FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 33-50884
33-84480
33-90272
33-35412
333-25057
002-82511
NORTHBROOK LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
ILLINOIS 35-300152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3100 Sanders Road
Northbrook, Illinois 60062
(Address of principal executive offices)(Zip Code)
847/402-2400
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the 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../X/.. No
Indicate the number of shares of each of the issuer's classes of common
stock, as of March 31, 1999; there were 25,000 shares of common capital stock
outstanding, par value $100 per share all of which shares are held by Allstate
Life Insurance Company.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Statements of Financial Position
March 31, 1999(Unaudited) and December 31, 1998.................. 3
Statements of Operations
Three Months Ended March 31, 1999 and
March 31, 1998 (Unaudited)....................................... 4
Statements of Cash Flows
Three Months Ended March 31, 1999 and
March 31, 1998 (Unaudited)................................. 5
Notes to Financial Statements.................................... 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................... 9
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK*..................................................N/A
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS..................................................14
Item 2. CHANGES IN SECURITIES*............................................N/A
Item 3. DEFAULTS UPON SENIOR SECURITIES*..................................N/A
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS*..............N/A
Item 5. OTHER INFORMATION..................................................14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K...................................15
SIGNATURE PAGE...............................................................16
*Omitted pursuant to General Instruction H(2) of Form 10-Q.
-2-
<PAGE>
<TABLE>
<CAPTION>
NORTHBROOK LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
MARCH 31, DECEMBER 31,
1999 1998
------------- -------------
($ in thousands) (UNAUDITED)
<S> <C> <C>
ASSETS
Investments
Fixed income securities at fair value
(amortized cost $83,779 and $81,156) $ 86,761 $ 86,336
Short-term 4,486 5,083
------------- -------------
Total investments 91,247 91,419
Reinsurance recoverable from
Allstate Life Insurance Company 2,107,850 2,148,091
Other assets 7,495 8,206
Separate Accounts 7,218,185 7,031,083
------------- -------------
TOTAL ASSETS $ 9,424,777 $ 9,278,799
============= =============
LIABILITIES
Reserve for life-contingent contract benefits 145,061 145,055
Contractholder funds 1,962,893 2,003,122
Current income taxes payable 2,526 1,830
Deferred income taxes 2,508 3,316
Payable to affiliates, net 6,006 6,586
Separate Accounts 7,218,185 7,031,083
------------- -------------
TOTAL LIABILITIES 9,337,179 9,190,992
------------- -------------
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 4)
SHAREHOLDER'S EQUITY
Common stock, $100 par value, 25,000 shares
authorized, issued and outstanding 2,500 2,500
Additional capital paid-in 56,600 56,600
Retained income 26,560 25,340
Accumulated other comprehensive income:
Unrealized net capital gains 1,938 3,367
------------- -------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 1,938 3,367
------------- -------------
TOTAL SHAREHOLDER'S EQUITY 87,598 87,807
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 9,424,777 $ 9,278,799
============= =============
<FN>
See notes to financial statements.
</FN>
</TABLE>
3
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
------------------------
($ in thousands) 1999 1998
---------- ----------
(UNAUDITED)
REVENUES
Net investment income $ 1,487 $ 1,425
Realized capital gains and losses 389 --
---------- ----------
INCOME BEFORE INCOME TAX EXPENSE 1,876 1,425
Income tax expense 656 496
---------- ----------
NET INCOME $ 1,220 $ 929
========== ==========
See notes to financial statements.
4
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31,
--------------------
($ in thousands) 1999 1998
--------- --------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,220 $ 929
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation, amortization and other
non-cash items 187 153
Realized capital gains and losses (389) --
Changes in:
Life-contingent contract benefits and
contractholder funds 18 (80)
Income taxes payable 657 (155)
Other operating assets and liabilities (93) 577
-------- --------
Net cash provided by operating activities 1,600 1,424
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed income securities
Proceeds from sales 4,044 --
Investment collections 2,177 3,515
Investment purchases (8,430) (6,556)
Change in short-term investments, net 609 2,695
-------- --------
Net cash used in investing activities (1,600) (346)
-------- --------
NET INCREASE IN CASH -- 1,078
CASH AT THE BEGINNING OF PERIOD -- --
-------- --------
CASH AT END OF PERIOD $ -- $ 1,078
======== ========
See notes to financial statements.
5
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Northbrook
Life Insurance Company (the "Company"), a wholly owned subsidiary of
Allstate Life Insurance Company ("ALIC"), which is wholly owned by Allstate
Insurance Company ("AIC"), a wholly owned subsidiary of The Allstate
Corporation (the "Corporation"). These financial statements have been
prepared in conformity with generally accepted accounting principles.
The financial statements and notes as of March 31, 1999 and for the three
month periods ended March 31, 1999 and 1998 are unaudited. The interim
financial statements reflect all adjustments (consisting only of normal
recurring accruals) which are, in the opinion of management, necessary for
the fair presentation of the financial position, results of operations and
cash flows for the interim periods. The financial statements and notes
should be read in conjunction with the financial statements and notes
thereto included in the Northbrook Life Insurance Company Annual Report on
Form 10K for 1998. The results of operations for the interim periods should
not be considered indicative of results to be expected for the full year.
Effective January 1, 1999, the Company adopted Statement of Position
("SOP") 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments." The SOP provides guidance concerning when
to recognize a liability for insurance-related assessments and how those
liabilities should be measured. Specifically, insurance-related assessments
should be recognized as liabilities when all of the following criteria have
been met: 1) an assessment has been imposed or it is probable that an
assessment will be imposed, 2) the event obligating an entity to pay an
assessment has occurred and 3) the amount of the assessment can be
reasonably estimated. The adoption of this statement was immaterial to the
Company's results of operations and financial position.
To conform with the 1999 presentation, certain amounts in the prior years'
financial statements and notes have been reclassified.
2. REINSURANCE
The Company has reinsurance agreements whereby substantially all premiums,
contract charges, credited interest, policy benefits and certain expenses
are ceded to ALIC and reflected net of such reinsurance in the statements
of operations. The amounts shown in the Company's statements of operations
relate to the investment of those assets of the Company that are not
transferred under reinsurance agreements. Reinsurance recoverable and the
related reserve for life-contingent contract benefits and contractholder
funds are reported separately in the statements of financial position. The
Company continues to have primary liability as the direct insurer for risks
reinsured.
6
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)(cont'd)
Investment income earned on the assets which support contractholder funds
and the reserve for life-contingent contract benefits is not included in
the Company's financial statements as those assets are owned and managed
under the terms of reinsurance agreements. The following amounts were
ceded to ALIC under reinsurance agreements.
THREE MONTHS ENDED
MARCH 31,
-------------------
($ in thousands) 1999 1998
-------- --------
Premiums $ 840 $ 366
Contract charges 27,478 23,708
Credited interest, policy benefits,
and expenses 55,494 52,663
3. COMPREHENSIVE INCOME
The components of other comprehensive income on a pretax and after-tax
basis for the three months ended March 31, are as follows:
<TABLE>
<CAPTION>
($ in thousands) 1999 1998
---------------------------------- ----------------------------------
AFTER- AFTER-
PRETAX TAX TAX PRETAX TAX TAX
------ --- --- ------ --- ---
<S> <C> <C> <C> <C> <C> <C>
Unrealized capital gains
and losses:
-------------------------------
Unrealized holding losses
arising during the period $ (1,809) $ 633 $ (1,176) $ (106) $ 37 $ (69)
Less: reclassification adjust-
ment for realized net
capital gains included in
net income 389 (136) 253 - - -
---------- --------- ----------- ---------- -------- ----------
Unrealized net capital losses (2,198) 769 (1,429) (106) 37 (69)
---------- --------- ----------- ---------- -------- ----------
Other comprehensive loss $ (2,198) $ 769 (1,429) $ (106) $ 37 (69)
========== ========= ----------- ========== ======== ----------
Net income 1,220 929
----------- ----------
Comprehensive (loss) income $ (209) $ 860
========== ==========
</TABLE>
7
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) (cont'd)
4. REGULATION AND LEGAL PROCEEDINGS
The Company is subject to the effects of a changing social, economic and
regulatory environment. Public and regulatory initiatives have varied and
have included efforts to adversely influence and restrict premium rates,
restrict the Company's ability to cancel policies, impose underwriting
standards and expand overall regulation. The ultimate changes and
eventual effects, if any, of these initiatives are uncertain.
Various other legal and regulatory actions are currently pending that
involve the Company and specific aspects of its conduct of business. In
the opinion of management, the ultimate liability, if any, in one or more
of these actions in excess of amounts currently reserved is not expected
to have a material effect on the results of operations, liquidity or
financial position of the Company.
8
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion highlights significant factors influencing
results of operations and changes in financial position of Northbrook Life
Insurance Company (the "Company"). It should be read in conjunction with the
financial statements and related notes thereto found under items 7 and 8 of Part
II of the Northbrook Life Insurance Company Annual Report on Form 10-K for the
year ended December 31, 1998.
The Company, a wholly owned subsidiary of Allstate Life Insurance Company
("ALIC"), which is wholly owned by Allstate Insurance Company ("AIC"), a wholly
owned subsidiary of The Allstate Corporation (the "Corporation"), markets
savings products and life insurance products through Dean Witter Reynolds Inc.,
a wholly owned subsidiary of Morgan Stanley Dean Witter. Savings products
consist of fixed annuity products, including indexed, market value adjusted and
structured settlement annuities, as well as variable annuities. Life insurance
includes universal life and variable life products. The Company re-domesticated
its operations from Illinois to Arizona in 1998. The Company has identified
itself as a single segment entity.
The assets and liabilities related to flexible premium deferred variable
annuity contracts and variable life policies are legally segregated and
reflected as Separate Account assets and liabilities and are carried at fair
value in the statements of financial position. Investment income and realized
gains and losses of the Separate Accounts accrue directly to the contractholders
(net of fees) and, therefore, are not included in the Company's statements of
operations.
RESULTS OF OPERATIONS
($ in thousands)
THREE MONTHS ENDED
MARCH 31,
1999 1998
--------- ---------
Net investment income $ 1,487 $ 1,425
============= =============
Realized capital gains and losses, after-tax $ 253 $ -
============= =============
Net income $ 1,220 $ 929
============= =============
Investments $ 91,247 $ 79,712
============= =============
The Company has reinsurance agreements under which substantially all
contract and policy related transactions are transferred to ALIC. The Company's
results of operations include only net investment income and realized capital
gains and losses earned on the assets of the Company that are not transferred
under reinsurance agreements.
Net income for the first quarter of 1999 was $1.2 million compared to $929
thousand for the first quarter of 1998. The increase in net income was primarily
due to an increase in realized capital gains from the sale of mortgage-backed
securities.
9
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(cont'd)
Pretax net investment income for the three month period ended March 31,
1999 was $1.5 million compared to $1.4 million for the same period last year as
investment income on higher investment balances were partially offset by lower
portfolio yields and higher investment expenses. Lower investment yields are
due, in part, to the investment of proceeds from calls and maturities and the
investment of positive cash flows from operations in securities yielding less
than the average portfolio rate. In relatively low interest rate environments,
funds from maturing investments may be reinvested at interest rates lower than
those which prevailed when the funds were previously invested, resulting in
lower investment yields.
FINANCIAL POSITION
($ in thousands)
MARCH 31, DECEMBER 31,
1999 1998
------------- -------------
Fixed income securities (1) $ 86,761 $ 86,336
Short-term investments 4,486 5,083
------------- -------------
Total investments $ 91,247 $ 91,419
============= =============
Reinsurance recoverable from ALIC $ 2,107,850 $ 2,148,091
============= =============
Separate Account assets and liabilities $ 7,218,185 $ 7,031,083
============= =============
Reserve for life-contingent contract benefits $ 145,061 $ 145,055
============= =============
Contractholder funds $ 1,962,893 $ 2,003,122
============= =============
(1) Fixed income securities are carried at fair value. Amortized cost for
these securities was $83,779 and $81,156 at March 31, 1999 and
December 31, 1998, respectively.
Total investments were to $91.2 million at March 31, 1999 compared to
$91.4 million at December 31, 1998. Positive cash flows generated from
operations were more than offset by a decrease in unrealized net capital gains
on fixed income securities. At March 31, 1999, unrealized net capital gains on
the fixed income securities were $3.0 million compared to $5.2 million at
December 31, 1998.
At March 31, 1999, all of the Company's fixed income securities portfolio
is rated investment grade, which is defined by the Company as a security having
a National Association of Insurance Commissioners ("NAIC") rating of 1 or 2, a
Moody's rating of Aaa, Aa, A or Baa, or a comparable Company internal rating.
During the three months ended March 31, 1999, contractholder funds and
reinsurance recoverable for ALIC decreased by $40.2 million. Deposits and
interest credited to contractholders was more than offset by fixed annuity
surrenders and withdrawals. Reinsurance recoverable from ALIC relates to
contract benefit obligations ceded to ALIC.
Separate Account assets and liabilities increased $187.1 million to $7.2
billion at March 31, 1999. The increases were primarily attributable to sales of
variable annuity contracts and favorable investment performance of the Separate
Account investment portfolios, partially offset by surrenders and withdrawals.
10
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(cont'd)
LIQUIDITY AND CAPITAL RESOURCES
Under the terms of reinsurance agreements, substantially all premiums and
deposits, excluding those relating to Separate Accounts, are transferred to
ALIC, which maintains the investment portfolio supporting the Company's
products. Substantially all payments of policyholder claims, benefits, contract
maturities, contract surrenders and withdrawals and certain operating costs are
also reimbursed by ALIC under the terms of the reinsurance agreements. The
Company continues to have primary liability as a direct insurer for risks
reinsured. The Company's ability to meet liquidity demands is dependant on
ALIC's ability to meet those demands. ALIC's claims-paying ability was rated
Aa2, AA+ and A+ by Moody's, Standard and Poor's and A.M. Best, respectively, at
March 31, 1999.
The primary sources for the remainder of the Company's funds are
collection of principal and interest from the investment portfolio and capital
contributions from ALIC. The primary uses for the remainder of the Company's
funds are to purchase investments and pay costs associated with the maintenance
of the Company's investment portfolio.
YEAR 2000
The Company is dependent upon certain services provided for it by the
Corporation including computer-related systems, and systems and equipment that
are not typically thought of as computer-related (referred to as "non-IT"). For
this reason, the Company is reliant upon the Corporation for the establishment
and maintenance of its computer-related systems and non-IT.
The Corporation is heavily dependent upon complex computer systems for all
phases of its operations, including customer service, insurance processing,
underwriting, loss reserving, investments and other enterprise systems. Since
many of the Corporation's older computer software programs recognize only the
last two digits of the year in any date, some software may fail to operate
properly in or after the year 1999, if the software is not reprogrammed,
remediated, or replaced ("Year 2000"). Also, many systems and equipment that are
not typically thought of as computer-related (referred to as "non-IT") contain
embedded hardware or software that may have a Year 2000 sensitive component. The
Corporation believes that many of its counterparties and suppliers also have
Year 2000 issues and non-IT issues which could affect the Corporation.
In 1995, the Corporation commenced a plan consisting of four phases which
are intended to mitigate and/or prevent the adverse affects of the Year 2000
issues on its systems: 1) inventory and assessment of affected systems and
equipment, 2) remediation and compliance of systems and equipment through
strategies that include the replacement or enhancement of existing systems,
upgrades to operating systems already covered by maintenance agreements and
modifications to existing systems to make them Year 2000 compliant, 3) testing
of systems using clock-forward testing for both current and future dates and for
dates which trigger specific processing, and 4) contingency planning which will
address possible adverse scenarios and the potential financial impact to the
Corporation's results of operations, liquidity or financial position.
The Corporation believes that the first three steps of this plan,
assessment, remediation and testing, including clock-forward testing which is
being performed on the Corporation's systems and non-IT, are mostly complete for
the Corporation's critical systems. The Corporation is relying on remediation
techniques for its midrange and personal computer environments, and certain
mainframe applications.
11
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(cont'd)
Certain other processing systems are planned to be remediated by the middle
of 1999, and the implementation and rollout of the remediated personal computer
environment will continue through the third quarter of 1999. Some systems and
non-IT related to discontinued or non-critical functions of the Corporation are
planned to be abandoned by the end of 1999.
The Corporation is currently in the process of developing contingency plans
in the event that the systems supporting key processes are not Year 2000
compliant in or after the year 1999. Management believes these contingency plans
should be completed by mid-1999 with testing of these plans conducted throughout
the second half of 1999. Management has also begun to identify and model the
impacts of the most reasonably likely worst case scenarios. Until these plans
are complete, management is unable to determine an estimate of the most
reasonably likely worst case scenario due to issues relating to the Year 2000.
In addition, the Corporation is actively working with its major external
counterparties and suppliers to assess their compliance efforts and the
Corporation's exposure to both their Year 2000 issues and non-IT issues. This
assessment has included the solicitation of external counterparties and
suppliers, evaluating responses received and testing third party interfaces and
interactions to determine compliance. Currently the Corporation has solicited
and has received responses from the majority of its counterparties and
suppliers. These responses generally state that they believe they will be Year
2000 compliant and that no transactions will be affected. However, certain
vendors are also in ongoing assessment and testing of their products whereby
they are currently unable to identify all potential problems in certain products
which are used by the Corporation. The Corporation believes that these vendors
will make no statements regarding their Year 2000 readiness other than to
publish declarations addressing specific compliance issues identified with their
products. The Corporation has begun to work with these key vendors and is
developing procedures in order to stay aware of any compliance issues
encountered by these vendors. The Corporation has also decided to test certain
interfaces and interactions to gain additional assurance on third party
compliance. If key vendors are unable to meet the Year 2000 requirement, the
Corporation is preparing contingency plans that will allow the Corporation to
continue to sell its products and to service its customers. Management believes
these contingency plans should be completed by mid-1999. The Corporation
currently does not have sufficient information to determine whether or not all
of its external counterparties and suppliers will be Year 2000 ready.
The Corporation may be exposed to the risk that the issuers of investments
in its portfolio will be adversely impacted by Year 2000 issues. The Corporation
assesses the impact which Year 2000 issues have on the Corporation's investments
as part of due diligence for proposed new investments and in its ongoing review
of all current portfolio holdings. Any recommended actions with respect to
individual investments are determined by taking into account the potential
impact of Year 2000 on the issuer. The Corporation currently does not have
sufficient information to determine the impacts of such exposures on their
results of operations, liquidity or financial position.
12
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(cont'd)
The Corporation presently believes that it will resolve the Year 2000
issue in a timely manner. Year 2000 costs are expensed as incurred, therefore,
the majority of the expenses related to this project have been incurred as of
March 31, 1999. The Corporation estimates that approximately $125 million in
costs will be incurred between the years 1995 and 2000. These amounts include
costs directly related to fixing Year 2000 issues, such as modifying software
and hiring Year 2000 solution providers, as well as costs incurred to replace
certain non-compliant systems which would not have been otherwise replaced. A
portion of these costs will be incurred by the Company on a pro rata basis of
usage of the computer-related systems and non-IT, as compared to the usage of
all entities which share these services with the Corporation. These amounts are
not expected to be material to the results of operations of the Company.
FORWARD-LOOKING STATEMENTS
The statements contained in this Management's Discussion and Analysis that
are not historical information are forward-looking statements that are based on
management's estimates, assumptions and projections. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor under The Securities Act of
1933 and The Securities Exchange Act of 1934 for forward-looking statements.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company and its Board of Directors know of no material legal
proceedings pending to which the Company is a party or which would
materially affect the Company. The Company is involved in pending and
threatened litigation in the normal course of its business in which claims
for monetary damages are asserted. Management, after consultation with
legal counsel, does not anticipate the ultimate liability arising from such
pending or threatened litigation to have a material effect on the financial
condition of the Company.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
(2) None
(3)(i) Amended and Restated Articles of Incorporation and Articles of
Redomestication of Northbrook Life Insurance Company (Incorporated herein
by reference to the Company's Form 10-K Annual Report for the year ended
December 31, 1998)
(3)(ii) Amended and Restated By-laws of Northbrook Life Insurance Company
(Incorporated herein by reference to the Company's Form 10-K Annual Report
for the year ended December 31, 1998)
(4) None
(10)(a) Reinsurance Agreement between Northbrook Life Insurance Company and
Allstate Life Insurance Company (Incorporated herein by reference to the
Company's Form S-1 Registration Statement (File No. 033-84480) dated April
1, 1997)
(10)(b) Amendment No. 1 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated June 6, 1991
(10)(c) Amendment No. 2 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated September 28,
1993
(10)(d) Amendment No. 3 to the Reinsurance Agreement between Northbrook Life
Insurance Company and allstate Life Insurance Company, dated February 23,
1995
(10)(e) Amendment No. 4 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Alstate Life Insurance Company, dated June 12, 1995
(10)(f) Amendment No. 5 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated January 26,
1996
(10)(g) Amendment No. 6 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated January 15,
1997
(10)(h) Amendment No. 7 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated October 22,
1998
(10)(i) Modified Coinsurance Agreement between Northbrook Life Insurance Company
and Allstate Life Insurance Company, dated October 20, 1987
(10)(j) Amendment No. 1 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated June 6,
1991
(10)(k) Amendment No. 2 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated June 8,
1995
(10)(l) Amendment No. 3 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated February
23, 1995
(10)(m) Amendment No. 4 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, January 26,
1996
14
<PAGE>
(10)(n) Amendment No. 5 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated January
15, 1997
(10)(o) Amendment No. 6 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated October
22, 1998
(11) Not Required
(15) None
(18) None
(19) None
(22) None
(23) Not required
(24) None
(27) Financial Data Schedule
(b) Reports on 8-K
No reports on Form 8-K were filed during the first quarter of 1999.
15
<PAGE>
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, on the 14th day of May 1999.
NORTHBROOK LIFE INSURANCE COMPANY
---------------------------------
(Registrant)
/s/ LOUIS G. LOWER, II CHAIRMAN OF THE BOARD OF DIRECTORS
- ------------------------ AND CHIEF EXECUTIVE OFFICER
LOUIS G. LOWER, II (Principal Executive Officer)
/s/ KEITH A. HAUSCHILDT ASSISTANT VICE PRESIDENT AND CONTROLLER
- ------------------------ (Chief Accounting Officer)
KEITH A. HAUSCHILDT
16
<PAGE>
Exhibit Index
Exhibit No. Exhibit
(10)(b) Amendment No. 1 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated June 6, 1991
(10)(c) Amendment No. 2 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated September 28,
1993
(10)(d) Amendment No. 3 to the Reinsurance Agreement between Northbrook Life
Insurance Company and allstate Life Insurance Company, dated February 23,
1995
(10)(e) Amendment No. 4 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Alstate Life Insurance Company, dated June 12, 1995
(10)(f) Amendment No. 5 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated January 26,
1996
(10)(g) Amendment No. 6 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated January 15,
1997
(10)(h) Amendment No. 7 to the Reinsurance Agreement between Northbrook Life
Insurance Company and Allstate Life Insurance Company, dated October 22,
1998
(10)(i) Modified Coinsurance Agreement between Northbrook Life Insurance Company
and Allstate Life Insurance Company, dated October 20, 1987
(10)(j) Amendment No. 1 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated June 4,
1991
(10)(k) Amendment No. 2 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated June 8,
1995
(10)(l) Amendment No. 3 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated February
23, 1995
(10)(m) Amendment No. 4 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, January 26,
1996
(10)(n) Amendment No. 5 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated January
15, 1997
(10)(o) Amendment No. 6 to the Modified Coinsurance Agreement between Northbrook
Life Insurance Company and Allstate Life Insurance Company, dated October
22, 1998
(27) Financial Data Scehdule
(10)(b)
AMENDMENT NO. 1
to the
REINSURANCE AGREEMENT
between the
NORTHBROOK LIFE INSURANCE COMPANY, Northbrook, Illinois
(hereinafter "NORTHBROOK")
and
ALLSTATE LIFE INSURANCE COMPANY, Northbrook, Illinois
(hereinafter "ALLSTATE")
IT IS HEREBY AGREED that the Reinsurance Agreement effective December
31, 1987 between NORTHBROOK and ALLSTATE (hereinafter "Coinsurance Agreement"),
is amended as follows:
1. Article II, paragraphs 1(a) and 3 of the Coinsurance Agreement are amended
as set out below:
1. Net benefits are defined as follows:
(a) For an application received, or a policy issued directly by
NORTHBROOK and reinsured under this Agreement, net benefits are
the actual amounts payable by NORTHBROOK to the policyholder,
less any amounts payable to NORTHBROOK by another reinsurer with
respect to the policy. These payments include death benefits,
endowment benefits, annuity benefits, disability benefits,
benefits under accident and health policies, surrender benefits,
and payments on supplementary contracts with and without life
contingencies.
3. With respect to applications received, or policies issued directly or
reinsured by NORTHBROOK, after the Effective Date of this Agreement,
ALLSTATE's liability for net benefits will begin simultaneously with
that of NORTHBROOK and will include any liability NORTHBROOK may incur
as a result of a Temporary Insurance Agreement or Conditional Receipt
issued in conjunction with a policy subject to this Agreement.
2. Article IV of the Coinsurance Agreement, is deleted, and replaced with new
Article IV set our below:
ARTICLE IV
SETTLEMENTS
1. While this Agreement is in effect, NORTHBROOK shall pay to ALLSTATE no
less frequently than weekly, with respect to eligible policies under
this Agreement, a reinsurance premium equal to (or the accounting
equivalent of) the sum of Items (a), (b) and (c) below, less the sum
of Items (d) and (e) below, as applicable for the period since the
date of NORTHBROOK's last payment to ALLSTATE.
(a) Gross premiums (direct and reinsurance assumed) collected by
NORTHBROOK.
(b) Reserves transferred from a NORTHBROOK Separate Account to the
NORTHBROOK General Account.
(c) Policy loan repayments collected by NORTHBROOK with respect to
the policies ceded under this Agreement.
(d) Gross premiums refunded by NORTHBROOK to policyholders.
(e) Reserves transferred from the NORTHBROOK General Account to the
NORTHBROOK Separate Account.
2. While this Agreement is in effect, ALLSTATE shall pay to NORTHBROOK no
less frequently than weekly a benefit and expense allowance equal to
(or the accounting equivalent of) the sum of Items (a), (b), (c), (d)
and (e) below, as applicable for the period since the date of
ALLSTATE's last payment to NORTHBROOK.
(a) Net benefits (as defined in Article II) paid by NORTHBROOK with
respect to the policies ceded under this Agreement.
(b) Commissions and other sales compensation incurred by NORTHBROOK
with respect to the policies ceded under this Agreement.
(c) General insurance expenses incurred by NORTHBROOK with respect to
the policies ceded under this Agreement.
(d) Insurance taxes, licenses and fees (excluding Federal Income Tax)
incurred by NORTHBROOK with respect to the policies ceded under
this Agreement.
(e) Policy loan distributions to policyholders incurred by NORTHBROOK
with respect to the policies ceded under this Agreement.
This Amendment shall be effective as of September 1, 1990.
IN WITNESS WHEREOF, the parties to the Coinsurance Agreement have
caused their respective officers to execute this Amendment on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY
By /s/ Marla Friedman
Title Vice President
Date June 6, 1991
ALLSTATE LIFE INSURANCE COMPANY
By /s/ Barry S. Paul
Title Assistant Vice President &
Corporate Actuary
Date June 4, 1991
<PAGE>
(10)(c)
AMENDMENT No. 2
to the
REINSURANCE AGREEMENT
between
NORTHBROOK LIFE INSURANCE COMPANY, Northbrook, Illinois
(hereinafter "NORTHBROOK")
and
ALLSTATE LIFE INSURANCE COMPANY, Northbrook, Illinois
(hereinafter "ALLSTATE")
IT IS HEREBY AGREED that the 100% Coinsurance Reinsurance Agreement
effective December 31, 1987, between NORTHBROOK and ALLSTATE is amended as
follows:
1. A new Article VIII is added, to read as follows:
Article VIII
CONVERSION TO FUNDS WITHHELD
(a) Effective on the date and at the time of transfer of all or
substantially all Assets to NORTHBROOK pursuant to Section 6(f) of the
Security and Trust Agreement among the parties hereto, Dean Witter
Reynolds, Inc., and Harris Trust and Savings Bank, the reinsurance
hereunder provided shall convert from an automatic coinsurance basis
to a funds withheld basis. The delivery to the Trustee of the
Instructions for Release to Beneficiary, as provided in Section 6(f)
of the Security and Trust Agreement, shall operate as notice to
NORTHBROOK and ALLSTATE of such conversion. NORTHBROOK shall hold all
assets received pursuant to such transfer, including subsequent
additions and investment income, under the Funds Withheld provisions
of this Article.
(b) In the event of a conversion, as provided in Section (a) of this
Article VIII, from an automatic coinsurance to a funds withheld basis,
Article IV, Monthly Settlements, as amended by Amendment No. 1 to this
Reinsurance Agreement, shall be automatically modified to operate as
follows:
(i) In addition to the settlements described in Article IV, which
shall continue, NORTHBROOK shall pay to ALLSTATE no less
frequently than weekly the net investment income, including all
realized capital gains and losses, earned on the assets held in
accordance with Section (a) of this Article VIII.
(ii) Notwithstanding the requirements of Article IV and Section (b)
(i) of this Article VIII, NORTHBROOK shall withhold from ALLSTATE
and hold an amount not greater than the sum A, B and C below,
such sum hereafter referred to as the "Funds Withheld."
A. an amount equal to the net statutory reserves in respect of
the business reinsured;
B. an amount equal to the Interest Maintenance Reserve related
to the Assets held in trust in accordance with Section (a)
of this Article VIII;
C. an amount not greater at any time than 20% of the net
statutory reserves with respect to the business reinsured,
equal to the accumulation, if positive, of the amounts due
ALLSTATE from NORTHBROOK less the amounts due NORTHBROOK
from ALLSTATE, beginning from the date Assets are
transferred to NORTHBROOK pursuant to Section 6(f) of the
Security and Trust Agreement.
(iii)The net periodic settlements described in Article IV
shall be adjusted to provide for Funds Withheld by
reducing the amount paid to ALLSTATE by any increase in
the Funds Withheld for the settlement period or
increasing the amount paid ALLSTATE by any decrease in
the Funds Withheld.
(c) Notwithstanding any of the foregoing provisions of this Article VIII,
NORTHBROOK shall at all times have the right to use any Assets in its
possession for the payment of benefits due and owing under policies
issued by NORTHBROOK.
2. This Reinsurance Agreement is amended further by renumbering current
Article VIII to be Article IX, and each subsequent Article is renumbered
consecutively from such new Article IX.
3. This Reinsurance Agreement is amend further by deleting current Article
XII, entitled DURATION OF AGREEMENT, and inserting, in its place, the
following:
Article XIII
DURATION OF AGREEMENT
This Agreement will be effective as of December 31, 1987, and shall remain
in force so long as any policies issued by NORTHBROOK through Dean Witter
Reynolds, Inc., pursuant to various General Agent's Agreements, remain in
force.
4. This Reinsurance Agreement is amended further by adding an Article XIV, to
read as follows:
Article XIV
ENTIRE AGREEMENT
This Reinsurance Agreement, together with all amendments thereto and the
Security and Trust Agreement to which ALLSTATE and NORTHBROOK are parties
dated as of September 1, 1993, constitutes the entire agreement between
ALLSTATE and NORTHBROOK with respect to the subject matter hereof, and
there are no written or oral understandings, agreements, conditions, or
qualifications to the terms and conditions of this Reinsurance Agreement
which are not fully expressed herein and in such Security and Trust
Agreement.
IN WITNESS HEREOF, the parties to this Agreement have caused this
Amendment No. 2 to be duly executed in duplicate by their respective officers on
the date shown below.
<PAGE>
NORTHBROOK LIFE INSURANCE COMPANY, of Northbrook, Illinois
By: /s/ Marla G. Friedman
Marla G. Friedman
Title: Vice President
Date: September 28, 1993
ALLSTATE LIFE INSURANCE COMPANY, of Northbrook, Illinois
By: /s/ Peter H. Heckman
Peter H. Heckman
Title: Vice President
Date: September 28, 1993
<PAGE>
(10)(d)
AMENDMENT NO. 3 to the
REINSURANCE AGREEMENT
between
NORTHBROOK LIFE INSURANCE COMPANY, Northbrook, Illinois
(hereinafter "Northbrook")
and
ALLSTATE LIFE INSURANCE COMPANY, Northbrook, Illinois
(hereinafter "Allstate")
It Is Hereby Agreed, that the Coinsurance Agreement effective December 31,
1987 between NORTHBROOK and ALLSTATE (hereafter "Agreement"), is amended as
follows:
1.) Schedule A, Eligible and Ineligible Policies, is hereby amended by
deleting said Schedule in its entirety, and replacing it with the following new
Schedule A:
Schedule A
ELIGIBLE AND INELIGIBLE POLICIES
1. This Agreement covers all eligible policies in force in NORTHBROOK (or
no longer in force but with remaining liability to NORTHBROOK) on the
Effective Date of this Agreement, all eligible policies issued
directly by NORTHBROOK after the Effective Date of this Agreement, and
all reinsurance accepted by NORTHBROOK before and after the Effective
Date of this Agreement.
2. An eligible policy is defined as any policy whose reserve is invested,
in whole or in part, in the NORTHBROOK general account, except for
those policies described in paragraph 3, below; provided, however,
that the portion of any such policy which is not so invested is not
covered under this Agreement.
3. No policy which is registered with the Securities and Exchange
Commission and which is sold to a pension plan as the term "pension
plan" is defined under the Employee Retirement Income Security Act of
1974, including, but not limited to, pension plans qualified under
Sections 401(a), 401(k), and 403(b) of the Internal Revenue Code,
shall be considered an eligible policy under this Agreement.
2.) This Amendment shall be effective February 1, 1995.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this
Amendment to be duly executed in duplicate by their respective officers on the
dates shown below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: /s/ M. Friedman By: /s/ Michael J. Velotta
Title: VP Title: VP, General Counsel
& Secy
Date: February 28, 1995 Date: February 23, 1995
<PAGE>
(10)(e)
AMENDMENT #4 TO THE
REINSURANCE AGREEMENT
BETWEEN
NORTHBROOK LIFE INSURANCE COMPANY, NORTHBROOK, ILLINOIS
(HEREINAFTER "NORTHBROOK")
AND
ALLSTATE LIFE INSURANCE COMPANY, NORTHBROOK, ILLINOIS
(HEREINAFTER "ALLSTATE")
WHEREAS, NORTHBROOK and ALLSTATE entered into a Coinsurance Agreement
(hereinafter "Agreement"), having an effective date of December 31, 1987; and,
WHEREAS, the California Insurance Department has determined that various changes
to the Agreement are required under California insurance law; and
WHEREAS, NORTHBROOK and ALLSTATE desire to amend the Agreement with respect to
coverage issued to California residents to meet the California requirements;
NOW, THEREFORE, the Agreement is hereby amended with respect to California
residents, as follows:
1.) Article VII, "Insolvency", hereby amended by deleting said Article in its
entirety, and replacing it with the following new Article VII:
Article VII
INSOLVENCY
1. The portion of any risk or obligation assumed by Allstate, when such
portion is ascertained, shall be payable on demand of Northbrook at the
same time as Northbrook shall pay its net retained portion of such risk or
obligation, and the reinsurance shall be payable by Allstate on the basis
of the liability of Northbrook under the contract or contracts reinsured
under this Agreement without diminution because of the insolvency of
Northbrook. In the event of insolvency and the appointment of a
conservator, liquidator or statutory successor of Northbrook, such portion
shall be payable to such conservator, liquidator or statutory successor
immediately upon demand, on the basis of claims allowed against Northbrook
by any court of competent jurisdiction or, by any conservator, liquidator,
or statutory successor of Northbrook having authority to allow such claims,
without diminution because of such insolvency or because such conservator,
liquidator or statutory successor has failed to pay all or a portion of any
claims. Payment by Allstate as above set forth shall be made directly to
Northbrook or its conservator, liquidator or statutory successor.
2. Further, in the event of the insolvency of Northbrook, the liquidator,
receiver or statutory successor of the insolvent Northbrook shall give
written notice to Allstate of the pendency of an obligation of the
insolvent Northbrook on any policy reinsured, whereupon Allstate may
investigate such claim and interpose at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses which it may
deem available to Northbrook or its liquidator or statutory successor. The
expense thus incurred by Allstate shall be chargeable, subject to court
approval, against the insolvent Northbrook as part of the expenses of
liquidation to the extent of a proportionate share of the benefit which may
accrue to Northbrook solely as a result of the defense undertaken by
Allstate.
2.) Article X, Arbitration, shall be amended to include the following language
at the end of that article:
The decision of the Arbitrators shall be handed down within 45 days of the
date on which the arbitration is concluded.
3.) Article XII, Parties to the Agreement, shall be deleted in its entirety and
shall be replaced with the following language:
This Agreement shall be effective as of December 31, 1987, and will be
unlimited as to its duration; provided, however, it may be terminated with
respect to the reinsurance of new business by either party giving the other
party ninety (90) days prior written notice of termination to the other
party.
4.) Article VII, paragraph 1(c) as amended in Amendment No. 2 shall be deleted
in its entirety and shall be replaced with the following language:
(c) Notwithstanding any of the foregoing provisions of this Article VII,
NORTHBROOK shall at all times have the right to use any Assets in its
possession for the payment of benefits due and owing under policies
issued by NORTHBROOK. Provided, however, NORTHBROOK will not use any
such Assets to satisfy any liabilities under the Northbrook Separate
Account.
5.) In addition, a new Article XIII is added to the Agreement, as follows:
Article XIII
OFFSET
All monies due Northbrook or Allstate under this Agreement shall be offset
against each other dollar for dollar.
6.) Further, a new Article XIV is added to the agreement, as follows:
Article XIV
ENTIRE AGREEMENT
This Agreement constitutes the entire contract between ALLSTATE and NORTHBROOK.
No variation, modification or changes to this Agreement shall be binding unless
in writing and signed by an officer of each party.
This amendment shall be effective June 12, 1995. Except as amended hereby, the
Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
Northbrook Life Insurance Company
By /s/ Sarah R. Donahue
Title First Vice President
Date June 12, 1995
Allstate Life Insurance Company
By /s/ John R. Hunter
Title AVP
Date June 12, 1995
<PAGE>
(10)(f)
Amendment Number 5
To the Reinsurance Agreement
Effective December 31, 1987
between
Northbrook Life Insurance Company
(hereinafter called ANorthbrook@)
and
Allstate Life Insurance Company
(hereinafter called AAllstate@)
It Is Hereby Agreed, that the Reinsurance Agreement effective December 31, 1987
between NORTHBROOK and ALLSTATE (hereafter AAgreement@), is amended as provided
below:
1. Effective January 1, 1995, Article IV is hereby amended by adding the
following new sub-paragraph 3:
3. ALLSTATE shall pay to NORTHBROOK, no less frequently than annually,
any taxes incurred by NORTHBROOK as a result of Section 848 of the
Internal Revenue Code which concerns capitalization of policy
acquisition costs.
2. Effective January 1, 1993, Article IV is hereby amended by adding the
following new sub-paragraph 4:
4. ALLSTATE and NORTHBROOK agree to an election under Treasury
Regulations 1-848-2(g)(8), as follows:
a) For each taxable year under this Agreement, the party with net
positive consideration, as defined in the regulations promulgated
under Treasury Code Section 848, will capitalize specified policy
acquisition expenses with respect to this Agreement without
regard to the general deductions limitation of Section 848(c)(1);
(b) NORTHBROOK and ALLSTATE agree to exchange information pertaining
to the amount of net consideration for all reinsurance agreements
in force between them to ensure consistency for purposes of
computing specified policy acquisition expenses. NORTHBROOK and
ALLSTATE shall agree on the amount of such net consideration for
each taxable year no later than the May 1 following the end of
such year.
(c) This election shall be effective for 1993 and for all subsequent
taxable years for which this Agreement remains in effect.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Sarah R. Donahue By: C. Nelson Strom
Title: Vice President Title: Assistant Vice President
Date: January 26, 1996 Date: January 26, 1996
<PAGE>
(10)(g)
Amendment No. 6 to the
Reinsurance Agreement
between
Northbrook Life Insurance Company, Northbrook, Illinois
(hereinafter ANorthbrook@)
and
Allstate Life Insurance Company, Northbrook, Illinois
(hereinafter AAllstate@)
It Is Hereby Agreed, that the Coinsurance Agreement effective December 31, 1987
between NORTHBROOK and ALLSTATE (hereafter AAgreement@), is amended as follows:
1.) Schedule A, Eligible and Ineligible Policies, is hereby amended by
deleting said Schedule in its entirety, and replacing it with the following new
Schedule A:
Schedule A
ELIGIBLE AND INELIGIBLE POLICIES
1. This Agreement covers all eligible policies in force in
NORTHBROOK (or no longer in force but with remaining liability
to NORTHBROOK) on the Effective Date of this Agreement, all
eligible policies issued directly by NORTHBROOK after the
Effective Date of this Agreement, and all reinsurance accepted
by NORTHBROOK before and after the Effective Date of this
Agreement.
2. An eligible policy is defined as any policy whose reserve is
invested, in whole or in part, in the NORTHBROOK general
account, provided, however, that the portion of any such
policy which is not so invested is not covered under this
Agreement.
2.) This Amendment shall be effective December 30, 1996.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Sarah R. Donahue By: C. Nelson Strom
Title: Assistant Vice President Title: Assistant Vice President and
Corporate Actuary
Date: January 15, 1997 Date: January 15, 1997
<PAGE>
(10)(h)
Amendment Number 7
To the Reinsurance Agreement
Effective December 31, 1987
between
Northbrook Life Insurance Company
(hereinafter called ANorthbrook@)
and
Allstate Life Insurance Company
(hereinafter called AAllstate@)
WHEREAS, NORTHBROOK and ALLSTATE entered into a Reinsurance Agreement effective
December 31, 1987 (hereinafter "Agreement"); and
WHEREAS, the parties now believe that the Agreement does not accurately reflect
their existing practices relating to settlements for certain tax benefits and
liabilities;
WHEREAS, the parties desire to amend the Agreement to reflect the existing
practices with respect to such tax settlements;
NOW, THEREFORE, IT IS HEREBY AGREED, that the Agreement is amended as provided
below.
1.) Article IV, paragraph 2, is amended by replacing subparagraph (d)
with a new subparagraph (d) as follows:
(d) Insurance taxes, licenses and fees (excluding Federal Income
Tax that is not related to the contracts reinsured under this
Agreement), incurred by NORTHBROOK with respect to the contracts
reinsured under this Agreement.
2.) Article IV is further amended by adding a new paragraph 3, as
follows:
3. No less frequently than quarterly, ALLSTATE will calculate the
amount of federal and state income tax liabilities incurred by
NORTHBROOK for the quarter related to the contracts reinsured under
this Agreement, and the amount of federal and state income tax
benefits earned by NORTHBROOK for the quarter related to the contracts
reinsured under this Agreement. If tax liabilities exceed tax
benefits, the difference, plus a gross-up for additional federal and
state income taxes, will be paid by ALLSTATE to NORTHBROOK. If tax
benefits exceed tax liabilities, the difference, plus a gross-up for
additional federal and state income taxes, will be paid by NORTHBROOK
to ALLSTATE.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Sarah R. Donahue By: C. Nelson Strom
Title: Assistant Vice President Title: AVP
Date: October 22, 1998 Date: October 22, 1998
<PAGE>
(10)(i)
REINSURANCE AGREEMENT
between
NORTHBROOK LIFE INSURANCE COMPANY, NORTHBROOK, ILLINOIS
(hereinafter "NORTHBROOK")
and
ALLSTATE LIFE INSURANCE COMPANY, NORTHBROOK, ILLINOIS
(hereinafter "ALLSTATE")
Article I
BASIS of REINSURANCE
1. ALLSTATE will indemnify and NORTHBROOK will automatically reinsure with
ALLSTATE, according to the terms and conditions hereof, the net liability
for contracts in force (or no longer in force but with remaining liability)
on the Effective Date and contracts directly issued subsequent to the
Effective Date by NORTHBROOK on the contracts listed in Schedule A.
2. The indemnity reinsurance provided hereunder shall be on a modified
coinsurance basis. NORTHBROOK shall retain, maintain, and own all assets
held in relation to the Reserve, as defined in Article III.
3. In no event will reinsurance under this Agreement be in force with respect
to a contract of NORTHBROOK unless such contract is in force.
Article II
LIABILITY of ALLSTATE
The liability of ALLSTATE with respect to any contract reinsured hereunder will
begin simultaneously with that of NORTHBROOK, but not prior to the Effective
Date of this Agreement. ALLSTATE's liability with respect to any contract
reinsured hereunder will terminate on the date NORTHBROOK's liability on such
contract terminates or the date this Agreement is terminated, whichever is
earliest. However, termination of this Agreement will not terminate ALLSTATE's
liability for benefit payments incurred prior to the date of termination.
<PAGE>
Article III
INITIAL CONSIDERATION
1. On the Effective Date of this Agreement, NORTHBROOK will pay ALLSTATE an
initial consideration which shall be equal to (or the accounting equivalent
of) one hundred (100) percent of the Reserve, as defined in Paragraph 2 of
this Article III, as of the Effective Date of this Agreement, with respect
to the contracts reinsured hereunder.
2. For the purpose of this Agreement, the term "Reserve" will be the total
liability for the reinsured contracts corresponding to the sum of the
amounts on page 3, line 18 of NORTHBROOK's Statutory Separate Account
(excluding Variable Life) Statement and page 3, line 12 of NORTHBROOK's
Statutory Variable Life Separate Account Statement.
Article IV
MONTHLY SETTLEMENTS
1. Within thirty (30) days following the end of each calendar month in which
this Agreement is in effect, NORTHBROOK shall pay to ALLSTATE, with respect
to contracts reinsured under this Agreement, a reinsurance premium equal to
(or the accounting equivalent of) the sum of Items (a) and (b) below less
the sum of Items (c), (d) and (e) below.
(a) Gross premiums (direct and reinsurance assumed) collected by
NORTHBROOK during the month.
(b) Reserves transferred from the NORTHBROOK General Account to a
NORTHBROOK Separate Account during the month.
(c) Gross premiums refunded by NORTHBROOK during the month to
policyholders.
(d) Reserves transferred from a NORTHBROOK Separate Account to the
NORTHBROOK General Account during the month.
(e) Reinsurance premiums paid by NORTHBROOK during the month to reinsurers
other than ALLSTATE.
2. Within thirty (30) days following the end of each calendar month in which
this Agreement is in effect, ALLSTATE shall pay to NORTHBROOK a benefit and
expense allowance equal to (or the accounting equivalent of) the sum of
Items (a), (b), (c) and (d) below. (a) Net benefits (as defined in
Paragraph 3 of this Article IV) paid by NORTHBROOK during the month with
respect to the contracts reinsured under this Agreement.
(b) Commissions and other sales compensation incurred by NORTHBROOK during
the month with respect to the contracts reinsured under this
Agreement.
(c) General insurance expenses incurred by NORTHBROOK during the month
with respect to the contracts reinsured under this Agreement.
(d) Insurance taxes, licenses and fees (excluding Federal Income Tax)
incurred by NORTHBROOK during the month with respect to the contracts
reinsured under this Agreement.
3. Net Benefits are defined as follows:
(a) For a contract issued directly by NORTHBROOK and reinsured under this
Agreement, net benefits are the actual amounts payable by NORTHBROOK
to the policyholder, less any amounts payable to NORTHBROOK by another
reinsurer with respect to the contract. These payments include death
benefits, endowment benefits, annuity benefits, disability benefits,
benefits under A & H policies, surrender benefits and payments on
supplementary contracts with and without life contingencies.
(b) For contracts reinsured by NORTHBROOK and retroceded under this
Agreement, net benefits are the actual amounts payable by NORTHBROOK
to the ceding company with respect to the contract reinsured by
NORTHBROOK. These payments will include commissions and expense
allowances on reinsurance accepted.
Article V
MONTHLY RESERVE ADJUSTMENTS
1. Simultaneously with the payment of the initial consideration described in
Article III, Paragraph I, ALLSTATE will pay to NORTHBROOK an initial
reserve adjustment in an amount that is equal to the Reserve on the
Effective Date of this Agreement with respect to the contracts reinsured
hereunder.
2. Within thirty (30) days following the end of each calendar month in which
this Agreement is in effect, a reserve adjustment equal to (or the
accounting equivalent of) the amount defined below shall be paid.
Let:
RC= The Reserve change from the end of the prior
accounting period to the end of the current
accounting period for the reinsured contracts
corresponding to the sum of the amounts on page 4,
lines 9, 10, 10A and 11 of NORTHBROOK's Statutory
Separate Account (excluding Variable Life) Statement
and page 4, lines 14 and 15 of NORTHBROOK's Statutory
Variable Life Separate Account Statement.
NII= The net investment income corresponding to the sum of
the amounts on page 4, line 2 of NORTHBROOK's
Statutory Separate Account (excluding Variable Life)
Statement and page 4, lines 4 and 5 of NORTHBROOK's
Statutory Variable Life Separate Account Statement.
If RC is greater than NII then a reserve adjustment of RC-NII is payable by
ALLSTATE to NORTHBROOK.
If NII is greater than RC, then a reserve adjustment of NII-RC is payable
by NORTHBROOK to ALLSTATE.
Article VI
STATEMENT REFERENCES
All references in this Agreement are to the 1986 NAIC Statutory General and
Separate Account Statements of NORTHBROOK, as filed with the Illinois Insurance
Department. Appropriate adjustments will be made for changes, if any, in the
NAIC Statutory General and Separate Account Statements on or after the Effective
Date.
Article VII
OVERSIGHTS
ALLSTATE shall be bound as NORTHBROOK is bound, and it is expressly understood
and agreed that if failure to reinsure or failure to comply with any terms of
this Agreement is shown to be unintentional and the result of misunderstanding
or oversight on the part of either NORTHBROOK or ALLSTATE, both NORTHBROOK and
ALLSTATE shall be restored to the positions they would have occupied had no such
error or oversight occurred.
Article VIII
INSPECTION OF RECORDS
NORTHBROOK and ALLSTATE shall have the right, at any reasonable time, to examine
at the office of the other, any books, documents, reports or records which
pertain in any way to the contracts reinsured under this Agreement.
Article IX
INSOLVENCY
1. In the event of the insolvency of NORTHBROOK, reinsurance hereunder is
payable by ALLSTATE on the basis of its liability hereunder without
diminution because of the insolvency of NORTHBROOK.
2. Further, in the event of the insolvency of NORTHBROOK, the liquidator,
receiver or statutory successor of the insolvent NORTHBROOK shall give
written notice to ALLSTATE of the pendency of any obligation of the
insolvent NORTHBROOK on any policy reinsured, whereupon ALLSTATE may
investigate such claim and interpose at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses which it may
deem available to NORTHBROOK or its liquidator or statutory successor. The
expense thus incurred by ALLSTATE shall be chargeable, subject to court
approval, against the insolvent NORTHBROOK as part of the expenses of
liquidation to the extent of a proportionate share of the benefit which may
accrue to NORTHBROOK solely as a result of the defense undertaken by
ALLSTATE.
3. All moneys due NORTHBROOK or ALLSTATE under this Agreement shall be offset
against each other, dollar for dollar, regardless of any insolvency of
either party.
Article X
ARBITRATION
Any dispute arising with respect to this Agreement which is not settled by
mutual agreement of the parties shall be referred to arbitration. Within twenty
(20) days from receipt of written notice from one party that an arbitrator has
been appointed, the other party shall also name an arbitrator. The two
arbitrators shall choose a third arbitrator and shall forthwith notify the
contracting parties of such choice. Each arbitrator shall be a present or former
officer of a life insurance company and should have no present or past
affiliation with this Agreement or with either party. The arbitrators shall
consider this Agreement as an honorable engagement rather than merely as a legal
obligation, and shall be relieved of all judicial formalities. The decision of
the arbitrators shall be final and binding upon the parties hereto. Each party
shall bear the expenses of its own arbitrator and shall jointly and equally bear
the expenses of the third arbitrator and of the arbitration. Any such
arbitration shall take place at the Home Office of NORTHBROOK, unless some other
location is mutually agreed upon.
Article XI
PARTIES TO AGREEMENT
This Agreement is solely between NORTHBROOK and ALLSTATE. The acceptance of
reinsurance hereunder shall not create any right or legal relation whatever
between ALLSTATE and any party in interest under any contract of NORTHBROOK
reinsured hereunder. NORTHBROOK shall be and remain solely liable to any
insured, contract owner, or beneficiary under any contract reinsured hereunder.
This Agreement will be effective as of December 31, 1987, and will be unlimited
as to its duration; provided, however, it may be terminated with respect to the
reinsurance of new business by either party giving the other party sixty (60)
days prior written notice of termination to the other party.
IN WITNESS HEREOF, the parties to this Agreement have caused it to be duly
executed in duplicate by their respective officers on the dates shown below.
NORTHBROOK LIFE INSURANCE COMPANY of Northbrook, Illinois
By /s/ James D. Clements
Title Assistant Vice President, Assistant Secretary and General Counsel
Date October 20, 1987
ALLSTATE LIFE INSURANCE COMPANY of Northbrook, Illinois
By /s/ Joseph Haas
Title Vice President and Controller
Date October 20, 1987
<PAGE>
REINSURANCE AGREEMENT
between
NORTHBROOK LIFE INSURANCE COMPANY, NORTHBROOK, ILLINOIS
(hereinafter "NORTHBROOK")
and
ALLSTATE LIFE INSURANCE COMPANY, NORTHBROOK, ILLINOIS
(hereinafter "ALLSTATE")
SCHEDULE A
CONTRACTS SUBJECT TO REINSURANCE UNDER THIS TREATY
Any contract whose reserve is invested, in whole or in part, in any account
designated as a NORTHBROOK Separate Account shall be reinsured under this
Agreement; provided, however, that the portion of any such contract which is not
so invested is not covered under this Agreement.
<PAGE>
(10)(j)
Amendment # 1 to the
Reinsurance Agreement
between
Northbrook Life Insurance Company, Northbrook, Illinois
(hereinafter "Northbrook")
and
Allstate Life Insurance Company, Northbrook, Illinois
(hereinafter "Allstate")
IT IS HEREBY AGREED, that the Reinsurance Agreement effective December 31, 1987
between NORTHBROOK and ALLSTATE (hereinafter "Modified Coinsurance Agreement"),
amended as follows:
1. Article IV, paragraphs 1 and 2 of the Modified Coinsurance Agreemen, are
deleted, and replaced with new paragraphs 1 and 2 set out below:
1. While this agreement is in effect, NORTHBROOK shall pay to ALLSTATE on
a daily basis, with respect to eligible policies reinsured under this
Agreement, a reinsurance premium equal to (or the accounting
equivalent of) the sum of Items (a) and (b) below less the sum of
Items (c) and (d)below.
(a) Gross premiums (direct and reinsurance assumed) collected by
NORTHBROOK.
(b) Reserves transferred from the NORTHBROOK General Account to a
NORTHBROOK Separate Account.
(c) Gross premiums refunded by NORTHBROOK to policyholders.
(d) Reserves transferred from a NORTHBROOK Separate Account to the
NORTHBROOK General Account during the month.
2. While this Agreement is in effect, ALLSTATE shall pay to NORTHBROOK on
a daily basis a benefit and expense allowance equal to (or the
accounting equivalent of) the sum of Items (a), (b), (c) and (d)
below.
(a) Net benefits (as defined in Paragraph 3 of this Article IV) paid
by NORTHBROOK with respect to the contracts reinsured under this
Agreement.
(b) Commissions and other sales compensation incurred by NORTHBROOK
during the month with respect to the contracts reinsured under
this Agreement.
(c) General insurance expenses incurred by NORTHBROOK during the
month with respect to the contracts reinsured under this
Agreement.
(d) Insurance taxes, licenses and fees (excluding Federal Income Tax)
incurred by NORTHBROOK during the month with respect to the
contracts reinsured under this Agreement.
2. Article IV is further amended by addidng new sub-paragraph 4 set out
below:
4. ALLSTATE shall pay to NORTHBROOK, no less frequently than
annually, any taxes incurred by NORTHBROOK as a result of
Section 848 of the Internal Revenue Code which concerns
capitalization of policy acquisition costs.
3. Article V, paragraph 2, is deleted, and replaced with the folowing
new paragraph 2:
2. While this Agreement is in effect, on a daily basis a
reserve adjustment equal to (or the accounting equivalent
of) the amount defined below shall be paid.
Let:
RC= The Reserve change from the end of the prior
accounting period to the end of the current
accounting period for the reinsured contracts
corresponding to the sum of the amounts on page 4,
lines 10, 11, 12 and 13 of NORTHBROOK's Statutory
Separate Account (excluding Variable Life) Statement.
NII= The net investment income corresponding to the sum of
the amounts on page 4, line 2 of NORTHBROOK's
Statutory Separate Account (excluding Variable Life)
Statement, minus
interest income on NORTHBROOK's capital investment.
If RC is greater than NII then a reserve adjustment of RC-NII is
payable by ALLSTATE to NORTHBROOK.
If NII is greater than RC, then a reserve adjustment of NII-RC is
payable by NORTHBROOK to ALLSTATE.
This Amendment shall be effective as of September 1, 1990.
In Witness Whereof, the parties to the Agreement have caused this Amendment to
be duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Marla Friedman By: Barry S. Paul
Title: Vice President Title: Assistant Vice President and
Corporate Actuary
Date: June 6, 1991 Date: June 4, 1991
<PAGE>
(10)(k)
Amendment # 2 to the
Reinsurance Agreement
between
Northbrook Life Insurance Company, Northbrook, Illinois
(hereinafter "Northbrook")
and
Allstate Life Insurance Company, Northbrook, Illinois
(hereinafter "Allstate")
Whereas, Northbrook and Allstate entered into a Modified Coinsurance Agreement
(hereinafter "Agreement") having an effective date of December 31, 1987; and,
Whereas, the California Insurance Department has determined that various changes
to the Agreement are required under California insurance law; and,
Whereas, Northbrook and Allstate desire to amend the Agreement with respect to
coverage issued to California residents to meet the California requirements;
Now Therefore, the Agreement is hereby amended with respect to California
residents, as follows;
1.) Article IX, "Insolvency", is hereby amended by deleting said Article
in its entirety, and replacing it with the following new Article IX.
Article IX
INSOLVENCY
1. The portion of any risk or obligation assumed by Allstate, when such
portion is ascertained, shall be payable on demand of Northbrook at the
same time as Northbrook shall pay its net retained portion of such risk or
obligation, and the reinsurance shall be payable by Allstate on the basis
of the liability of Northbrook under the contract or contracts reinsured
under this Agreement without diminution because of the insolvency of
Northbrook. In the event of insolvency and the appointment of a
conservator, liquidator or statutory successor of Northbrook, such portion
shall be payable to such conservator, liquidator or statutory successor
immediately upon demand, on the basis of claims allowed against Northbrook
by any court of competent jurisdiction or, by any conservator, liquidator,
or statutory successor of Northbrook having authority to allow such claims,
without diminution because of such insolvency or because such conservator,
liquidator or statutory successor has failed to pay all or a portion of any
claims. Payments by Allstate as above set forth shall be made directly to
Northbrook or its conservator, liquidator or statutory successor.
2. Further, in the event of the insolvency of Northbrook, the liquidator,
receiver or statutory successor of the insolvent Northbrook shall give
written notice to Allstate of the pendency of an obligation of the
insolvent Northbrook on any policy reinsured, whereupon Allstate may
investigate such claim and interpose at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses which it may
deem available to Northbrook or its liquidator or statutory successor. The
expense thus incurred by Allstate shall be chargeable, subject to court
approval, against the insolvent Northbrook as part of the expenses of
liquidation to the extent of a proportionate share of the benefit which may
accrue to Northbrook solely as a result of the defense undertaken by
Allstate
2.) Article X, Arbitration, shall be amended to include the following
language at the end of that article:
The decision of the Arbitrators shall be handed down within 45 days of
the date on which the arbitration is concluded.
3.) The second paragraph of Article XI, Parties to the Agreement, shall be
deleted in its entirety and shall be replaced with the following
language:
This Agreement shall be effective as of December 31, 1987, and will be
unlimited as to its duration; provided, however, it may be terminated
with respect to the reinsurance of new business by either party giving
the other party ninety (90) days prior written notice of termination
to the other party.
4.) In addition, a new Article XII is added to the Agreement, as follows:
Article XII
OFFSET
All monies due Northbrook or Allstate under this Agreement shall be
offset against each other dollar for dollar.
5.) Further, a new Article XIII is added to the agreement, as follows:
Article XIII
ENTIRE AGREEMENT
This Agreement constitutes the entire contract between ALLSTATE and
NORTHBROOK. No variation, modification or changes to this Agreement
shall be binding unless in writing and signed by an officer of each
party.
6.) Finally, the definition of "RC" in Article V, paragraph 2, is deleted,
and replaced with the following language:
RC= The Reserve change from the end of the prior accounting period to
the end of the current accounting period for the reinsured contracts
corresponding to the sum of the amounts on page 4, lines 10, 11, 12
and 13 of NORTHBROOK's Statutory Separate Account Statement. An
accounting period shall be defined as one day.
This Amendment shall be effective on June 8, 1995. Except as amended hereby, the
Agreement shall remain unchanged.
In Witness Hereof, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Marla Friedman By: Michael J. Velotta
Title: Vice President Title: VP, Secretary and General Counsel
Date: June 8, 1995 Date: June 8, 1995
<PAGE>
(10)(l)
Amendment No. 3 to the
Reinsurance Agreement
between
Northbrook Life Insurance Company, Northbrook, Illinois
(hereinafter "Northbrook")
and
Allstate Life Insurance Company, Northbrook, Illinois
(hereinafter "Allstate")
It Is Hereby Agreed, that the Modified Coinsurance Agreement effective December
31, 1987 between NORTHBROOK and ALLSTATE (hereafter "Agreement"), is amended as
follows;
1.) Schedule A, Contacts Subject to Reinsurance Under This Treaty, is
hereby amended by deleting said Schedule in its entirety, and
replacing it with the following new Schedule A:
Schedule A
CONTRACTS SUBJECT TO REINSURANCE UNDER THIS TREATY
I. Any contract whose reserve is invested, in whole or in
part, in any account designated as a NORTHBROOK Separate
Account shall be reinsured under this Agreement, provided,
however, that the portion of any such contract which is not
invested is not covered under this Agreement.
II. Any contract registered with the Securities and Exchange
Commission which is sold to a pension plan as the term
"pension plan" is defined under the Employee Retirement Income
and Security Act of 1974, including, but not limited to,
pension plans qualified under SS. 401(a), 401(k) and 403 (b)
of the Internal Revenue Code.
2.) This Amendment shall be effective February 1, 1995.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Marla Friedman By: Michael J. Velotta
Title: Vice President Title: Vice President, General Counsel and
Secretary
Date: February 28, 1995 Date: February 23, 1995
<PAGE>
(10)(m)
Amendment Number 4
To the Reinsurance Agreement
Effective December 31, 1987
between
Northbrook Life Insurance Company
(hereinafter called "Northbrook")
and
Allstate Life Insurance Company
(hereinafter called "Allstate")
It Is Hereby Agreed, that the Reinsurance Agreement effective December 31, 1987
between NORTHBROOK and ALLSTATE (hereafter "Agreement"), is amended as provided
below:
Effective January 1, 1993, Article IV is hereby amended by adding the following
new sub-paragraph 5:
5. ALLSTATE and NORTHBROOK agree to an election under Treasury Regulations
1-848-2(g)(8), as follows:
a) For each taxable year under this Agreement, the party with net
positive consideration, as defined in the regulations promulgated
under Treasury Code Section 848, will capitalize specified policy
acquisition expenses with respect to this Agreement without regard to
the general deductions limitation of Section 848(c)(1);
(b) NORTHBROOK and ALLSTATE agree to exchange information pertaining to
the amount of net consideration for all reinsurance agreements in
force between them to ensure consistency for purposes of computing
specified policy acquisition expenses. NORTHBROOK and ALLSTATE shall
agree on the amount of such net consideration for each taxable year no
later than the May 1 following the end of such year.
(c) This election shall be effective for 1993 and for all subsequent
taxable years for which this Agreement remains in effect.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Sarah R. Donahue By: C. Nelson Strom
Title: Vice President Title: Assistant Vice President
Date: January 26, 1996 Date: January 26, 1996
<PAGE>
(10)(n)
Amendment No. 5 to the
Reinsurance Agreement
between
Northbrook Life Insurance Company, Northbrook, Illinois
(hereinafter "Northbrook")
and
Allstate Life Insurance Company, Northbrook, Illinois
(hereinafter "Allstate")
It Is Hereby Agreed, that the Modified Coinsurance Agreement effective December
31, 1987 between NORTHBROOK and ALLSTATE (hereafter "Agreement"), is amended as
follows:
1.) Schedule A, Contacts Subject to Reinsurance Under This Treaty,
is hereby amended by deleting said Schedule in its entirety,
and replacing it with the following new Schedule A:
Schedule A
CONTRACTS SUBJECT TO REINSURANCE UNDER THIS TREATY
Any contract whose reserve is invested, in whole or in part,
in any account designated as a NORTHBROOK Separate Account
shall be reinsured under this Agreement, provided, however,
that the portion of any such contract which is not so invested
is not covered under this Agreement.
2.) This Amendment shall be effective December 30, 1996.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Sarah R. Donahue By: C. Nelson Strom
Title: Assistant Vice President Title: Assistant Vice President and
Corporate Actuary
Date: January 15, 1997 Date: January 15, 1997
<PAGE>
(10)(o)
Amendment Number 6
To the Reinsurance Agreement
Effective December 31, 1987
between
Northbrook Life Insurance Company
(hereinafter called ANorthbrook@)
and
Allstate Life Insurance Company
(hereinafter called AAllstate@)
WHEREAS, NORTHBROOK and ALLSTATE entered into a Reinsurance Agreement effective
December 31, 1987 (hereinafter "Agreement"); and
WHEREAS, the parties now believe that the Agreement does not accurately reflect
their existing practices relating to settlements for certain tax benefits and
liabilities; and
WHEREAS, the parties desire to amend the Agreement to reflect the existing
practices with respect to such tax settlements;
NOW, THEREFORE, IT IS HEREBY AGREED, that the Agreement is amended as provided
below.
1.) Article IV, paragraph 2, is amended by replacing subparagraph (d) with
a new subparagraph (d) as follows:
(d) Insurance taxes, licenses and fees (excluding Federal Income Tax
that is not related to the contracts reinsured under this
Agreement), incurred by NORTHBROOK with respect to the contracts
reinsured under this Agreement.
2.) Article IV is further amended by adding a new paragraph 5, as follows:
5. No less frequently than quarterly, ALLSTATE will calculate the
amount of federal and state income tax liabilities incurred by
NORTHBROOK for the quarter related to the contracts reinsured
under this Agreement, and the amount of federal and state income
tax benefits earned by NORTHBROOK for the quarter related to the
contracts reinsured under this Agreement. If tax liabilities
exceed tax benefits, the difference, plus a gross-up for
additional federal and state income taxes, will be paid by
ALLSTATE to NORTHBROOK. If tax benefits exceed tax liabilities,
the difference, plus a gross-up for additional federal and state
income taxes, will be paid by NORTHBROOK to ALLSTATE.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
NORTHBROOK LIFE INSURANCE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: Sarah R. Donahue By: C. Nelson Strom
Title: Assistant Vice President Title: AVP
Date: October 22, 1998 Date: October 22, 1998
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND> THIS SCHEUDLE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
STATEMENTS OF FINANCIAL POSITION AT MARCH 31, 1999; STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999; AND STATEMENTS OF CASH FLOWS THREE MONTHS
ENDED MARCH 31, 1999.
</LEGEND>
<CIK> 0000716791
<NAME> NORTHBROOK LIFE INSURANCE COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 86,761
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 91,247
<CASH> 0
<RECOVER-REINSURE> 2,107,850
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 9,424,777
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 145,061
<POLICY-HOLDER-FUNDS> 1,962,893
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,500
<OTHER-SE> 85,098
<TOTAL-LIABILITY-AND-EQUITY> 9,424,777
0
<INVESTMENT-INCOME> 1,487
<INVESTMENT-GAINS> 389
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 1,876
<INCOME-TAX> 656
<INCOME-CONTINUING> 1,220
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,220
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
