0.185708 0.237584 0.287584 0.317584 0.338330 0.348330
5 0.184770 0.235208 0.287584 0.317584 0.338330 0.348330 0.330346
6 0.234020 0.284708 0.317584 0.338330 0.348330 0.330346 0.342229
7 0.283270 0.314408 0.338330 0.348330 0.330346 0.342229 0.352442
8 0.312820 0.334946 0.348330 0.330346 0.342229 0.352442 0.362354
9 0.333255 0.344846 0.330346 0.342229 0.352442 0.362354 0.372869
10 0.343105 0.327043 0.342229 0.352442 0.362354 0.372869 0.380881
11 0.325391 0.338807 0.352442 0.362354 0.372869 0.380881 0.400152
12 0.337096 0.348918 0.362354 0.372869 0.380881 0.400152 0.403544
13 0.347156 0.358731 0.372869 0.380881 0.400152 0.403544 0.414059
14 0.356919 0.369140 0.380881 0.400152 0.403544 0.414059 0.425248
15 0.367276 0.377072 0.400152 0.403544 0.414059 0.425248 0.436207
16 0.375167 0.396151 0.403544 0.414059 0.425248 0.436207 0.448639
17 0.394150 0.399508 0.414059 0.425248 0.436207 0.448639 0.453646
18 0.396683 0.409090 0.424397 0.435771 0.448639 0.453646 0.457695
19 0.406191 0.419295 0.434026 0.447742 0.453646 0.457695 0.474175
20 0.416318 0.429227 0.445499 0.451832 0.457695 0.474175 0.488295
21 0.426610 0.441012 0.449110 0.455406 0.474175 0.488295 0.506462
22 0.437872 0.445027 0.452202 0.471330 0.488295 0.506462 0.552784
23 0.441852 0.448083 0.467063 0.484877 0.506462 0.552784 0.592123
24 0.444879 0.463269 0.479994 0.501904 0.552784 0.592123 0.658285
25 0.459950 0.476087 0.496333 0.547256 0.592123 0.658285 0.712313
26 0.471693 0.491775 0.540070 0.584426 0.656969 0.711600 0.801262
27 0.486710 0.535095 0.576728 0.648411 0.708751 0.799660 0.884704
28 0.529014 0.570807 0.639195 0.699491 0.795654 0.882050 0.987543
29 0.563701 0.631954 0.696642 0.784436 0.875857 0.983592 1.075974
30 0.624054 0.681683 0.773218 0.864356 0.975692 1.070594 1.183304
31 0.671711 0.763603 0.851085 0.961867 1.059834 1.176205 1.300777
32 0.752385 0.839584 0.947053 1.044771 1.163188 1.291672 1.418054
33 0.826314 0.933228 1.028631 1.145439 1.274762 1.406710 1.547763
34 0.918415 1.013568 1.127689 1.256551 1.386857 1.533833 1.681005
35 0.995276 1.109940 1.238340 1.365586 1.509069 1.664195 1.821708
36 1.087457 1.217527 1.347151 1.487400 1.630575 1.796204 1.977347
37 1.191512 1.324462 1.468827 1.613765 1.765235 1.945646 2.141498
38 1.296101 1.444063 1.591912 1.747018 1.917907 2.104910 2.313541
39 1.411560 1.565016 1.723336 1.898094 2.081235 2.271604 2.511556
40 1.528034 1.692367 1.872337 2.059712 2.250635 2.470966 2.720160
41 1.652289 1.836674 2.029581 2.227337 2.450670 2.678862 2.951800
42 1.793085 1.990840 2.194719 2.422764 2.656837 2.915839 3.199818
43 1.941338 2.152781 2.384710 2.626552 2.888869 3.164011 3.442067
44 2.096865 2.339045 2.585254 2.855904 3.134715 3.413969 3.704989
45 2.278159 2.532943 2.810953 3.098908 3.378845 3.678470 4.012232
46 2.466866 2.751018 3.046826 3.340210 3.644375 3.979412 4.341625
47 2.676099 2.984978 3.284013 3.598915 3.942490 4.310518 4.728256
48 2.900344 3.213767 3.538302 3.893260 4.266080 4.689540 5.130624
49 3.122447 3.458747 3.823518 4.208310 4.641144 5.093826 5.603218
50 3.356462 3.737366 4.137209 4.578230 5.041258 5.557290 6.126612
51 3.626599 4.043888 4.500797 4.967663 5.499880 6.076343 6.849578
52 3.919461 4.394326 4.878298 5.419506 6.013506 6.793376 7.643733
53 4.258818 4.762649 5.321909 5.925534 6.716099 7.580951 8.268677
54 4.615459 5.189866 5.818711 6.617746 7.494625 8.200762 8.903173
55 5.023377 5.674186 6.491292 7.384756 8.107378 8.829971 9.576539
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.287584 15 0.317584
1 0.317584 16 0.338330
2 0.338330 17 0.348330
3 0.348330 18 0.330346
4 0.330346 19 0.342229
5 0.342229 20 0.352442
6 0.352442 21 0.362354
7 0.362354 22 0.372869
8 0.372869 23 0.380881
9 0.380881 24 0.400152
10 0.400152 25 0.403544
11 0.403544 26 0.414059
12 0.414059 27 0.425248
13 0.425248 28 0.436207
14 0.436207 29 0.448639
15 0.448639 30 0.453646
16 0.453646 31 0.457695
17 0.457695 32 0.474175
18 0.474175 33 0.488295
19 0.488295 34 0.506462
20 0.506462 35 0.552784
21 0.552784 36 0.592123
22 0.592123 37 0.658285
23 0.658285 38 0.712313
24 0.712313 39 0.801262
25 0.801262 40 0.884704
26 0.884704 41 0.987543
27 0.987543 42 1.075974
28 1.075974 43 1.183304
29 1.183304 44 1.300777
30 1.300777 45 1.418054
31 1.418054 46 1.547763
32 1.547763 47 1.681005
33 1.681005 48 1.821708
34 1.821708 49 1.981309
35 1.981309 50 2.152260
36 2.152260 51 2.329850
37 2.329850 52 2.536926
38 2.536926 53 2.753199
39 2.753199 54 2.996752
40 2.996752 55 3.255156
41 3.255156 56 3.512313
42 3.512313 57 3.788332
43 3.788332 58 4.102487
44 4.102487 59 4.443834
45 4.443834 60 4.839566
46 4.834727 61 5.256787
47 5.246273 62 5.741003
48 5.723780 63 6.283705
49 6.271138 64 7.025208
50 6.990082 65 7.847775
51 7.800688 66 8.489401
52 8.429976 67 9.150229
53 9.077027 68 9.842280
54 9.753700 69 10.589852
55 10.483953 70 11.482672
</TABLE>
<PAGE> 32
Schedule 3
Mortality Rates Per Thousand - Traditional Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 1.685910 1.973721 2.654309 3.017363 3.590958 4.179145 4.810960
57 1.803246 2.104576 2.852941 3.261868 3.879509 4.541133 5.246894
58 1.932271 2.248580 3.082804 3.511534 4.208155 4.951560 5.851998
59 2.057495 2.414944 3.322289 3.806285 4.580821 5.507763 6.513653
60 2.182644 2.591596 3.605350 4.134678 5.093276 6.129112 7.020735
61 2.328756 2.790127 3.933599 4.587461 5.658246 6.604754 7.539789
62 2.480113 3.009895 4.362654 5.085358 6.078411 7.082277 8.090354
63 2.658007 3.322923 4.818534 5.458685 6.514963 7.588398 8.673088
64 2.873310 3.672759 5.187024 5.837846 6.968334 8.122416 9.369861
65 3.162653 3.922103 5.545039 6.230163 7.455256 8.772762 10.158193
66 3.353314 4.172504 5.915210 6.650427 8.037871 9.508469 11.149694
67 3.550289 4.409342 6.322141 7.153705 8.696313 10.407298 12.344218
68 3.749909 4.680714 6.797742 7.721726 9.513673 11.519233 13.773683
69 3.960605 5.006445 7.346885 8.441322 10.510918 12.833792 15.412367
70 4.225623 5.385217 8.015132 9.303996 11.688833 14.356725 17.483045
71 4.510588 5.842935 8.845671 10.321718 13.051568 16.259232 19.773039
72 4.866821 6.401272 9.826139 11.516090 14.773173 18.360679 22.282098
73 5.316569 7.074820 10.940285 13.003015 16.650980 20.684514 25.051284
74 5.827328 7.850135 12.369254 14.643943 18.722568 23.219034 28.085450
75 6.449010 8.828938 13.925374 16.424289 21.007697 26.023481 31.464584
76 7.189902 9.861741 15.639510 18.385684 23.499345 29.108733 35.175438
77 8.028151 11.014924 17.469559 20.548595 26.233796 32.531679 39.299170
78 8.912839 12.257123 19.482059 22.879704 29.305397 36.287740 43.731717
79 9.887834 13.616111 21.721743 25.496591 32.623832 40.367738 48.540106
80 10.914219 15.093417 24.241926 28.357639 36.274898 44.734262 57.394974
81 13.017074 17.610124 26.952305 32.013859 42.924927 57.394974 76.293597
82 17.162029 23.288397 31.509262 42.488191 57.049222 76.293597 83.791059
83 22.535540 30.780401 41.801891 56.634318 76.293597 83.791059 91.637222
84 29.546942 40.741246 55.873662 76.293597 83.791059 91.637222 102.057698
85 38.619956 54.421500 76.293597 83.791059 91.637222 102.057698 113.159363
86 50.203315 76.293597 83.791059 91.637222 102.057698 113.159363 118.864642
87 76.293597 83.791059 91.637222 102.057698 113.159363 118.864642 127.286916
88 83.791059 91.637222 102.057698 113.159363 118.864642 127.286916 140.604334
89 91.637222 102.057698 113.159363 118.864642 127.286916 140.604334 161.969570
90 102.057698 113.159363 118.864642 127.286916 140.604334 161.969570 190.569238
91 113.159363 118.864642 127.286916 140.604334 161.969570 190.569238 221.437195
92 118.864642 127.286916 140.604334 161.969570 190.569238 221.437195 260.025797
93 127.286916 140.604334 161.969570 190.569238 221.437195 260.025797 306.336374
94 140.604334 161.969570 190.569238 221.437195 260.025797 306.336374 1000.000000
95 161.969570 190.569238 221.437195 260.025797 306.336374 1000.000000 1000.000000
96 190.569238 221.437195 260.025797 306.336374 1000.000000 1000.000000 1000.000000
97 221.437195 260.025797 306.336374 1000.000000 1000.000000 1000.000000 1000.000000
98 260.025797 306.336374 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 306.336374 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 5.485674 6.329712 7.243496 7.980037 8.729318 9.487958 10.303926
57 6.118956 7.055150 7.827228 8.592065 9.379693 10.208617 11.161157
58 6.819716 7.623482 8.418210 9.232059 10.081539 11.057813 12.144851
59 7.360311 8.198605 9.045055 9.922691 10.931504 12.032399 13.349387
60 7.905798 8.798998 9.721484 10.747781 11.882462 13.225655 14.834450
61 8.484045 9.446148 10.518128 11.682547 13.060678 14.681675 16.576269
62 9.107272 10.231061 11.432653 12.840708 14.498345 16.422469 18.617679
63 9.852133 11.107791 12.565747 14.253905 16.200312 18.425744 21.176338
64 10.695465 12.194549 13.948356 15.926889 18.195422 20.979654 24.010119
65 11.740862 13.535863 15.568022 17.869133 20.695554 23.762337 27.158935
66 13.016428 15.106620 17.466070 20.324039 23.440220 26.878657 30.579626
67 14.508508 16.947846 19.865110 23.018989 26.514295 30.263721 34.413565
68 16.256880 19.253203 22.498646 26.009795 29.853044 34.022501 38.611996
69 18.466466 21.780077 25.393184 29.284414 33.560336 38.212699 43.330762
70 20.888060 24.608405 28.589423 32.955965 37.653683 42.837858 48.534224
71 23.571377 27.673298 32.138288 36.974879 42.255335 47.982129 56.066303
72 26.504448 31.107303 36.056496 41.448764 47.279462 56.066303 62.390882
73 29.756357 34.858606 40.373337 46.376032 56.066303 62.390882 69.150572
74 33.341279 39.029053 45.171460 51.749198 62.390882 69.150572 76.293597
75 37.326293 43.665745 50.403607 62.390882 69.150572 76.293597 83.791059
76 41.708315 48.665551 56.027012 69.150572 76.293597 83.791059 91.637222
77 46.478965 54.092895 69.150572 76.293597 83.791059 91.637222 102.057698
78 51.659650 69.150572 76.293597 83.791059 91.637222 102.057698 113.159363
79 57.118372 76.293597 83.791059 91.637222 102.057698 113.159363 118.864642
80 76.293597 83.791059 91.637222 102.057698 113.159363 118.864642 127.286916
81 83.791059 91.637222 102.057698 113.159363 118.864642 127.286916 140.604334
82 91.637222 102.057698 113.159363 118.864642 127.286916 140.604334 161.969570
83 102.057698 113.159363 118.864642 127.286916 140.604334 161.969570 190.569238
84 113.159363 118.864642 127.286916 140.604334 161.969570 190.569238 221.437195
85 118.864642 127.286916 140.604334 161.969570 190.569238 221.437195 260.025797
86 127.286916 140.604334 161.969570 190.569238 221.437195 260.025797 306.336374
87 140.604334 161.969570 190.569238 221.437195 260.025797 306.336374 1000.000000
88 161.969570 190.569238 221.437195 260.025797 306.336374 1000.000000 1000.000000
89 190.569238 221.437195 260.025797 306.336374 1000.000000 1000.000000 1000.000000
90 221.437195 260.025797 306.336374 1000.000000 1000.000000 1000.000000 1000.000000
91 260.025797 306.336374 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 306.336374 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 11.321915 71 12.494703
57 12.269798 72 13.748082
58 13.445624 73 15.277498
59 14.941393 74 17.088937
60 16.712980 75 19.193483
61 18.752033 76 21.853806
62 21.351168 77 24.778245
63 24.208345 78 28.027796
64 27.355129 79 31.590523
65 30.832350 80 35.551203
66 34.697974 81 39.929675
67 38.931433 82 44.809475
68 43.689238 83 50.190511
69 48.935749 84 56.066303
70 56.066303 85 62.390882
71 62.390882 86 69.150572
72 69.150572 87 76.293597
73 76.293597 88 83.791059
74 83.791059 89 91.637222
75 91.637222 90 102.057698
76 102.057698 91 113.159363
77 113.159363 92 118.864642
78 118.864642 93 127.286916
79 127.286916 94 140.604334
80 140.604334 95 161.969570
81 161.969570 96 190.569238
82 190.569238 97 221.437195
83 221.437195 98 260.025797
84 260.025797 99 306.336374
85 306.336374 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 33
Schedule 3
Mortality Rate Per Thousand - Universal Life Male
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.990775 0.517430 0.479003 0.430753 0.401803 0.366967 0.361979
1 0.507415 0.461630 0.430753 0.401803 0.363203 0.357217 0.312579
2 0.452695 0.415130 0.401803 0.363203 0.353553 0.308467 0.273059
3 0.407095 0.387230 0.363203 0.353553 0.305303 0.269467 0.253299
4 0.379735 0.350030 0.353553 0.305303 0.266703 0.249967 0.203899
5 0.343255 0.340730 0.305303 0.266703 0.247403 0.201217 0.203899
6 0.334135 0.294230 0.266703 0.247403 0.199153 0.201217 0.292819
7 0.288535 0.257030 0.247403 0.199153 0.199153 0.288967 0.441019
8 0.252055 0.238430 0.199153 0.199153 0.286003 0.435217 0.589219
9 0.233815 0.191930 0.199153 0.286003 0.430753 0.581467 0.688019
10 0.188215 0.191930 0.286003 0.430753 0.575503 0.678967 0.807259
11 0.188215 0.275630 0.430753 0.575503 0.672003 0.796637 1.010323
12 0.270295 0.415130 0.575503 0.672003 0.788466 0.997030 1.122929
13 0.407095 0.554630 0.672003 0.788466 0.986804 1.108154 1.144117
14 0.543895 0.647630 0.788466 0.986804 1.096788 1.129063 1.135726
15 0.635095 0.759869 0.986804 1.096788 1.117483 1.120782 1.126900
16 0.731272 0.951013 1.096788 1.117483 1.109287 1.112072 1.096976
17 0.909087 1.057008 1.117483 1.109287 1.100666 1.082542 1.056311
18 0.999043 1.066530 1.103539 1.094963 1.066998 1.040273 1.023466
19 1.006314 1.047213 1.088120 1.059226 1.026375 1.008919 0.983809
20 0.987438 1.027668 1.052564 1.013545 0.995412 0.970785 0.951972
21 0.968358 0.989277 1.007130 0.978787 0.958763 0.941276 0.942648
22 0.931541 0.940843 0.972553 0.937724 0.928635 0.932034 0.953863
23 0.885248 0.902936 0.930711 0.903353 0.919491 0.944070 0.977163
24 0.848905 0.857577 0.896546 0.889581 0.932318 0.968106 1.020505
25 0.808486 0.821672 0.882828 0.896083 0.956030 1.012071 1.067227
26 0.774997 0.803711 0.888248 0.912757 0.994149 1.055061 1.125149
27 0.757398 0.803047 0.904706 0.947763 1.034049 1.111084 1.189987
28 0.761915 0.815141 0.939329 0.985388 1.087644 1.173788 1.261844
29 0.772875 0.841284 0.975434 1.033730 1.146375 1.244559 1.334482
30 0.797006 0.867053 1.024354 1.089056 1.213976 1.314691 1.393906
31 0.819497 0.900119 1.077841 1.150153 1.279350 1.371640 1.472670
32 0.855582 0.938283 1.136856 1.208667 1.333044 1.447442 1.555170
33 0.870995 0.962671 1.195945 1.255852 1.403293 1.526711 1.646946
34 0.893529 0.998034 1.241007 1.318150 1.478164 1.616612 1.762881
35 0.908974 1.033183 1.302382 1.382745 1.561298 1.728315 1.878442
36 0.918880 1.083216 1.367679 1.457806 1.666864 1.837293 1.983450
37 0.958654 1.133315 1.439963 1.549722 1.769398 1.935340 2.100297
38 0.999393 1.191939 1.530519 1.639779 1.865362 2.048957 2.229476
39 1.045623 1.265511 1.621262 1.723218 1.971946 2.169625 2.362290
40 1.104201 1.337336 1.699163 1.813257 2.089822 2.295784 2.540196
41 1.162453 1.401755 1.792254 1.915255 2.207997 2.454088 2.756115
42 1.211501 1.474875 1.892811 2.019120 2.362239 2.649870 2.994063
43 1.269513 1.553651 1.992517 2.158449 2.546750 2.871439 3.256406
44 1.331701 1.636046 2.124006 2.331136 2.752222 3.118863 3.543895
45 1.401945 1.739389 2.284263 2.520599 2.973886 3.389636 3.845784
46 1.498285 1.868658 2.459287 2.728541 3.219139 3.673386 4.159194
47 1.618671 2.009667 2.650476 2.959335 3.470046 3.972102 4.479380
48 1.747388 2.159785 2.857849 3.195979 3.732241 4.272001 4.812751
49 1.892135 2.326061 3.076627 3.439610 4.012778 4.583573 5.182093
50 2.050019 2.501970 3.300491 3.691341 4.298497 4.934464 5.611212
51 2.214641 2.676851 3.525438 3.946344 4.614358 5.335573 6.072327
52 2.384221 2.851457 3.761884 4.227815 4.987744 5.765859 6.572829
53 2.555942 3.035220 4.022464 4.561160 5.380994 6.232589 7.113865
54 2.733375 3.231258 4.331462 4.917729 5.807288 6.735915 7.698690
55 2.929272 3.465169 4.654025 5.289194 6.273975 7.279094 8.340181
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.311630 0.273612 0.256376 0.206376 0.206376 0.296376 0.446376
1 0.272230 0.253812 0.206376 0.206376 0.296376 0.446376 0.596376
2 0.252530 0.204312 0.206376 0.296376 0.446376 0.596376 0.696376
3 0.203280 0.204312 0.296376 0.446376 0.596376 0.696376 0.817063
4 0.203280 0.293412 0.446376 0.596376 0.696376 0.817063 1.022595
5 0.291930 0.441912 0.596376 0.696376 0.817063 1.022595 1.136568
6 0.439680 0.590412 0.696376 0.817063 1.022595 1.136568 1.158013
7 0.587430 0.689412 0.817063 1.022595 1.136568 1.158013 1.149520
8 0.685930 0.808893 1.022595 1.136568 1.158013 1.149520 1.140587
9 0.804807 1.012369 1.136568 1.158013 1.149520 1.140587 1.110300
10 1.007256 1.125203 1.158013 1.149520 1.140587 1.110300 1.069140
11 1.119520 1.146433 1.149520 1.140587 1.110300 1.069140 1.039052
12 1.140643 1.138025 1.140587 1.110300 1.069140 1.039052 1.001842
13 1.132277 1.129181 1.110300 1.069140 1.039052 1.001842 0.972393
14 1.123478 1.099197 1.069140 1.039052 1.001842 0.972393 0.964839
15 1.093645 1.058449 1.039052 1.001842 0.972393 0.964839 0.979326
16 1.053103 1.028661 1.001842 0.972393 0.964839 0.979326 1.006347
17 1.023466 0.991823 0.972393 0.964839 0.979326 1.006347 1.054241
18 0.984811 0.960724 0.962909 0.978346 1.006347 1.054241 1.105934
19 0.953917 0.951331 0.974429 1.004334 1.054241 1.105934 1.172030
20 0.944577 0.963656 0.999303 1.050024 1.105934 1.172030 1.246059
21 0.957781 0.989239 1.043699 1.100405 1.172030 1.246059 1.329657
22 0.982195 1.034211 1.092663 1.164998 1.246059 1.329657 1.413646
23 1.026831 1.082710 1.154449 1.237337 1.329657 1.413646 1.484458
24 1.074968 1.145073 1.224876 1.317690 1.413646 1.484458 1.576734
25 1.136869 1.214908 1.303063 1.399510 1.484458 1.576734 1.674025
26 1.203693 1.291097 1.381132 1.465160 1.573581 1.672351 1.784340
27 1.277800 1.368409 1.445862 1.553083 1.665655 1.780772 1.920350
28 1.352859 1.431018 1.531009 1.643893 1.771850 1.914589 2.057439
29 1.413204 1.513665 1.637197 1.746869 1.901147 2.049210 2.186825
30 1.494744 1.602042 1.721888 1.876182 2.032750 2.175891 2.333664
31 1.578606 1.700476 1.847377 2.003946 2.154022 2.319662 2.493821
32 1.675496 1.822412 1.973084 2.123407 2.293991 2.476365 2.660237
33 1.793607 1.944280 2.090605 2.258987 2.443945 2.638955 2.870278
34 1.913419 2.059989 2.223982 2.409032 2.601712 2.844446 3.124847
35 2.022813 2.188977 2.374118 2.561808 2.798521 3.093598 3.406215
36 2.144637 2.334217 2.527225 2.758338 3.031101 3.358528 3.709923
37 2.284340 2.484661 2.723894 2.999853 3.300622 3.650446 4.039147
38 2.431456 2.677970 2.959230 3.266560 3.598403 3.970136 4.389498
39 2.617694 2.909232 3.222279 3.561229 3.925482 4.309930 4.749253
40 2.840486 3.164374 3.512903 3.884888 4.270146 4.672497 5.122254
41 3.089437 3.445991 3.828056 4.225942 4.634119 5.044487 5.505877
42 3.364209 3.754986 4.164055 4.581350 5.003011 5.438800 5.937060
43 3.661619 4.084487 4.509391 4.945982 5.388493 5.870623 6.431564
44 3.978397 4.423041 4.868215 5.327006 5.816265 6.379062 6.970347
45 4.307908 4.769710 5.243160 5.749828 6.313433 6.920457 7.562620
46 4.645283 5.131366 5.653192 6.241242 6.856312 7.500758 8.205721
47 4.991623 5.538437 6.136237 6.770787 7.431164 8.146929 8.911873
48 5.381404 6.004981 6.656752 7.338371 8.062940 8.838899 9.678973
49 5.834347 6.507082 7.206914 7.953755 8.747683 9.609554 10.469921
50 6.314649 7.044527 7.819372 8.629101 9.510385 10.384102 11.379831
51 6.835743 7.642995 8.483154 9.371547 10.276828 11.286458 12.668057
52 7.407826 8.282477 9.202958 10.126645 11.169742 12.564114 14.158581
53 8.027071 8.984785 9.944279 11.006340 12.421192 14.042288 15.558330
54 8.707109 9.697550 10.807922 12.239292 13.882387 15.430541 17.093546
55 9.386456 10.539475 12.005420 13.678875 15.254831 16.953003 18.802952
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.596376 15 0.696376
1 0.696376 16 0.817063
2 0.817063 17 1.022595
3 1.022595 18 1.136568
4 1.136568 19 1.158013
5 1.158013 20 1.149520
6 1.149520 21 1.140587
7 1.140587 22 1.110300
8 1.110300 23 1.069140
9 1.069140 24 1.039052
10 1.039052 25 1.001842
11 1.001842 26 0.972393
12 0.972393 27 0.964839
13 0.964839 28 0.979326
14 0.979326 29 1.006347
15 1.006347 30 1.054241
16 1.054241 31 1.105934
17 1.105934 32 1.172030
18 1.172030 33 1.246059
19 1.246059 34 1.329657
20 1.329657 35 1.413646
21 1.413646 36 1.484458
22 1.484458 37 1.576734
23 1.576734 38 1.674025
24 1.674025 39 1.784340
25 1.784340 40 1.920350
26 1.920350 41 2.057439
27 2.057439 42 2.186825
28 2.186825 43 2.333664
29 2.333664 44 2.493821
30 2.493821 45 2.660237
31 2.660237 46 2.870278
32 2.870278 47 3.124847
33 3.124847 48 3.406215
34 3.406215 49 3.717358
35 3.717358 50 4.059444
36 4.059444 51 4.420441
37 4.420441 52 4.797225
38 4.797225 53 5.184468
39 5.184468 54 5.589723
40 5.589723 55 6.039735
41 6.039735 56 6.562821
42 6.562821 57 7.127144
43 7.127144 58 7.732740
44 7.732740 59 8.398896
45 8.398896 60 9.121671
46 9.112549 61 9.916981
47 9.897147 62 10.727378
48 10.695196 63 11.671622
49 11.648279 64 12.992879
50 12.927914 65 14.536530
51 14.449311 66 15.973645
52 15.861829 67 17.567879
53 17.427336 68 19.324719
54 19.150797 69 21.259935
55 21.047336 70 23.447312
</TABLE>
<PAGE> 34
Schedule 3
Mortality Rate Per Thousand - Universal Life Male
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 3.150154 3.713242 5.003083 5.702850 6.768280 7.884000 8.989543
57 3.392520 3.966896 5.392091 6.148006 7.318732 8.485356 9.745804
58 3.642121 4.249841 5.810504 6.624543 7.863168 9.197238 10.823068
59 3.888689 4.551714 6.267532 7.112252 8.508612 10.186417 12.065320
60 4.113874 4.889072 6.736793 7.679927 9.419837 11.353030 13.210204
61 4.393223 5.213506 7.306435 8.484350 10.480838 12.427496 14.475932
62 4.634227 5.590707 8.068578 9.419672 11.437130 13.597538 15.884919
63 4.937096 6.145632 8.925430 10.271054 12.508330 14.899359 17.411887
64 5.314087 6.803096 9.759897 11.208307 13.681901 16.306370 19.133007
65 5.858222 7.379824 10.646135 12.232547 14.966995 17.913747 21.022159
66 6.309590 8.010953 11.614156 13.351239 16.413119 19.677568 23.197245
67 6.816337 8.657474 12.692181 14.607676 17.996830 21.652669 25.615029
68 7.362718 9.396891 13.880809 15.979943 19.793457 23.903133 28.344642
69 7.951216 10.223028 15.204218 17.562402 21.810816 26.410454 31.291286
70 8.628611 11.144588 16.675701 19.306377 24.054262 29.148047 34.761323
71 9.334562 12.156386 18.355324 21.240898 26.498225 32.328030 38.530874
72 10.125554 13.283041 20.221054 23.380786 29.373318 35.778668 42.494364
73 11.032215 14.559159 22.211747 25.853734 32.447051 39.447598 46.777258
74 11.991964 15.937903 24.593636 28.536023 35.705956 43.355971 51.301987
75 13.093240 17.554468 27.135778 31.322889 39.226831 47.535512 56.233709
76 14.295594 19.217152 29.826233 34.330851 42.924827 52.023317 61.441993
77 15.644114 21.006648 32.620207 37.534871 46.885212 56.824060 67.108719
78 16.997745 22.887234 35.586694 40.890756 51.188616 61.966289 72.982520
79 18.463155 24.871723 38.821241 44.535661 55.709665 67.368480 79.200274
80 19.936342 26.975053 42.344100 48.424555 60.538065 72.990484 91.562591
81 23.264199 30.760132 46.024754 53.426947 70.038289 91.562591 119.030926
82 29.977431 39.768130 52.584841 69.325690 91.011009 119.030926 127.853828
83 38.482522 51.368466 68.205892 90.349111 119.030926 127.853828 136.740849
84 49.309985 66.475294 89.135630 119.030926 127.853828 136.740849 148.933453
85 63.014100 86.818987 119.030926 127.853828 136.740849 148.933453 161.465864
86 80.089688 119.030926 127.853828 136.740849 148.933453 161.465864 166.370938
87 119.030926 127.853828 136.740849 148.933453 161.465864 166.370938 173.744227
88 127.853828 136.740849 148.933453 161.465864 166.370938 173.744227 185.695620
89 136.740849 148.933453 161.465864 166.370938 173.744227 185.695620 205.041280
90 148.933453 161.465864 166.370938 173.744227 185.695620 205.041280 231.160308
91 161.465864 166.370938 173.744227 185.695620 205.041280 231.160308 259.155061
92 166.370938 173.744227 185.695620 205.041280 231.160308 259.155061 294.150308
93 173.744227 185.695620 205.041280 231.160308 259.155061 294.150308 336.153170
94 185.695620 205.041280 231.160308 259.155061 294.150308 336.153170 1000.000000
95 205.041280 231.160308 259.155061 294.150308 336.153170 1000.000000 1000.000000
96 231.160308 259.155061 294.150308 336.153170 1000.000000 1000.000000 1000.000000
97 259.155061 294.150308 336.153170 1000.000000 1000.000000 1000.000000 1000.000000
98 294.150308 336.153170 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 336.153170 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 10.189326 11.706584 13.417218 15.015226 16.759756 18.629029 20.685917
57 11.316797 13.068341 14.727701 16.496238 18.416457 20.494578 22.790787
58 12.632245 14.344333 16.162449 18.126587 20.239459 22.579762 25.133503
59 13.849150 15.740820 17.759417 19.920559 22.321841 24.900786 27.773767
60 15.178647 17.276299 19.516621 21.946684 24.590496 27.516337 30.782417
61 16.657908 18.963862 21.477738 24.176775 27.173098 30.465399 34.112038
62 18.283544 20.891555 23.659625 26.715446 30.084978 33.795535 37.798938
63 20.117794 22.987330 26.143381 29.577750 33.338363 37.409258 42.104652
64 22.134032 25.371093 28.943714 32.775690 36.941643 41.713587 46.787489
65 24.427185 28.087767 32.037182 36.279187 41.148716 46.304646 51.795017
66 27.009906 31.087672 35.460860 40.410038 45.676950 51.260496 57.100109
67 29.856825 34.408724 39.497553 44.856117 50.565620 56.510232 62.861168
68 33.005877 38.280907 43.842147 49.603483 55.743391 62.146837 69.007610
69 36.716647 42.441902 48.427539 54.681612 61.302627 68.293984 75.687143
70 40.703667 46.930882 53.383883 60.198660 67.294908 74.826173 82.878840
71 44.953157 51.673239 58.705058 66.081745 73.808662 81.936061 93.567334
72 49.490693 56.821821 64.440405 72.399801 80.736160 93.567334 101.799838
73 54.354130 62.299528 70.521320 79.193431 93.567334 101.799838 110.316374
74 59.587750 68.173218 77.136459 86.362649 101.799838 110.316374 119.030926
75 65.198956 74.565244 84.117033 101.799838 110.316374 119.030926 127.853828
76 71.222664 81.216446 91.416255 110.316374 119.030926 127.853828 136.740849
77 77.567320 88.260460 110.316374 119.030926 127.853828 136.740849 148.933453
78 84.290266 110.316374 119.030926 127.853828 136.740849 148.933453 161.465864
79 91.121325 119.030926 127.853828 136.740849 148.933453 161.465864 166.370938
80 119.030926 127.853828 136.740849 148.933453 161.465864 166.370938 173.744227
81 127.853828 136.740849 148.933453 161.465864 166.370938 173.744227 185.695620
82 136.740849 148.933453 161.465864 166.370938 173.744227 185.695620 205.041280
83 148.933453 161.465864 166.370938 173.744227 185.695620 205.041280 231.160308
84 161.465864 166.370938 173.744227 185.695620 205.041280 231.160308 259.155061
85 166.370938 173.744227 185.695620 205.041280 231.160308 259.155061 294.150308
86 173.744227 185.695620 205.041280 231.160308 259.155061 294.150308 336.153170
87 185.695620 205.041280 231.160308 259.155061 294.150308 336.153170 1000.000000
88 205.041280 231.160308 259.155061 294.150308 336.153170 1000.000000 1000.000000
89 231.160308 259.155061 294.150308 336.153170 1000.000000 1000.000000 1000.000000
90 259.155061 294.150308 336.153170 1000.000000 1000.000000 1000.000000 1000.000000
91 294.150308 336.153170 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 336.153170 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 23.119050 71 25.857514
57 25.392078 72 28.603261
58 27.973989 73 31.701768
59 31.004329 74 35.167050
60 34.393375 75 38.967977
61 38.071714 76 43.451653
62 42.452265 77 48.284303
63 47.173764 78 53.452030
64 52.169181 79 58.987716
65 57.572010 80 64.939223
66 63.380682 81 71.362575
67 69.578511 82 78.270055
68 76.313304 83 85.707177
69 83.564497 84 93.567334
70 93.567334 85 101.799838
71 101.799838 86 110.316374
72 110.316374 87 119.030926
73 119.030926 88 127.853828
74 127.853828 89 136.740849
75 136.740849 90 148.933453
76 148.933453 91 161.465864
77 161.465864 92 166.370938
78 166.370938 93 173.744227
79 173.744227 94 185.695620
80 185.695620 95 205.041280
81 205.041280 96 231.160308
82 231.160308 97 259.155061
83 259.155061 98 294.150308
84 294.150308 99 336.153170
85 336.153170 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 35
Schedule 3
Mortality Rates Per Thousand - Universal Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.783364 0.380325 0.336739 0.307789 0.278839 0.271978 0.255845
1 0.372964 0.324525 0.307789 0.278839 0.269189 0.252478 0.226205
2 0.318244 0.296625 0.278839 0.269189 0.249889 0.223228 0.206445
3 0.290884 0.268725 0.269189 0.249889 0.220939 0.203728 0.176805
4 0.263524 0.259425 0.249889 0.220939 0.201639 0.174478 0.166925
5 0.254404 0.240825 0.220939 0.201639 0.172689 0.164728 0.166925
6 0.236164 0.212925 0.201639 0.172689 0.163039 0.164728 0.186685
7 0.208804 0.194325 0.172689 0.163039 0.163039 0.184228 0.236085
8 0.190564 0.166425 0.163039 0.163039 0.182339 0.232978 0.285485
9 0.163204 0.157125 0.163039 0.182339 0.230589 0.281728 0.315125
10 0.154084 0.157125 0.182339 0.230589 0.278839 0.310978 0.335658
11 0.154084 0.175725 0.230589 0.278839 0.307789 0.331241 0.345538
12 0.172324 0.222225 0.278839 0.307789 0.327844 0.340991 0.330677
13 0.217924 0.268725 0.307789 0.327844 0.337494 0.326326 0.342493
14 0.263524 0.296625 0.327844 0.337494 0.322979 0.337987 0.352518
15 0.290884 0.315953 0.337494 0.322979 0.334520 0.347880 0.362205
16 0.304063 0.325253 0.322979 0.334520 0.344312 0.357439 0.372569
17 0.310914 0.311265 0.334520 0.344312 0.353773 0.367666 0.380175
18 0.294196 0.319267 0.342528 0.351940 0.362387 0.374403 0.397900
19 0.301241 0.325045 0.349741 0.359747 0.369401 0.392245 0.400293
20 0.306491 0.330311 0.357485 0.364783 0.386993 0.394994 0.409339
21 0.311247 0.335990 0.362475 0.380530 0.390102 0.404740 0.419468
22 0.316382 0.338617 0.378106 0.381542 0.399304 0.414745 0.428825
23 0.318608 0.351041 0.378689 0.388433 0.409163 0.424422 0.439685
24 0.330035 0.348932 0.385506 0.395854 0.419139 0.435610 0.443538
25 0.328958 0.353311 0.392848 0.402849 0.430176 0.439872 0.446272
26 0.333241 0.357642 0.399327 0.410705 0.432083 0.441185 0.460279
27 0.337034 0.361023 0.407082 0.411922 0.432399 0.454526 0.471545
28 0.342532 0.366781 0.408257 0.412050 0.444937 0.465126 0.486387
29 0.347763 0.365644 0.407888 0.422882 0.454263 0.479724 0.527961
30 0.346400 0.362567 0.419046 0.431550 0.467936 0.520131 0.562757
31 0.342682 0.368223 0.427106 0.443335 0.506149 0.553767 0.621881
32 0.350004 0.371805 0.438210 0.478185 0.538185 0.611228 0.669765
33 0.345141 0.371069 0.473152 0.507021 0.592585 0.657509 0.748045
34 0.344417 0.394852 0.501028 0.556630 0.636601 0.734267 0.821464
35 0.359618 0.417123 0.549972 0.595507 0.709143 0.805357 0.911674
36 0.370976 0.457422 0.589018 0.662137 0.776722 0.891703 0.987155
37 0.404822 0.488085 0.654033 0.722137 0.858751 0.963211 1.077278
38 0.430409 0.541380 0.713188 0.795843 0.928383 1.050945 1.176214
39 0.474923 0.589700 0.786856 0.857639 1.011444 1.144638 1.273550
40 0.514533 0.649056 0.845666 0.930050 1.102536 1.237696 1.385398
41 0.564180 0.697648 0.919277 1.010439 1.190368 1.338436 1.499957
42 0.602959 0.756489 0.998598 1.088541 1.288342 1.442135 1.620083
43 0.651155 0.819666 1.074199 1.177197 1.386014 1.553731 1.755801
44 0.702571 0.882019 1.158412 1.268671 1.489223 1.681641 1.900563
45 0.755812 0.948646 1.243161 1.363892 1.603472 1.817836 2.050591
46 0.817150 1.016977 1.330716 1.471185 1.726400 1.958668 2.224954
47 0.880927 1.087427 1.429094 1.587068 1.850246 2.124870 2.406647
48 0.945509 1.164521 1.532642 1.704112 1.996557 2.295229 2.611031
49 1.020209 1.247449 1.640473 1.840014 2.155955 2.486696 2.826050
50 1.099410 1.334063 1.765592 1.983256 2.332035 2.691006 3.039072
51 1.180858 1.431978 1.894121 2.140984 2.516436 2.889784 3.267310
52 1.275435 1.532009 2.040910 2.305635 2.701397 3.102410 3.530150
53 1.373237 1.646678 2.193647 2.470357 2.895327 3.347413 3.810862
54 1.482920 1.762164 2.345950 2.646061 3.118991 3.608396 4.135707
55 1.597476 1.876760 2.504170 2.840733 3.360938 3.910301 4.477136
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.225518 0.206863 0.178952 0.168952 0.168952 0.188952 0.238952
1 0.205818 0.177163 0.168952 0.168952 0.188952 0.238952 0.288952
2 0.176268 0.167263 0.168952 0.188952 0.238952 0.288952 0.318952
3 0.166418 0.167263 0.188952 0.238952 0.288952 0.318952 0.339735
4 0.166418 0.187063 0.238952 0.288952 0.318952 0.339735 0.349735
5 0.186118 0.236563 0.288952 0.318952 0.339735 0.349735 0.334694
6 0.235368 0.286063 0.318952 0.339735 0.349735 0.334694 0.346653
7 0.284618 0.315763 0.339735 0.349735 0.334694 0.346653 0.356800
8 0.314168 0.336337 0.349735 0.334694 0.346653 0.356800 0.366605
9 0.334639 0.346237 0.334694 0.346653 0.356800 0.366605 0.377094
10 0.344489 0.331347 0.346653 0.356800 0.366605 0.377094 0.384793
11 0.329673 0.343186 0.356800 0.366605 0.377094 0.384793 0.403960
12 0.341453 0.353232 0.366605 0.377094 0.384793 0.403960 0.407631
13 0.351448 0.362938 0.377094 0.384793 0.403960 0.407631 0.418120
14 0.361105 0.373323 0.384793 0.403960 0.407631 0.418120 0.429342
15 0.371437 0.380945 0.403960 0.407631 0.418120 0.429342 0.440272
16 0.379021 0.399920 0.407631 0.418120 0.429342 0.440272 0.452817
17 0.397900 0.403554 0.418120 0.429342 0.440272 0.452817 0.458201
18 0.400701 0.413102 0.428484 0.439832 0.452817 0.458201 0.462458
19 0.410175 0.423332 0.438070 0.451911 0.458201 0.462458 0.479458
20 0.420326 0.433228 0.449647 0.456368 0.462458 0.479458 0.493765
21 0.430586 0.445119 0.453619 0.460146 0.479458 0.493765 0.512526
22 0.441949 0.449495 0.456909 0.476581 0.493765 0.512526 0.559281
23 0.446287 0.452747 0.472266 0.490308 0.512526 0.559281 0.599315
24 0.449510 0.468430 0.485371 0.507913 0.559281 0.599315 0.665826
25 0.465074 0.481420 0.502275 0.553688 0.599315 0.665826 0.720952
26 0.476977 0.497663 0.546417 0.591524 0.664494 0.720231 0.810449
27 0.492537 0.541384 0.583733 0.655839 0.717348 0.808828 0.894841
28 0.535232 0.577740 0.646517 0.707975 0.804776 0.892156 0.998548
29 0.570548 0.639193 0.705091 0.793430 0.885892 0.994554 1.088374
30 0.631203 0.689951 0.782083 0.874259 0.986565 1.082932 1.196976
31 0.679858 0.772358 0.860837 0.972586 1.072048 1.189794 1.315675
32 0.761012 0.849204 0.957607 1.056811 1.176627 1.306466 1.434178
33 0.835781 0.943628 1.040485 1.158672 1.289362 1.422705 1.565422
34 0.928650 1.025248 1.140718 1.270942 1.402626 1.551333 1.700631
35 1.006746 1.122763 1.252523 1.381113 1.526286 1.683625 1.843097
36 1.100021 1.231472 1.362469 1.504370 1.649612 1.817294 2.000331
37 1.205159 1.339522 1.485585 1.632606 1.785961 1.968261 2.166163
38 1.310839 1.460539 1.610498 1.767530 1.940201 2.129154 2.340502
39 1.427665 1.583288 1.743570 1.920157 2.105206 2.298076 2.540605
40 1.545874 1.712237 1.894101 2.083436 2.276863 2.499545 2.752046
41 1.671689 1.858023 2.052957 2.253293 2.479015 2.710264 2.987068
42 1.813927 2.013770 2.220295 2.450786 2.687980 2.950677 3.237771
43 1.963698 2.177869 2.412292 2.657340 2.923384 3.201539 3.483381
44 2.121301 2.366099 2.615558 2.890026 3.171896 3.454945 3.750503
45 2.304509 2.562634 2.844537 3.135664 3.419400 3.723659 4.061749
46 2.495782 2.783886 3.082964 3.380301 3.689145 4.028524 4.395765
47 2.708072 3.020382 3.323430 3.643127 3.991146 4.364270 4.787424
48 2.934745 3.252340 3.581769 3.941309 4.319277 4.748223 5.195820
49 3.159924 3.501237 3.870706 4.260787 4.699221 5.158555 5.675177
50 3.397695 3.783490 4.188799 4.635520 5.105319 5.628659 6.205997
51 3.671356 4.094315 4.557118 5.030789 5.570512 6.155076 6.934317
52 3.968336 4.449315 4.940288 5.489105 6.091424 6.877420 7.733745
53 4.312111 4.823169 5.390255 6.002313 6.799187 7.670224 8.359418
54 4.674108 5.256516 5.894105 6.699617 7.582882 8.290757 8.994276
55 5.087889 5.747708 6.571599 7.471719 8.196349 8.920325 9.668190
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.288952 15 0.318952
1 0.318952 16 0.339735
2 0.339735 17 0.349735
3 0.349735 18 0.334694
4 0.334694 19 0.346653
5 0.346653 20 0.356800
6 0.356800 21 0.366605
7 0.366605 22 0.377094
8 0.377094 23 0.384793
9 0.384793 24 0.403960
10 0.403960 25 0.407631
11 0.407631 26 0.418120
12 0.418120 27 0.429342
13 0.429342 28 0.440272
14 0.440272 29 0.452817
15 0.452817 30 0.458201
16 0.458201 31 0.462458
17 0.462458 32 0.479458
18 0.479458 33 0.493765
19 0.493765 34 0.512526
20 0.512526 35 0.559281
21 0.559281 36 0.599315
22 0.599315 37 0.665826
23 0.665826 38 0.720952
24 0.720952 39 0.810449
25 0.810449 40 0.894841
26 0.894841 41 0.998548
27 0.998548 42 1.088374
28 1.088374 43 1.196976
29 1.196976 44 1.315675
30 1.315675 45 1.434178
31 1.434178 46 1.565422
32 1.565422 47 1.700631
33 1.700631 48 1.843097
34 1.843097 49 2.004339
35 2.004339 50 2.177049
36 2.177049 51 2.357001
37 2.357001 52 2.566268
38 2.566268 53 2.785471
39 2.785471 54 3.032556
40 3.032556 55 3.293765
41 3.293765 56 3.554470
42 3.554470 57 3.834870
43 3.834870 58 4.153118
44 4.153118 59 4.499247
45 4.499247 60 4.900127
46 4.895226 61 5.323586
47 5.312939 62 5.814730
48 5.797286 63 6.365125
49 6.352394 64 7.112120
50 7.076560 65 7.940190
51 7.892549 66 8.582564
52 8.522486 67 9.243860
53 9.169909 68 9.936475
54 9.847047 69 10.685106
55 10.578255 70 11.579990
</TABLE>
<PAGE> 36
Mortality Rates Per Thousand - Universal Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 1.706146 1.997967 2.687067 3.054989 3.635894 4.232251 4.872744
57 1.825398 2.130549 2.888517 3.302685 3.928806 4.599452 5.314879
58 1.956118 2.276619 3.121381 3.556155 4.262197 5.015718 5.924396
59 2.083151 2.445163 3.364506 3.855166 4.640176 5.575902 6.590358
60 2.209957 2.624528 3.651651 4.188252 5.156287 6.201288 7.097781
61 2.358349 2.825959 3.984568 4.644214 5.724877 6.677235 7.616941
62 2.511963 3.048895 4.416627 5.145243 6.145116 7.154748 8.167782
63 2.692448 3.364033 4.875277 5.518589 6.581628 7.661022 8.751102
64 2.908857 3.716009 5.243947 5.897583 7.035024 8.195476 9.449272
65 3.199897 3.965145 5.601779 6.289789 7.522314 8.847112 10.238814
66 3.390113 4.215200 5.971821 6.710246 8.105993 9.583933 11.231709
67 3.586618 4.451541 6.379008 7.214334 8.765331 10.483852 12.427939
68 3.785797 4.722817 6.855354 7.783010 9.583653 11.597359 13.859344
69 3.996230 5.048876 7.405194 8.503415 10.582206 12.913607 15.500144
70 4.261436 5.427957 8.074090 9.367098 11.761528 14.438490 17.579627
71 4.546386 5.885914 8.905664 10.385910 13.125900 16.349053 19.879453
72 4.902620 6.444686 9.887249 11.581676 14.854785 18.459492 22.398478
73 5.352627 7.118819 11.002593 13.074848 16.740592 20.792549 25.178637
74 5.863569 7.894843 12.437586 14.722753 18.820356 23.337072 28.224066
75 6.485739 8.877712 14.000317 16.510073 21.114494 26.151920 31.615820
76 7.229622 9.914815 15.721196 18.479151 23.615326 29.248646 35.339811
77 8.071357 11.072455 17.558369 20.650013 26.359890 32.683697 39.478304
78 8.959391 12.319434 19.578213 22.989676 29.442339 36.453147 43.926378
79 9.938100 13.683313 21.826150 25.615735 32.772539 40.547426 48.751746
80 10.968087 15.165964 24.355207 28.486899 36.436367 44.929308 57.640639
81 13.079641 17.692415 27.075159 32.156361 43.112084 57.640639 76.614834
82 17.242226 23.394551 31.649518 42.673443 57.293406 76.614834 84.138978
83 22.638261 30.917412 41.984151 56.876727 76.614834 84.138978 92.012770
84 29.678463 40.918882 56.112815 76.614834 84.138978 92.012770 102.454057
85 38.788343 54.654437 76.614834 84.138978 92.012770 102.454057 113.576088
86 50.418198 76.614834 84.138978 92.012770 102.454057 113.576088 119.278173
87 76.614834 84.138978 92.012770 102.454057 113.576088 119.278173 127.700665
88 84.138978 92.012770 102.454057 113.576088 119.278173 127.700665 141.024226
89 92.012770 102.454057 113.576088 119.278173 127.700665 141.024226 162.410241
90 102.454057 113.576088 119.278173 127.700665 141.024226 162.410241 191.033607
91 113.576088 119.278173 127.700665 141.024226 162.410241 191.033607 221.919487
92 119.278173 127.700665 141.024226 162.410241 191.033607 221.919487 260.530344
93 127.700665 141.024226 162.410241 191.033607 221.919487 260.530344 306.867694
94 141.024226 162.410241 191.033607 221.919487 260.530344 306.867694 1000.000000
95 162.410241 191.033607 221.919487 260.530344 306.867694 1000.000000 1000.000000
96 191.033607 221.919487 260.530344 306.867694 1000.000000 1000.000000 1000.000000
97 221.919487 260.530344 306.867694 1000.000000 1000.000000 1000.000000 1000.000000
98 260.530344 306.867694 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 306.867694 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 5.556754 6.408020 7.328795 8.067610 8.818643 9.578762 10.396608
57 6.194657 7.138231 7.913124 8.679985 9.469460 10.300442 11.255750
58 6.900025 7.707143 8.504351 9.320413 10.172221 11.151530 12.241238
59 7.441083 8.282499 9.131620 10.011944 11.024151 12.127894 13.447583
60 7.986695 8.883208 9.808927 10.838871 11.976767 13.322940 14.935061
61 8.565241 9.531114 10.607271 11.775265 13.156750 14.781249 16.679359
62 9.189191 10.317771 11.523388 12.935162 14.596676 16.524602 18.723710
63 9.935632 11.195947 12.658178 14.350578 16.301065 18.530682 21.293323
64 10.780350 12.284249 14.042956 16.025941 18.299049 21.095552 24.139336
65 11.827225 13.627666 15.664842 17.970901 20.809884 23.890220 27.300786
66 13.104708 15.200571 17.565542 20.436316 23.566369 27.019045 30.735083
67 14.598738 17.044367 19.974851 23.142872 26.652780 30.417572 34.583413
68 16.349466 19.359564 22.619729 26.145645 30.004807 34.190420 38.797586
69 18.568481 21.897292 25.525813 29.433287 33.725973 38.396370 43.533244
70 21.000475 24.736935 28.734763 33.118620 37.834668 43.038037 48.755454
71 23.694491 27.813980 32.296906 37.152601 42.452791 48.200841 56.315869
72 26.639189 31.260833 36.229804 41.642452 47.494971 56.315869 62.662912
73 29.903220 35.026156 40.561999 46.587424 56.315869 62.662912 69.446553
74 33.501535 39.211433 45.377361 51.979547 62.662912 69.446553 76.614834
75 37.500716 43.864782 50.627966 62.662912 69.446553 76.614834 84.138978
76 41.898430 48.882174 56.271295 69.446553 76.614834 84.138978 92.012770
77 46.685856 54.328745 69.446553 76.614834 84.138978 92.012770 102.454057
78 51.884891 69.446553 76.614834 84.138978 92.012770 102.454057 113.576088
79 57.362853 76.614834 84.138978 92.012770 102.454057 113.576088 119.278173
80 76.614834 84.138978 92.012770 102.454057 113.576088 119.278173 127.700665
81 84.138978 92.012770 102.454057 113.576088 119.278173 127.700665 141.024226
82 92.012770 102.454057 113.576088 119.278173 127.700665 141.024226 162.410241
83 102.454057 113.576088 119.278173 127.700665 141.024226 162.410241 191.033607
84 113.576088 119.278173 127.700665 141.024226 162.410241 191.033607 221.919487
85 119.278173 127.700665 141.024226 162.410241 191.033607 221.919487 260.530344
86 127.700665 141.024226 162.410241 191.033607 221.919487 260.530344 306.867694
87 141.024226 162.410241 191.033607 221.919487 260.530344 306.867694 1000.000000
88 162.410241 191.033607 221.919487 260.530344 306.867694 1000.000000 1000.000000
89 191.033607 221.919487 260.530344 306.867694 1000.000000 1000.000000 1000.000000
90 221.919487 260.530344 306.867694 1000.000000 1000.000000 1000.000000 1000.000000
91 260.530344 306.867694 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 306.867694 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 11.417870 71 12.593867
57 12.367177 72 13.849210
58 13.544528 73 15.381113
59 15.042728 74 17.195216
60 16.816921 75 19.302794
61 18.858830 76 21.974534
62 21.469120 77 24.911595
63 24.338629 78 28.174186
64 27.498006 79 31.751119
65 30.989092 80 35.726666
66 34.869226 81 40.121599
67 39.118559 82 45.018867
68 43.893395 83 50.419290
69 49.158808 84 56.315869
70 56.315869 85 62.662912
71 62.662912 86 69.446553
72 69.446553 87 76.614834
73 76.614834 88 84.138978
74 84.138978 89 92.012770
75 92.012770 90 102.454057
76 102.454057 91 113.576088
77 113.576088 92 119.278173
78 119.278173 93 127.700665
79 127.700665 94 141.024226
80 141.024226 95 162.410241
81 162.410241 96 191.033607
82 191.033607 97 221.919487
83 221.919487 98 260.530344
84 260.530344 99 306.867694
85 306.867694 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 37
SCHEDULE 3
Mortality Rates Per Thousand - Variable Life Male
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.991659 0.518331 0.479938 0.431688 0.402738 0.367912 0.362937
1 0.508299 0.462531 0.431688 0.402738 0.364138 0.358162 0.313537
2 0.453579 0.416031 0.402738 0.364138 0.354488 0.309412 0.274017
3 0.407979 0.388131 0.364138 0.354488 0.306238 0.270412 0.254257
4 0.380619 0.350931 0.354488 0.306238 0.267638 0.250912 0.204857
5 0.344139 0.341631 0.306238 0.267638 0.248338 0.202162 0.204857
6 0.335019 0.295131 0.267638 0.248338 0.200088 0.202162 0.293777
7 0.289419 0.257931 0.248338 0.200088 0.200088 0.289912 0.441977
8 0.252939 0.239331 0.200088 0.200088 0.286938 0.436162 0.590177
9 0.234699 0.192831 0.200088 0.286938 0.431688 0.582412 0.688977
10 0.189099 0.192831 0.286938 0.431688 0.576438 0.679912 0.808228
11 0.189099 0.276531 0.431688 0.576438 0.672938 0.797594 1.011217
12 0.271179 0.416031 0.576438 0.672938 0.789413 0.997912 1.166985
13 0.407979 0.555531 0.672938 0.789413 0.987677 1.151630 1.189771
14 0.544779 0.648531 0.789413 0.987677 1.139818 1.174116 1.182220
15 0.635979 0.760782 0.987677 1.139818 1.162074 1.166664 1.174198
16 0.732150 0.951854 1.139818 1.162074 1.154698 1.158748 1.143603
17 0.909891 1.098477 1.162074 1.154698 1.146864 1.128556 1.101518
18 1.038238 1.109088 1.148715 1.140921 1.112351 1.084795 1.067830
19 1.046469 1.090083 1.133791 1.104249 1.070301 1.052653 1.028774
20 1.027861 1.070802 1.097304 1.056922 1.038560 1.015155 0.996096
21 1.009002 1.031327 1.050233 1.021214 1.002583 0.984904 0.987408
22 0.971137 0.981109 1.014710 0.980583 0.971677 0.976290 1.000678
23 0.923134 0.942076 0.973249 0.945223 0.963152 0.990404 1.027437
24 0.885703 0.896772 0.938101 0.931822 0.978075 1.017914 1.074949
25 0.845438 0.859756 0.924747 0.940062 1.005216 1.066066 1.127974
26 0.810918 0.841874 0.931843 0.959717 1.047187 1.115117 1.188494
27 0.793362 0.842460 0.951252 0.998326 1.092908 1.173638 1.260838
28 0.799309 0.857079 0.989442 1.041477 1.148878 1.243675 1.339351
29 0.812638 0.886167 1.030957 1.091929 1.214629 1.321004 1.418663
30 0.839527 0.916406 1.082025 1.153898 1.288543 1.397623 1.488206
31 0.866144 0.950795 1.142016 1.220799 1.360053 1.464433 1.577667
32 0.903751 0.994148 1.206686 1.284912 1.423226 1.550641 1.673534
33 0.922854 1.021802 1.271387 1.340812 1.503345 1.642910 1.779779
34 0.948413 1.060992 1.324963 1.412131 1.590668 1.746998 1.913543
35 0.966314 1.103079 1.395239 1.487986 1.687222 1.876022 2.046759
36 0.981043 1.160447 1.471773 1.575384 1.809319 2.001923 2.169738
37 1.027004 1.219572 1.556101 1.682166 1.927944 2.117109 2.308067
38 1.075457 1.288074 1.661322 1.786711 2.040558 2.251648 2.459970
39 1.129957 1.373665 1.766535 1.885064 2.167019 2.393931 2.612599
40 1.198570 1.457167 1.858750 1.992631 2.305878 2.539046 2.807053
41 1.266614 1.533409 1.969551 2.113263 2.441956 2.711899 3.042006
42 1.325286 1.620776 2.088498 2.233066 2.610401 2.924740 3.296265
43 1.395098 1.714275 2.203645 2.385202 2.810924 3.161265 3.573533
44 1.469378 1.809401 2.347140 2.572944 3.030014 3.422596 3.875228
45 1.550495 1.922118 2.521209 2.775013 3.263501 3.706546 4.188699
46 1.655685 2.062494 2.707513 2.994262 3.520109 4.000930 4.514275
47 1.786575 2.212510 2.908595 3.236015 3.779458 4.311211 4.849793
48 1.923759 2.370117 3.125040 3.480953 4.050872 4.625265 5.200986
49 2.076402 2.543534 3.350959 3.733259 4.344606 4.953320 5.595669
50 2.241684 2.725062 3.582262 3.996588 4.645248 5.328277 6.058225
51 2.412113 2.905381 3.816967 4.264688 4.982624 5.760628 6.554530
52 2.587768 3.087252 4.065347 4.565231 5.385089 6.223726 7.093242
53 2.767301 3.280064 4.343491 4.924522 5.808298 6.726062 7.673035
54 2.953870 3.489141 4.676525 5.308246 6.267088 7.265377 8.299606
55 3.163053 3.741220 5.023601 5.707973 6.767128 7.847258 8.987639
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.312585 0.274572 0.257345 0.207345 0.207345 0.297345 0.447345
1 0.273185 0.254772 0.207345 0.207345 0.297345 0.447345 0.597345
2 0.253485 0.205272 0.207345 0.297345 0.447345 0.597345 0.697345
3 0.204235 0.205272 0.297345 0.447345 0.597345 0.697345 0.818045
4 0.204235 0.294372 0.447345 0.597345 0.697345 0.818045 1.023499
5 0.292885 0.442872 0.597345 0.697345 0.818045 1.023499 1.181158
6 0.440635 0.591372 0.697345 0.818045 1.023499 1.181158 1.204222
7 0.588385 0.690372 0.818045 1.023499 1.181158 1.204222 1.196578
8 0.686885 0.809864 1.023499 1.181158 1.204222 1.196578 1.188460
9 0.805774 1.013264 1.181158 1.204222 1.196578 1.188460 1.157493
10 1.008147 1.169347 1.204222 1.196578 1.188460 1.157493 1.114897
11 1.163441 1.192180 1.196578 1.188460 1.157493 1.114897 1.084092
12 1.186159 1.184613 1.188460 1.157493 1.114897 1.084092 1.047631
13 1.178630 1.176575 1.157493 1.114897 1.084092 1.047631 1.017463
14 1.170633 1.145918 1.114897 1.084092 1.047631 1.017463 1.010653
15 1.140131 1.103748 1.084092 1.047631 1.017463 1.010653 1.027390
16 1.098173 1.073251 1.047631 1.017463 1.010653 1.027390 1.058122
17 1.067830 1.037155 1.017463 1.010653 1.027390 1.058122 1.110485
18 1.029822 1.005253 1.008631 1.026362 1.058122 1.110485 1.168885
19 0.998131 0.996504 1.022253 1.056006 1.110485 1.168885 1.238015
20 0.989429 1.010952 1.050715 1.106043 1.168885 1.238015 1.320249
21 1.004787 1.040134 1.099380 1.163041 1.238015 1.320249 1.411329
22 1.032727 1.089386 1.154859 1.230587 1.320249 1.411329 1.502821
23 1.081612 1.144339 1.219445 1.311008 1.411329 1.502821 1.584884
24 1.136157 1.209540 1.297805 1.398627 1.502821 1.584884 1.689151
25 1.200874 1.287243 1.383102 1.487793 1.584884 1.689151 1.801436
26 1.275361 1.370400 1.468256 1.564281 1.685773 1.799635 1.928254
27 1.356287 1.454731 1.543677 1.663814 1.792429 1.924398 2.084469
28 1.438200 1.527828 1.640166 1.769010 1.914756 2.078216 2.241796
29 1.508810 1.621585 1.761805 1.887761 2.063624 2.232828 2.392214
30 1.601315 1.723974 1.860765 2.036526 2.214894 2.380253 2.564519
31 1.698754 1.837626 2.005259 2.183509 2.356330 2.549132 2.751645
32 1.810631 1.978161 2.149882 2.322839 2.520922 2.732383 2.942116
33 1.946894 2.118497 2.286956 2.482455 2.696612 2.918579 3.171811
34 2.084870 2.253465 2.443987 2.658089 2.877389 3.143265 3.448986
35 2.212798 2.405519 2.619566 2.833257 3.092516 3.414496 3.750018
36 2.356793 2.575540 2.795010 3.048111 3.345517 3.697517 4.071217
37 2.520507 2.747936 3.010049 3.311027 3.633767 4.005947 4.416783
38 2.689094 2.959300 3.266190 3.596267 3.948836 4.341320 4.780895
39 2.892692 3.211006 3.547517 3.908042 4.292491 4.694232 5.154709
40 3.135129 3.483766 3.855010 4.248102 4.650900 5.071401 5.545828
41 3.401266 3.781581 4.185956 4.602754 5.029746 5.461630 5.950025
42 3.691835 4.106054 4.535350 4.972472 5.416725 5.877537 6.410889
43 4.003958 4.448687 4.894370 5.354980 5.823172 6.339150 6.943931
44 4.333137 4.800648 5.270782 5.756725 6.280454 6.887246 7.523862
45 4.675686 5.164131 5.666115 6.208714 6.816389 7.470010 8.161401
46 5.029415 5.545302 6.104366 6.738447 7.400772 8.094641 8.850715
47 5.394287 5.980453 6.625077 7.308455 8.019536 8.787301 9.607483
48 5.810887 6.483364 7.185365 7.919396 8.696711 9.528813 10.430364
49 6.299137 7.023809 7.777531 8.578943 9.430477 10.355556 11.288804
50 6.816095 7.602286 8.433998 9.302639 10.248687 11.196273 12.264034
51 7.376972 8.243757 9.145301 10.099072 11.080609 12.163406 13.599705
52 7.990103 8.928960 9.917395 10.918679 12.037622 13.488117 15.124451
53 8.653618 9.682284 10.722051 11.861523 13.334685 15.000225 16.574902
54 9.383053 10.456023 11.647688 13.139407 14.829415 16.438764 18.160880
55 10.120598 11.358383 12.888336 14.612021 16.251573 18.011561 19.919611
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.597345 15 0.697345
1 0.697345 16 0.818045
2 0.818045 17 1.023499
3 1.023499 18 1.181158
4 1.181158 19 1.204222
5 1.204222 20 1.196578
6 1.196578 21 1.188460
7 1.188460 22 1.157493
8 1.157493 23 1.114897
9 1.114897 24 1.084092
10 1.084092 25 1.047631
11 1.047631 26 1.017463
12 1.017463 27 1.010653
13 1.010653 28 1.027390
14 1.027390 29 1.058122
15 1.058122 30 1.110485
16 1.110485 31 1.168885
17 1.168885 32 1.238015
18 1.238015 33 1.320249
19 1.320249 34 1.411329
20 1.411329 35 1.502821
21 1.502821 36 1.584884
22 1.584884 37 1.689151
23 1.689151 38 1.801436
24 1.801436 39 1.928254
25 1.928254 40 2.084469
26 2.084469 41 2.241796
27 2.241796 42 2.392214
28 2.392214 43 2.564519
29 2.564519 44 2.751645
30 2.751645 45 2.942116
31 2.942116 46 3.171811
32 3.171811 47 3.448986
33 3.448986 48 3.750018
34 3.750018 49 4.079376
35 4.079376 50 4.438978
36 4.438978 51 4.814597
37 4.814597 52 5.206777
38 5.206777 53 5.613186
39 5.613186 54 6.040634
40 6.040634 55 6.521759
41 6.521759 56 7.085644
42 7.085644 57 7.693110
43 7.693110 58 8.344990
44 8.344990 59 9.059074
45 9.059074 60 9.833657
46 9.823823 61 10.686848
47 10.665475 62 11.566398
48 11.531698 63 12.578497
49 12.553340 64 13.948415
50 13.878673 65 15.528183
51 15.435014 66 17.017354
52 16.898232 67 18.664831
53 18.515512 68 20.472365
54 20.288114 69 22.460929
55 22.236319 70 24.702216
</TABLE>
<PAGE> 38
Schedule 3
Mortality Rates Per Thousand - Variable Life Male
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 3.401109 4.008110 5.399209 6.151111 7.296573 8.496044 9.692641
57 3.661920 4.280980 5.815925 6.627885 7.886894 9.149020 10.503045
58 3.930490 4.583891 6.264039 7.138815 8.478169 9.911856 11.619030
59 4.194351 4.906995 6.754088 7.668522 9.169724 10.935557 12.888392
60 4.434979 5.268616 7.263698 8.276651 10.112601 12.127511 14.073351
61 4.734274 5.621269 7.874139 9.108315 11.195820 13.239501 15.379820
62 4.996684 6.025100 8.661966 10.062263 12.184425 14.446579 16.828284
63 5.320704 6.597600 9.534305 10.942158 13.289359 15.784194 18.395501
64 5.704902 7.267190 10.397603 11.908162 14.494435 17.227532 20.157008
65 6.257858 7.862017 11.310887 12.959007 15.812494 18.872493 22.098105
66 6.721855 8.511163 12.303891 14.105463 17.291551 20.684696 24.329565
67 7.241954 9.171620 13.409174 15.389480 18.917935 22.709594 26.808040
68 7.799971 9.927730 14.623712 16.797821 20.759628 25.016414 29.602430
69 8.400387 10.770166 15.982393 18.419670 22.826648 27.582413 32.614830
70 9.090415 11.714985 17.489687 20.205565 25.121665 30.380938 36.171902
71 9.812319 12.749772 19.210217 22.183459 27.619034 33.639869 40.029587
72 10.619810 13.901694 21.118359 24.369736 30.565258 37.170331 44.076867
73 11.546037 15.205218 23.151249 26.902852 33.709126 40.916639 48.440127
74 12.524105 16.612037 25.591621 29.645973 37.035657 44.897217 53.036543
75 13.647052 18.266811 28.191263 32.489363 40.621292 49.142721 58.032418
76 14.875695 19.964631 30.936971 35.551266 44.376146 53.687351 63.290862
77 16.252614 21.788942 33.779811 38.803952 48.384897 58.533969 68.996733
78 17.630747 23.700844 36.789906 42.198700 52.728947 63.709627 74.896370
79 19.119495 25.712653 40.062989 45.875797 57.276981 69.135111 81.131604
80 20.610404 27.837886 43.618288 49.786914 62.125579 74.770385 93.637478
81 24.008335 31.685744 47.319598 54.827984 71.746200 93.637478 121.539870
82 30.879491 40.886953 53.963795 71.016224 93.073396 121.539870 130.363691
83 39.565176 52.715522 69.869119 92.396499 121.539870 130.363691 139.246585
84 50.603060 68.096320 91.155520 121.539870 130.363691 139.246585 151.311466
85 64.550723 88.786379 121.539870 130.363691 139.246585 151.311466 163.691439
86 81.904589 121.539870 130.363691 139.246585 151.311466 163.691439 168.540302
87 121.539870 130.363691 139.246585 151.311466 163.691439 168.540302 175.888407
88 130.363691 139.246585 151.311466 163.691439 168.540302 175.888407 187.884323
89 139.246585 151.311466 163.691439 168.540302 175.888407 187.884323 207.420611
90 151.311466 163.691439 168.540302 175.888407 187.884323 207.420611 233.817716
91 163.691439 168.540302 175.888407 187.884323 207.420611 233.817716 262.106354
92 168.540302 175.888407 187.884323 207.420611 233.817716 262.106354 297.468598
93 175.888407 187.884323 207.420611 233.817716 262.106354 297.468598 339.910102
94 187.884323 207.420611 233.817716 262.106354 297.468598 339.910102 1000.000000
95 207.420611 233.817716 262.106354 297.468598 339.910102 1000.000000 1000.000000
96 233.817716 262.106354 297.468598 339.910102 1000.000000 1000.000000 1000.000000
97 262.106354 297.468598 339.910102 1000.000000 1000.000000 1000.000000 1000.000000
98 297.468598 339.910102 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 339.910102 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 10.981028 12.567522 14.332513 15.996312 17.806248 19.735360 21.854484
57 12.149070 13.959837 15.690000 17.526276 19.510164 21.652335 24.010554
58 13.493991 15.281584 17.171644 19.203078 21.382804 23.788234 26.419874
59 14.754046 16.723688 18.814104 21.045890 23.516509 26.175246 29.129479
60 16.126414 18.302294 20.619133 23.121274 25.849074 28.859483 32.216098
61 17.647179 20.035148 22.627229 25.414179 28.499490 31.884315 35.625753
62 19.316399 22.009674 24.870560 28.019498 31.486176 35.295205 39.397740
63 21.194501 24.163856 27.419509 30.955324 34.817746 38.991578 43.813217
64 23.266885 26.609524 30.291758 34.230105 38.504183 43.406283 48.607356
65 25.619541 29.395945 33.458826 37.813707 42.818489 48.105732 53.723879
66 28.267884 32.467181 36.960767 42.049837 47.453621 53.169453 59.129940
67 31.181716 35.864128 41.100324 46.600860 52.448699 58.519094 64.986549
68 34.401944 39.834308 45.547450 51.450733 57.724993 64.248066 71.214909
69 38.206572 44.092741 50.230995 56.625470 63.375313 70.478457 77.964667
70 42.286895 48.678603 55.281607 62.234020 69.447424 77.077789 85.210524
71 46.627226 53.510153 60.689918 68.195455 76.029660 84.241221 96.020987
72 51.250021 58.743007 66.501616 74.578404 83.007563 96.020987 104.282267
73 56.191882 64.292260 72.643397 81.421432 96.020987 104.282267 112.816238
74 61.493742 70.224638 79.306589 88.627371 104.282267 112.816238 121.539870
75 67.160876 76.663036 86.322868 104.282267 112.816238 121.539870 130.363691
76 73.226417 83.346217 93.645476 112.816238 121.539870 130.363691 139.246585
77 79.601398 90.412725 112.816238 121.539870 130.363691 139.246585 151.311466
78 86.345717 112.816238 121.539870 130.363691 139.246585 151.311466 163.691439
79 93.186213 121.539870 130.363691 139.246585 151.311466 163.691439 168.540302
80 121.539870 130.363691 139.246585 151.311466 163.691439 168.540302 175.888407
81 130.363691 139.246585 151.311466 163.691439 168.540302 175.888407 187.884323
82 139.246585 151.311466 163.691439 168.540302 175.888407 187.884323 207.420611
83 151.311466 163.691439 168.540302 175.888407 187.884323 207.420611 233.817716
84 163.691439 168.540302 175.888407 187.884323 207.420611 233.817716 262.106354
85 168.540302 175.888407 187.884323 207.420611 233.817716 262.106354 297.468598
86 175.888407 187.884323 207.420611 233.817716 262.106354 297.468598 339.910102
87 187.884323 207.420611 233.817716 262.106354 297.468598 339.910102 1000.000000
88 207.420611 233.817716 262.106354 297.468598 339.910102 1000.000000 1000.000000
89 233.817716 262.106354 297.468598 339.910102 1000.000000 1000.000000 1000.000000
90 262.106354 297.468598 339.910102 1000.000000 1000.000000 1000.000000 1000.000000
91 297.468598 339.910102 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 339.910102 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 24.356385 71 27.180940
57 26.691683 72 29.999463
58 29.339475 73 33.178267
59 32.448346 74 36.727580
60 35.919574 75 40.616227
61 39.682054 76 45.214878
62 44.174936 77 50.162390
63 49.008655 78 55.442600
64 54.111977 79 61.084649
65 59.618617 80 67.134865
66 65.523628 81 73.645200
67 71.804070 82 80.625302
68 78.609669 83 88.118433
69 85.915472 84 96.020987
70 96.020987 85 104.282267
71 104.282267 86 112.816238
72 112.816238 87 121.539870
73 121.539870 88 130.363691
74 130.363691 89 139.246585
75 139.246585 90 151.311466
76 151.311466 91 163.691439
77 163.691439 92 168.540302
78 168.540302 93 175.888407
79 175.888407 94 187.884323
80 187.884323 95 207.420611
81 207.420611 96 233.817716
82 233.817716 97 262.106354
83 262.106354 98 297.468598
84 297.468598 99 339.910102
85 339.910102 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 39
Schedule 3
Mortality Rates Per Thousand - Variable Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.784555 0.381539 0.337998 0.309048 0.280098 0.273251 0.257134
1 0.374155 0.325739 0.309048 0.280098 0.270448 0.253751 0.227494
2 0.319435 0.297839 0.280098 0.270448 0.251148 0.224501 0.207734
3 0.292075 0.269939 0.270448 0.251148 0.222198 0.205001 0.178094
4 0.264715 0.260639 0.251148 0.222198 0.202898 0.175751 0.168214
5 0.255595 0.242039 0.222198 0.202898 0.173948 0.166001 0.168214
6 0.237355 0.214139 0.202898 0.173948 0.164298 0.166001 0.187974
7 0.209995 0.195539 0.173948 0.164298 0.164298 0.185501 0.237374
8 0.191755 0.167639 0.164298 0.164298 0.183598 0.234251 0.286774
9 0.164395 0.158339 0.164298 0.183598 0.231848 0.283001 0.316414
10 0.155275 0.158339 0.183598 0.231848 0.280098 0.312251 0.336982
11 0.155275 0.176939 0.231848 0.280098 0.309048 0.332548 0.346862
12 0.173515 0.223439 0.280098 0.309048 0.329137 0.342298 0.348679
13 0.219115 0.269939 0.309048 0.329137 0.338787 0.344091 0.361704
14 0.264715 0.297839 0.329137 0.338787 0.340562 0.356945 0.371764
15 0.292075 0.317200 0.338787 0.340562 0.353284 0.366872 0.381479
16 0.305262 0.326500 0.340562 0.353284 0.363109 0.376460 0.391883
17 0.312106 0.328210 0.353284 0.363109 0.372599 0.386727 0.398350
18 0.310212 0.337175 0.361228 0.370668 0.381174 0.392302 0.415452
19 0.318138 0.342790 0.368352 0.378397 0.387061 0.409547 0.419022
20 0.323224 0.347888 0.376018 0.382222 0.404064 0.413475 0.428051
21 0.327810 0.353409 0.379803 0.397316 0.408355 0.423242 0.438204
22 0.332783 0.354806 0.394785 0.399394 0.417558 0.433271 0.447573
23 0.333840 0.366526 0.396407 0.406189 0.427440 0.442977 0.459037
24 0.344593 0.365258 0.403129 0.413536 0.437463 0.454783 0.464659
25 0.344349 0.369462 0.410396 0.420461 0.449110 0.460819 0.468599
26 0.348475 0.373617 0.416785 0.428782 0.452658 0.463258 0.484891
27 0.352088 0.376806 0.425000 0.431538 0.454031 0.478830 0.497298
28 0.357507 0.382925 0.427697 0.432665 0.468728 0.490529 0.514965
29 0.363070 0.383056 0.428295 0.445494 0.479072 0.507911 0.558766
30 0.362895 0.380706 0.441453 0.455119 0.495430 0.550479 0.596923
31 0.359826 0.387913 0.450432 0.469383 0.535681 0.587387 0.658233
32 0.368719 0.392110 0.463957 0.506085 0.570859 0.646957 0.711661
33 0.363991 0.392871 0.500758 0.537803 0.627224 0.698638 0.793156
34 0.364654 0.417890 0.531446 0.589168 0.676423 0.778548 0.871494
35 0.380600 0.442448 0.582121 0.632758 0.751908 0.854406 0.966556
36 0.393499 0.484161 0.625863 0.702068 0.824027 0.945383 1.048981
37 0.428486 0.518616 0.693474 0.766117 0.910447 1.023537 1.145341
38 0.457332 0.574028 0.756624 0.843751 0.986528 1.117344 1.250513
39 0.503564 0.625615 0.834223 0.911353 1.075348 1.216942 1.353483
40 0.545870 0.688128 0.898631 0.988811 1.172181 1.315379 1.472221
41 0.598142 0.741342 0.977357 1.074266 1.265080 1.422315 1.595188
42 0.640723 0.804284 1.061677 1.156863 1.369082 1.533695 1.722091
43 0.692295 0.871442 1.141621 1.250972 1.474011 1.651561 1.864017
44 0.746951 0.937379 1.231010 1.349218 1.582991 1.785286 2.014984
45 0.803250 1.008097 1.322089 1.449769 1.702299 1.927275 2.173331
46 0.868361 1.081545 1.414504 1.561859 1.830334 2.075905 2.355484
47 0.936856 1.155897 1.517174 1.682615 1.960994 2.249528 2.548132
48 1.005043 1.236295 1.624912 1.806113 2.113687 2.430163 2.766051
49 1.083088 1.322549 1.738664 1.947960 2.282702 2.634335 2.992010
50 1.165598 1.413914 1.869173 2.099850 2.470492 2.849035 3.219054
51 1.251539 1.515986 2.005474 2.268098 2.664214 3.060925 3.465307
52 1.350260 1.622075 2.162082 2.441034 2.861381 3.290415 3.745786
53 1.453969 1.744443 2.322469 2.616658 3.070783 3.551886 4.046841
54 1.570963 1.865647 2.484884 2.806411 3.309512 3.831838 4.393920
55 1.691288 1.987907 2.655922 3.014256 3.569056 4.154441 4.761531
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.226803 0.208155 0.180257 0.170257 0.170257 0.190257 0.240257
1 0.207103 0.178455 0.170257 0.170257 0.190257 0.240257 0.290257
2 0.177553 0.168555 0.170257 0.190257 0.240257 0.290257 0.320257
3 0.167703 0.168555 0.190257 0.240257 0.290257 0.320257 0.341075
4 0.167703 0.188355 0.240257 0.290257 0.320257 0.341075 0.351075
5 0.187403 0.237855 0.290257 0.320257 0.341075 0.351075 0.352914
6 0.236653 0.287355 0.320257 0.341075 0.351075 0.352914 0.366097
7 0.285903 0.317055 0.341075 0.351075 0.352914 0.366097 0.376279
8 0.315453 0.337664 0.351075 0.352914 0.366097 0.376279 0.386113
9 0.335959 0.347564 0.352914 0.366097 0.376279 0.386113 0.396643
10 0.345809 0.349385 0.366097 0.376279 0.386113 0.396643 0.403188
11 0.347621 0.362436 0.376279 0.386113 0.396643 0.403188 0.421779
12 0.360606 0.372516 0.386113 0.396643 0.403188 0.421779 0.426703
13 0.370635 0.382252 0.396643 0.403188 0.421779 0.426703 0.437233
14 0.380321 0.392677 0.403188 0.421779 0.426703 0.437233 0.448520
15 0.390693 0.399156 0.421779 0.426703 0.437233 0.448520 0.459520
16 0.397140 0.417561 0.426703 0.437233 0.448520 0.459520 0.472747
17 0.415452 0.422436 0.437233 0.448520 0.459520 0.472747 0.480020
18 0.419449 0.431986 0.447623 0.459061 0.472747 0.480020 0.485595
19 0.428926 0.442241 0.457222 0.471801 0.480020 0.485595 0.505095
20 0.439101 0.452168 0.469438 0.478099 0.485595 0.505095 0.520731
21 0.449411 0.464710 0.475219 0.483167 0.505095 0.520731 0.542640
22 0.461401 0.470899 0.479768 0.502064 0.520731 0.542640 0.591913
23 0.467539 0.475398 0.497518 0.517086 0.542640 0.591913 0.635701
24 0.471998 0.493478 0.511878 0.537756 0.591913 0.635701 0.704747
25 0.489942 0.507713 0.531787 0.585994 0.635701 0.704747 0.766051
26 0.503026 0.526903 0.578299 0.627437 0.703337 0.765284 0.859324
27 0.521477 0.572971 0.619172 0.694175 0.762220 0.857605 0.949340
28 0.566460 0.612815 0.684309 0.752262 0.853309 0.946492 1.058659
29 0.605187 0.676557 0.749197 0.841278 0.939846 1.054424 1.156539
30 0.668100 0.733110 0.829248 0.927505 1.045955 1.150756 1.272601
31 0.722386 0.818936 0.913265 1.031134 1.139191 1.264965 1.398784
32 0.806905 0.900923 1.015254 1.122999 1.250967 1.388992 1.524193
33 0.886683 1.000433 1.105651 1.231878 1.370808 1.512000 1.663527
34 0.984553 1.089460 1.212789 1.351225 1.490661 1.648555 1.808603
35 1.069799 1.193700 1.331642 1.467798 1.621939 1.790517 1.959147
36 1.169520 1.309262 1.447983 1.598649 1.754345 1.931719 2.123618
37 1.281286 1.423596 1.578687 1.736259 1.898414 2.089572 2.296574
38 1.393113 1.552070 1.712747 1.878822 2.059782 2.257336 2.480595
39 1.517136 1.683809 1.853353 2.038503 2.231946 2.435629 2.689653
40 1.644020 1.820048 2.010841 2.208865 2.413146 2.646183 2.913836
41 1.776947 1.972539 2.176552 2.388166 2.624449 2.869598 3.164414
42 1.925726 2.135006 2.353192 2.594564 2.846004 3.125863 3.427909
43 2.081919 2.308227 2.553812 2.813563 3.096949 3.389549 3.689676
44 2.248273 2.504909 2.769324 3.061611 3.358165 3.659556 3.977782
45 2.439705 2.713289 3.013422 3.319806 3.621906 3.949312 4.309857
46 2.642507 2.949170 3.264011 3.580492 3.912706 4.274603 4.667962
47 2.868855 3.197754 3.520252 3.863899 4.234941 4.634517 5.086327
48 3.107087 3.444953 3.798823 4.182060 4.586739 5.044678 5.525867
49 3.347063 3.713410 4.107144 4.524627 4.992618 5.486235 6.039644
50 3.603594 4.014601 4.448181 4.924939 5.429618 5.990139 6.607510
51 3.895617 4.347846 4.841642 5.350353 5.928257 6.553294 7.363829
52 4.214066 4.727108 5.254103 5.841623 6.485525 7.303408 8.190299
53 4.581338 5.129545 5.736424 6.390648 7.220329 8.123028 8.817003
54 4.971016 5.594096 6.275440 7.114592 8.030530 8.744584 9.451363
55 5.414640 6.119570 6.978644 7.912805 8.645008 9.373654 10.124744
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.290257 15 0.320257
1 0.320257 16 0.341075
2 0.341075 17 0.351075
3 0.351075 18 0.352914
4 0.352914 19 0.366097
5 0.366097 20 0.376279
6 0.376279 21 0.386113
7 0.386113 22 0.396643
8 0.396643 23 0.403188
9 0.403188 24 0.421779
10 0.421779 25 0.426703
11 0.426703 26 0.437233
12 0.437233 27 0.448520
13 0.448520 28 0.459520
14 0.459520 29 0.472747
15 0.472747 30 0.480020
16 0.480020 31 0.485595
17 0.485595 32 0.505095
18 0.505095 33 0.520731
19 0.520731 34 0.542640
20 0.542640 35 0.591913
21 0.591913 36 0.635701
22 0.635701 37 0.704747
23 0.704747 38 0.766051
24 0.766051 39 0.859324
25 0.859324 40 0.949340
26 0.949340 41 1.058659
27 1.058659 42 1.156539
28 1.156539 43 1.272601
29 1.272601 44 1.398784
30 1.398784 45 1.524193
31 1.524193 46 1.663527
32 1.663527 47 1.808603
33 1.808603 48 1.959147
34 1.959147 49 2.127874
35 2.127874 50 2.308114
36 2.308114 51 2.498081
37 2.498081 52 2.716821
38 2.716821 53 2.949227
39 2.949227 54 3.212603
40 3.212603 55 3.487191
41 3.487191 56 3.764976
42 3.764976 57 4.067262
43 4.067262 58 4.406807
44 4.406807 59 4.777853
45 4.777853 60 5.206066
46 5.200860 61 5.661749
47 5.650426 62 6.188160
48 6.169595 63 6.776933
49 6.763379 64 7.552645
50 7.514882 65 8.408932
51 8.358478 66 9.052365
52 8.988998 67 9.713631
53 9.635922 68 10.405698
54 10.312047 69 11.154535
55 11.042990 70 12.047939
</TABLE>
<PAGE> 40
Schedule 3
Mortality Rates Per Thousand - Variable Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 1.807188 2.119044 2.851204 3.244162 3.862901 4.501091 5.185678
57 1.936017 2.260692 3.067381 3.508889 4.178371 4.894834 5.658739
58 2.075606 2.417593 3.316264 3.782049 4.535921 5.340223 6.291353
59 2.212146 2.597827 3.578226 4.102750 4.940384 5.921274 6.979413
60 2.347936 2.791242 3.886164 4.459222 5.475668 6.567376 7.486306
61 2.508155 3.007446 4.242360 4.931877 6.062840 7.042740 8.004032
62 2.673285 3.246151 4.690193 5.448988 6.481493 7.518350 8.553484
63 2.866643 3.572401 5.163084 5.820671 6.916105 8.022793 9.135564
64 3.089032 3.935380 5.530995 6.197296 7.367234 8.555528 9.831118
65 3.388799 4.182193 5.886460 6.586807 7.852793 9.204626 10.623576
66 3.575684 4.429416 6.253824 7.005048 8.433557 9.944085 11.619873
67 3.768889 4.661753 6.659257 7.505866 9.094722 10.846170 12.820995
68 3.964571 4.930304 7.132380 8.075486 9.914861 11.964147 14.257797
69 4.171796 5.252901 7.683472 8.797290 10.916887 13.284870 15.904428
70 4.433642 5.631933 8.353127 9.663349 12.099669 14.815084 18.028100
71 4.717234 6.089329 9.187322 10.684503 13.468258 16.766133 20.377296
72 5.072053 6.648511 10.171505 11.883757 15.233744 18.921775 22.945798
73 5.521914 7.323484 11.289569 13.408399 17.159828 21.300628 25.780191
74 6.032145 8.100761 12.754881 15.091456 19.280243 23.894628 28.881203
75 6.654904 9.104190 14.350928 16.913506 21.618949 26.760811 32.335269
76 7.414056 10.163112 16.105353 18.920644 24.165158 29.914227 36.124105
77 8.273489 11.343017 17.977863 21.130804 26.959736 33.409045 40.335651
78 9.178319 12.613763 20.034050 23.512829 30.095751 37.244797 44.860862
79 10.175536 14.001900 22.322825 26.184224 33.484257 41.410027 49.771141
80 11.223455 15.511081 24.895721 29.105547 37.211510 45.868776 58.827795
81 13.377281 18.085062 27.663148 32.840452 44.013554 58.827795 78.172371
82 17.624882 23.902608 32.322827 43.565741 58.473411 78.172371 85.831535
83 23.129895 31.575145 42.862036 58.048150 78.172371 85.831535 93.845671
84 30.309839 41.774492 57.268504 78.172371 85.831535 93.845671 104.377795
85 39.599404 55.780090 78.172371 85.831535 93.845671 104.377795 115.585735
86 51.456602 78.172371 85.831535 93.845671 104.377795 115.585735 121.280445
87 78.172371 85.831535 93.845671 104.377795 115.585735 121.280445 129.719944
88 85.831535 93.845671 104.377795 115.585735 121.280445 129.719944 143.103925
89 93.845671 104.377795 115.585735 121.280445 129.719944 143.103925 164.645436
90 104.377795 115.585735 121.280445 129.719944 143.103925 164.645436 193.457709
91 115.585735 121.280445 129.719944 143.103925 164.645436 193.457709 224.511264
92 121.280445 129.719944 143.103925 164.645436 193.457709 224.511264 263.331112
93 129.719944 143.103925 164.645436 193.457709 224.511264 263.331112 309.919361
94 143.103925 164.645436 193.457709 224.511264 263.331112 309.919361 1000.000000
95 164.645436 193.457709 224.511264 263.331112 309.919361 1000.000000 1000.000000
96 193.457709 224.511264 263.331112 309.919361 1000.000000 1000.000000 1000.000000
97 224.511264 263.331112 309.919361 1000.000000 1000.000000 1000.000000 1000.000000
98 263.331112 309.919361 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 309.919361 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 5.916262 6.804933 7.761444 8.509223 9.266804 10.031093 10.853362
57 6.578354 7.559629 8.346280 9.121099 9.916630 10.752972 11.710597
58 7.307362 8.129024 8.936540 9.760545 10.619117 11.602165 12.701250
59 7.848400 8.703413 9.562836 10.451799 11.469638 12.583646 13.912327
60 8.392577 9.302694 10.239863 11.276871 12.426840 13.783376 15.407409
61 8.969712 9.949845 11.035912 12.217766 13.611442 15.248733 17.158887
62 9.592900 10.734714 11.956423 13.382197 15.058322 16.999681 19.212074
63 10.337132 11.616678 13.095640 14.804441 16.769716 19.014011 21.836536
64 11.185463 12.708789 14.487090 16.486683 18.776336 21.633720 24.743859
65 12.235970 14.058666 16.115202 18.439630 21.340763 24.488505 27.967897
66 13.519168 15.637584 18.023698 20.957666 24.156544 27.679271 31.469388
67 15.018449 17.488929 20.484429 23.722441 27.304056 31.144291 35.388613
68 16.775904 19.853445 23.186196 26.784529 30.721665 34.986470 39.680463
69 19.042181 22.445668 26.149551 30.136490 34.511209 39.270117 44.499375
70 21.526391 25.341397 29.421277 33.889715 38.695633 43.993178 49.814272
71 24.273479 28.478496 33.048870 37.998044 43.394944 49.247615 57.513926
72 27.275637 31.988674 37.054248 42.566621 48.526416 57.513926 63.973188
73 30.599452 35.823210 41.462189 47.599159 57.513926 63.973188 70.876862
74 34.263895 40.081650 46.362818 53.085354 63.973188 70.876862 78.172371
75 38.332968 44.817390 51.705020 63.973188 70.876862 78.172371 85.831535
76 42.808335 49.922088 57.447923 70.876862 78.172371 85.831535 93.845671
77 47.679045 55.464754 70.876862 78.172371 85.831535 93.845671 104.377795
78 52.969800 70.876862 78.172371 85.831535 93.845671 104.377795 115.585735
79 58.544288 78.172371 85.831535 93.845671 104.377795 115.585735 121.280445
80 78.172371 85.831535 93.845671 104.377795 115.585735 121.280445 129.719944
81 85.831535 93.845671 104.377795 115.585735 121.280445 129.719944 143.103925
82 93.845671 104.377795 115.585735 121.280445 129.719944 143.103925 164.645436
83 104.377795 115.585735 121.280445 129.719944 143.103925 164.645436 193.457709
84 115.585735 121.280445 129.719944 143.103925 164.645436 193.457709 224.511264
85 121.280445 129.719944 143.103925 164.645436 193.457709 224.511264 263.331112
86 129.719944 143.103925 164.645436 193.457709 224.511264 263.331112 309.919361
87 143.103925 164.645436 193.457709 224.511264 263.331112 309.919361 1000.000000
88 164.645436 193.457709 224.511264 263.331112 309.919361 1000.000000 1000.000000
89 193.457709 224.511264 263.331112 309.919361 1000.000000 1000.000000 1000.000000
90 224.511264 263.331112 309.919361 1000.000000 1000.000000 1000.000000 1000.000000
91 263.331112 309.919361 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 309.919361 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 11.879268 71 13.067129
57 12.831921 72 14.327834
58 14.012621 73 15.867568
59 15.518482 74 17.689574
60 17.300404 75 19.806262
61 19.350718 76 22.535125
62 22.016817 77 25.535458
63 24.948143 78 28.862639
64 28.169936 79 32.509698
65 31.729466 80 36.558485
66 35.681081 81 41.034605
67 40.008740 82 46.017968
68 44.867519 83 51.514242
69 50.226386 84 57.513926
70 57.513926 85 63.973188
71 63.973188 86 70.876862
72 70.876862 87 78.172371
73 78.172371 88 85.831535
74 85.831535 89 93.845671
75 93.845671 90 104.377795
76 104.377795 91 115.585735
77 115.585735 92 121.280445
78 121.280445 93 129.719944
79 129.719944 94 143.103925
80 143.103925 95 164.645436
81 164.645436 96 193.457709
82 193.457709 97 224.511264
83 224.511264 98 263.331112
84 263.331112 99 309.919361
85 309.919361 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 1
AMENDED AND RESTATED
AGGREGATE EXCESS OF LOSS
REINSURANCE AGREEMENT
(amended as of the 1st day of March, 2000, the "Amendment Date")
between
METROPOLITAN LIFE INSURANCE COMPANY
One Madison Avenue
New York, New York 10010
(hereinafter referred to as the "Company")
AND
STOCKWOOD REINSURANCE COMPANY LTD.
Carleton Court, High Street
Bridgetown, Barbados
(hereinafter referred to as the "Reinsurer")
WHEREAS, the Company and the Reinsurer are parties to that certain Restatement
of the Aggregate Excess of Loss Reinsurance Agreement, Reference No. A-9852,
effective as of December 31, 1998, as amended effective as of December 31, 1998
by Addendum No. 1 to the Restatement of the Aggregate Excess of Loss Reinsurance
Agreement (hereinafter referred to as the "Agreement");
WHEREAS, the Company and the Reinsurer desire to amend certain provisions of the
Agreement effective as of the Amendment Date, and as a result of such amendments
and for the sake of clarity, to restate the Agreement in its entirety by this
Agreement;
NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree that the Agreement shall be amended and restated as
follows:
TYPE: Aggregate Excess of Loss Reinsurance.
EFFECTIVE DATE
OF AGREEMENT: The Effective Date of this Agreement shall be 12:01
a.m., New York City Time, December 31, 1998.
TERM: This Agreement shall remain in force and the Term of
this Agreement shall be from December 31, 1998 until
the earlier of (A) the later of March 31, 2005 or the
exhaustion of the Part A
-1-
<PAGE> 2
Aggregate Sublimit; or (B) the Effective Date of
Commutation of this Agreement.
COVERAGE: Part A Coverage:
The Reinsurer shall indemnify the Company for Part A
Covered Losses.
Part B Coverage:
The Reinsurer shall indemnify the Company for Part B
Covered Losses.
Part C Coverage:
The Reinsurer shall indemnify the Company for Part C
Covered Losses.
BUSINESS
COVERED: Part A Business Covered:
Amounts paid or to be paid by the Company as life
insurance benefits, cash values or otherwise (but
excluding all benefits that are included in Part C
Business Covered) to its life insurance policyholders
and annuity contract holders, or beneficiaries or
proper assignees thereof, where such amounts arise
out of policies or contracts issued by the Company
but are in addition to the amounts anticipated at the
time the policies or contracts were issued; and,
where such amounts are payable pursuant to judgments
in, or settlements of, lawsuits or other proceedings
(including without limitation administrative
proceedings) alleging that the Company or its agents
engaged in improper sales practices.
Part B Business Covered:
Except as otherwise provided in this section, Part B
Business Covered shall mean all death benefits for
policies listed in the Company's Notice Business
Policy Master File (NBPMF) that were issued and
delivered in the Part B Subject Territory prior to
January 1, 1997, and were in force as of December 31,
1998 with a policy account code of: (1) premium
paying (Policy Account Code = 1), (2) fully paid up
(Policy Account Code =2), or (3) single premium
(Policy Account Code =9). Policies on (a) the
nonforfeiture reduced paid up option (Policy Account
Code =3) as of December 31, 1998 or on any other date
during the Term of this
-2-
<PAGE> 3
Agreement and policies on (b) the nonforfeiture
extended term insurance option (Policy Account Code
=5) as of December 31, 1998 or on any other date
during the Term of this Agreement are excluded from
coverage under this Part B Business Covered
subsection. Policy forms identified by the Company's
plan code "Estate Saver" are also excluded from
coverage under this Part B Business Covered
subsection. All other policy riders and benefits are
covered under this Part B Business Covered subsection
except for the Accidental Death Benefit (ADB),
Disability Waiver of Premium Benefit (DW),
Applicant's Waiver of Premium Benefit (AWB), and
Additional Insurance (AI).
Part C Business Covered:
Amounts paid by the Company as death benefits (other
than benefits paid pursuant to agreements providing
accidental death benefits) where such amounts meet
all three of the following criteria: (1) such amounts
arise out of policies or contracts issued by the
Company but are in addition to the amounts
anticipated at the time the policies or contracts
were issued; and (2) such amounts are payable
pursuant to the Stipulation of Settlement with
exhibits, dated August 18, 1999, as amended and in
effect on the Amendment Date (or as amended in the
future if the Reinsurer provides its written consent
to the corresponding changes in coverage resulting
from such amendment) of the Metropolitan Life
Insurance Company sales practices litigation, MDL No.
1091, in the United States District Court for Western
Pennsylvania (as so in effect, the "Settlement
Order"); and (3) the amount of the benefit is
determined as set forth in the settlement agreement
or determined by the claims evaluator prior to the
date of death of the measuring life.
SUBJECT
TERRITORY: Part A and Part C Subject Territory:
The Reinsurer's liability shall be limited to
policies or contracts issued for delivery in the
fifty (50) States of the United States of America,
the District of Columbia, or Canada for losses
occurring in the fifty (50) States of the United
States of America, the District of Columbia, or
Canada.
-3-
<PAGE> 4
Part B Subject Territory:
The Reinsurer's liability shall be limited to
policies issued for delivery in the fifty (50) States
of the United States of America and the District of
Columbia for losses occurring in the fifty (50)
States of the United States of America and the
District of Columbia.
SUBJECT LOSSES: Part A Subject Losses:
Part A Subject Losses shall mean all Part A Ultimate
Net Loss with Claim Dates on or after December 31,
1998 arising from claims made against the Company on
or prior to December 31, 1999 in respect of the Part
A Business Covered hereunder.
Part B Subject Losses:
Part B Subject Losses shall mean all Part B Ultimate
Net Loss paid by the Company on or after December 31,
1998 as a result of deaths occurring on or after
December 31, 1998 and on or prior to December 31,
1999 in respect of the Part B Business Covered
hereunder.
Part C Subject Losses:
Part C Subject Losses shall mean all Part C Ultimate
Net Loss paid by the Company in respect of the Part C
Business Covered hereunder.
COVERED LOSSES: Part A Covered Losses:
Subject to the Combined Aggregate Limit and the Part
A Aggregate Sublimit, Part A Covered Losses shall
mean Fifty Percent (50%) of Part A Subject Losses in
excess of the Part A Aggregate Retention.
Part B Covered Losses:
Subject to the Combined Aggregate Limit and the Part
B Sublimit, Part B Covered Losses shall mean Fifty
Percent (50%) of Part B Subject Losses in excess of
the Part B Aggregate Retention.
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Part C Covered Losses:
Part C Covered Losses shall mean Fifty Percent (50%)
of Part C Subject Losses.
RETENTIONS: Part A Aggregate Retention:
The Part A Aggregate Retention shall be equal to
Three Hundred Eighty Five Million Dollars
($385,000,000) in the aggregate.
Part B Aggregate Retention:
The Part B Aggregate Retention shall be equal to Five
Hundred Six Million Dollars ($506,000,000), plus the
Company's statutory policy reserves released upon
death of an insured or otherwise.
Part C Aggregate Retention:
The Part C Aggregate Retention shall be equal to zero
(0).
SUBLIMITS: Part A Aggregate Sublimit:
The maximum amount of Part A Covered Losses
indemnified under this Agreement shall be limited to
Two Hundred Seventy Five Million Dollars
($275,000,000), less the aggregate amount of
Mortality Cover Purchase Charges paid or due to be
paid by the Company to the Reinsurer. However, the
Part A Aggregate Sublimit shall never be less than
zero.
This Part A Aggregate Sublimit is the maximum amount
payable by the Reinsurer for Part A Covered Losses
under this Agreement. Under no circumstances will the
Reinsurer be obligated to pay more than this amount
in respect of Part A Covered Losses.
Part B Sublimit
The maximum amount of Part B Covered Losses
indemnified under this Agreement shall be limited to
Two Million Five Hundred Thousand Dollars
($2,500,000) for any individual insured.
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COMBINED
AGGREGATE
LIMIT: The Combined Aggregate Limit for the sum of Part A
Covered Losses and Part B Covered Losses under this
Agreement shall equal Three Hundred Twenty Five
Million Dollars ($325,000,000), less the aggregate
amount of Mortality Cover Purchase Charges paid or
due to be paid by the Company to the Reinsurer.
However, the Combined Aggregate Limit shall never be
less than zero.
This Combined Aggregate Limit is the maximum amount
payable by the Reinsurer under this Agreement for
Part A Covered Losses and Part B Covered Losses.
Under no circumstances will the Reinsurer be
obligated to pay more than this amount in respect of
Part A Covered Losses and Part B Covered Losses
combined.
REINSURANCE
PREMIUM: The Reinsurance Premium shall equal Two Hundred Sixty
Four Million Five Hundred Thousand Dollars
($264,500,000) and shall be payable in full and
without deduction by the Company on or before
December 31, 1998. The date the Reinsurance Premium
is paid shall be referred to as the "Premium Payment
Date". The Reinsurance Premium shall be payable in
cash by federal wire transfer in immediately
available non-reversible United States Federal Funds
to an account specified by the Reinsurer.
The Reinsurance Premium shall be considered fully
earned when received in the account specified by the
Reinsurer.
The Reinsurance Premium is a net amount and includes
no allowance for commissions, brokerage, taxes or any
other costs which may arise in connection with this
Agreement or the Business Covered hereunder. Any such
amounts shall remain the sole responsibility of the
Company.
If the Company fails to pay the Reinsurance Premium
in full and in accordance with the terms of this
Reinsurance Premium Section, this Agreement shall not
come into effect and shall not in any way bind the
Reinsurer.
MORTALITY
COVER
PURCHASE
CHARGES: For coverage of Part C Covered Losses, the Company
shall pay to the Reinsurer the Mortality Cover
Purchase Charges for each calendar quarter. Such
payment shall be due and payable on the
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<PAGE> 7
Settlement Date for the calendar quarter in which the
amount of the settlement death benefit and the
specifics of the measuring life are first
determinable by the Company. Payment of the Mortality
Cover Purchase Charges shall be made first by a
reduction in the Part A Aggregate Sublimit until the
available Part A Aggregate Sublimit is exhausted, and
then in cash to the Reinsurer. The Mortality Cover
Purchase Charges for each calendar quarter shall be
equal to the amounts defined in Schedule 3.
If any of the Mortality Cover Purchase Charges due to
be paid by the Company under this Agreement are paid
later than indicated herein, interest at rates equal
to the actual effective yield on the three (3) month
United States Treasury Bill maturing closest to the
due date shall be computed from the date such amounts
are due to the date such amounts are received. Such
interest computed shall be paid as an integral part
of the payment made. If the Company fails to pay the
Mortality Cover Purchase Charges or interest payable
for a calendar quarter in full and in accordance with
the terms of this Mortality Cover Purchase Charges
section, then the mortality benefits associated with
the Mortality Cover Purchase Charges shall be
excluded from Part C Business Covered.
REINSURER'S
MARGIN: The Reinsurer's Margin for each calendar quarter
shall be equal to nine-tenths-of-one percent (0.9%)
of the Mortality Cover Purchase Charges for that
calendar quarter, provided that the Company's
reserves for the Part C Business Covered are
established in accordance with the 1980 CSO Tables
according to Age Last Birthday, with twenty (20) year
select factors and a five percent (5%) interest rate.
If the Company uses a different reserving basis, the
Company and the Reinsurer shall negotiate in good
faith to adjust the Reinsurer's Margin to reflect the
alternative reserving basis.
SETTLEMENT
DATES: The first Settlement Date, which shall cover the
period from December 31, 1998 through December 31,
1999, shall be March 31, 2000. The Settlement Date
for each calendar quarter beginning January 1, 2000
and thereafter shall be the later of (a) the first
Business Day on or after sixty (60) days after the
end of that calendar quarter, or (b) the first
Business Day on or after the thirtieth day after the
Reinsurer's receipt of the Company's Loss Report for
the prior calendar quarter.
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<PAGE> 8
BUSINESS DAYS: Business Day shall mean any day other than a
Saturday, a Sunday or a day on which banking
institutions in New York, New York, or the Islands of
Bermuda are authorized or obligated by law,
regulation or executive order to be closed.
EXPERIENCE
BALANCE: The Reinsurer shall establish and maintain a notional
Experience Balance during the time that this
Agreement is in effect and whose balance shall be
determined on each Settlement Date in accordance with
this Experience Balance section.
The Experience Balance at the Premium Payment Date
shall be equal to Two Hundred Sixty One Million Five
Hundred Thousand United States Dollars
($261,500,000).
The Experience Balance at the Settlement Date for the
period from December 31,1998 through December 31,1999
shall be equal to:
The Experience Balance at the Premium
Payment Date multiplied by (1.0 plus the
annual compounding yield on the one (1) year
United States Treasury Bill as of the close
of business on the Premium Payment Date)
raised to the power of four-hundred-fifty-six
(456) days divided by three-hundred-sixty-six
(366) days,
LESS
Covered Losses due from the Reinsurer for
the period from December 31, 1998 through
December 31, 1999.
The Experience Balance at the Settlement Date for
each calendar quarter commencing on or after January
1, 2000 shall be equal to:
(A) The Experience Balance at the end of the
prior Settlement Date multiplied by (1.0
plus the annual compounding yield determined
as of the prior Settlement Date on the three
(3) month United States Treasury Bill
maturing closest to that Settlement Date)
raised to the power of the actual number of
days from the prior Settlement Date to the
current Settlement Date divided by the
actual number of days in the current
calendar year,
PLUS
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<PAGE> 9
(B) The Mortality Cover Purchase Charges paid to
the Reinsurer in cash by the Company for
that calendar quarter that are not paid by a
reduction in the Part A Aggregate Sublimit,
LESS
(C) Covered Losses due from the Reinsurer for
that calendar quarter,
LESS
(D) Reinsurer's Margin for that calendar
quarter.
ULTIMATE NET LOSS: (a) Part A Ultimate Net Loss:
Part A Ultimate Net Loss as used herein
shall mean the actual sum of all Claim
Amounts with Claim Dates on or after
December 31, 1998 in settlement of all
losses arising in respect of the Part A
Business Covered after making deductions for
all recoveries, all salvage, and all claims
upon other reinsurances, which inure to the
benefit of the Reinsurer under this
Agreement, whether collectable or not, and
shall include Allocated Loss Adjustment
Expenses paid by the Company. Part A
Ultimate Net Loss shall also include
Allocated Loss Adjustment Expenses paid by
the Company in connection with Part C
Business Covered.
Part B Ultimate Net Loss:
Part B Ultimate Net Loss as used herein
shall mean the actual sum paid by the
Company on or after December 31, 1998 in
settlement of all death claims arising in
respect of the Part B Business Covered after
making deductions for all recoveries, all
salvage, and all claims upon other
reinsurances, which inure to the benefit of
the Reinsurer under this Agreement, whether
collectable or not.
Part C Ultimate Net Loss:
Part C Ultimate Net Loss as used herein
shall mean the actual sum of all claims paid
by the Company arising in respect of the
Part C Business Covered after making
deductions for all recoveries, all salvage,
and all claims upon other reinsurances,
which inure to the benefit of the
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<PAGE> 10
Reinsurer under this Agreement, whether
collectable or not. For purposes of this
Agreement, Allocated Loss Adjustment
Expenses paid by the Company in connection
with Part C Business Covered shall be
included in Part A Ultimate Net Loss and not
in Part C Ultimate Net Loss.
(b) All salvages, recoveries, reinsurance or
payments recovered or received subsequent to
a loss settlement under this Agreement shall
be applied as if recovered or received prior
to the aforesaid settlement and all
necessary adjustments shall be made by the
parties hereto.
(c) Nothing in this definition shall be
construed to mean that losses are not
recoverable hereunder until the Part A
Ultimate Net Loss and Part B Ultimate Net
Loss and Part C Ultimate Net Loss of the
Company has been ascertained.
CLAIM AMOUNT: Claim Amount as used herein shall mean for
each claim, the sum of the amount paid by
the Company on the Claim Date plus the
amount reserved by the Company on the Claim
Date on the basis of New York State
statutorily prescribed mortality, morbidity
or interest rates, arising in respect of the
Part A Business Covered.
CLAIM DATE: Claim Date as used herein shall mean the
date of judgment in, or settlement of, a
lawsuit or other proceeding (including
without limitation administrative
proceedings) arising in respect of the Part
A Business Covered.
CLAIMS HANDLING: (a) The Company shall have the sole and absolute
authority with respect to the
administration, defense, settlement and
payment of Part A Covered Losses, subject to
the terms and conditions of this Agreement.
(b) The Company shall retain the sole and
absolute authority with respect to the
administration, defense, settlement and
payment of Part B Covered Losses and Part C
Covered Losses.
(c) In furtherance of the commonality of
interest evidenced by the execution of this
Agreement, the Company agrees that the
Company or the Company's designated counsel
shall provide the Reinsurer with updated
information concerning the present and
future handling of the Part A Covered Losses
on a quarterly basis to allow the Reinsurer
to
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<PAGE> 11
properly reserve and project payments under
this Agreement and as otherwise reasonably
required by the Reinsurer.
ALLOCATED
LOSS ADJUSTMENT
EXPENSES:
Allocated Loss Adjustment Expenses as used
herein shall mean all allocated expenses
incurred by the Company on or after December
31, 1998 in connection with the
investigation, settlement, defense or
mitigation of any claim or loss which is the
subject matter of the Part A Business
Covered, or the Part C Business Covered, and
shall exclude salaries and fees of
adjusters, attorneys or other persons who
are employees of the Company, or its
designated claims adjusters, attorneys on
permanent retainer, office expenses,
overhead or other unallocated expenses.
COMMUTATION: This Agreement may be irrevocably commuted
by the Company at the end of any calendar
quarter ("Effective Date of Commutation")
after December 31, 1999 in the event that
the Experience Balance at the Settlement
Date for that calendar quarter is positive,
subject to the Company providing written
notice to the Reinsurer on or prior to the
end of such calendar quarter of its intent
to commute the Agreement provided that the
Experience Balance is positive. If it is
determined on the Settlement Date for that
calendar quarter that the Experience Balance
is positive, then upon receipt from the
Company of a full release in form and
substance reasonably satisfactory to the
Reinsurer, the Reinsurer shall pay to the
Company a Commutation Settlement equal to
Ninety Nine Percent (99%) multiplied by the
positive Experience Balance, if any, at the
Settlement Date first following the
Effective Date of Commutation, less all
amounts due and payable by the Company to
the Reinsurer, under this or any related
agreement and the Reinsurer and the Company
shall be fully and finally released from all
liability and obligations under or in
connection with this Agreement. If it is
determined on the Settlement Date for the
calendar quarter that the Experience Balance
is not positive, then this Agreement shall
not be commuted as of the end of that
calendar quarter.
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<PAGE> 12
REPORTS AND
REMITTANCES: Within sixty (60) days after the end of each
calendar quarter during the Term of this
Agreement, the Company shall provide the
Reinsurer with copies of all loss reports
received or prepared by the Company in
connection with the Business Covered during
that calendar quarter. In addition to the
above, within sixty (60) days after the end
of each calendar quarter, the Company shall
provide to the Reinsurer a written Loss
Report, providing, in a format acceptable to
the Reinsurer and the Company, the following
information in respect of the Business
Covered hereunder, for Part A Business
Covered:
(1) The amount of Subject Losses paid
by the Company during that calendar
quarter.
(2) The net amount of Subject Losses
payable but unpaid by the Company
as at the end of the calendar
quarter (the "Net Subject Loss").
(3) The Company's estimate of reserves
for Net Subject Loss and Allocated
Loss Adjustment Expenses, as at the
end of that calendar quarter.
(4) And such other information as may
be agreed to by the Company and the
Reinsurer, including but not
limited to the updated information
referred to in subsection (c) of
the section entitled "Claims
Handling".
In addition to the above, within sixty (60)
days after the end of each calendar quarter,
the Company shall provide to the Reinsurer a
written Loss Report, providing, in a format
acceptable to the Reinsurer, the following
information in respect of the Business
Covered hereunder, separately for Part B
Business Covered, and for Part C Business
Covered:
(1) The face amount of death claims
paid during the calendar quarter.
(2) The face amount of death claims
reported but not paid as of the end
of that calendar quarter.
(3) Statutory reserves released in the
calendar quarter on death claims
paid.
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<PAGE> 13
(4) Statutory reserves released in the
calendar quarter on death claims
reported but not paid.
(5) The face amount of death claims
during the calendar quarter ceded
to other reinsurers.
(6) Statutory reserves released in the
calendar quarter on death claims
ceded to other reinsurers.
(7) Policy level detail (as detailed in
items (1) through (6) above) for
individual insureds with Subject
Losses in excess of Five Million
Dollars ($5,000,000).
(8) The Company's estimate of IBNR
losses as at the end of that
calendar quarter.
(9) The terms of any mortality benefits
covered by Part C Business Covered
for which the amount of the
settlement death benefits and the
specifics of the measuring life are
first determinable by the Company
during the calendar quarter.
(10) Statutory mortality reserves as at
the end of the calendar quarter.
Each Loss Report shall provide both the cumulative
position from December 31, 1998 through the end of
that calendar quarter and the changes within the
calendar quarter. The first such quarterly Loss
Report shall be due by June 1, 1999 for the period
from December 31, 1998 through March 31, 1999.
Within sixty (60) days after the end of each calendar
quarter, the Company shall furnish the Reinsurer with
a written Report, providing, in a format acceptable
to the Reinsurer, the Subject Losses paid by the
Company for that calendar quarter in respect of the
Business Covered hereunder separately for Part A
Business Covered, Part B Business Covered, and Part C
Business Covered.
On each Settlement Date, Covered Losses due from the
Reinsurer shall be paid by the Reinsurer to the
Company, and Mortality Cover Purchase Charges due
from the Company that are not paid by a reduction in
the Part A Aggregate Sublimit shall be paid by
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<PAGE> 14
the Company to the Reinsurer as provided in the
Mortality Cover Purchase Charges section. Remittances
shall be net of these items.
All remittances shall be made by federal wire
transfer in immediately available non-reversible
United States Federal Funds to an account specified
by the receiving party.
SECURITY: 1. Security:
Upon the Company's written request and expense, the
Reinsurer shall provide security to the Company
adjusted at each Settlement Date in an amount equal
to the sum of the remaining Part A Aggregate Sublimit
plus the Company's aggregate reserves for the Part C
Business Covered as these reserves would be
calculated in accordance with the 1980 CSO Tables
according to Age Last Birthday, with twenty (20) year
select factors and a five percent (5%) interest rate
(hereinafter referred to as the "Secured Reserve
Amount"), if any, by providing access to funds held
in Trust or Letters of Credit or any combination
thereof, for the benefit of the Company, in
accordance with the provisions set forth in this
SECURITY Article.
2. Letter of Credit:
(A) Upon the written request of the Company, the
Reinsurer agrees that it will be the
applicant for and provide the Company with a
Letter or Letters of Credit, adjusted at
each Settlement Date, in an amount no less
than the Secured Reserve Amount, as of such
Settlement Date if any. The cost of such
Letter(s) of Credit, if any, shall be borne
by the Company.
(B) The Reinsurer and the Company agree that the
Letter(s) of Credit provided by the
Reinsurer pursuant to the provisions of this
Agreement may be drawn upon at any time,
notwithstanding any other provisions in this
Agreement, and shall be utilized by the
Company or any successor by operation of law
of the Company including, without
limitation, any liquidator, rehabilitator,
receiver, or conservator of the Company only
for one or more of the following purposes:
(i) to reimburse the Company for the
Reinsurer's share of premiums
returned to the owners of policies
reinsured under this Agreement, on
account of
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<PAGE> 15
cancellations of such policies;
(ii) to reimburse the Company for the
Reinsurer's share of surrenders and
benefits or losses paid by the
Company under the terms and
provisions of the policies
reinsured under this Agreement.
(iii) to fund an account with the Company
in an amount at least equal to the
deduction, for reinsurance ceded,
from the Company's liabilities for
reinsurance ceded under this
Agreement. Such amount shall be
limited to the Secured Reserve
Amount. Such amount shall include,
but not be limited to, amounts for
policy reserves, reserves for
claims and losses incurred
(including losses incurred but not
reported), reserves for loss
adjustment expenses and reserves
for unearned premiums, but shall
not exceed the amount of the
obligations of the Reinsurer under
this Agreement; and
(iv) to pay any other amounts payable to
the Company under this Agreement.
All of the foregoing shall be applied without
diminution because of insolvency on the part of the
Company or the Reinsurer.
(C) Should amounts be held pursuant to (B)(iii)
above, then the Company shall pay interest
at the Prime Rate on such funds as may be
held from time to time.
(D) Should any amounts drawn down on the Letters
of Credit be in excess of the actual amounts
required for (B)(i), (B)(ii), or (B)(iii)
above, or should any amounts subsequently be
determined not to be due under (B)(iv)
above, then such excess amounts and amounts
not due shall be returned to the Reinsurer
forthwith and the Company shall pay interest
at the Prime Rate on such funds from the
date they were drawn down to the date they
are returned.
(E) Any interest calculated pursuant to the
provisions of paragraphs (C) and (D) above
shall be offset against any other
obligations of the Reinsurer.
3. Trust Funds:
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<PAGE> 16
(A) Upon the written request of the Company, the
Reinsurer may at its option provide funds in
Trust for the benefit of the Company,
adjusted at each Settlement Date as an
alternative or supplement to Letter(s) of
Credit. The cost of such Trust Funds, if
any, shall be borne by the Company.
(B) The assets deposited in the trust account
shall be valued, according to their current
fair market value, and shall consist only of
cash (United States legal tender),
certificates of deposit (issued by a United
States bank and payable in United States
legal tender), and investments of the types
permitted by the Delaware Insurance Laws,
provided that such investments are issued by
an institution that is not the parent,
subsidiary, or affiliate of either the
Reinsurer or the Company.
(C) Prior to depositing assets into the Trust
account, the Reinsurer shall execute
assignments, endorsements in blank, or
transfer legal title to the trustee of all
shares, obligations or any other assets
requiring assignments, in order that the
Company, or the trustee upon the direction
of the Company, may whenever necessary
negotiate any such assets without consent or
signature from the Reinsurer or any other
entity.
(D) All settlements of account between the
Company and the Reinsurer shall be made in
cash or its equivalent.
(E) The Reinsurer and the Company agree that the
assets in the Trust account, established by
the Reinsurer pursuant to the provisions of
this Agreement, may be withdrawn by the
Company at any time, notwithstanding any
other provisions in this Agreement, and
shall be utilized and applied by the Company
or any successor by operation of law of the
Company including, without limitation, any
liquidator, rehabilitator, receiver or
conservator of the Company only for one or
more of the following purposes:
(i) to reimburse the Company for the
Reinsurer's share of premiums
returned to the owners of policies
reinsured this Agreement, on
account of cancellations of such
policies;
(ii) to reimburse the Company for the
Reinsurer's share
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<PAGE> 17
of surrenders and benefits or
losses paid by the Company pursuant
to the provisions of the policies
reinsured under this Agreement;
(iii) to fund an account with the Company
in an amount at least equal to the
deduction, for reinsurance ceded,
from the Company's liabilities for
reinsurance ceded under this
Agreement. Such amount shall be
limited to the Secured Reserve
Amount. Such amount shall include,
but not be limited to, amounts for
policy reserves, reserves for
claims and losses incurred
(including losses incurred but not
reported), reserves for loss
adjustment expenses and reserves
for unearned premiums, but shall
not exceed the amount of the
obligations of the Reinsurer under
this Agreement; and
(iv) to pay any other amounts payable to
the Company under this Agreement.
All of the foregoing shall be applied without
diminution because of insolvency on the part of the
Company or the Reinsurer.
(F) The Company shall give the Reinsurer the
right to seek approval from the Company to
withdraw from the aforementioned Trust
account all or any part of the assets
contained therein and transfer such assets
to the Reinsurer, provided:
(i) The Reinsurer shall at the time of
such withdrawal, replace the
withdrawn assets with other
qualified assets having a market
value equal to the market value of
the assets withdrawn so as to
maintain at all times the deposit
equal to the Secured Reserve
Amount, or
(ii) after such withdrawal and transfer,
the market value of the Trust
account is no less than
one-hundred-two percent (102%) of
the Secured Reserve Amount.
(G) Should amounts be held pursuant to (E)(iii)
above, then the Company shall pay interest
at the Prime Rate on such funds as may be
held from time to time.
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<PAGE> 18
(H) Should any amounts withdrawn from the Trust
account be in excess of the actual amounts
required for (E)(i), (E)(ii), or (E)(iii)
above, or should any amounts subsequently be
determined not to be due under (E)(iv)
above, then such excess amounts and amounts
not due shall be returned to the Reinsurer
forthwith and the Company shall pay interest
at the Prime Rate on such funds from the
date they were drawn down to the date they
are returned.
(I) Any interest calculated pursuant to the
provisions of paragraphs (G) and (H) above
shall be offset against any other
obligations of the Reinsurer.
4. Other Forms of Security:
The Reinsurer may, at its option, as an alternative
or supplement to Letter(s) of Credit and Trust Funds,
provide security in any other form that would permit
the Company to take credit for the reinsurance ceded
hereunder in the amount of the Secured Reserve
Amount.
5. Prime Rates:
Prime Rates shall be determined for each Business Day
in New York City, and for non-business days shall
equal the Prime Rate as determined for the most
recent preceding Business Day. The BANK PRIME LOAN
rates as published in "FEDERAL RESERVE statistical
release H.15(519) SELECTED INTEREST RATES" and the
PRIME RATES as published in The Wall Street Journal
shall be the primary sources for the Prime Rates.
When either or both sources publish such a rate for a
Business Day, the Prime Rate shall be the maximum of
such published rates. If neither source publishes
such a rate for a Business Day, the Prime Rate shall
be the maximum of the rates publicly announced by
major banks in New York City as their "Prime Rates"
applicable to such day.
INSOLVENCY: 1. Reinsurer's Obligation:
In the event of the insolvency of the Company, the
reinsurance afforded by this Agreement shall be
payable by the Reinsurer on the basis of the
liability of the Company under the Business Covered,
without diminution because of such insolvency,
directly to the Company or its liquidator, receiver,
conservator, or statutory
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<PAGE> 19
successor, except (a) where this Agreement
specifically provides another payee of such
reinsurance in the event of the insolvency of the
Company and (b) where the Reinsurer, with the consent
of the direct insured or insureds, has assumed such
policy obligations of the Company as direct
obligations of the Reinsurer to the payees under such
policies and in substitution for the obligations of
the Company to such payees.
2. Reinsurer's Notice and Defense of Claims:
The Reinsurer shall be given written notice of the
pendency of each claim or loss which may involve the
reinsurance afforded by this Agreement within a
reasonable time after such claim or loss is filed in
the insolvency proceedings. The Reinsurer shall have
the right to investigate each such claim or loss and
interpose at its own expense, in the proceeding where
the claim or loss is to be adjudicated, any defense
which it may deem available to the Company or its
liquidator, receiver, conservator, or statutory
successor. If more than one Reinsurer is involved,
they may designate one Reinsurer to act for all.
3. Defense Expense:
The expense thus incurred by the Reinsurer shall be
chargeable, subject to court approval, against the
insolvent Company as part of the expense of
liquidation to the extent of a proportionate share of
the benefit which may accrue to the Company solely as
a result of the defense undertaken by the Reinsurer.
4. Offset:
Any debts or credits, liquidated or unliquidated, in
favor of or against either party under this Agreement
on the date of the receivership or liquidation order
(except where the obligation was purchased by or
transferred to be used as an offset) are deemed
mutual debts or credits and shall be set off with the
balance only to be allowed or paid. Although such
claim on the part of either party may be unliquidated
or undetermined in amount on the date of the entry of
the receivership or liquidation order, such claim
will be regarded as being in existence as of such
date and any credits or claims then in existence and
held by the other party may be offset against it.
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<PAGE> 20
5. Rights of Parties:
Nothing hereinabove set forth in this Insolvency
Article shall in any way change the relationship or
status of the parties hereto, nor enlarge the
obligations of either party to each other except as
specifically hereinabove provided, to wit, to pay the
statutory successor on the basis of the amount of
liability determined in the liquidation or
receivership proceeding, rather than on the basis of
the actual amount of loss (dividends) paid by the
liquidator, receiver, conservator, or statutory
successor to allowed claimants. Nor, except as
hereinabove specifically provided, shall anything in
this Insolvency Article in any manner create any
obligation or establish any right against the
Reinsurer in favor of any third parties or any other
persons not parties to this Agreement.
ARBITRATION: Except as otherwise agreed upon by the parties:
1. Resolution of Disputes: Any dispute between
the Company and the Reinsurer arising out of
the provisions of this Agreement, or
concerning its interpretation or validity,
whether arising before or after termination
of this Agreement, shall be submitted to
arbitration in the manner set forth in this
Article. Either party may initiate
arbitration of any such dispute by giving
written notice to the other party, by
registered or certified mail, return receipt
requested, of its intention to arbitrate and
of its appointment of an arbitrator in
accordance with subsection (3) of this
Article.
2. Composition of Panel: Unless the parties
agree upon a single arbitrator within
fifteen (15) days after the receipt of a
notice of intention to arbitrate, all
disputes shall be submitted to an
arbitration panel composed of two
arbitrators and an umpire, chosen in
accordance with subsections (3) and (4) of
this Article.
3. Appointment of Arbitrators: The members of
the arbitration panel shall be chosen from
disinterested persons having knowledge of
the insurance, reinsurance and financial
issues relevant to the matters in dispute.
The party requesting arbitration
(hereinafter referred to as the "requesting
party") shall appoint an arbitrator and give
written notice thereof, by registered or
certified mail, return receipt requested, to
the other party (hereinafter referred to as
the "respondent") together with its notice
of intention to
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<PAGE> 21
arbitrate. Unless a single arbitrator is
agreed upon within fifteen (15) days after
the receipt of the notice of intention to
arbitrate, the respondent shall, within
thirty (30) days after receiving such
notice, also appoint an arbitrator and
notify the requesting party thereof in a
like manner. Before instituting a hearing,
the two arbitrators so appointed shall
choose an umpire. If, within twenty (20)
days after they are both appointed, the
arbitrators fail to agree upon the
appointment of an umpire, the umpire shall
be appointed by the President of the
American Arbitration Association.
4. Failure of Party to Appoint Arbitrator: If
the respondent fails to appoint an
arbitrator within thirty (30) days after
receiving a notice of intention to
arbitrate, such arbitrator shall be
appointed by the President of the American
Arbitration Association, and shall then,
together with the arbitrator appointed by
the requesting party, choose an umpire as
provided in subsection (3) of this Article.
5. Involvement of Other Reinsurers:
(a) If more than one Reinsurer of this
Agreement is involved in the same dispute,
all such Reinsurers shall constitute and act
as one party for purposes of this Article
and communication shall be made by the
Company to each of the Reinsurers
constituting the one party; provided,
however, nothing herein shall impair the
right of such Reinsurers to assert several,
rather than joint, defenses or claims, nor
be construed as changing the liability of
the Reinsurers under the terms of this
Agreement from several to joint.
(b) If the Company is involved in a dispute
under the terms of this Agreement and in one
or more separate disputes with one or more
other insurers or reinsurers in which common
questions of law or fact are in issue, the
Company or Reinsurer, at their option, may
join with such other insurers or reinsurers
in a common arbitration proceeding under the
terms of this Article. If the Company and
such other insurers or reinsurers have
commenced arbitration, the Reinsurers may at
their option join such proceeding for the
determination of the dispute between the
Company and Reinsurer.
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<PAGE> 22
6. Choice of Law and Forum: Any arbitration
instituted pursuant to this Article shall be
held in Wilmington, Delaware. Any action to
enforce any arbitration award or to compel
arbitration shall be brought only in the
state courts of the State of Delaware
situated in New Castle County, to the
exclusion of all other courts. The
substantive laws of the State of Delaware,
without regard to its conflict of laws
rules, shall govern any action or suit
brought to compel any such arbitration or to
enforce any award rendered pursuant to such
arbitration.
7. Submission of Dispute to Panel: Unless
otherwise extended by the arbitration panel,
or agreed to by the parties, each party
shall submit its case to the panel within
thirty (30) days after the selection of an
umpire.
8. Procedure Governing Arbitration: All
proceedings before the panel shall be
informal and the panel shall not be bound by
the formal rules of evidence. The panel
shall have the power to fix all procedural
rules relating to the arbitration
proceeding. In reaching any decision, the
panel shall give due consideration to the
customs and usage of the insurance,
reinsurance and finance business.
9. Arbitration Award: The arbitration panel
shall render its decision within sixty (60)
days after conclusion of the hearing, which
decision shall be in writing, stating the
reasons therefor. The decision of the
majority of the panel shall be final and
binding on the parties to the proceeding.
Judgment on the award may be entered in any
court of competent jurisdiction, and
execution of any monetary judgment may occur
in any jurisdiction.
10. Cost of Arbitration: Unless otherwise
allocated by the panel, each party shall
bear the expense of its own arbitrator and
its own witnesses and shall jointly and
equally bear with the other parties the
expense of the umpire and the arbitration.
11. Limit of Authority of Arbitration Panel: The
arbitration panel does not have the
authority to award punitive, multiplied, or
exemplary damages, other similar damages or
any extra contractual damages of any nature
or description whatsoever except to the
extent claimed as Subject Loss under this
Agreement, and each of the
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<PAGE> 23
Company and the Reinsurer expressly waives
all rights to punitive, multiplied, or
exemplary damages, other similar damages or
any extra contractual damages of any nature
or description whatsoever except to the
extent claimed as a Subject Loss under this
Agreement.
WAIVER OF PUNITIVE
DAMAGES: The Company and the Reinsurer agree that in
no event shall either party be entitled to
any award against the other of punitive,
multiplied, or exemplary damages, other
similar damages or any extra contractual
damages of any nature or description
whatsoever, and each of the Company and the
Reinsurer both expressly waives all rights
to punitive, multiplied, or exemplary
damages, other similar damages or any extra
contractual damages of any nature or
description whatsoever except to the extent
claimed as a Subject Loss under this
Agreement.
DAC TAX JOINT
ELECTION: The Company and the Reinsurer hereby jointly
elect under Treasury Regulation Section
1.848-2(g)(8), with respect to this
Agreement, that the party with net positive
consideration under 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).
The parties agree to timely exchange
information pertaining to the amount of net
consideration under this Agreement to ensure
consistency, as required under applicable
Treasury Regulations or as is otherwise
required by the Internal Revenue Service.
This joint election shall be effective for
all taxable years under this Agreement. The
first year for which the joint election is
effective is 1998.
Each of the Company and the Reinsurer
represents and warrants that it is subject
to United States income taxation under
Subchapter L of Chapter 1 of the Internal
Revenue Code.
CONTRACT PAYMENT: For purposes of determining DAC Tax
Reimbursement Amounts, a Contract Payment
shall be any payment (other than a DAC Tax
Reimbursement Amount or a DAC Tax
Amortization Reimbursement Amount) made
under this Agreement either by the Company
to the Reinsurer or by the Reinsurer to the
Company in accordance with the
-23-
<PAGE> 24
principles set forth in Treasury Regulations
Section 1.848 defining net consideration.
DAC TAX
REIMBURSEMENT
AMOUNT: In addition to the Contract Payment
consisting solely of the Reinsurance Premium
paid in 1998, the Company agrees to pay the
Reinsurer a DAC Tax Reimbursement Amount of
$10,845,433 on or before September 15, 1999.
In addition to and simultaneous with any
Contract Payment other than the Reinsurance
Premium paid by the Company to the Reinsurer
in 1998, the party making the Contract
Payment agrees to pay to the party receiving
the Contract payment the additional amount
set forth below ("DAC Tax Reimbursement
Amounts") to compensate the party receiving
the payment for any additional tax due as a
result of the application of Section 848 of
the Internal Revenue Code.
The amount of each DAC Tax Reimbursement
Amount shall be equal to X divided by Y
where
X = The product of the Contract Payment
multiplied by the Applicable Capitalization
Factor multiplied by 95% multiplied by 35%,
and
Y = 65% minus (the product of the Applicable
Capitalization Factor multiplied by 95%
multiplied by 35%), and
Applicable Capitalization Factor = the
percentage set forth in Section 848(c)(1)(C)
of the Internal Revenue Code (currently
7.7%).
DAC TAX
AMORTIZATION
REIMBURSEMENT
AMOUNT: Starting one year after the payment of any
DAC Tax Reimbursement Amount, the party that
received such a reimbursement payment shall
pay the other party an amount (the "DAC Tax
Amortization Reimbursement Amount") to
-24-
<PAGE> 25
reimburse the party receiving the DAC Tax
Reimbursement Amount for any tax benefit as
a result of the application of Section 848
of the Internal Revenue Code. In each of the
nine years following the Contract Payment
giving rise to the DAC Tax Reimbursement
Amount, each DAC Tax Amortization
Reimbursement Amount shall be equal to the
applicable DAC Tax Reimbursement Amount
multiplied by 10/95. In the tenth year
following the Contract Payment giving rise
to the DAC Tax Reimbursement Amount, the
amount of the DAC Tax Amortization
Reimbursement Payment shall be equal to the
amount of the applicable DAC Tax
Reimbursement Amount multiplied by 5/95.
CHANGE IN LAW: If the Internal Revenue Code is amended to
change the impact of Section 848 (either as
a change in the capitalization amount or
otherwise) the formula for determining the
DAC Tax Reimbursement Amounts and the DAC
Tax Amortization Reimbursement Amounts shall
be appropriately adjusted in a manner agreed
to by each of the Company and the Reinsurer,
pursuant to negotiations entered into by the
parties in good faith, so that each of the
parties hereto is appropriately compensated
on an after-tax basis for any DAC tax
incurred.
MAXIMUM PAYMENT
FROM REINSURER TO
COMPANY: At no time during the life of this Agreement
shall the total amounts paid by the
Reinsurer to the Company pursuant to the
sections entitled "DAC Tax Joint Election",
"Contract Payment", "DAC Tax Reimbursement
Amount", "DAC Tax Amortization Reimbursement
Amount", and "Change in Law", exceed the
total amounts paid by the Company to the
Reinsurer pursuant to these sections.
EXCLUSIONS: (A) Ex Gratia Payments: Part B Covered Losses
and Part C Covered Losses under this
Agreement shall exclude any Ex Gratia
Payments except to the extent consented to
by the Reinsurer. "Ex Gratia Payments" as
used herein with respect to Part B Covered
Losses means a claim payment not required by
the terms of the underlying insurance
policies covered by this Agreement. "Ex
Gratia Payments" as used herein with respect
to Part C Covered Losses means
-25-
<PAGE> 26
a claim payment not required by the terms of
the Settlement Order.
(B) Insolvency Funds: The Reinsurer shall not be
obligated to pay to the Company any share of
any liability of the Company arising, by
contract, operation of law, or otherwise,
from participation or membership of the
Company or any of its affiliates, whether
voluntary or involuntary, in any insolvency
fund or from reimbursement of any person for
any such liability. "Insolvency Fund"
includes any guaranty or insolvency fund,
plan, pool, association, or other
arrangement howsoever denominated,
established or governed, which provides for
any assessment of or payment or assumption
by any person of part or all of any claim,
debt, charge, fee, or other obligation of
any insurer, or its successors or assigns
which has been declared to be insolvent, or
which is otherwise deemed unable to meet any
claim, debt, charge, fee or other obligation
in whole or in part.
(C) Assessments: This Agreement does not cover
assessments of any nature whatsoever levied
against the Company.
(D) Dividends: The Reinsurer shall not
participate in the determination of, nor
reimburse the Company for, any policyholder
or other dividends paid by the Company.
(E) Assumed Reinsurance: This Agreement does not
cover reinsurance assumed by the Company.
(F) Noncontractual Damages: Part B Covered
Losses and Part C Covered Losses under this
Agreement shall exclude Noncontractual
Damages. "Noncontractual Damages" as used
herein with respect to Part B Covered Losses
means those liabilities of the Company or
its affiliates, or their agents, brokers, or
representatives arising from actual or
alleged misconduct in their handling of
claims or losses on Part B Business Covered.
Such liabilities shall include, but are not
limited to, punitive, exemplary,
compensatory, and consequential damages.
"Noncontractual Damages" as used herein with
respect to Part C Covered Losses means those
liabilities of the Company or its
affiliates, or their agents, brokers, or
representatives arising from actual or
alleged misconduct in their handling of the
benefits agreed to be provided by the
Company pursuant to the Settlement Order.
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<PAGE> 27
Such liabilities shall include, but are not
limited to, punitive, exemplary,
compensatory, and consequential damages.
REINSURANCE
INTERMEDIARY: Swiss Re Atrium Corporation, 55 East 52 Street, 42nd
Floor, New York, New York 10055, U.S.A., is hereby
recognized as the Reinsurance Intermediary for all
business under this Agreement.
All communications, including but not limited to
notices, reports, and statements, relating to this
Agreement, shall be transmitted to the Company and
the Reinsurer through the Intermediary.
All payments, including but not limited to premiums,
losses, loss adjustment expenses, and salvages and
settlements, relating to this Agreement shall be made
directly between the Company and the Reinsurer, and
not through any Intermediary.
AMENDMENTS: This Agreement may be amended only by mutual consent
of the parties expressed in a written addendum
executed by the parties with the same formalities as
this Agreement, and such addendum shall be deemed to
be an integral part of this Agreement and binding on
the parties hereto. From time to time at the request
of either party, the parties shall negotiate in good
faith, and attempt to reach agreement upon, any
amendments to this Agreement, (including, without
limitation, reasonable adjustments to applicable
pricing terms relating to such amendments) necessary
to comply with applicable law or as required by the
New York State Department of Insurance.
ACCESS TO RECORDS: The Reinsurer shall have the right to examine, at any
reasonable time, all papers, books, accounts,
documents and other records of the Company or any
agent or employee of the Company including any claims
adjuster or any other person acting on behalf of the
Company relating to the business covered hereunder.
Upon the Reinsurer's request, the Company shall
supply the Reinsurer, at the Reinsurer's expense,
with copies of the whole or any part of such papers,
books, accounts, documents and other records relating
to the business covered hereunder. The Reinsurer's
right of inspection under this Access to Records
section shall continue to exist after termination of
this Agreement as long as one of the parties hereto
has a claim against any other arising from this
Agreement.
-27-
<PAGE> 28
CAPTIONS AND
CATCHLINES: Captions and catchlines used in this Agreement are
intended solely as aids to convenient reference. They
shall not be considered part of this Agreement nor
limit or otherwise affect its meaning, and no
inference as to the meaning or intent of any
provision of this Agreement may be drawn from them.
COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an
original, but all of which together shall constitute
one and the same instrument.
CURRENCY: All payments hereunder shall be made in United States
Dollars. All monetary amounts herein are in United
States Dollars. All reports and accounts hereunder
shall be rendered in United States Dollars. For the
purpose of this Agreement, where the Company pays
amounts in currencies other than United States
Dollars, such amounts shall be converted into United
States Dollars at the actual rate of exchange at
which such amounts are entered in the Company's
books.
DISCLOSURES
AND APPROVALS: The Company represents and warrants with respect to
this Agreement and the transactions hereunder and
with respect to any insurance and reinsurance which
is covered by this Agreement and all transactions
thereunder, that all disclosures, approvals and
expiry of waiting periods which are necessary or
appropriate under any applicable law or regulation
have been made or obtained, or will be made or
obtained in a timely manner.
ERRORS AND
OMISSIONS: Inadvertent errors and omissions of any nature made
by either party shall neither increase nor reduce the
liability of either party from what that liability
would have been had no such error or omission taken
place. Upon discovery, the party committing an error
or omission shall correct such error or supply such
omission retroactively to the extent possible to the
time such error or omission occurred, and advise the
other party thereof as soon as possible.
NON TRANSFERABILITY: This Agreement confers no rights, powers, or
obligations on any person or organization other than
the Reinsurer and the Company. Neither this Agreement
nor any of the rights, powers, or obligations of the
Reinsurer or the Company under this Agreement may be
in any way transferred or assigned to any other
person or organization without the express written
consent of the Reinsurer
-28-
<PAGE> 29
and the Company. The granting of such consent shall
be at the sole and absolute discretion of each of the
parties.
OTHER REINSURANCES: The existence or collectibility of any other
reinsurance of the Company (past, present, or future)
shall in no way cause any liability of the Reinsurer
hereunder to be payable earlier or to be greater than
would have been the case in the absence of such
reinsurance and the risk of uncollectibility of
reinsurance shall be with the Company.
PARTIES TO THIS
AGREEMENT: This is an Agreement for indemnity reinsurance solely
between the Company and the Reinsurer. The acceptance
of reinsurance hereunder shall not create any right
or legal relationship whatsoever between the
Reinsurer and the policyholder, the insured or the
beneficiary under any policy reinsured hereunder. The
Company shall be and remain solely liable to the
policyholder, the insured or the beneficiary under
any policy reinsured hereunder.
RIGHT OF OFFSET: Both the Company and the Reinsurer shall have, and
may exercise, at any time the right to offset any
balance or balances due the other. Such offset may
only include balances due under this Agreement and
any other agreements heretofore or hereafter entered
into between the Company and the Reinsurer,
regardless of whether such balances are in respect of
premiums, or losses or otherwise, and regardless of
the capacity of any party, whether as reinsurer or
reinsured, under the various agreements involved.
SALVAGE,
SUBROGATION,
AND OTHER
RECOVERIES: In the event of the payment of any indemnity by the
Reinsurer under this Agreement, the Reinsurer shall
be subrogated, to the extent of such payment, to all
of the rights of the Company against any person or
entity legally responsible for damages for the losses
paid by the Company. The Company agrees to enforce
such rights, but in case the Company refuses or
neglects to do so, the Reinsurer is hereby authorized
and empowered to bring any appropriate action in the
name of the Company or the Company's policyholders or
otherwise to enforce such rights. In determining the
amount of salvage, subrogation and other recoveries,
there shall first be deducted from any amount
recovered the expenses incurred in effecting the
recovery. The whole of the balance shall then be
applied in reduction of the original losses paid by
the Company
-29-
<PAGE> 30
and the Covered Losses and the Experience Balance
shall be determined or redetermined accordingly. Any
overpayment made by the Reinsurer because of the
computation of loss before the application of such a
recovery shall be refunded promptly by the Company
but no later than three (3) Business Days after
receipt of notice of such overpayment.
TAXES: The Company shall be liable for all taxes, except
income and profit taxes of the Reinsurer, on amounts
paid to the Reinsurer under the terms of this
Agreement, and shall indemnify and hold the Reinsurer
harmless for any taxes which the Reinsurer may become
obligated to pay on the Company's behalf.
-30-
<PAGE> 31
FEDERAL EXCISE
TAX: In the event that any Federal Excise Tax is due with
respect to any amounts due under this Agreement, the
Company agrees to pay such tax in addition to any
amounts due under this Agreement and agrees to remit
such tax to the United States Internal Revenue
Service and shall indemnify and hold the Reinsurer
harmless for any such taxes which the Reinsurer may
become obligated to pay.
NO WAIVER: No consent or waiver, express or implied, by any
other party to or of any breach or default by any
other party in the performance of its obligations
hereunder shall be construed to be a consent or
waiver to or of any other breach or default in the
performance of obligations by such other party
hereunder. Failure on the part of any party to
complain of any act or failure to act of any other
party or to declare any other party in default,
irrespective of how long such failure continues,
shall not constitute a waiver by such first party of
its rights hereunder.
GOVERNING LAW: It is agreed that, subject to the express
provisions of this Agreement to the contrary, this
Agreement shall be governed by the substantive laws
of the State of Delaware, without regard to its
principles of conflict of laws.
SERVICE OF SUIT: Submission To Jurisdiction: It is agreed that in the
event of the failure of the Reinsurer to pay any
amount claimed to be due under this Agreement, the
Reinsurer, at the request of the Company, will submit
to the jurisdiction of any Court of competent
jurisdiction within the United States of America and
will comply with all requirements necessary to give
such Court jurisdiction; and all matters arising
hereunder shall be determined in accordance with the
law and practice of such Court and the Reinsurer will
abide by the final decision of such Court or of any
Appellate Court in the event of an appeal.
Service of Process: It is further agreed that service
of process in any suit instituted against the
Reinsurer arising out of this Agreement, may be made
upon Morgan, Lewis & Bockius LLP, 101 Park Avenue,
New York, New York 10178-0060, U.S.A., Attention: F.
Sedgwick Browne, and that in such suit the Reinsurer
will abide by the final decision of such Court or of
any Appellate Court in the event of an appeal.
Appearance: Morgan, Lewis & Bockius LLP are
authorized and directed to accept service of process
on behalf of the Reinsurer in any such suit and/or
upon the request of the Company to give a
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<PAGE> 32
written undertaking to the Company that they will
enter a general appearance upon the Reinsurer's
behalf in the event such a suit shall be instituted.
Insurance Official As Attorney For Service of
Process: Further, pursuant to any statute of any
State, Territory or District of the United States of
America which makes provision therefor, the Reinsurer
hereby designates the Superintendent, Commissioner or
Director of Insurance or other officer specified for
that purpose in the statute, or his successor or
successors in office, as their true and lawful
attorney upon whom may be served any lawful process
in any action, suit or proceeding instituted by or on
behalf of the Company or any beneficiary hereunder
arising out of this Agreement, and hereby designates
Morgan, Lewis & Bockius LLP as the party to whom the
said officer is authorized to mail such process or a
true copy thereof.
REPRESENTATIONS: The Company acknowledges that, at the Reinsurer's
request, it has provided the Reinsurer with the
Company Data described in Schedule 1 prior to
December 31, 1998. The Company also acknowledges
that, at the Reinsurer's request, it has provided the
Reinsurer with the Company Data described in Schedule
2 prior to March 31, 2000. The Company represents
that all factual information contained in the Company
Data is substantially complete and accurate as of the
date the document containing the information was
prepared. The Company further represents that any
assumptions made in preparing the Company Data were
based upon informed judgment and are consistent with
sound actuarial principles. The Company further
represents that it is not aware of any omissions,
errors, changes or discrepancies which would
materially affect the Company Data. The Reinsurer has
relied on such data and the foregoing representations
in entering into this Agreement.
DATES AND TIMES: All dates and times contained in this Agreement,
unless otherwise specified, are New York, New York
time.
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<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives,
In New York, New York, this ________________ day of ____________________, 2000
METROPOLITAN LIFE INSURANCE COMPANY
BY: ___________________________
Name: _________________________
Title: ________________________
And in ______________, __________________, this _____ day of _____________, 2000
STOCKWOOD REINSURANCE COMPANY LTD.
BY: ________________________________ BY: _____________________________
Name: ______________________________ Name: ___________________________
Title: _______________________________ Title: __________________________
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<PAGE> 34
SCHEDULE 1
The Company Data provided to Stockwood Reinsurance Company Ltd. includes the
following information:
(A) The following e-mails and attachments thereto:
December 14, 1998 e-mail from Joseph Dunn to Mary Rohe, "Re: Revised
Traditional Ordinary Calendar Year Exposure and Paid Death Claims"
December 15, 1998 e-mail from Ronald Rubnich to Mary Rohe, "Trad Ord
Exposure"
December 22, 1998 e-mail from Richard Daillak to Mary Rohe, "Net amount
at risk basis data"
December 23, 1998 e-mail from Richard Daillak to Mary Rohe, "MetLife
Business Definition"
December 23, 1998 e-mail from Richard Daillak to Mary Rohe, "Re:
MetLife Business Definition"
December 23, 1998 e-mail from Richard Daillak to Mary Rohe, "9 mos of
1998, exposure by attained age and sex"
December 28, 1998 e-mail from Richard Daillak to Mary Rohe, "Metromatic
& COLI"
December 28, 1998 e-mail from Richard Daillak to Mary Rohe, "9 mos 1998
exposure and death experience"
(B) The following facsimile transmission:
December 14, 1998 facsimile from Paul Schmieder to Mary Rohe, "Re
Information on Traditional Ordinary Large-sized Policies
<PAGE> 35
SCHEDULE 2
The Company Data provided to Stockwood Reinsurance Company Ltd.
includes the following information:
The following e-mails and attachments thereto:
November 18, 1999 e-mail from Paul Schmieder to Bill Schnaer, "Re:
Spreadsheets for Supplemental Death Benefit Calculation"
March 15, 2000 e-mail from Marissa Limjoco to Bill Schnaer, "Re:
Settlement Death Benefit"
March 7, 2000 and March 14, 2000 access databases from Marissa Limjoco
to Bill Schnaer, "Re: SDB9599 1995-1999 Settlement Death Benefit"
March 23, 2000 e-mail from Joseph Dunn to Bill Schnaer, "Re: Selection
Factors for SDB Policies"
<PAGE> 36
SCHEDULE 3
The Mortality Cover Purchase Charge for a given measuring life shall equal:
[FORMULA]
where
FaceAmount(t) is the average face amount of settlement death benefit
that is potentially recoverable as a Part C Covered Loss under this
Agreement during the year commencing at March 24th in calendar year
1999+t;
t(0) is the number of policy years that have elapsed as of the
anniversary of the underlying policy in calendar year 2000;
d is the number of days from March 24, 2000 to the Settlement Date at
which the Mortality Cover Purchase Charge is paid by the Company;
x is the age of the measuring life as of the last birthday on or before
the issue date of the underlying policy;
q[x]+t-1 is the mortality rate for an individual of issue
age x and policy year t as shown in the attached tables;
1
v=---;
1+i
i = 4.6%;
margin is the Reinsurer's Margin defined in the Agreement; and
the product over s is defined to be 1 when s ranges from 1 to 0.
<PAGE> 37
Schedule 3
Mortality Rates Per Thousand - Traditional Life Male
<TABLE>
<CAPTION>
Select Mortality by
Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.990287 0.516932 0.478486 0.430236 0.401286 0.366445 0.361451
1 0.506927 0.461132 0.430236 0.401286 0.362686 0.356695 0.312051
2 0.452207 0.414632 0.401286 0.362686 0.353036 0.307945 0.272531
3 0.406607 0.386732 0.362686 0.353036 0.304786 0.268945 0.252771
4 0.379247 0.349532 0.353036 0.304786 0.266186 0.249445 0.203371
5 0.342767 0.340232 0.304786 0.266186 0.246886 0.200695 0.203371
6 0.333647 0.293732 0.266186 0.246886 0.198636 0.200695 0.292291
7 0.288047 0.256532 0.246886 0.198636 0.198636 0.288445 0.440491
8 0.251567 0.237932 0.198636 0.198636 0.285486 0.434695 0.588691
9 0.233327 0.191432 0.198636 0.285486 0.430236 0.580945 0.687491
10 0.187727 0.191432 0.285486 0.430236 0.574986 0.678445 0.806724
11 0.187727 0.275132 0.430236 0.574986 0.671486 0.796109 1.009830
12 0.269807 0.414632 0.574986 0.671486 0.787944 0.996543 1.145930
13 0.406607 0.554132 0.671486 0.787944 0.986322 1.130852 1.168269
14 0.543407 0.647132 0.787944 0.986322 1.119253 1.152897 1.160509
15 0.634607 0.759365 0.986322 1.119253 1.141072 1.145239 1.152255
16 0.730787 0.950549 1.119253 1.141072 1.133493 1.137094 1.122036
17 0.908643 1.078658 1.141072 1.133493 1.125431 1.107272 1.080626
18 1.019506 1.089044 1.127620 1.119600 1.091373 1.064219 1.047316
19 1.027556 1.070065 1.112603 1.083423 1.050001 1.032430 1.007920
20 1.008985 1.050791 1.076609 1.036876 1.018608 0.994577 0.975584
21 0.990146 1.011876 1.030313 1.001596 0.982260 0.964622 0.966546
22 0.952822 0.962501 0.995216 0.960706 0.951667 0.955663 0.978872
23 0.905626 0.923977 0.953521 0.925758 0.942802 0.968822 1.003994
24 0.868688 0.878594 0.918782 0.912134 0.956762 0.994688 1.049587
25 0.828301 0.842051 0.905209 0.919577 0.982281 1.040912 1.099723
26 0.794219 0.824087 0.911537 0.937820 1.022479 1.087187 1.159103
27 0.776600 0.824102 0.929548 0.974771 1.065535 1.144614 1.228033
28 0.781892 0.837524 0.966097 1.015392 1.120466 1.211316 1.303520
29 0.794096 0.865258 1.005135 1.064926 1.183027 1.285663 1.379812
30 0.819718 0.893454 1.055267 1.123875 1.254071 1.359349 1.444779
31 0.844450 0.927282 1.112302 1.188140 1.322807 1.421700 1.529382
32 0.881401 0.968282 1.174404 1.249724 1.381695 1.503183 1.619210
33 0.898843 0.994466 1.236569 1.301686 1.457334 1.589580 1.718923
34 0.923040 1.031936 1.286300 1.368911 1.539034 1.687264 1.844610
35 0.939851 1.070891 1.352537 1.439685 1.629532 1.808441 1.969831
36 0.952416 1.124931 1.423999 1.521517 1.744141 1.926681 2.084706
37 0.995572 1.179984 1.502894 1.621569 1.855482 2.034140 2.213274
38 1.040547 1.244031 1.601475 1.719557 1.960589 2.159172 2.354831
39 1.091321 1.324181 1.700139 1.811189 2.078019 2.291614 2.498492
40 1.155393 1.402399 1.785906 1.910793 2.207325 2.428152 2.685526
41 1.219008 1.473315 1.888661 2.022942 2.335302 2.594491 2.911903
42 1.273349 1.554210 1.999236 2.135536 2.497388 2.799653 3.158805
43 1.337801 1.641006 2.107399 2.281939 2.690704 3.029434 3.429313
44 1.406577 1.730375 2.245525 2.462902 2.903657 3.284468 3.724553
45 1.482776 1.838903 2.413380 2.659290 3.131793 3.562430 4.032731
46 1.584005 1.974283 2.594604 2.873420 3.383242 3.851953 4.352597
47 1.710165 2.120245 2.791211 3.110194 3.638728 4.156805 4.680851
48 1.843535 2.274465 3.003534 3.351338 3.905790 4.464145 5.023591
49 1.992603 2.444638 3.226185 3.599552 4.193262 4.784373 5.406375
50 2.154524 2.623593 3.453964 3.857368 4.486808 5.148028 5.853484
51 2.322297 2.801325 3.684003 4.119228 4.814068 5.565944 6.333818
52 2.495087 2.979708 3.926686 4.410795 5.203097 6.014154 6.855588
53 2.670902 3.168188 4.196557 4.758095 5.612714 6.500711 7.418505
54 2.853120 3.371108 4.518479 5.129501 6.057114 7.024370 8.027054
55 3.056051 3.614783 4.854440 5.516732 6.542649 7.589561 8.694939
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.311103 0.273082 0.255841 0.205841 0.205841 0.295841 0.445841
1 0.271703 0.253282 0.205841 0.205841 0.295841 0.445841 0.595841
2 0.252003 0.203782 0.205841 0.295841 0.445841 0.595841 0.695841
3 0.202753 0.203782 0.295841 0.445841 0.595841 0.695841 0.816522
4 0.202753 0.292882 0.445841 0.595841 0.695841 0.816522 1.022095
5 0.291403 0.441382 0.595841 0.695841 0.816522 1.022095 1.159848
6 0.439153 0.589882 0.695841 0.816522 1.022095 1.159848 1.182458
7 0.586903 0.688882 0.816522 1.022095 1.159848 1.182458 1.174604
8 0.685403 0.808357 1.022095 1.159848 1.182458 1.174604 1.166250
9 0.804274 1.011874 1.159848 1.182458 1.174604 1.166250 1.135664
10 1.006764 1.148249 1.182458 1.174604 1.166250 1.135664 1.093751
11 1.142450 1.170634 1.174604 1.166250 1.135664 1.093751 1.063265
12 1.164722 1.162858 1.166250 1.135664 1.093751 1.063265 1.026395
13 1.156985 1.154588 1.135664 1.093751 1.063265 1.026395 0.996510
14 1.148757 1.124307 1.093751 1.063265 1.026395 0.996510 0.989300
15 1.118629 1.082813 1.063265 1.026395 0.996510 0.989300 1.005002
16 1.077344 1.052632 1.026395 0.996510 0.989300 1.005002 1.033980
17 1.047316 1.016131 0.996510 0.989300 1.005002 1.033980 1.084284
18 1.008946 0.984552 0.987321 1.003997 1.033980 1.084284 1.139609
19 0.977577 0.975449 0.999977 1.031912 1.084284 1.139609 1.207399
20 0.968524 0.988922 1.026742 1.079946 1.139609 1.207399 1.285898
21 0.982892 1.016402 1.073441 1.133911 1.207399 1.285898 1.373572
22 1.009164 1.063682 1.125934 1.200155 1.285898 1.373572 1.461666
23 1.056092 1.115677 1.189288 1.276897 1.373572 1.461666 1.538636
24 1.107700 1.179629 1.264038 1.361210 1.461666 1.538636 1.637454
25 1.171177 1.253751 1.346100 1.447049 1.538636 1.637454 1.742960
26 1.242178 1.333738 1.428047 1.518634 1.634179 1.741217 1.862322
27 1.320003 1.414892 1.498631 1.612892 1.734246 1.858597 2.009379
28 1.398814 1.483245 1.589968 1.711587 1.849286 2.003351 2.157537
29 1.464781 1.571956 1.704615 1.823213 1.989285 2.148907 2.298463
30 1.552306 1.668013 1.797141 1.963163 2.131647 2.286971 2.459194
31 1.643612 1.774793 1.933022 2.101441 2.263986 2.444438 2.634039
32 1.748720 1.906900 2.069078 2.231808 2.417387 2.615601 2.813617
33 1.876760 2.038872 2.197331 2.380499 2.581358 2.791108 3.034493
34 2.006509 2.165153 2.343611 2.544482 2.751718 3.007183 3.301477
35 2.126079 2.306724 2.507605 2.709513 2.958631 3.268462 3.593635
36 2.259999 2.465461 2.672936 2.916148 3.202433 3.543324 3.906912
37 2.412780 2.627919 2.879734 3.169418 3.482232 3.844276 4.245052
38 2.571646 2.831182 3.126499 3.446296 3.789470 4.172523 4.602875
39 2.767458 3.073675 3.399579 3.750322 4.125593 4.519440 4.970093
40 3.001043 3.338487 3.699431 4.082929 4.477722 4.889768 5.352640
41 3.259427 3.628965 4.023200 4.431368 4.849606 5.271375 5.747082
42 3.542841 3.946405 4.366474 4.794383 5.228034 5.677067 6.194017
43 3.848278 4.283038 4.719078 5.168440 5.624555 6.124704 6.709256
44 4.171790 4.628713 5.087175 5.560375 6.067994 6.654487 7.270510
45 4.508226 4.984240 5.472856 5.998682 6.586025 7.218471 7.887959
46 4.854216 5.356164 5.897863 6.510717 7.151565 7.823436 8.557119
47 5.210299 5.778142 6.401178 7.062356 7.750848 8.495809 9.291981
48 5.614312 6.264254 6.943411 7.654063 8.408223 9.215895 10.090679
49 6.086254 6.787296 7.516951 8.294362 9.120788 10.018307 10.919458
50 6.586576 7.347578 8.154225 8.997149 9.914919 10.829955 11.866045
51 7.129812 7.970295 8.844977 9.770176 10.718075 11.768683 13.181556
52 7.725055 8.635741 9.594416 10.561443 11.646980 13.073400 14.692195
53 8.369441 9.366962 10.371248 11.476595 12.924685 14.571519 16.119672
54 9.077475 10.113925 11.269700 12.735411 14.405591 15.987272 17.681882
55 9.789473 10.989783 12.492059 14.194410 15.805222 17.536501 19.416647
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.595841 15 0.695841
1 0.695841 16 0.816522
2 0.816522 17 1.022095
3 1.022095 18 1.159848
4 1.159848 19 1.182458
5 1.182458 20 1.174604
6 1.174604 21 1.166250
7 1.166250 22 1.135664
8 1.135664 23 1.093751
9 1.093751 24 1.063265
10 1.063265 25 1.026395
11 1.026395 26 0.996510
12 0.996510 27 0.989300
13 0.989300 28 1.005002
14 1.005002 29 1.033980
15 1.033980 30 1.084284
16 1.084284 31 1.139609
17 1.139609 32 1.207399
18 1.207399 33 1.285898
19 1.285898 34 1.373572
20 1.373572 35 1.461666
21 1.461666 36 1.538636
22 1.538636 37 1.637454
23 1.637454 38 1.742960
24 1.742960 39 1.862322
25 1.862322 40 2.009379
26 2.009379 41 2.157537
27 2.157537 42 2.298463
28 2.298463 43 2.459194
29 2.459194 44 2.634039
30 2.634039 45 2.813617
31 2.813617 46 3.034493
32 3.034493 47 3.301477
33 3.301477 48 3.593635
34 3.593635 49 3.914741
35 3.914741 50 4.266384
36 4.266384 51 4.635323
37 4.635323 52 5.020296
38 5.020296 53 5.417652
39 5.417652 54 5.834601
40 5.834601 55 6.301136
41 6.301136 56 6.846180
42 6.846180 57 7.434059
43 7.434059 58 8.065398
44 8.065398 59 8.758566
45 8.758566 60 9.510728
46 9.501217 61 10.338810
47 10.318133 62 11.187970
48 11.154406 63 12.170303
49 12.145962 64 13.519545
50 13.451947 65 15.084389
51 14.993882 66 16.549971
52 16.434121 67 18.172540
53 18.027160 68 19.955444
54 19.775845 69 21.917407
55 21.698233 70 24.131461
</TABLE>
<PAGE> 38
Schedule 3
Mortality Rates Per Thousand - Traditional Life Male
<TABLE>
<CAPTION>
Select Mortality by
Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 3.286166 3.873145 5.218313 5.947066 7.056960 8.219354 9.375519
57 3.538612 4.137549 5.622999 6.410231 7.630042 8.849684 10.162203
58 3.798802 4.431834 6.058334 6.906325 8.200782 9.590198 11.261781
59 4.055216 4.745853 6.534128 7.417624 8.872151 10.599323 12.520043
60 4.289338 5.097033 7.026045 8.008059 9.801670 11.780908 13.686826
61 4.580093 5.437353 7.618609 8.828263 10.875844 12.875877 14.974173
62 4.833203 5.829575 8.395637 9.774684 11.849779 14.065546 16.403375
63 5.148038 6.394745 9.261815 10.641631 12.938849 15.385647 17.950356
64 5.529494 7.059494 10.112032 11.594081 14.128454 16.810651 19.691272
65 6.079009 7.646087 11.012559 12.631796 15.429854 18.436436 21.610548
66 6.537239 8.286678 11.993222 13.764131 16.892023 20.228323 23.817919
67 7.050946 8.940039 13.084692 15.033900 18.500543 22.232016 26.270418
68 7.603024 9.687494 14.285825 16.427206 20.323058 24.514722 29.036959
69 8.197110 10.521317 15.629769 18.032309 22.368871 27.055529 32.021013
70 8.880378 11.456514 17.121883 19.800352 24.641786 29.827793 35.540352
71 9.595827 12.481647 18.824966 21.759706 27.116176 33.052527 39.359683
72 10.396478 13.622903 20.714952 23.926037 30.031597 36.548277 43.370398
73 11.314487 14.914766 22.729735 26.433137 33.144996 40.260823 47.698515
74 12.284867 16.309582 25.144799 29.149840 36.442045 44.209847 52.263485
75 13.398581 17.947878 27.719476 31.968621 39.999385 48.426419 57.230161
76 14.615970 19.630518 30.441110 35.006981 43.729321 52.945162 62.465550
77 15.980623 21.439706 33.262646 38.238347 47.716010 57.770687 68.153205
78 17.348159 23.337987 36.253658 41.615333 52.041363 62.930737 74.040561
79 18.826778 25.337867 39.509147 45.277577 56.576734 68.345133 80.267247
80 20.309987 27.453047 43.049506 49.178238 61.415696 73.973799 92.708229
81 23.676437 31.272562 46.741087 54.201488 70.981832 92.708229 120.415645
82 30.476822 40.387084 53.347174 70.259634 92.149746 120.415645 129.238995
83 39.081467 52.113164 69.124750 91.479566 120.415645 129.238995 138.125663
84 50.024841 67.370838 90.250903 120.415645 129.238995 138.125663 150.249337
85 63.863015 87.905273 120.415645 129.238995 138.125663 150.249337 162.699579
86 81.091777 120.415645 129.238995 138.125663 150.249337 162.699579 167.574508
87 120.415645 129.238995 138.125663 150.249337 162.699579 167.574508 174.934780
88 129.238995 138.125663 150.249337 162.699579 167.574508 174.934780 186.912763
89 138.125663 150.249337 162.699579 167.574508 174.934780 186.912763 206.366225
90 150.249337 162.699579 167.574508 174.934780 186.912763 206.366225 232.642809
91 162.699579 167.574508 174.934780 186.912763 206.366225 232.642809 260.804543
92 167.574508 174.934780 186.912763 206.366225 232.642809 260.804543 296.008348
93 174.934780 186.912763 206.366225 232.642809 260.804543 296.008348 338.260607
94 186.912763 206.366225 232.642809 260.804543 296.008348 338.260607 1000.000000
95 206.366225 232.642809 260.804543 296.008348 338.260607 1000.000000 1000.000000
96 232.642809 260.804543 296.008348 338.260607 1000.000000 1000.000000 1000.000000
97 260.804543 296.008348 338.260607 1000.000000 1000.000000 1000.000000 1000.000000
98 296.008348 338.260607 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 338.260607 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 10.624674 12.181110 13.922891 15.556973 17.336603 19.237048 21.325637
57 11.775523 13.560865 15.259073 17.064015 19.017538 21.128380 23.455780
58 13.108334 14.861874 16.718737 18.718206 20.865371 23.238597 25.836965
59 14.348825 16.282596 18.339053 20.536610 22.973151 25.597734 28.516892
60 15.701075 17.840167 20.120179 22.587048 25.278759 28.252575 31.570020
61 17.201592 19.550327 22.104418 24.853459 27.900152 31.244891 34.945224
62 18.848970 21.501132 24.321834 27.430255 30.854736 34.620990 38.680427
63 20.704794 23.630722 26.842883 30.334530 34.152651 38.281660 43.048251
64 22.753541 26.049931 29.684272 33.576235 37.803139 42.648422 47.793900
65 25.080768 28.806424 32.819689 37.125235 42.070891 47.300671 52.862787
66 27.700986 31.846987 36.287823 41.315659 46.659473 52.317248 58.224669
67 30.586077 35.211152 40.382725 45.820984 51.608046 57.623174 64.039309
68 33.775589 39.138812 44.785203 50.626075 56.841231 63.311589 70.230414
69 37.539497 43.354838 49.425888 55.758541 62.451557 69.504143 76.948009
70 41.579214 47.898377 54.435253 61.326900 68.487363 76.072695 84.168772
71 45.879881 52.690919 59.805305 67.252702 75.038234 83.211320 94.923796
72 50.465390 57.886772 65.582279 73.605903 81.992744 94.923796 103.171268
73 55.372832 63.403466 71.696128 80.426004 94.923796 103.171268 111.696662
74 60.643635 69.308910 78.337017 87.614664 103.171268 111.696662 120.415645
75 66.285099 75.725783 85.336493 103.171268 111.696662 120.415645 129.238995
76 72.331179 82.393855 92.647799 111.696662 120.415645 129.238995 138.125663
77 78.691827 89.449489 111.696662 120.415645 129.238995 138.125663 150.249337
78 85.425810 111.696662 120.415645 129.238995 138.125663 150.249337 162.699579
79 92.261443 120.415645 129.238995 138.125663 150.249337 162.699579 167.574508
80 120.415645 129.238995 138.125663 150.249337 162.699579 167.574508 174.934780
81 129.238995 138.125663 150.249337 162.699579 167.574508 174.934780 186.912763
82 138.125663 150.249337 162.699579 167.574508 174.934780 186.912763 206.366225
83 150.249337 162.699579 167.574508 174.934780 186.912763 206.366225 232.642809
84 162.699579 167.574508 174.934780 186.912763 206.366225 232.642809 260.804543
85 167.574508 174.934780 186.912763 206.366225 232.642809 260.804543 296.008348
86 174.934780 186.912763 206.366225 232.642809 260.804543 296.008348 338.260607
87 186.912763 206.366225 232.642809 260.804543 296.008348 338.260607 1000.000000
88 206.366225 232.642809 260.804543 296.008348 338.260607 1000.000000 1000.000000
89 232.642809 260.804543 296.008348 338.260607 1000.000000 1000.000000 1000.000000
90 260.804543 296.008348 338.260607 1000.000000 1000.000000 1000.000000 1000.000000
91 296.008348 338.260607 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 338.260607 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 23.793621 71 26.581239
57 26.102777 72 29.368581
58 28.722472 73 32.512894
59 31.797610 74 36.026004
60 35.233432 75 39.876729
61 38.959564 76 44.425440
62 43.403655 77 49.322911
63 48.188484 78 54.553960
64 53.244665 79 60.149451
65 58.705864 80 66.156310
66 64.568559 81 72.627108
67 70.811431 82 79.573949
68 77.584600 83 87.041130
69 84.865101 84 94.923796
70 94.923796 85 103.171268
71 103.171268 86 111.696662
72 111.696662 87 120.415645
73 120.415645 88 129.238995
74 129.238995 89 138.125663
75 138.125663 90 150.249337
76 150.249337 91 162.699579
77 162.699579 92 167.574508
78 167.574508 93 174.934780
79 174.934780 94 186.912763
80 186.912763 95 206.366225
81 206.366225 96 232.642809
82 232.642809 97 260.804543
83 260.804543 98 296.008348
84 296.008348 99 338.260607
85 338.260607 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 39
Schedule 3
Mortality Rates Per Thousand - Traditional Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.782117 0.379053 0.335419 0.306469 0.277519 0.270644 0.254493
1 0.371717 0.323253 0.306469 0.277519 0.267869 0.251144 0.224853
2 0.316997 0.295353 0.277519 0.267869 0.248569 0.221894 0.205093
3 0.289637 0.267453 0.267869 0.248569 0.219619 0.202394 0.175453
4 0.262277 0.258153 0.248569 0.219619 0.200319 0.173144 0.165573
5 0.253157 0.239553 0.219619 0.200319 0.171369 0.163394 0.165573
6 0.234917 0.211653 0.200319 0.171369 0.161719 0.163394 0.185333
7 0.207557 0.193053 0.171369 0.161719 0.161719 0.182894 0.234733
8 0.189317 0.165153 0.161719 0.161719 0.181019 0.231644 0.284133
9 0.161957 0.155853 0.161719 0.181019 0.229269 0.280394 0.313773
10 0.152837 0.155853 0.181019 0.229269 0.277519 0.309644 0.334270
11 0.152837 0.174453 0.229269 0.277519 0.306469 0.329871 0.344150
12 0.171077 0.220953 0.277519 0.306469 0.326488 0.339621 0.326382
13 0.216677 0.267453 0.306469 0.326488 0.336138 0.322088 0.338122
14 0.262277 0.295353 0.326488 0.336138 0.318784 0.333673 0.348213
15 0.289637 0.314647 0.336138 0.318784 0.330251 0.343631 0.358006
16 0.302805 0.323947 0.318784 0.330251 0.340107 0.353295 0.368395
17 0.309665 0.307222 0.330251 0.340107 0.349672 0.363547 0.376310
18 0.290374 0.315193 0.338345 0.347860 0.358327 0.370597 0.394150
19 0.297397 0.321075 0.345686 0.355717 0.365645 0.388548 0.396280
20 0.302748 0.326481 0.353480 0.361075 0.383346 0.391034 0.405363
21 0.307639 0.332226 0.358790 0.376944 0.386191 0.400809 0.415467
22 0.312837 0.335175 0.374543 0.377717 0.395426 0.410790 0.424865
23 0.315369 0.347732 0.374892 0.384660 0.405261 0.420503 0.435629
24 0.326925 0.345433 0.381762 0.392079 0.415269 0.431591 0.439130
25 0.325660 0.349880 0.389102 0.399129 0.426207 0.435500 0.441675
26 0.330005 0.354232 0.395640 0.406916 0.427788 0.436641 0.455208
27 0.333820 0.357690 0.403327 0.407828 0.427945 0.449518 0.466322
28 0.339369 0.363398 0.404199 0.407806 0.440035 0.459974 0.480633
29 0.344555 0.362010 0.403687 0.418223 0.449231 0.474049 0.521828
30 0.342957 0.358833 0.414429 0.426770 0.462400 0.514089 0.556004
31 0.339152 0.364167 0.422375 0.438090 0.500269 0.547122 0.614838
32 0.346148 0.367686 0.433025 0.472630 0.531727 0.604306 0.661739
33 0.341318 0.366679 0.467655 0.500936 0.585874 0.649629 0.739565
34 0.340343 0.390265 0.495015 0.550326 0.628972 0.725944 0.812158
35 0.355440 0.412118 0.543744 0.588370 0.701105 0.796234 0.901626
36 0.366524 0.452242 0.581960 0.654631 0.767923 0.881876 0.975908
37 0.400237 0.482236 0.646619 0.713956 0.849287 0.952237 1.064974
38 0.425251 0.535243 0.705109 0.787071 0.917806 1.038941 1.162895
39 0.469540 0.583020 0.778184 0.847868 0.999892 1.131676 1.259232
40 0.508705 0.641903 0.836032 0.919428 1.090051 1.223781 1.369770
41 0.557962 0.689699 0.908778 0.998997 1.176985 1.323337 1.482647
42 0.596090 0.747848 0.987290 1.076303 1.273809 1.425493 1.601281
43 0.643718 0.810384 1.062122 1.163918 1.370019 1.535700 1.735627
44 0.694615 0.872103 1.145345 1.254030 1.471940 1.662318 1.878923
45 0.747314 0.937944 1.228815 1.348064 1.585047 1.797137 2.026970
46 0.807932 1.005241 1.315273 1.454281 1.706742 1.936105 2.199515
47 0.870761 1.074808 1.412673 1.568997 1.828932 2.100574 2.378764
48 0.934536 1.151141 1.515191 1.684482 1.973728 2.268636 2.580203
49 1.008486 1.233245 1.621576 1.818976 2.130976 2.457336 2.792924
50 1.086891 1.318695 1.745405 1.960277 2.304502 2.659462 3.003028
51 1.167255 1.415605 1.872175 2.115707 2.486939 2.855511 3.227659
52 1.260852 1.514259 2.016814 2.278609 2.669358 3.064761 3.487114
53 1.357327 1.627236 2.167934 2.441058 2.860191 3.306605 3.763927
54 1.465412 1.741508 2.318127 2.613949 3.080968 3.563954 4.084594
55 1.578751 1.854501 2.473781 2.806101 3.319544 3.861974 4.420958
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.224170 0.205508 0.177584 0.167584 0.167584 0.187584 0.237584
1 0.204470 0.175808 0.167584 0.167584 0.187584 0.237584 0.287584
2 0.174920 0.165908 0.167584 0.187584 0.237584 0.287584 0.317584
3 0.165070 0.165908 0.187584 0.237584 0.287584 0.317584 0.338330
4 0.165070 0.185708 0.237584 0.287584 0.317584 0.338330 0.348330
5 0.184770 0.235208 0.287584 0.317584 0.338330 0.348330 0.330346
6 0.234020 0.284708 0.317584 0.338330 0.348330 0.330346 0.342229
7 0.283270 0.314408 0.338330 0.348330 0.330346 0.342229 0.352442
8 0.312820 0.334946 0.348330 0.330346 0.342229 0.352442 0.362354
9 0.333255 0.344846 0.330346 0.342229 0.352442 0.362354 0.372869
10 0.343105 0.327043 0.342229 0.352442 0.362354 0.372869 0.380881
11 0.325391 0.338807 0.352442 0.362354 0.372869 0.380881 0.400152
12 0.337096 0.348918 0.362354 0.372869 0.380881 0.400152 0.403544
13 0.347156 0.358731 0.372869 0.380881 0.400152 0.403544 0.414059
14 0.356919 0.369140 0.380881 0.400152 0.403544 0.414059 0.425248
15 0.367276 0.377072 0.400152 0.403544 0.414059 0.425248 0.436207
16 0.375167 0.396151 0.403544 0.414059 0.425248 0.436207 0.448639
17 0.394150 0.399508 0.414059 0.425248 0.436207 0.448639 0.453646
18 0.396683 0.409090 0.424397 0.435771 0.448639 0.453646 0.457695
19 0.406191 0.419295 0.434026 0.447742 0.453646 0.457695 0.474175
20 0.416318 0.429227 0.445499 0.451832 0.457695 0.474175 0.488295
21 0.426610 0.441012 0.449110 0.455406 0.474175 0.488295 0.506462
22 0.437872 0.445027 0.452202 0.471330 0.488295 0.506462 0.552784
23 0.441852 0.448083 0.467063 0.484877 0.506462 0.552784 0.592123
24 0.444879 0.463269 0.479994 0.501904 0.552784 0.592123 0.658285
25 0.459950 0.476087 0.496333 0.547256 0.592123 0.658285 0.712313
26 0.471693 0.491775 0.540070 0.584426 0.656969 0.711600 0.801262
27 0.486710 0.535095 0.576728 0.648411 0.708751 0.799660 0.884704
28 0.529014 0.570807 0.639195 0.699491 0.795654 0.882050 0.987543
29 0.563701 0.631954 0.696642 0.784436 0.875857 0.983592 1.075974
30 0.624054 0.681683 0.773218 0.864356 0.975692 1.070594 1.183304
31 0.671711 0.763603 0.851085 0.961867 1.059834 1.176205 1.300777
32 0.752385 0.839584 0.947053 1.044771 1.163188 1.291672 1.418054
33 0.826314 0.933228 1.028631 1.145439 1.274762 1.406710 1.547763
34 0.918415 1.013568 1.127689 1.256551 1.386857 1.533833 1.681005
35 0.995276 1.109940 1.238340 1.365586 1.509069 1.664195 1.821708
36 1.087457 1.217527 1.347151 1.487400 1.630575 1.796204 1.977347
37 1.191512 1.324462 1.468827 1.613765 1.765235 1.945646 2.141498
38 1.296101 1.444063 1.591912 1.747018 1.917907 2.104910 2.313541
39 1.411560 1.565016 1.723336 1.898094 2.081235 2.271604 2.511556
40 1.528034 1.692367 1.872337 2.059712 2.250635 2.470966 2.720160
41 1.652289 1.836674 2.029581 2.227337 2.450670 2.678862 2.951800
42 1.793085 1.990840 2.194719 2.422764 2.656837 2.915839 3.199818
43 1.941338 2.152781 2.384710 2.626552 2.888869 3.164011 3.442067
44 2.096865 2.339045 2.585254 2.855904 3.134715 3.413969 3.704989
45 2.278159 2.532943 2.810953 3.098908 3.378845 3.678470 4.012232
46 2.466866 2.751018 3.046826 3.340210 3.644375 3.979412 4.341625
47 2.676099 2.984978 3.284013 3.598915 3.942490 4.310518 4.728256
48 2.900344 3.213767 3.538302 3.893260 4.266080 4.689540 5.130624
49 3.122447 3.458747 3.823518 4.208310 4.641144 5.093826 5.603218
50 3.356462 3.737366 4.137209 4.578230 5.041258 5.557290 6.126612
51 3.626599 4.043888 4.500797 4.967663 5.499880 6.076343 6.849578
52 3.919461 4.394326 4.878298 5.419506 6.013506 6.793376 7.643733
53 4.258818 4.762649 5.321909 5.925534 6.716099 7.580951 8.268677
54 4.615459 5.189866 5.818711 6.617746 7.494625 8.200762 8.903173
55 5.023377 5.674186 6.491292 7.384756 8.107378 8.829971 9.576539
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.287584 15 0.317584
1 0.317584 16 0.338330
2 0.338330 17 0.348330
3 0.348330 18 0.330346
4 0.330346 19 0.342229
5 0.342229 20 0.352442
6 0.352442 21 0.362354
7 0.362354 22 0.372869
8 0.372869 23 0.380881
9 0.380881 24 0.400152
10 0.400152 25 0.403544
11 0.403544 26 0.414059
12 0.414059 27 0.425248
13 0.425248 28 0.436207
14 0.436207 29 0.448639
15 0.448639 30 0.453646
16 0.453646 31 0.457695
17 0.457695 32 0.474175
18 0.474175 33 0.488295
19 0.488295 34 0.506462
20 0.506462 35 0.552784
21 0.552784 36 0.592123
22 0.592123 37 0.658285
23 0.658285 38 0.712313
24 0.712313 39 0.801262
25 0.801262 40 0.884704
26 0.884704 41 0.987543
27 0.987543 42 1.075974
28 1.075974 43 1.183304
29 1.183304 44 1.300777
30 1.300777 45 1.418054
31 1.418054 46 1.547763
32 1.547763 47 1.681005
33 1.681005 48 1.821708
34 1.821708 49 1.981309
35 1.981309 50 2.152260
36 2.152260 51 2.329850
37 2.329850 52 2.536926
38 2.536926 53 2.753199
39 2.753199 54 2.996752
40 2.996752 55 3.255156
41 3.255156 56 3.512313
42 3.512313 57 3.788332
43 3.788332 58 4.102487
44 4.102487 59 4.443834
45 4.443834 60 4.839566
46 4.834727 61 5.256787
47 5.246273 62 5.741003
48 5.723780 63 6.283705
49 6.271138 64 7.025208
50 6.990082 65 7.847775
51 7.800688 66 8.489401
52 8.429976 67 9.150229
53 9.077027 68 9.842280
54 9.753700 69 10.589852
55 10.483953 70 11.482672
</TABLE>
<PAGE> 40
Schedule 3
Mortality Rates Per Thousand - Traditional Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 1.685910 1.973721 2.654309 3.017363 3.590958 4.179145 4.810960
57 1.803246 2.104576 2.852941 3.261868 3.879509 4.541133 5.246894
58 1.932271 2.248580 3.082804 3.511534 4.208155 4.951560 5.851998
59 2.057495 2.414944 3.322289 3.806285 4.580821 5.507763 6.513653
60 2.182644 2.591596 3.605350 4.134678 5.093276 6.129112 7.020735
61 2.328756 2.790127 3.933599 4.587461 5.658246 6.604754 7.539789
62 2.480113 3.009895 4.362654 5.085358 6.078411 7.082277 8.090354
63 2.658007 3.322923 4.818534 5.458685 6.514963 7.588398 8.673088
64 2.873310 3.672759 5.187024 5.837846 6.968334 8.122416 9.369861
65 3.162653 3.922103 5.545039 6.230163 7.455256 8.772762 10.158193
66 3.353314 4.172504 5.915210 6.650427 8.037871 9.508469 11.149694
67 3.550289 4.409342 6.322141 7.153705 8.696313 10.407298 12.344218
68 3.749909 4.680714 6.797742 7.721726 9.513673 11.519233 13.773683
69 3.960605 5.006445 7.346885 8.441322 10.510918 12.833792 15.412367
70 4.225623 5.385217 8.015132 9.303996 11.688833 14.356725 17.483045
71 4.510588 5.842935 8.845671 10.321718 13.051568 16.259232 19.773039
72 4.866821 6.401272 9.826139 11.516090 14.773173 18.360679 22.282098
73 5.316569 7.074820 10.940285 13.003015 16.650980 20.684514 25.051284
74 5.827328 7.850135 12.369254 14.643943 18.722568 23.219034 28.085450
75 6.449010 8.828938 13.925374 16.424289 21.007697 26.023481 31.464584
76 7.189902 9.861741 15.639510 18.385684 23.499345 29.108733 35.175438
77 8.028151 11.014924 17.469559 20.548595 26.233796 32.531679 39.299170
78 8.912839 12.257123 19.482059 22.879704 29.305397 36.287740 43.731717
79 9.887834 13.616111 21.721743 25.496591 32.623832 40.367738 48.540106
80 10.914219 15.093417 24.241926 28.357639 36.274898 44.734262 57.394974
81 13.017074 17.610124 26.952305 32.013859 42.924927 57.394974 76.293597
82 17.162029 23.288397 31.509262 42.488191 57.049222 76.293597 83.791059
83 22.535540 30.780401 41.801891 56.634318 76.293597 83.791059 91.637222
84 29.546942 40.741246 55.873662 76.293597 83.791059 91.637222 102.057698
85 38.619956 54.421500 76.293597 83.791059 91.637222 102.057698 113.159363
86 50.203315 76.293597 83.791059 91.637222 102.057698 113.159363 118.864642
87 76.293597 83.791059 91.637222 102.057698 113.159363 118.864642 127.286916
88 83.791059 91.637222 102.057698 113.159363 118.864642 127.286916 140.604334
89 91.637222 102.057698 113.159363 118.864642 127.286916 140.604334 161.969570
90 102.057698 113.159363 118.864642 127.286916 140.604334 161.969570 190.569238
91 113.159363 118.864642 127.286916 140.604334 161.969570 190.569238 221.437195
92 118.864642 127.286916 140.604334 161.969570 190.569238 221.437195 260.025797
93 127.286916 140.604334 161.969570 190.569238 221.437195 260.025797 306.336374
94 140.604334 161.969570 190.569238 221.437195 260.025797 306.336374 1000.000000
95 161.969570 190.569238 221.437195 260.025797 306.336374 1000.000000 1000.000000
96 190.569238 221.437195 260.025797 306.336374 1000.000000 1000.000000 1000.000000
97 221.437195 260.025797 306.336374 1000.000000 1000.000000 1000.000000 1000.000000
98 260.025797 306.336374 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 306.336374 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 5.485674 6.329712 7.243496 7.980037 8.729318 9.487958 10.303926
57 6.118956 7.055150 7.827228 8.592065 9.379693 10.208617 11.161157
58 6.819716 7.623482 8.418210 9.232059 10.081539 11.057813 12.144851
59 7.360311 8.198605 9.045055 9.922691 10.931504 12.032399 13.349387
60 7.905798 8.798998 9.721484 10.747781 11.882462 13.225655 14.834450
61 8.484045 9.446148 10.518128 11.682547 13.060678 14.681675 16.576269
62 9.107272 10.231061 11.432653 12.840708 14.498345 16.422469 18.617679
63 9.852133 11.107791 12.565747 14.253905 16.200312 18.425744 21.176338
64 10.695465 12.194549 13.948356 15.926889 18.195422 20.979654 24.010119
65 11.740862 13.535863 15.568022 17.869133 20.695554 23.762337 27.158935
66 13.016428 15.106620 17.466070 20.324039 23.440220 26.878657 30.579626
67 14.508508 16.947846 19.865110 23.018989 26.514295 30.263721 34.413565
68 16.256880 19.253203 22.498646 26.009795 29.853044 34.022501 38.611996
69 18.466466 21.780077 25.393184 29.284414 33.560336 38.212699 43.330762
70 20.888060 24.608405 28.589423 32.955965 37.653683 42.837858 48.534224
71 23.571377 27.673298 32.138288 36.974879 42.255335 47.982129 56.066303
72 26.504448 31.107303 36.056496 41.448764 47.279462 56.066303 62.390882
73 29.756357 34.858606 40.373337 46.376032 56.066303 62.390882 69.150572
74 33.341279 39.029053 45.171460 51.749198 62.390882 69.150572 76.293597
75 37.326293 43.665745 50.403607 62.390882 69.150572 76.293597 83.791059
76 41.708315 48.665551 56.027012 69.150572 76.293597 83.791059 91.637222
77 46.478965 54.092895 69.150572 76.293597 83.791059 91.637222 102.057698
78 51.659650 69.150572 76.293597 83.791059 91.637222 102.057698 113.159363
79 57.118372 76.293597 83.791059 91.637222 102.057698 113.159363 118.864642
80 76.293597 83.791059 91.637222 102.057698 113.159363 118.864642 127.286916
81 83.791059 91.637222 102.057698 113.159363 118.864642 127.286916 140.604334
82 91.637222 102.057698 113.159363 118.864642 127.286916 140.604334 161.969570
83 102.057698 113.159363 118.864642 127.286916 140.604334 161.969570 190.569238
84 113.159363 118.864642 127.286916 140.604334 161.969570 190.569238 221.437195
85 118.864642 127.286916 140.604334 161.969570 190.569238 221.437195 260.025797
86 127.286916 140.604334 161.969570 190.569238 221.437195 260.025797 306.336374
87 140.604334 161.969570 190.569238 221.437195 260.025797 306.336374 1000.000000
88 161.969570 190.569238 221.437195 260.025797 306.336374 1000.000000 1000.000000
89 190.569238 221.437195 260.025797 306.336374 1000.000000 1000.000000 1000.000000
90 221.437195 260.025797 306.336374 1000.000000 1000.000000 1000.000000 1000.000000
91 260.025797 306.336374 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 306.336374 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 11.321915 71 12.494703
57 12.269798 72 13.748082
58 13.445624 73 15.277498
59 14.941393 74 17.088937
60 16.712980 75 19.193483
61 18.752033 76 21.853806
62 21.351168 77 24.778245
63 24.208345 78 28.027796
64 27.355129 79 31.590523
65 30.832350 80 35.551203
66 34.697974 81 39.929675
67 38.931433 82 44.809475
68 43.689238 83 50.190511
69 48.935749 84 56.066303
70 56.066303 85 62.390882
71 62.390882 86 69.150572
72 69.150572 87 76.293597
73 76.293597 88 83.791059
74 83.791059 89 91.637222
75 91.637222 90 102.057698
76 102.057698 91 113.159363
77 113.159363 92 118.864642
78 118.864642 93 127.286916
79 127.286916 94 140.604334
80 140.604334 95 161.969570
81 161.969570 96 190.569238
82 190.569238 97 221.437195
83 221.437195 98 260.025797
84 260.025797 99 306.336374
85 306.336374 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 41
Schedule 3
Mortality Rate Per Thousand - Universal Life Male
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.990775 0.517430 0.479003 0.430753 0.401803 0.366967 0.361979
1 0.507415 0.461630 0.430753 0.401803 0.363203 0.357217 0.312579
2 0.452695 0.415130 0.401803 0.363203 0.353553 0.308467 0.273059
3 0.407095 0.387230 0.363203 0.353553 0.305303 0.269467 0.253299
4 0.379735 0.350030 0.353553 0.305303 0.266703 0.249967 0.203899
5 0.343255 0.340730 0.305303 0.266703 0.247403 0.201217 0.203899
6 0.334135 0.294230 0.266703 0.247403 0.199153 0.201217 0.292819
7 0.288535 0.257030 0.247403 0.199153 0.199153 0.288967 0.441019
8 0.252055 0.238430 0.199153 0.199153 0.286003 0.435217 0.589219
9 0.233815 0.191930 0.199153 0.286003 0.430753 0.581467 0.688019
10 0.188215 0.191930 0.286003 0.430753 0.575503 0.678967 0.807259
11 0.188215 0.275630 0.430753 0.575503 0.672003 0.796637 1.010323
12 0.270295 0.415130 0.575503 0.672003 0.788466 0.997030 1.122929
13 0.407095 0.554630 0.672003 0.788466 0.986804 1.108154 1.144117
14 0.543895 0.647630 0.788466 0.986804 1.096788 1.129063 1.135726
15 0.635095 0.759869 0.986804 1.096788 1.117483 1.120782 1.126900
16 0.731272 0.951013 1.096788 1.117483 1.109287 1.112072 1.096976
17 0.909087 1.057008 1.117483 1.109287 1.100666 1.082542 1.056311
18 0.999043 1.066530 1.103539 1.094963 1.066998 1.040273 1.023466
19 1.006314 1.047213 1.088120 1.059226 1.026375 1.008919 0.983809
20 0.987438 1.027668 1.052564 1.013545 0.995412 0.970785 0.951972
21 0.968358 0.989277 1.007130 0.978787 0.958763 0.941276 0.942648
22 0.931541 0.940843 0.972553 0.937724 0.928635 0.932034 0.953863
23 0.885248 0.902936 0.930711 0.903353 0.919491 0.944070 0.977163
24 0.848905 0.857577 0.896546 0.889581 0.932318 0.968106 1.020505
25 0.808486 0.821672 0.882828 0.896083 0.956030 1.012071 1.067227
26 0.774997 0.803711 0.888248 0.912757 0.994149 1.055061 1.125149
27 0.757398 0.803047 0.904706 0.947763 1.034049 1.111084 1.189987
28 0.761915 0.815141 0.939329 0.985388 1.087644 1.173788 1.261844
29 0.772875 0.841284 0.975434 1.033730 1.146375 1.244559 1.334482
30 0.797006 0.867053 1.024354 1.089056 1.213976 1.314691 1.393906
31 0.819497 0.900119 1.077841 1.150153 1.279350 1.371640 1.472670
32 0.855582 0.938283 1.136856 1.208667 1.333044 1.447442 1.555170
33 0.870995 0.962671 1.195945 1.255852 1.403293 1.526711 1.646946
34 0.893529 0.998034 1.241007 1.318150 1.478164 1.616612 1.762881
35 0.908974 1.033183 1.302382 1.382745 1.561298 1.728315 1.878442
36 0.918880 1.083216 1.367679 1.457806 1.666864 1.837293 1.983450
37 0.958654 1.133315 1.439963 1.549722 1.769398 1.935340 2.100297
38 0.999393 1.191939 1.530519 1.639779 1.865362 2.048957 2.229476
39 1.045623 1.265511 1.621262 1.723218 1.971946 2.169625 2.362290
40 1.104201 1.337336 1.699163 1.813257 2.089822 2.295784 2.540196
41 1.162453 1.401755 1.792254 1.915255 2.207997 2.454088 2.756115
42 1.211501 1.474875 1.892811 2.019120 2.362239 2.649870 2.994063
43 1.269513 1.553651 1.992517 2.158449 2.546750 2.871439 3.256406
44 1.331701 1.636046 2.124006 2.331136 2.752222 3.118863 3.543895
45 1.401945 1.739389 2.284263 2.520599 2.973886 3.389636 3.845784
46 1.498285 1.868658 2.459287 2.728541 3.219139 3.673386 4.159194
47 1.618671 2.009667 2.650476 2.959335 3.470046 3.972102 4.479380
48 1.747388 2.159785 2.857849 3.195979 3.732241 4.272001 4.812751
49 1.892135 2.326061 3.076627 3.439610 4.012778 4.583573 5.182093
50 2.050019 2.501970 3.300491 3.691341 4.298497 4.934464 5.611212
51 2.214641 2.676851 3.525438 3.946344 4.614358 5.335573 6.072327
52 2.384221 2.851457 3.761884 4.227815 4.987744 5.765859 6.572829
53 2.555942 3.035220 4.022464 4.561160 5.380994 6.232589 7.113865
54 2.733375 3.231258 4.331462 4.917729 5.807288 6.735915 7.698690
55 2.929272 3.465169 4.654025 5.289194 6.273975 7.279094 8.340181
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.311630 0.273612 0.256376 0.206376 0.206376 0.296376 0.446376
1 0.272230 0.253812 0.206376 0.206376 0.296376 0.446376 0.596376
2 0.252530 0.204312 0.206376 0.296376 0.446376 0.596376 0.696376
3 0.203280 0.204312 0.296376 0.446376 0.596376 0.696376 0.817063
4 0.203280 0.293412 0.446376 0.596376 0.696376 0.817063 1.022595
5 0.291930 0.441912 0.596376 0.696376 0.817063 1.022595 1.136568
6 0.439680 0.590412 0.696376 0.817063 1.022595 1.136568 1.158013
7 0.587430 0.689412 0.817063 1.022595 1.136568 1.158013 1.149520
8 0.685930 0.808893 1.022595 1.136568 1.158013 1.149520 1.140587
9 0.804807 1.012369 1.136568 1.158013 1.149520 1.140587 1.110300
10 1.007256 1.125203 1.158013 1.149520 1.140587 1.110300 1.069140
11 1.119520 1.146433 1.149520 1.140587 1.110300 1.069140 1.039052
12 1.140643 1.138025 1.140587 1.110300 1.069140 1.039052 1.001842
13 1.132277 1.129181 1.110300 1.069140 1.039052 1.001842 0.972393
14 1.123478 1.099197 1.069140 1.039052 1.001842 0.972393 0.964839
15 1.093645 1.058449 1.039052 1.001842 0.972393 0.964839 0.979326
16 1.053103 1.028661 1.001842 0.972393 0.964839 0.979326 1.006347
17 1.023466 0.991823 0.972393 0.964839 0.979326 1.006347 1.054241
18 0.984811 0.960724 0.962909 0.978346 1.006347 1.054241 1.105934
19 0.953917 0.951331 0.974429 1.004334 1.054241 1.105934 1.172030
20 0.944577 0.963656 0.999303 1.050024 1.105934 1.172030 1.246059
21 0.957781 0.989239 1.043699 1.100405 1.172030 1.246059 1.329657
22 0.982195 1.034211 1.092663 1.164998 1.246059 1.329657 1.413646
23 1.026831 1.082710 1.154449 1.237337 1.329657 1.413646 1.484458
24 1.074968 1.145073 1.224876 1.317690 1.413646 1.484458 1.576734
25 1.136869 1.214908 1.303063 1.399510 1.484458 1.576734 1.674025
26 1.203693 1.291097 1.381132 1.465160 1.573581 1.672351 1.784340
27 1.277800 1.368409 1.445862 1.553083 1.665655 1.780772 1.920350
28 1.352859 1.431018 1.531009 1.643893 1.771850 1.914589 2.057439
29 1.413204 1.513665 1.637197 1.746869 1.901147 2.049210 2.186825
30 1.494744 1.602042 1.721888 1.876182 2.032750 2.175891 2.333664
31 1.578606 1.700476 1.847377 2.003946 2.154022 2.319662 2.493821
32 1.675496 1.822412 1.973084 2.123407 2.293991 2.476365 2.660237
33 1.793607 1.944280 2.090605 2.258987 2.443945 2.638955 2.870278
34 1.913419 2.059989 2.223982 2.409032 2.601712 2.844446 3.124847
35 2.022813 2.188977 2.374118 2.561808 2.798521 3.093598 3.406215
36 2.144637 2.334217 2.527225 2.758338 3.031101 3.358528 3.709923
37 2.284340 2.484661 2.723894 2.999853 3.300622 3.650446 4.039147
38 2.431456 2.677970 2.959230 3.266560 3.598403 3.970136 4.389498
39 2.617694 2.909232 3.222279 3.561229 3.925482 4.309930 4.749253
40 2.840486 3.164374 3.512903 3.884888 4.270146 4.672497 5.122254
41 3.089437 3.445991 3.828056 4.225942 4.634119 5.044487 5.505877
42 3.364209 3.754986 4.164055 4.581350 5.003011 5.438800 5.937060
43 3.661619 4.084487 4.509391 4.945982 5.388493 5.870623 6.431564
44 3.978397 4.423041 4.868215 5.327006 5.816265 6.379062 6.970347
45 4.307908 4.769710 5.243160 5.749828 6.313433 6.920457 7.562620
46 4.645283 5.131366 5.653192 6.241242 6.856312 7.500758 8.205721
47 4.991623 5.538437 6.136237 6.770787 7.431164 8.146929 8.911873
48 5.381404 6.004981 6.656752 7.338371 8.062940 8.838899 9.678973
49 5.834347 6.507082 7.206914 7.953755 8.747683 9.609554 10.469921
50 6.314649 7.044527 7.819372 8.629101 9.510385 10.384102 11.379831
51 6.835743 7.642995 8.483154 9.371547 10.276828 11.286458 12.668057
52 7.407826 8.282477 9.202958 10.126645 11.169742 12.564114 14.158581
53 8.027071 8.984785 9.944279 11.006340 12.421192 14.042288 15.558330
54 8.707109 9.697550 10.807922 12.239292 13.882387 15.430541 17.093546
55 9.386456 10.539475 12.005420 13.678875 15.254831 16.953003 18.802952
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.596376 15 0.696376
1 0.696376 16 0.817063
2 0.817063 17 1.022595
3 1.022595 18 1.136568
4 1.136568 19 1.158013
5 1.158013 20 1.149520
6 1.149520 21 1.140587
7 1.140587 22 1.110300
8 1.110300 23 1.069140
9 1.069140 24 1.039052
10 1.039052 25 1.001842
11 1.001842 26 0.972393
12 0.972393 27 0.964839
13 0.964839 28 0.979326
14 0.979326 29 1.006347
15 1.006347 30 1.054241
16 1.054241 31 1.105934
17 1.105934 32 1.172030
18 1.172030 33 1.246059
19 1.246059 34 1.329657
20 1.329657 35 1.413646
21 1.413646 36 1.484458
22 1.484458 37 1.576734
23 1.576734 38 1.674025
24 1.674025 39 1.784340
25 1.784340 40 1.920350
26 1.920350 41 2.057439
27 2.057439 42 2.186825
28 2.186825 43 2.333664
29 2.333664 44 2.493821
30 2.493821 45 2.660237
31 2.660237 46 2.870278
32 2.870278 47 3.124847
33 3.124847 48 3.406215
34 3.406215 49 3.717358
35 3.717358 50 4.059444
36 4.059444 51 4.420441
37 4.420441 52 4.797225
38 4.797225 53 5.184468
39 5.184468 54 5.589723
40 5.589723 55 6.039735
41 6.039735 56 6.562821
42 6.562821 57 7.127144
43 7.127144 58 7.732740
44 7.732740 59 8.398896
45 8.398896 60 9.121671
46 9.112549 61 9.916981
47 9.897147 62 10.727378
48 10.695196 63 11.671622
49 11.648279 64 12.992879
50 12.927914 65 14.536530
51 14.449311 66 15.973645
52 15.861829 67 17.567879
53 17.427336 68 19.324719
54 19.150797 69 21.259935
55 21.047336 70 23.447312
</TABLE>
<PAGE> 42
Schedule 3
Mortality Rate Per Thousand - Universal Life Male
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 3.150154 3.713242 5.003083 5.702850 6.768280 7.884000 8.989543
57 3.392520 3.966896 5.392091 6.148006 7.318732 8.485356 9.745804
58 3.642121 4.249841 5.810504 6.624543 7.863168 9.197238 10.823068
59 3.888689 4.551714 6.267532 7.112252 8.508612 10.186417 12.065320
60 4.113874 4.889072 6.736793 7.679927 9.419837 11.353030 13.210204
61 4.393223 5.213506 7.306435 8.484350 10.480838 12.427496 14.475932
62 4.634227 5.590707 8.068578 9.419672 11.437130 13.597538 15.884919
63 4.937096 6.145632 8.925430 10.271054 12.508330 14.899359 17.411887
64 5.314087 6.803096 9.759897 11.208307 13.681901 16.306370 19.133007
65 5.858222 7.379824 10.646135 12.232547 14.966995 17.913747 21.022159
66 6.309590 8.010953 11.614156 13.351239 16.413119 19.677568 23.197245
67 6.816337 8.657474 12.692181 14.607676 17.996830 21.652669 25.615029
68 7.362718 9.396891 13.880809 15.979943 19.793457 23.903133 28.344642
69 7.951216 10.223028 15.204218 17.562402 21.810816 26.410454 31.291286
70 8.628611 11.144588 16.675701 19.306377 24.054262 29.148047 34.761323
71 9.334562 12.156386 18.355324 21.240898 26.498225 32.328030 38.530874
72 10.125554 13.283041 20.221054 23.380786 29.373318 35.778668 42.494364
73 11.032215 14.559159 22.211747 25.853734 32.447051 39.447598 46.777258
74 11.991964 15.937903 24.593636 28.536023 35.705956 43.355971 51.301987
75 13.093240 17.554468 27.135778 31.322889 39.226831 47.535512 56.233709
76 14.295594 19.217152 29.826233 34.330851 42.924827 52.023317 61.441993
77 15.644114 21.006648 32.620207 37.534871 46.885212 56.824060 67.108719
78 16.997745 22.887234 35.586694 40.890756 51.188616 61.966289 72.982520
79 18.463155 24.871723 38.821241 44.535661 55.709665 67.368480 79.200274
80 19.936342 26.975053 42.344100 48.424555 60.538065 72.990484 91.562591
81 23.264199 30.760132 46.024754 53.426947 70.038289 91.562591 119.030926
82 29.977431 39.768130 52.584841 69.325690 91.011009 119.030926 127.853828
83 38.482522 51.368466 68.205892 90.349111 119.030926 127.853828 136.740849
84 49.309985 66.475294 89.135630 119.030926 127.853828 136.740849 148.933453
85 63.014100 86.818987 119.030926 127.853828 136.740849 148.933453 161.465864
86 80.089688 119.030926 127.853828 136.740849 148.933453 161.465864 166.370938
87 119.030926 127.853828 136.740849 148.933453 161.465864 166.370938 173.744227
88 127.853828 136.740849 148.933453 161.465864 166.370938 173.744227 185.695620
89 136.740849 148.933453 161.465864 166.370938 173.744227 185.695620 205.041280
90 148.933453 161.465864 166.370938 173.744227 185.695620 205.041280 231.160308
91 161.465864 166.370938 173.744227 185.695620 205.041280 231.160308 259.155061
92 166.370938 173.744227 185.695620 205.041280 231.160308 259.155061 294.150308
93 173.744227 185.695620 205.041280 231.160308 259.155061 294.150308 336.153170
94 185.695620 205.041280 231.160308 259.155061 294.150308 336.153170 1000.000000
95 205.041280 231.160308 259.155061 294.150308 336.153170 1000.000000 1000.000000
96 231.160308 259.155061 294.150308 336.153170 1000.000000 1000.000000 1000.000000
97 259.155061 294.150308 336.153170 1000.000000 1000.000000 1000.000000 1000.000000
98 294.150308 336.153170 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 336.153170 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 10.189326 11.706584 13.417218 15.015226 16.759756 18.629029 20.685917
57 11.316797 13.068341 14.727701 16.496238 18.416457 20.494578 22.790787
58 12.632245 14.344333 16.162449 18.126587 20.239459 22.579762 25.133503
59 13.849150 15.740820 17.759417 19.920559 22.321841 24.900786 27.773767
60 15.178647 17.276299 19.516621 21.946684 24.590496 27.516337 30.782417
61 16.657908 18.963862 21.477738 24.176775 27.173098 30.465399 34.112038
62 18.283544 20.891555 23.659625 26.715446 30.084978 33.795535 37.798938
63 20.117794 22.987330 26.143381 29.577750 33.338363 37.409258 42.104652
64 22.134032 25.371093 28.943714 32.775690 36.941643 41.713587 46.787489
65 24.427185 28.087767 32.037182 36.279187 41.148716 46.304646 51.795017
66 27.009906 31.087672 35.460860 40.410038 45.676950 51.260496 57.100109
67 29.856825 34.408724 39.497553 44.856117 50.565620 56.510232 62.861168
68 33.005877 38.280907 43.842147 49.603483 55.743391 62.146837 69.007610
69 36.716647 42.441902 48.427539 54.681612 61.302627 68.293984 75.687143
70 40.703667 46.930882 53.383883 60.198660 67.294908 74.826173 82.878840
71 44.953157 51.673239 58.705058 66.081745 73.808662 81.936061 93.567334
72 49.490693 56.821821 64.440405 72.399801 80.736160 93.567334 101.799838
73 54.354130 62.299528 70.521320 79.193431 93.567334 101.799838 110.316374
74 59.587750 68.173218 77.136459 86.362649 101.799838 110.316374 119.030926
75 65.198956 74.565244 84.117033 101.799838 110.316374 119.030926 127.853828
76 71.222664 81.216446 91.416255 110.316374 119.030926 127.853828 136.740849
77 77.567320 88.260460 110.316374 119.030926 127.853828 136.740849 148.933453
78 84.290266 110.316374 119.030926 127.853828 136.740849 148.933453 161.465864
79 91.121325 119.030926 127.853828 136.740849 148.933453 161.465864 166.370938
80 119.030926 127.853828 136.740849 148.933453 161.465864 166.370938 173.744227
81 127.853828 136.740849 148.933453 161.465864 166.370938 173.744227 185.695620
82 136.740849 148.933453 161.465864 166.370938 173.744227 185.695620 205.041280
83 148.933453 161.465864 166.370938 173.744227 185.695620 205.041280 231.160308
84 161.465864 166.370938 173.744227 185.695620 205.041280 231.160308 259.155061
85 166.370938 173.744227 185.695620 205.041280 231.160308 259.155061 294.150308
86 173.744227 185.695620 205.041280 231.160308 259.155061 294.150308 336.153170
87 185.695620 205.041280 231.160308 259.155061 294.150308 336.153170 1000.000000
88 205.041280 231.160308 259.155061 294.150308 336.153170 1000.000000 1000.000000
89 231.160308 259.155061 294.150308 336.153170 1000.000000 1000.000000 1000.000000
90 259.155061 294.150308 336.153170 1000.000000 1000.000000 1000.000000 1000.000000
91 294.150308 336.153170 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 336.153170 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 23.119050 71 25.857514
57 25.392078 72 28.603261
58 27.973989 73 31.701768
59 31.004329 74 35.167050
60 34.393375 75 38.967977
61 38.071714 76 43.451653
62 42.452265 77 48.284303
63 47.173764 78 53.452030
64 52.169181 79 58.987716
65 57.572010 80 64.939223
66 63.380682 81 71.362575
67 69.578511 82 78.270055
68 76.313304 83 85.707177
69 83.564497 84 93.567334
70 93.567334 85 101.799838
71 101.799838 86 110.316374
72 110.316374 87 119.030926
73 119.030926 88 127.853828
74 127.853828 89 136.740849
75 136.740849 90 148.933453
76 148.933453 91 161.465864
77 161.465864 92 166.370938
78 166.370938 93 173.744227
79 173.744227 94 185.695620
80 185.695620 95 205.041280
81 205.041280 96 231.160308
82 231.160308 97 259.155061
83 259.155061 98 294.150308
84 294.150308 99 336.153170
85 336.153170 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 43
Schedule 3
Mortality Rates Per Thousand - Universal Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.783364 0.380325 0.336739 0.307789 0.278839 0.271978 0.255845
1 0.372964 0.324525 0.307789 0.278839 0.269189 0.252478 0.226205
2 0.318244 0.296625 0.278839 0.269189 0.249889 0.223228 0.206445
3 0.290884 0.268725 0.269189 0.249889 0.220939 0.203728 0.176805
4 0.263524 0.259425 0.249889 0.220939 0.201639 0.174478 0.166925
5 0.254404 0.240825 0.220939 0.201639 0.172689 0.164728 0.166925
6 0.236164 0.212925 0.201639 0.172689 0.163039 0.164728 0.186685
7 0.208804 0.194325 0.172689 0.163039 0.163039 0.184228 0.236085
8 0.190564 0.166425 0.163039 0.163039 0.182339 0.232978 0.285485
9 0.163204 0.157125 0.163039 0.182339 0.230589 0.281728 0.315125
10 0.154084 0.157125 0.182339 0.230589 0.278839 0.310978 0.335658
11 0.154084 0.175725 0.230589 0.278839 0.307789 0.331241 0.345538
12 0.172324 0.222225 0.278839 0.307789 0.327844 0.340991 0.330677
13 0.217924 0.268725 0.307789 0.327844 0.337494 0.326326 0.342493
14 0.263524 0.296625 0.327844 0.337494 0.322979 0.337987 0.352518
15 0.290884 0.315953 0.337494 0.322979 0.334520 0.347880 0.362205
16 0.304063 0.325253 0.322979 0.334520 0.344312 0.357439 0.372569
17 0.310914 0.311265 0.334520 0.344312 0.353773 0.367666 0.380175
18 0.294196 0.319267 0.342528 0.351940 0.362387 0.374403 0.397900
19 0.301241 0.325045 0.349741 0.359747 0.369401 0.392245 0.400293
20 0.306491 0.330311 0.357485 0.364783 0.386993 0.394994 0.409339
21 0.311247 0.335990 0.362475 0.380530 0.390102 0.404740 0.419468
22 0.316382 0.338617 0.378106 0.381542 0.399304 0.414745 0.428825
23 0.318608 0.351041 0.378689 0.388433 0.409163 0.424422 0.439685
24 0.330035 0.348932 0.385506 0.395854 0.419139 0.435610 0.443538
25 0.328958 0.353311 0.392848 0.402849 0.430176 0.439872 0.446272
26 0.333241 0.357642 0.399327 0.410705 0.432083 0.441185 0.460279
27 0.337034 0.361023 0.407082 0.411922 0.432399 0.454526 0.471545
28 0.342532 0.366781 0.408257 0.412050 0.444937 0.465126 0.486387
29 0.347763 0.365644 0.407888 0.422882 0.454263 0.479724 0.527961
30 0.346400 0.362567 0.419046 0.431550 0.467936 0.520131 0.562757
31 0.342682 0.368223 0.427106 0.443335 0.506149 0.553767 0.621881
32 0.350004 0.371805 0.438210 0.478185 0.538185 0.611228 0.669765
33 0.345141 0.371069 0.473152 0.507021 0.592585 0.657509 0.748045
34 0.344417 0.394852 0.501028 0.556630 0.636601 0.734267 0.821464
35 0.359618 0.417123 0.549972 0.595507 0.709143 0.805357 0.911674
36 0.370976 0.457422 0.589018 0.662137 0.776722 0.891703 0.987155
37 0.404822 0.488085 0.654033 0.722137 0.858751 0.963211 1.077278
38 0.430409 0.541380 0.713188 0.795843 0.928383 1.050945 1.176214
39 0.474923 0.589700 0.786856 0.857639 1.011444 1.144638 1.273550
40 0.514533 0.649056 0.845666 0.930050 1.102536 1.237696 1.385398
41 0.564180 0.697648 0.919277 1.010439 1.190368 1.338436 1.499957
42 0.602959 0.756489 0.998598 1.088541 1.288342 1.442135 1.620083
43 0.651155 0.819666 1.074199 1.177197 1.386014 1.553731 1.755801
44 0.702571 0.882019 1.158412 1.268671 1.489223 1.681641 1.900563
45 0.755812 0.948646 1.243161 1.363892 1.603472 1.817836 2.050591
46 0.817150 1.016977 1.330716 1.471185 1.726400 1.958668 2.224954
47 0.880927 1.087427 1.429094 1.587068 1.850246 2.124870 2.406647
48 0.945509 1.164521 1.532642 1.704112 1.996557 2.295229 2.611031
49 1.020209 1.247449 1.640473 1.840014 2.155955 2.486696 2.826050
50 1.099410 1.334063 1.765592 1.983256 2.332035 2.691006 3.039072
51 1.180858 1.431978 1.894121 2.140984 2.516436 2.889784 3.267310
52 1.275435 1.532009 2.040910 2.305635 2.701397 3.102410 3.530150
53 1.373237 1.646678 2.193647 2.470357 2.895327 3.347413 3.810862
54 1.482920 1.762164 2.345950 2.646061 3.118991 3.608396 4.135707
55 1.597476 1.876760 2.504170 2.840733 3.360938 3.910301 4.477136
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.225518 0.206863 0.178952 0.168952 0.168952 0.188952 0.238952
1 0.205818 0.177163 0.168952 0.168952 0.188952 0.238952 0.288952
2 0.176268 0.167263 0.168952 0.188952 0.238952 0.288952 0.318952
3 0.166418 0.167263 0.188952 0.238952 0.288952 0.318952 0.339735
4 0.166418 0.187063 0.238952 0.288952 0.318952 0.339735 0.349735
5 0.186118 0.236563 0.288952 0.318952 0.339735 0.349735 0.334694
6 0.235368 0.286063 0.318952 0.339735 0.349735 0.334694 0.346653
7 0.284618 0.315763 0.339735 0.349735 0.334694 0.346653 0.356800
8 0.314168 0.336337 0.349735 0.334694 0.346653 0.356800 0.366605
9 0.334639 0.346237 0.334694 0.346653 0.356800 0.366605 0.377094
10 0.344489 0.331347 0.346653 0.356800 0.366605 0.377094 0.384793
11 0.329673 0.343186 0.356800 0.366605 0.377094 0.384793 0.403960
12 0.341453 0.353232 0.366605 0.377094 0.384793 0.403960 0.407631
13 0.351448 0.362938 0.377094 0.384793 0.403960 0.407631 0.418120
14 0.361105 0.373323 0.384793 0.403960 0.407631 0.418120 0.429342
15 0.371437 0.380945 0.403960 0.407631 0.418120 0.429342 0.440272
16 0.379021 0.399920 0.407631 0.418120 0.429342 0.440272 0.452817
17 0.397900 0.403554 0.418120 0.429342 0.440272 0.452817 0.458201
18 0.400701 0.413102 0.428484 0.439832 0.452817 0.458201 0.462458
19 0.410175 0.423332 0.438070 0.451911 0.458201 0.462458 0.479458
20 0.420326 0.433228 0.449647 0.456368 0.462458 0.479458 0.493765
21 0.430586 0.445119 0.453619 0.460146 0.479458 0.493765 0.512526
22 0.441949 0.449495 0.456909 0.476581 0.493765 0.512526 0.559281
23 0.446287 0.452747 0.472266 0.490308 0.512526 0.559281 0.599315
24 0.449510 0.468430 0.485371 0.507913 0.559281 0.599315 0.665826
25 0.465074 0.481420 0.502275 0.553688 0.599315 0.665826 0.720952
26 0.476977 0.497663 0.546417 0.591524 0.664494 0.720231 0.810449
27 0.492537 0.541384 0.583733 0.655839 0.717348 0.808828 0.894841
28 0.535232 0.577740 0.646517 0.707975 0.804776 0.892156 0.998548
29 0.570548 0.639193 0.705091 0.793430 0.885892 0.994554 1.088374
30 0.631203 0.689951 0.782083 0.874259 0.986565 1.082932 1.196976
31 0.679858 0.772358 0.860837 0.972586 1.072048 1.189794 1.315675
32 0.761012 0.849204 0.957607 1.056811 1.176627 1.306466 1.434178
33 0.835781 0.943628 1.040485 1.158672 1.289362 1.422705 1.565422
34 0.928650 1.025248 1.140718 1.270942 1.402626 1.551333 1.700631
35 1.006746 1.122763 1.252523 1.381113 1.526286 1.683625 1.843097
36 1.100021 1.231472 1.362469 1.504370 1.649612 1.817294 2.000331
37 1.205159 1.339522 1.485585 1.632606 1.785961 1.968261 2.166163
38 1.310839 1.460539 1.610498 1.767530 1.940201 2.129154 2.340502
39 1.427665 1.583288 1.743570 1.920157 2.105206 2.298076 2.540605
40 1.545874 1.712237 1.894101 2.083436 2.276863 2.499545 2.752046
41 1.671689 1.858023 2.052957 2.253293 2.479015 2.710264 2.987068
42 1.813927 2.013770 2.220295 2.450786 2.687980 2.950677 3.237771
43 1.963698 2.177869 2.412292 2.657340 2.923384 3.201539 3.483381
44 2.121301 2.366099 2.615558 2.890026 3.171896 3.454945 3.750503
45 2.304509 2.562634 2.844537 3.135664 3.419400 3.723659 4.061749
46 2.495782 2.783886 3.082964 3.380301 3.689145 4.028524 4.395765
47 2.708072 3.020382 3.323430 3.643127 3.991146 4.364270 4.787424
48 2.934745 3.252340 3.581769 3.941309 4.319277 4.748223 5.195820
49 3.159924 3.501237 3.870706 4.260787 4.699221 5.158555 5.675177
50 3.397695 3.783490 4.188799 4.635520 5.105319 5.628659 6.205997
51 3.671356 4.094315 4.557118 5.030789 5.570512 6.155076 6.934317
52 3.968336 4.449315 4.940288 5.489105 6.091424 6.877420 7.733745
53 4.312111 4.823169 5.390255 6.002313 6.799187 7.670224 8.359418
54 4.674108 5.256516 5.894105 6.699617 7.582882 8.290757 8.994276
55 5.087889 5.747708 6.571599 7.471719 8.196349 8.920325 9.668190
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.288952 15 0.318952
1 0.318952 16 0.339735
2 0.339735 17 0.349735
3 0.349735 18 0.334694
4 0.334694 19 0.346653
5 0.346653 20 0.356800
6 0.356800 21 0.366605
7 0.366605 22 0.377094
8 0.377094 23 0.384793
9 0.384793 24 0.403960
10 0.403960 25 0.407631
11 0.407631 26 0.418120
12 0.418120 27 0.429342
13 0.429342 28 0.440272
14 0.440272 29 0.452817
15 0.452817 30 0.458201
16 0.458201 31 0.462458
17 0.462458 32 0.479458
18 0.479458 33 0.493765
19 0.493765 34 0.512526
20 0.512526 35 0.559281
21 0.559281 36 0.599315
22 0.599315 37 0.665826
23 0.665826 38 0.720952
24 0.720952 39 0.810449
25 0.810449 40 0.894841
26 0.894841 41 0.998548
27 0.998548 42 1.088374
28 1.088374 43 1.196976
29 1.196976 44 1.315675
30 1.315675 45 1.434178
31 1.434178 46 1.565422
32 1.565422 47 1.700631
33 1.700631 48 1.843097
34 1.843097 49 2.004339
35 2.004339 50 2.177049
36 2.177049 51 2.357001
37 2.357001 52 2.566268
38 2.566268 53 2.785471
39 2.785471 54 3.032556
40 3.032556 55 3.293765
41 3.293765 56 3.554470
42 3.554470 57 3.834870
43 3.834870 58 4.153118
44 4.153118 59 4.499247
45 4.499247 60 4.900127
46 4.895226 61 5.323586
47 5.312939 62 5.814730
48 5.797286 63 6.365125
49 6.352394 64 7.112120
50 7.076560 65 7.940190
51 7.892549 66 8.582564
52 8.522486 67 9.243860
53 9.169909 68 9.936475
54 9.847047 69 10.685106
55 10.578255 70 11.579990
</TABLE>
<PAGE> 44
Mortality Rates Per Thousand - Universal Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 1.706146 1.997967 2.687067 3.054989 3.635894 4.232251 4.872744
57 1.825398 2.130549 2.888517 3.302685 3.928806 4.599452 5.314879
58 1.956118 2.276619 3.121381 3.556155 4.262197 5.015718 5.924396
59 2.083151 2.445163 3.364506 3.855166 4.640176 5.575902 6.590358
60 2.209957 2.624528 3.651651 4.188252 5.156287 6.201288 7.097781
61 2.358349 2.825959 3.984568 4.644214 5.724877 6.677235 7.616941
62 2.511963 3.048895 4.416627 5.145243 6.145116 7.154748 8.167782
63 2.692448 3.364033 4.875277 5.518589 6.581628 7.661022 8.751102
64 2.908857 3.716009 5.243947 5.897583 7.035024 8.195476 9.449272
65 3.199897 3.965145 5.601779 6.289789 7.522314 8.847112 10.238814
66 3.390113 4.215200 5.971821 6.710246 8.105993 9.583933 11.231709
67 3.586618 4.451541 6.379008 7.214334 8.765331 10.483852 12.427939
68 3.785797 4.722817 6.855354 7.783010 9.583653 11.597359 13.859344
69 3.996230 5.048876 7.405194 8.503415 10.582206 12.913607 15.500144
70 4.261436 5.427957 8.074090 9.367098 11.761528 14.438490 17.579627
71 4.546386 5.885914 8.905664 10.385910 13.125900 16.349053 19.879453
72 4.902620 6.444686 9.887249 11.581676 14.854785 18.459492 22.398478
73 5.352627 7.118819 11.002593 13.074848 16.740592 20.792549 25.178637
74 5.863569 7.894843 12.437586 14.722753 18.820356 23.337072 28.224066
75 6.485739 8.877712 14.000317 16.510073 21.114494 26.151920 31.615820
76 7.229622 9.914815 15.721196 18.479151 23.615326 29.248646 35.339811
77 8.071357 11.072455 17.558369 20.650013 26.359890 32.683697 39.478304
78 8.959391 12.319434 19.578213 22.989676 29.442339 36.453147 43.926378
79 9.938100 13.683313 21.826150 25.615735 32.772539 40.547426 48.751746
80 10.968087 15.165964 24.355207 28.486899 36.436367 44.929308 57.640639
81 13.079641 17.692415 27.075159 32.156361 43.112084 57.640639 76.614834
82 17.242226 23.394551 31.649518 42.673443 57.293406 76.614834 84.138978
83 22.638261 30.917412 41.984151 56.876727 76.614834 84.138978 92.012770
84 29.678463 40.918882 56.112815 76.614834 84.138978 92.012770 102.454057
85 38.788343 54.654437 76.614834 84.138978 92.012770 102.454057 113.576088
86 50.418198 76.614834 84.138978 92.012770 102.454057 113.576088 119.278173
87 76.614834 84.138978 92.012770 102.454057 113.576088 119.278173 127.700665
88 84.138978 92.012770 102.454057 113.576088 119.278173 127.700665 141.024226
89 92.012770 102.454057 113.576088 119.278173 127.700665 141.024226 162.410241
90 102.454057 113.576088 119.278173 127.700665 141.024226 162.410241 191.033607
91 113.576088 119.278173 127.700665 141.024226 162.410241 191.033607 221.919487
92 119.278173 127.700665 141.024226 162.410241 191.033607 221.919487 260.530344
93 127.700665 141.024226 162.410241 191.033607 221.919487 260.530344 306.867694
94 141.024226 162.410241 191.033607 221.919487 260.530344 306.867694 1000.000000
95 162.410241 191.033607 221.919487 260.530344 306.867694 1000.000000 1000.000000
96 191.033607 221.919487 260.530344 306.867694 1000.000000 1000.000000 1000.000000
97 221.919487 260.530344 306.867694 1000.000000 1000.000000 1000.000000 1000.000000
98 260.530344 306.867694 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 306.867694 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 5.556754 6.408020 7.328795 8.067610 8.818643 9.578762 10.396608
57 6.194657 7.138231 7.913124 8.679985 9.469460 10.300442 11.255750
58 6.900025 7.707143 8.504351 9.320413 10.172221 11.151530 12.241238
59 7.441083 8.282499 9.131620 10.011944 11.024151 12.127894 13.447583
60 7.986695 8.883208 9.808927 10.838871 11.976767 13.322940 14.935061
61 8.565241 9.531114 10.607271 11.775265 13.156750 14.781249 16.679359
62 9.189191 10.317771 11.523388 12.935162 14.596676 16.524602 18.723710
63 9.935632 11.195947 12.658178 14.350578 16.301065 18.530682 21.293323
64 10.780350 12.284249 14.042956 16.025941 18.299049 21.095552 24.139336
65 11.827225 13.627666 15.664842 17.970901 20.809884 23.890220 27.300786
66 13.104708 15.200571 17.565542 20.436316 23.566369 27.019045 30.735083
67 14.598738 17.044367 19.974851 23.142872 26.652780 30.417572 34.583413
68 16.349466 19.359564 22.619729 26.145645 30.004807 34.190420 38.797586
69 18.568481 21.897292 25.525813 29.433287 33.725973 38.396370 43.533244
70 21.000475 24.736935 28.734763 33.118620 37.834668 43.038037 48.755454
71 23.694491 27.813980 32.296906 37.152601 42.452791 48.200841 56.315869
72 26.639189 31.260833 36.229804 41.642452 47.494971 56.315869 62.662912
73 29.903220 35.026156 40.561999 46.587424 56.315869 62.662912 69.446553
74 33.501535 39.211433 45.377361 51.979547 62.662912 69.446553 76.614834
75 37.500716 43.864782 50.627966 62.662912 69.446553 76.614834 84.138978
76 41.898430 48.882174 56.271295 69.446553 76.614834 84.138978 92.012770
77 46.685856 54.328745 69.446553 76.614834 84.138978 92.012770 102.454057
78 51.884891 69.446553 76.614834 84.138978 92.012770 102.454057 113.576088
79 57.362853 76.614834 84.138978 92.012770 102.454057 113.576088 119.278173
80 76.614834 84.138978 92.012770 102.454057 113.576088 119.278173 127.700665
81 84.138978 92.012770 102.454057 113.576088 119.278173 127.700665 141.024226
82 92.012770 102.454057 113.576088 119.278173 127.700665 141.024226 162.410241
83 102.454057 113.576088 119.278173 127.700665 141.024226 162.410241 191.033607
84 113.576088 119.278173 127.700665 141.024226 162.410241 191.033607 221.919487
85 119.278173 127.700665 141.024226 162.410241 191.033607 221.919487 260.530344
86 127.700665 141.024226 162.410241 191.033607 221.919487 260.530344 306.867694
87 141.024226 162.410241 191.033607 221.919487 260.530344 306.867694 1000.000000
88 162.410241 191.033607 221.919487 260.530344 306.867694 1000.000000 1000.000000
89 191.033607 221.919487 260.530344 306.867694 1000.000000 1000.000000 1000.000000
90 221.919487 260.530344 306.867694 1000.000000 1000.000000 1000.000000 1000.000000
91 260.530344 306.867694 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 306.867694 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 11.417870 71 12.593867
57 12.367177 72 13.849210
58 13.544528 73 15.381113
59 15.042728 74 17.195216
60 16.816921 75 19.302794
61 18.858830 76 21.974534
62 21.469120 77 24.911595
63 24.338629 78 28.174186
64 27.498006 79 31.751119
65 30.989092 80 35.726666
66 34.869226 81 40.121599
67 39.118559 82 45.018867
68 43.893395 83 50.419290
69 49.158808 84 56.315869
70 56.315869 85 62.662912
71 62.662912 86 69.446553
72 69.446553 87 76.614834
73 76.614834 88 84.138978
74 84.138978 89 92.012770
75 92.012770 90 102.454057
76 102.454057 91 113.576088
77 113.576088 92 119.278173
78 119.278173 93 127.700665
79 127.700665 94 141.024226
80 141.024226 95 162.410241
81 162.410241 96 191.033607
82 191.033607 97 221.919487
83 221.919487 98 260.530344
84 260.530344 99 306.867694
85 306.867694 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 45
SCHEDULE 3
Mortality Rates Per Thousand - Variable Life Male
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.991659 0.518331 0.479938 0.431688 0.402738 0.367912 0.362937
1 0.508299 0.462531 0.431688 0.402738 0.364138 0.358162 0.313537
2 0.453579 0.416031 0.402738 0.364138 0.354488 0.309412 0.274017
3 0.407979 0.388131 0.364138 0.354488 0.306238 0.270412 0.254257
4 0.380619 0.350931 0.354488 0.306238 0.267638 0.250912 0.204857
5 0.344139 0.341631 0.306238 0.267638 0.248338 0.202162 0.204857
6 0.335019 0.295131 0.267638 0.248338 0.200088 0.202162 0.293777
7 0.289419 0.257931 0.248338 0.200088 0.200088 0.289912 0.441977
8 0.252939 0.239331 0.200088 0.200088 0.286938 0.436162 0.590177
9 0.234699 0.192831 0.200088 0.286938 0.431688 0.582412 0.688977
10 0.189099 0.192831 0.286938 0.431688 0.576438 0.679912 0.808228
11 0.189099 0.276531 0.431688 0.576438 0.672938 0.797594 1.011217
12 0.271179 0.416031 0.576438 0.672938 0.789413 0.997912 1.166985
13 0.407979 0.555531 0.672938 0.789413 0.987677 1.151630 1.189771
14 0.544779 0.648531 0.789413 0.987677 1.139818 1.174116 1.182220
15 0.635979 0.760782 0.987677 1.139818 1.162074 1.166664 1.174198
16 0.732150 0.951854 1.139818 1.162074 1.154698 1.158748 1.143603
17 0.909891 1.098477 1.162074 1.154698 1.146864 1.128556 1.101518
18 1.038238 1.109088 1.148715 1.140921 1.112351 1.084795 1.067830
19 1.046469 1.090083 1.133791 1.104249 1.070301 1.052653 1.028774
20 1.027861 1.070802 1.097304 1.056922 1.038560 1.015155 0.996096
21 1.009002 1.031327 1.050233 1.021214 1.002583 0.984904 0.987408
22 0.971137 0.981109 1.014710 0.980583 0.971677 0.976290 1.000678
23 0.923134 0.942076 0.973249 0.945223 0.963152 0.990404 1.027437
24 0.885703 0.896772 0.938101 0.931822 0.978075 1.017914 1.074949
25 0.845438 0.859756 0.924747 0.940062 1.005216 1.066066 1.127974
26 0.810918 0.841874 0.931843 0.959717 1.047187 1.115117 1.188494
27 0.793362 0.842460 0.951252 0.998326 1.092908 1.173638 1.260838
28 0.799309 0.857079 0.989442 1.041477 1.148878 1.243675 1.339351
29 0.812638 0.886167 1.030957 1.091929 1.214629 1.321004 1.418663
30 0.839527 0.916406 1.082025 1.153898 1.288543 1.397623 1.488206
31 0.866144 0.950795 1.142016 1.220799 1.360053 1.464433 1.577667
32 0.903751 0.994148 1.206686 1.284912 1.423226 1.550641 1.673534
33 0.922854 1.021802 1.271387 1.340812 1.503345 1.642910 1.779779
34 0.948413 1.060992 1.324963 1.412131 1.590668 1.746998 1.913543
35 0.966314 1.103079 1.395239 1.487986 1.687222 1.876022 2.046759
36 0.981043 1.160447 1.471773 1.575384 1.809319 2.001923 2.169738
37 1.027004 1.219572 1.556101 1.682166 1.927944 2.117109 2.308067
38 1.075457 1.288074 1.661322 1.786711 2.040558 2.251648 2.459970
39 1.129957 1.373665 1.766535 1.885064 2.167019 2.393931 2.612599
40 1.198570 1.457167 1.858750 1.992631 2.305878 2.539046 2.807053
41 1.266614 1.533409 1.969551 2.113263 2.441956 2.711899 3.042006
42 1.325286 1.620776 2.088498 2.233066 2.610401 2.924740 3.296265
43 1.395098 1.714275 2.203645 2.385202 2.810924 3.161265 3.573533
44 1.469378 1.809401 2.347140 2.572944 3.030014 3.422596 3.875228
45 1.550495 1.922118 2.521209 2.775013 3.263501 3.706546 4.188699
46 1.655685 2.062494 2.707513 2.994262 3.520109 4.000930 4.514275
47 1.786575 2.212510 2.908595 3.236015 3.779458 4.311211 4.849793
48 1.923759 2.370117 3.125040 3.480953 4.050872 4.625265 5.200986
49 2.076402 2.543534 3.350959 3.733259 4.344606 4.953320 5.595669
50 2.241684 2.725062 3.582262 3.996588 4.645248 5.328277 6.058225
51 2.412113 2.905381 3.816967 4.264688 4.982624 5.760628 6.554530
52 2.587768 3.087252 4.065347 4.565231 5.385089 6.223726 7.093242
53 2.767301 3.280064 4.343491 4.924522 5.808298 6.726062 7.673035
54 2.953870 3.489141 4.676525 5.308246 6.267088 7.265377 8.299606
55 3.163053 3.741220 5.023601 5.707973 6.767128 7.847258 8.987639
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.312585 0.274572 0.257345 0.207345 0.207345 0.297345 0.447345
1 0.273185 0.254772 0.207345 0.207345 0.297345 0.447345 0.597345
2 0.253485 0.205272 0.207345 0.297345 0.447345 0.597345 0.697345
3 0.204235 0.205272 0.297345 0.447345 0.597345 0.697345 0.818045
4 0.204235 0.294372 0.447345 0.597345 0.697345 0.818045 1.023499
5 0.292885 0.442872 0.597345 0.697345 0.818045 1.023499 1.181158
6 0.440635 0.591372 0.697345 0.818045 1.023499 1.181158 1.204222
7 0.588385 0.690372 0.818045 1.023499 1.181158 1.204222 1.196578
8 0.686885 0.809864 1.023499 1.181158 1.204222 1.196578 1.188460
9 0.805774 1.013264 1.181158 1.204222 1.196578 1.188460 1.157493
10 1.008147 1.169347 1.204222 1.196578 1.188460 1.157493 1.114897
11 1.163441 1.192180 1.196578 1.188460 1.157493 1.114897 1.084092
12 1.186159 1.184613 1.188460 1.157493 1.114897 1.084092 1.047631
13 1.178630 1.176575 1.157493 1.114897 1.084092 1.047631 1.017463
14 1.170633 1.145918 1.114897 1.084092 1.047631 1.017463 1.010653
15 1.140131 1.103748 1.084092 1.047631 1.017463 1.010653 1.027390
16 1.098173 1.073251 1.047631 1.017463 1.010653 1.027390 1.058122
17 1.067830 1.037155 1.017463 1.010653 1.027390 1.058122 1.110485
18 1.029822 1.005253 1.008631 1.026362 1.058122 1.110485 1.168885
19 0.998131 0.996504 1.022253 1.056006 1.110485 1.168885 1.238015
20 0.989429 1.010952 1.050715 1.106043 1.168885 1.238015 1.320249
21 1.004787 1.040134 1.099380 1.163041 1.238015 1.320249 1.411329
22 1.032727 1.089386 1.154859 1.230587 1.320249 1.411329 1.502821
23 1.081612 1.144339 1.219445 1.311008 1.411329 1.502821 1.584884
24 1.136157 1.209540 1.297805 1.398627 1.502821 1.584884 1.689151
25 1.200874 1.287243 1.383102 1.487793 1.584884 1.689151 1.801436
26 1.275361 1.370400 1.468256 1.564281 1.685773 1.799635 1.928254
27 1.356287 1.454731 1.543677 1.663814 1.792429 1.924398 2.084469
28 1.438200 1.527828 1.640166 1.769010 1.914756 2.078216 2.241796
29 1.508810 1.621585 1.761805 1.887761 2.063624 2.232828 2.392214
30 1.601315 1.723974 1.860765 2.036526 2.214894 2.380253 2.564519
31 1.698754 1.837626 2.005259 2.183509 2.356330 2.549132 2.751645
32 1.810631 1.978161 2.149882 2.322839 2.520922 2.732383 2.942116
33 1.946894 2.118497 2.286956 2.482455 2.696612 2.918579 3.171811
34 2.084870 2.253465 2.443987 2.658089 2.877389 3.143265 3.448986
35 2.212798 2.405519 2.619566 2.833257 3.092516 3.414496 3.750018
36 2.356793 2.575540 2.795010 3.048111 3.345517 3.697517 4.071217
37 2.520507 2.747936 3.010049 3.311027 3.633767 4.005947 4.416783
38 2.689094 2.959300 3.266190 3.596267 3.948836 4.341320 4.780895
39 2.892692 3.211006 3.547517 3.908042 4.292491 4.694232 5.154709
40 3.135129 3.483766 3.855010 4.248102 4.650900 5.071401 5.545828
41 3.401266 3.781581 4.185956 4.602754 5.029746 5.461630 5.950025
42 3.691835 4.106054 4.535350 4.972472 5.416725 5.877537 6.410889
43 4.003958 4.448687 4.894370 5.354980 5.823172 6.339150 6.943931
44 4.333137 4.800648 5.270782 5.756725 6.280454 6.887246 7.523862
45 4.675686 5.164131 5.666115 6.208714 6.816389 7.470010 8.161401
46 5.029415 5.545302 6.104366 6.738447 7.400772 8.094641 8.850715
47 5.394287 5.980453 6.625077 7.308455 8.019536 8.787301 9.607483
48 5.810887 6.483364 7.185365 7.919396 8.696711 9.528813 10.430364
49 6.299137 7.023809 7.777531 8.578943 9.430477 10.355556 11.288804
50 6.816095 7.602286 8.433998 9.302639 10.248687 11.196273 12.264034
51 7.376972 8.243757 9.145301 10.099072 11.080609 12.163406 13.599705
52 7.990103 8.928960 9.917395 10.918679 12.037622 13.488117 15.124451
53 8.653618 9.682284 10.722051 11.861523 13.334685 15.000225 16.574902
54 9.383053 10.456023 11.647688 13.139407 14.829415 16.438764 18.160880
55 10.120598 11.358383 12.888336 14.612021 16.251573 18.011561 19.919611
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.597345 15 0.697345
1 0.697345 16 0.818045
2 0.818045 17 1.023499
3 1.023499 18 1.181158
4 1.181158 19 1.204222
5 1.204222 20 1.196578
6 1.196578 21 1.188460
7 1.188460 22 1.157493
8 1.157493 23 1.114897
9 1.114897 24 1.084092
10 1.084092 25 1.047631
11 1.047631 26 1.017463
12 1.017463 27 1.010653
13 1.010653 28 1.027390
14 1.027390 29 1.058122
15 1.058122 30 1.110485
16 1.110485 31 1.168885
17 1.168885 32 1.238015
18 1.238015 33 1.320249
19 1.320249 34 1.411329
20 1.411329 35 1.502821
21 1.502821 36 1.584884
22 1.584884 37 1.689151
23 1.689151 38 1.801436
24 1.801436 39 1.928254
25 1.928254 40 2.084469
26 2.084469 41 2.241796
27 2.241796 42 2.392214
28 2.392214 43 2.564519
29 2.564519 44 2.751645
30 2.751645 45 2.942116
31 2.942116 46 3.171811
32 3.171811 47 3.448986
33 3.448986 48 3.750018
34 3.750018 49 4.079376
35 4.079376 50 4.438978
36 4.438978 51 4.814597
37 4.814597 52 5.206777
38 5.206777 53 5.613186
39 5.613186 54 6.040634
40 6.040634 55 6.521759
41 6.521759 56 7.085644
42 7.085644 57 7.693110
43 7.693110 58 8.344990
44 8.344990 59 9.059074
45 9.059074 60 9.833657
46 9.823823 61 10.686848
47 10.665475 62 11.566398
48 11.531698 63 12.578497
49 12.553340 64 13.948415
50 13.878673 65 15.528183
51 15.435014 66 17.017354
52 16.898232 67 18.664831
53 18.515512 68 20.472365
54 20.288114 69 22.460929
55 22.236319 70 24.702216
</TABLE>
<PAGE> 46
Schedule 3
Mortality Rates Per Thousand - Variable Life Male
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 3.401109 4.008110 5.399209 6.151111 7.296573 8.496044 9.692641
57 3.661920 4.280980 5.815925 6.627885 7.886894 9.149020 10.503045
58 3.930490 4.583891 6.264039 7.138815 8.478169 9.911856 11.619030
59 4.194351 4.906995 6.754088 7.668522 9.169724 10.935557 12.888392
60 4.434979 5.268616 7.263698 8.276651 10.112601 12.127511 14.073351
61 4.734274 5.621269 7.874139 9.108315 11.195820 13.239501 15.379820
62 4.996684 6.025100 8.661966 10.062263 12.184425 14.446579 16.828284
63 5.320704 6.597600 9.534305 10.942158 13.289359 15.784194 18.395501
64 5.704902 7.267190 10.397603 11.908162 14.494435 17.227532 20.157008
65 6.257858 7.862017 11.310887 12.959007 15.812494 18.872493 22.098105
66 6.721855 8.511163 12.303891 14.105463 17.291551 20.684696 24.329565
67 7.241954 9.171620 13.409174 15.389480 18.917935 22.709594 26.808040
68 7.799971 9.927730 14.623712 16.797821 20.759628 25.016414 29.602430
69 8.400387 10.770166 15.982393 18.419670 22.826648 27.582413 32.614830
70 9.090415 11.714985 17.489687 20.205565 25.121665 30.380938 36.171902
71 9.812319 12.749772 19.210217 22.183459 27.619034 33.639869 40.029587
72 10.619810 13.901694 21.118359 24.369736 30.565258 37.170331 44.076867
73 11.546037 15.205218 23.151249 26.902852 33.709126 40.916639 48.440127
74 12.524105 16.612037 25.591621 29.645973 37.035657 44.897217 53.036543
75 13.647052 18.266811 28.191263 32.489363 40.621292 49.142721 58.032418
76 14.875695 19.964631 30.936971 35.551266 44.376146 53.687351 63.290862
77 16.252614 21.788942 33.779811 38.803952 48.384897 58.533969 68.996733
78 17.630747 23.700844 36.789906 42.198700 52.728947 63.709627 74.896370
79 19.119495 25.712653 40.062989 45.875797 57.276981 69.135111 81.131604
80 20.610404 27.837886 43.618288 49.786914 62.125579 74.770385 93.637478
81 24.008335 31.685744 47.319598 54.827984 71.746200 93.637478 121.539870
82 30.879491 40.886953 53.963795 71.016224 93.073396 121.539870 130.363691
83 39.565176 52.715522 69.869119 92.396499 121.539870 130.363691 139.246585
84 50.603060 68.096320 91.155520 121.539870 130.363691 139.246585 151.311466
85 64.550723 88.786379 121.539870 130.363691 139.246585 151.311466 163.691439
86 81.904589 121.539870 130.363691 139.246585 151.311466 163.691439 168.540302
87 121.539870 130.363691 139.246585 151.311466 163.691439 168.540302 175.888407
88 130.363691 139.246585 151.311466 163.691439 168.540302 175.888407 187.884323
89 139.246585 151.311466 163.691439 168.540302 175.888407 187.884323 207.420611
90 151.311466 163.691439 168.540302 175.888407 187.884323 207.420611 233.817716
91 163.691439 168.540302 175.888407 187.884323 207.420611 233.817716 262.106354
92 168.540302 175.888407 187.884323 207.420611 233.817716 262.106354 297.468598
93 175.888407 187.884323 207.420611 233.817716 262.106354 297.468598 339.910102
94 187.884323 207.420611 233.817716 262.106354 297.468598 339.910102 1000.000000
95 207.420611 233.817716 262.106354 297.468598 339.910102 1000.000000 1000.000000
96 233.817716 262.106354 297.468598 339.910102 1000.000000 1000.000000 1000.000000
97 262.106354 297.468598 339.910102 1000.000000 1000.000000 1000.000000 1000.000000
98 297.468598 339.910102 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 339.910102 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 10.981028 12.567522 14.332513 15.996312 17.806248 19.735360 21.854484
57 12.149070 13.959837 15.690000 17.526276 19.510164 21.652335 24.010554
58 13.493991 15.281584 17.171644 19.203078 21.382804 23.788234 26.419874
59 14.754046 16.723688 18.814104 21.045890 23.516509 26.175246 29.129479
60 16.126414 18.302294 20.619133 23.121274 25.849074 28.859483 32.216098
61 17.647179 20.035148 22.627229 25.414179 28.499490 31.884315 35.625753
62 19.316399 22.009674 24.870560 28.019498 31.486176 35.295205 39.397740
63 21.194501 24.163856 27.419509 30.955324 34.817746 38.991578 43.813217
64 23.266885 26.609524 30.291758 34.230105 38.504183 43.406283 48.607356
65 25.619541 29.395945 33.458826 37.813707 42.818489 48.105732 53.723879
66 28.267884 32.467181 36.960767 42.049837 47.453621 53.169453 59.129940
67 31.181716 35.864128 41.100324 46.600860 52.448699 58.519094 64.986549
68 34.401944 39.834308 45.547450 51.450733 57.724993 64.248066 71.214909
69 38.206572 44.092741 50.230995 56.625470 63.375313 70.478457 77.964667
70 42.286895 48.678603 55.281607 62.234020 69.447424 77.077789 85.210524
71 46.627226 53.510153 60.689918 68.195455 76.029660 84.241221 96.020987
72 51.250021 58.743007 66.501616 74.578404 83.007563 96.020987 104.282267
73 56.191882 64.292260 72.643397 81.421432 96.020987 104.282267 112.816238
74 61.493742 70.224638 79.306589 88.627371 104.282267 112.816238 121.539870
75 67.160876 76.663036 86.322868 104.282267 112.816238 121.539870 130.363691
76 73.226417 83.346217 93.645476 112.816238 121.539870 130.363691 139.246585
77 79.601398 90.412725 112.816238 121.539870 130.363691 139.246585 151.311466
78 86.345717 112.816238 121.539870 130.363691 139.246585 151.311466 163.691439
79 93.186213 121.539870 130.363691 139.246585 151.311466 163.691439 168.540302
80 121.539870 130.363691 139.246585 151.311466 163.691439 168.540302 175.888407
81 130.363691 139.246585 151.311466 163.691439 168.540302 175.888407 187.884323
82 139.246585 151.311466 163.691439 168.540302 175.888407 187.884323 207.420611
83 151.311466 163.691439 168.540302 175.888407 187.884323 207.420611 233.817716
84 163.691439 168.540302 175.888407 187.884323 207.420611 233.817716 262.106354
85 168.540302 175.888407 187.884323 207.420611 233.817716 262.106354 297.468598
86 175.888407 187.884323 207.420611 233.817716 262.106354 297.468598 339.910102
87 187.884323 207.420611 233.817716 262.106354 297.468598 339.910102 1000.000000
88 207.420611 233.817716 262.106354 297.468598 339.910102 1000.000000 1000.000000
89 233.817716 262.106354 297.468598 339.910102 1000.000000 1000.000000 1000.000000
90 262.106354 297.468598 339.910102 1000.000000 1000.000000 1000.000000 1000.000000
91 297.468598 339.910102 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 339.910102 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 24.356385 71 27.180940
57 26.691683 72 29.999463
58 29.339475 73 33.178267
59 32.448346 74 36.727580
60 35.919574 75 40.616227
61 39.682054 76 45.214878
62 44.174936 77 50.162390
63 49.008655 78 55.442600
64 54.111977 79 61.084649
65 59.618617 80 67.134865
66 65.523628 81 73.645200
67 71.804070 82 80.625302
68 78.609669 83 88.118433
69 85.915472 84 96.020987
70 96.020987 85 104.282267
71 104.282267 86 112.816238
72 112.816238 87 121.539870
73 121.539870 88 130.363691
74 130.363691 89 139.246585
75 139.246585 90 151.311466
76 151.311466 91 163.691439
77 163.691439 92 168.540302
78 168.540302 93 175.888407
79 175.888407 94 187.884323
80 187.884323 95 207.420611
81 207.420611 96 233.817716
82 233.817716 97 262.106354
83 262.106354 98 297.468598
84 297.468598 99 339.910102
85 339.910102 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<PAGE> 47
Schedule 3
Mortality Rates Per Thousand - Variable Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.784555 0.381539 0.337998 0.309048 0.280098 0.273251 0.257134
1 0.374155 0.325739 0.309048 0.280098 0.270448 0.253751 0.227494
2 0.319435 0.297839 0.280098 0.270448 0.251148 0.224501 0.207734
3 0.292075 0.269939 0.270448 0.251148 0.222198 0.205001 0.178094
4 0.264715 0.260639 0.251148 0.222198 0.202898 0.175751 0.168214
5 0.255595 0.242039 0.222198 0.202898 0.173948 0.166001 0.168214
6 0.237355 0.214139 0.202898 0.173948 0.164298 0.166001 0.187974
7 0.209995 0.195539 0.173948 0.164298 0.164298 0.185501 0.237374
8 0.191755 0.167639 0.164298 0.164298 0.183598 0.234251 0.286774
9 0.164395 0.158339 0.164298 0.183598 0.231848 0.283001 0.316414
10 0.155275 0.158339 0.183598 0.231848 0.280098 0.312251 0.336982
11 0.155275 0.176939 0.231848 0.280098 0.309048 0.332548 0.346862
12 0.173515 0.223439 0.280098 0.309048 0.329137 0.342298 0.348679
13 0.219115 0.269939 0.309048 0.329137 0.338787 0.344091 0.361704
14 0.264715 0.297839 0.329137 0.338787 0.340562 0.356945 0.371764
15 0.292075 0.317200 0.338787 0.340562 0.353284 0.366872 0.381479
16 0.305262 0.326500 0.340562 0.353284 0.363109 0.376460 0.391883
17 0.312106 0.328210 0.353284 0.363109 0.372599 0.386727 0.398350
18 0.310212 0.337175 0.361228 0.370668 0.381174 0.392302 0.415452
19 0.318138 0.342790 0.368352 0.378397 0.387061 0.409547 0.419022
20 0.323224 0.347888 0.376018 0.382222 0.404064 0.413475 0.428051
21 0.327810 0.353409 0.379803 0.397316 0.408355 0.423242 0.438204
22 0.332783 0.354806 0.394785 0.399394 0.417558 0.433271 0.447573
23 0.333840 0.366526 0.396407 0.406189 0.427440 0.442977 0.459037
24 0.344593 0.365258 0.403129 0.413536 0.437463 0.454783 0.464659
25 0.344349 0.369462 0.410396 0.420461 0.449110 0.460819 0.468599
26 0.348475 0.373617 0.416785 0.428782 0.452658 0.463258 0.484891
27 0.352088 0.376806 0.425000 0.431538 0.454031 0.478830 0.497298
28 0.357507 0.382925 0.427697 0.432665 0.468728 0.490529 0.514965
29 0.363070 0.383056 0.428295 0.445494 0.479072 0.507911 0.558766
30 0.362895 0.380706 0.441453 0.455119 0.495430 0.550479 0.596923
31 0.359826 0.387913 0.450432 0.469383 0.535681 0.587387 0.658233
32 0.368719 0.392110 0.463957 0.506085 0.570859 0.646957 0.711661
33 0.363991 0.392871 0.500758 0.537803 0.627224 0.698638 0.793156
34 0.364654 0.417890 0.531446 0.589168 0.676423 0.778548 0.871494
35 0.380600 0.442448 0.582121 0.632758 0.751908 0.854406 0.966556
36 0.393499 0.484161 0.625863 0.702068 0.824027 0.945383 1.048981
37 0.428486 0.518616 0.693474 0.766117 0.910447 1.023537 1.145341
38 0.457332 0.574028 0.756624 0.843751 0.986528 1.117344 1.250513
39 0.503564 0.625615 0.834223 0.911353 1.075348 1.216942 1.353483
40 0.545870 0.688128 0.898631 0.988811 1.172181 1.315379 1.472221
41 0.598142 0.741342 0.977357 1.074266 1.265080 1.422315 1.595188
42 0.640723 0.804284 1.061677 1.156863 1.369082 1.533695 1.722091
43 0.692295 0.871442 1.141621 1.250972 1.474011 1.651561 1.864017
44 0.746951 0.937379 1.231010 1.349218 1.582991 1.785286 2.014984
45 0.803250 1.008097 1.322089 1.449769 1.702299 1.927275 2.173331
46 0.868361 1.081545 1.414504 1.561859 1.830334 2.075905 2.355484
47 0.936856 1.155897 1.517174 1.682615 1.960994 2.249528 2.548132
48 1.005043 1.236295 1.624912 1.806113 2.113687 2.430163 2.766051
49 1.083088 1.322549 1.738664 1.947960 2.282702 2.634335 2.992010
50 1.165598 1.413914 1.869173 2.099850 2.470492 2.849035 3.219054
51 1.251539 1.515986 2.005474 2.268098 2.664214 3.060925 3.465307
52 1.350260 1.622075 2.162082 2.441034 2.861381 3.290415 3.745786
53 1.453969 1.744443 2.322469 2.616658 3.070783 3.551886 4.046841
54 1.570963 1.865647 2.484884 2.806411 3.309512 3.831838 4.393920
55 1.691288 1.987907 2.655922 3.014256 3.569056 4.154441 4.761531
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
0 0.226803 0.208155 0.180257 0.170257 0.170257 0.190257 0.240257
1 0.207103 0.178455 0.170257 0.170257 0.190257 0.240257 0.290257
2 0.177553 0.168555 0.170257 0.190257 0.240257 0.290257 0.320257
3 0.167703 0.168555 0.190257 0.240257 0.290257 0.320257 0.341075
4 0.167703 0.188355 0.240257 0.290257 0.320257 0.341075 0.351075
5 0.187403 0.237855 0.290257 0.320257 0.341075 0.351075 0.352914
6 0.236653 0.287355 0.320257 0.341075 0.351075 0.352914 0.366097
7 0.285903 0.317055 0.341075 0.351075 0.352914 0.366097 0.376279
8 0.315453 0.337664 0.351075 0.352914 0.366097 0.376279 0.386113
9 0.335959 0.347564 0.352914 0.366097 0.376279 0.386113 0.396643
10 0.345809 0.349385 0.366097 0.376279 0.386113 0.396643 0.403188
11 0.347621 0.362436 0.376279 0.386113 0.396643 0.403188 0.421779
12 0.360606 0.372516 0.386113 0.396643 0.403188 0.421779 0.426703
13 0.370635 0.382252 0.396643 0.403188 0.421779 0.426703 0.437233
14 0.380321 0.392677 0.403188 0.421779 0.426703 0.437233 0.448520
15 0.390693 0.399156 0.421779 0.426703 0.437233 0.448520 0.459520
16 0.397140 0.417561 0.426703 0.437233 0.448520 0.459520 0.472747
17 0.415452 0.422436 0.437233 0.448520 0.459520 0.472747 0.480020
18 0.419449 0.431986 0.447623 0.459061 0.472747 0.480020 0.485595
19 0.428926 0.442241 0.457222 0.471801 0.480020 0.485595 0.505095
20 0.439101 0.452168 0.469438 0.478099 0.485595 0.505095 0.520731
21 0.449411 0.464710 0.475219 0.483167 0.505095 0.520731 0.542640
22 0.461401 0.470899 0.479768 0.502064 0.520731 0.542640 0.591913
23 0.467539 0.475398 0.497518 0.517086 0.542640 0.591913 0.635701
24 0.471998 0.493478 0.511878 0.537756 0.591913 0.635701 0.704747
25 0.489942 0.507713 0.531787 0.585994 0.635701 0.704747 0.766051
26 0.503026 0.526903 0.578299 0.627437 0.703337 0.765284 0.859324
27 0.521477 0.572971 0.619172 0.694175 0.762220 0.857605 0.949340
28 0.566460 0.612815 0.684309 0.752262 0.853309 0.946492 1.058659
29 0.605187 0.676557 0.749197 0.841278 0.939846 1.054424 1.156539
30 0.668100 0.733110 0.829248 0.927505 1.045955 1.150756 1.272601
31 0.722386 0.818936 0.913265 1.031134 1.139191 1.264965 1.398784
32 0.806905 0.900923 1.015254 1.122999 1.250967 1.388992 1.524193
33 0.886683 1.000433 1.105651 1.231878 1.370808 1.512000 1.663527
34 0.984553 1.089460 1.212789 1.351225 1.490661 1.648555 1.808603
35 1.069799 1.193700 1.331642 1.467798 1.621939 1.790517 1.959147
36 1.169520 1.309262 1.447983 1.598649 1.754345 1.931719 2.123618
37 1.281286 1.423596 1.578687 1.736259 1.898414 2.089572 2.296574
38 1.393113 1.552070 1.712747 1.878822 2.059782 2.257336 2.480595
39 1.517136 1.683809 1.853353 2.038503 2.231946 2.435629 2.689653
40 1.644020 1.820048 2.010841 2.208865 2.413146 2.646183 2.913836
41 1.776947 1.972539 2.176552 2.388166 2.624449 2.869598 3.164414
42 1.925726 2.135006 2.353192 2.594564 2.846004 3.125863 3.427909
43 2.081919 2.308227 2.553812 2.813563 3.096949 3.389549 3.689676
44 2.248273 2.504909 2.769324 3.061611 3.358165 3.659556 3.977782
45 2.439705 2.713289 3.013422 3.319806 3.621906 3.949312 4.309857
46 2.642507 2.949170 3.264011 3.580492 3.912706 4.274603 4.667962
47 2.868855 3.197754 3.520252 3.863899 4.234941 4.634517 5.086327
48 3.107087 3.444953 3.798823 4.182060 4.586739 5.044678 5.525867
49 3.347063 3.713410 4.107144 4.524627 4.992618 5.486235 6.039644
50 3.603594 4.014601 4.448181 4.924939 5.429618 5.990139 6.607510
51 3.895617 4.347846 4.841642 5.350353 5.928257 6.553294 7.363829
52 4.214066 4.727108 5.254103 5.841623 6.485525 7.303408 8.190299
53 4.581338 5.129545 5.736424 6.390648 7.220329 8.123028 8.817003
54 4.971016 5.594096 6.275440 7.114592 8.030530 8.744584 9.451363
55 5.414640 6.119570 6.978644 7.912805 8.645008 9.373654 10.124744
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
0 0.290257 15 0.320257
1 0.320257 16 0.341075
2 0.341075 17 0.351075
3 0.351075 18 0.352914
4 0.352914 19 0.366097
5 0.366097 20 0.376279
6 0.376279 21 0.386113
7 0.386113 22 0.396643
8 0.396643 23 0.403188
9 0.403188 24 0.421779
10 0.421779 25 0.426703
11 0.426703 26 0.437233
12 0.437233 27 0.448520
13 0.448520 28 0.459520
14 0.459520 29 0.472747
15 0.472747 30 0.480020
16 0.480020 31 0.485595
17 0.485595 32 0.505095
18 0.505095 33 0.520731
19 0.520731 34 0.542640
20 0.542640 35 0.591913
21 0.591913 36 0.635701
22 0.635701 37 0.704747
23 0.704747 38 0.766051
24 0.766051 39 0.859324
25 0.859324 40 0.949340
26 0.949340 41 1.058659
27 1.058659 42 1.156539
28 1.156539 43 1.272601
29 1.272601 44 1.398784
30 1.398784 45 1.524193
31 1.524193 46 1.663527
32 1.663527 47 1.808603
33 1.808603 48 1.959147
34 1.959147 49 2.127874
35 2.127874 50 2.308114
36 2.308114 51 2.498081
37 2.498081 52 2.716821
38 2.716821 53 2.949227
39 2.949227 54 3.212603
40 3.212603 55 3.487191
41 3.487191 56 3.764976
42 3.764976 57 4.067262
43 4.067262 58 4.406807
44 4.406807 59 4.777853
45 4.777853 60 5.206066
46 5.200860 61 5.661749
47 5.650426 62 6.188160
48 6.169595 63 6.776933
49 6.763379 64 7.552645
50 7.514882 65 8.408932
51 8.358478 66 9.052365
52 8.988998 67 9.713631
53 9.635922 68 10.405698
54 10.312047 69 11.154535
55 11.042990 70 12.047939
</TABLE>
<PAGE> 48
Schedule 3
Mortality Rates Per Thousand - Variable Life Female
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 1 2 3 4 5 6 7
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 1.807188 2.119044 2.851204 3.244162 3.862901 4.501091 5.185678
57 1.936017 2.260692 3.067381 3.508889 4.178371 4.894834 5.658739
58 2.075606 2.417593 3.316264 3.782049 4.535921 5.340223 6.291353
59 2.212146 2.597827 3.578226 4.102750 4.940384 5.921274 6.979413
60 2.347936 2.791242 3.886164 4.459222 5.475668 6.567376 7.486306
61 2.508155 3.007446 4.242360 4.931877 6.062840 7.042740 8.004032
62 2.673285 3.246151 4.690193 5.448988 6.481493 7.518350 8.553484
63 2.866643 3.572401 5.163084 5.820671 6.916105 8.022793 9.135564
64 3.089032 3.935380 5.530995 6.197296 7.367234 8.555528 9.831118
65 3.388799 4.182193 5.886460 6.586807 7.852793 9.204626 10.623576
66 3.575684 4.429416 6.253824 7.005048 8.433557 9.944085 11.619873
67 3.768889 4.661753 6.659257 7.505866 9.094722 10.846170 12.820995
68 3.964571 4.930304 7.132380 8.075486 9.914861 11.964147 14.257797
69 4.171796 5.252901 7.683472 8.797290 10.916887 13.284870 15.904428
70 4.433642 5.631933 8.353127 9.663349 12.099669 14.815084 18.028100
71 4.717234 6.089329 9.187322 10.684503 13.468258 16.766133 20.377296
72 5.072053 6.648511 10.171505 11.883757 15.233744 18.921775 22.945798
73 5.521914 7.323484 11.289569 13.408399 17.159828 21.300628 25.780191
74 6.032145 8.100761 12.754881 15.091456 19.280243 23.894628 28.881203
75 6.654904 9.104190 14.350928 16.913506 21.618949 26.760811 32.335269
76 7.414056 10.163112 16.105353 18.920644 24.165158 29.914227 36.124105
77 8.273489 11.343017 17.977863 21.130804 26.959736 33.409045 40.335651
78 9.178319 12.613763 20.034050 23.512829 30.095751 37.244797 44.860862
79 10.175536 14.001900 22.322825 26.184224 33.484257 41.410027 49.771141
80 11.223455 15.511081 24.895721 29.105547 37.211510 45.868776 58.827795
81 13.377281 18.085062 27.663148 32.840452 44.013554 58.827795 78.172371
82 17.624882 23.902608 32.322827 43.565741 58.473411 78.172371 85.831535
83 23.129895 31.575145 42.862036 58.048150 78.172371 85.831535 93.845671
84 30.309839 41.774492 57.268504 78.172371 85.831535 93.845671 104.377795
85 39.599404 55.780090 78.172371 85.831535 93.845671 104.377795 115.585735
86 51.456602 78.172371 85.831535 93.845671 104.377795 115.585735 121.280445
87 78.172371 85.831535 93.845671 104.377795 115.585735 121.280445 129.719944
88 85.831535 93.845671 104.377795 115.585735 121.280445 129.719944 143.103925
89 93.845671 104.377795 115.585735 121.280445 129.719944 143.103925 164.645436
90 104.377795 115.585735 121.280445 129.719944 143.103925 164.645436 193.457709
91 115.585735 121.280445 129.719944 143.103925 164.645436 193.457709 224.511264
92 121.280445 129.719944 143.103925 164.645436 193.457709 224.511264 263.331112
93 129.719944 143.103925 164.645436 193.457709 224.511264 263.331112 309.919361
94 143.103925 164.645436 193.457709 224.511264 263.331112 309.919361 1000.000000
95 164.645436 193.457709 224.511264 263.331112 309.919361 1000.000000 1000.000000
96 193.457709 224.511264 263.331112 309.919361 1000.000000 1000.000000 1000.000000
97 224.511264 263.331112 309.919361 1000.000000 1000.000000 1000.000000 1000.000000
98 263.331112 309.919361 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 309.919361 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by Policy Year
Issue Age 8 9 10 11 12 13 14
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
56 5.916262 6.804933 7.761444 8.509223 9.266804 10.031093 10.853362
57 6.578354 7.559629 8.346280 9.121099 9.916630 10.752972 11.710597
58 7.307362 8.129024 8.936540 9.760545 10.619117 11.602165 12.701250
59 7.848400 8.703413 9.562836 10.451799 11.469638 12.583646 13.912327
60 8.392577 9.302694 10.239863 11.276871 12.426840 13.783376 15.407409
61 8.969712 9.949845 11.035912 12.217766 13.611442 15.248733 17.158887
62 9.592900 10.734714 11.956423 13.382197 15.058322 16.999681 19.212074
63 10.337132 11.616678 13.095640 14.804441 16.769716 19.014011 21.836536
64 11.185463 12.708789 14.487090 16.486683 18.776336 21.633720 24.743859
65 12.235970 14.058666 16.115202 18.439630 21.340763 24.488505 27.967897
66 13.519168 15.637584 18.023698 20.957666 24.156544 27.679271 31.469388
67 15.018449 17.488929 20.484429 23.722441 27.304056 31.144291 35.388613
68 16.775904 19.853445 23.186196 26.784529 30.721665 34.986470 39.680463
69 19.042181 22.445668 26.149551 30.136490 34.511209 39.270117 44.499375
70 21.526391 25.341397 29.421277 33.889715 38.695633 43.993178 49.814272
71 24.273479 28.478496 33.048870 37.998044 43.394944 49.247615 57.513926
72 27.275637 31.988674 37.054248 42.566621 48.526416 57.513926 63.973188
73 30.599452 35.823210 41.462189 47.599159 57.513926 63.973188 70.876862
74 34.263895 40.081650 46.362818 53.085354 63.973188 70.876862 78.172371
75 38.332968 44.817390 51.705020 63.973188 70.876862 78.172371 85.831535
76 42.808335 49.922088 57.447923 70.876862 78.172371 85.831535 93.845671
77 47.679045 55.464754 70.876862 78.172371 85.831535 93.845671 104.377795
78 52.969800 70.876862 78.172371 85.831535 93.845671 104.377795 115.585735
79 58.544288 78.172371 85.831535 93.845671 104.377795 115.585735 121.280445
80 78.172371 85.831535 93.845671 104.377795 115.585735 121.280445 129.719944
81 85.831535 93.845671 104.377795 115.585735 121.280445 129.719944 143.103925
82 93.845671 104.377795 115.585735 121.280445 129.719944 143.103925 164.645436
83 104.377795 115.585735 121.280445 129.719944 143.103925 164.645436 193.457709
84 115.585735 121.280445 129.719944 143.103925 164.645436 193.457709 224.511264
85 121.280445 129.719944 143.103925 164.645436 193.457709 224.511264 263.331112
86 129.719944 143.103925 164.645436 193.457709 224.511264 263.331112 309.919361
87 143.103925 164.645436 193.457709 224.511264 263.331112 309.919361 1000.000000
88 164.645436 193.457709 224.511264 263.331112 309.919361 1000.000000 1000.000000
89 193.457709 224.511264 263.331112 309.919361 1000.000000 1000.000000 1000.000000
90 224.511264 263.331112 309.919361 1000.000000 1000.000000 1000.000000 1000.000000
91 263.331112 309.919361 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
92 309.919361 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
93 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
94 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
95 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
96 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
97 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
98 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
99 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000 1000.000000
</TABLE>
<TABLE>
<CAPTION>
Select Mortality by
Policy Year Ultimate Mortality
Issue Age 15 Attained Age Rate
--------- -------- ------------ ----
<S> <C> <C> <C>
56 11.879268 71 13.067129
57 12.831921 72 14.327834
58 14.012621 73 15.867568
59 15.518482 74 17.689574
60 17.300404 75 19.806262
61 19.350718 76 22.535125
62 22.016817 77 25.535458
63 24.948143 78 28.862639
64 28.169936 79 32.509698
65 31.729466 80 36.558485
66 35.681081 81 41.034605
67 40.008740 82 46.017968
68 44.867519 83 51.514242
69 50.226386 84 57.513926
70 57.513926 85 63.973188
71 63.973188 86 70.876862
72 70.876862 87 78.172371
73 78.172371 88 85.831535
74 85.831535 89 93.845671
75 93.845671 90 104.377795
76 104.377795 91 115.585735
77 115.585735 92 121.280445
78 121.280445 93 129.719944
79 129.719944 94 143.103925
80 143.103925 95 164.645436
81 164.645436 96 193.457709
82 193.457709 97 224.511264
83 224.511264 98 263.331112
84 263.331112 99 309.919361
85 309.919361 100 1000.000000
86 1000.000000
87 1000.000000
88 1000.000000
89 1000.000000
90 1000.000000
91 1000.000000
92 1000.000000
93 1000.000000
94 1000.000000
95 1000.000000
96 1000.000000
97 1000.000000
98 1000.000000
99 1000.000000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-2000
<PERIOD-END> MAR-31-1999 MAR-31-2000
<DEBT-HELD-FOR-SALE> 0 108,566
<DEBT-CARRYING-VALUE> 0 0
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 0 2,137
<MORTGAGE> 0 21,185
<REAL-ESTATE> 0 5,747
<TOTAL-INVEST> 0 150,976
<CASH> 0 2,237
<RECOVER-REINSURE> 0 0
<DEFERRED-ACQUISITION> 0 10,582
<TOTAL-ASSETS> 0 256,048
<POLICY-LOSSES> 0 79,934
<UNEARNED-PREMIUMS> 0 809
<POLICY-OTHER> 0 52,405
<POLICY-HOLDER-FUNDS> 0 5,385
<NOTES-PAYABLE> 0 6,378
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 0 14,016
<TOTAL-LIABILITY-AND-EQUITY> 0 256,048
2,916 3,860
<INVESTMENT-INCOME> 2,310 2,784
<INVESTMENT-GAINS> (74) (112)
<OTHER-INCOME> 793 1,134
<BENEFITS> 3,141 4,047
<UNDERWRITING-AMORTIZATION> 0 0
<UNDERWRITING-OTHER> 0 0
<INCOME-PRETAX> 411 475
<INCOME-TAX> 174 198
<INCOME-CONTINUING> 237 277
<DISCONTINUED> 0 0
<EXTRAORDINARY> 8 41
<CHANGES> 0 0
<NET-INCOME> 229 236
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
<RESERVE-OPEN> 0 0
<PROVISION-CURRENT> 0 0
<PROVISION-PRIOR> 0 0
<PAYMENTS-CURRENT> 0 0
<PAYMENTS-PRIOR> 0 0
<RESERVE-CLOSE> 0 0
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
