the reinsurance agreements and security documents

The Reinsurance Agreements and Security Documents

Contentspage

Deed of Fixed Charge 2 - 44

Deed of Floating Charge 45 - 59

EFL Retrocession Agreement 60 - 85

GSMWPF Reinsurance Agreement 86 - 132

GWPF Reinsurance Agreement 133 - 177

HWPF Reinsurance Agreement 178 - 226

DATED _____________

STANDARD LIFE ASSURANCE LIMITED as Chargor

- and -

STANDARD LIFE INTERNATIONAL DAC as Secured Party

__________________________________

DEED OF FIXED CHARGE

in relation to certain Securities Accounts and Cash Accounts

at Citibank, N.A., London branch and certain contractual interests

__________________________________

Slaughter and May One Bunhill Row

London EC1Y 8YY (SRBP/JNXC)

551230743

6/34/001

Contents

Clause Page

1. Definitions and Interpretation 1

2. Effective Date 8

3. Covenant to pay Secured Liabilities 8

4. Charge 8

5. Representations and warranties of the Chargor 9

6. Undertakings of the Chargor 10

7. Perfection of Security and Certain Undertakings 10

8. Top-up and Withdrawal 13

9. Additional Property 14

10. Control and Enforcement 14

11. Powers of Receiver and Secured Party 17

12. Protection of the Secured Party and Receiver 18

13. Role of Secured Party 18

14. Costs, Expenses and Liabilities 19

15. Application of sums realised – order of application 19

16. Right of Appropriation 19

17. Further Action 20

18. Power of attorney 21

19. Saving Provisions 22

20. Secured Party’s undertaking 23

21. Release 23

22. Covenants relating to Custody Agreement 24

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23. Additional Security 29

24. Third Party Rights 30

25. Variations and assignment 30

26. Forbearance and illegality 30

27. Demands, notices etc 30

28. Execution as a Deed 32

29. Counterparts 32

30. Jurisdiction 32

31. Governing law 32

Schedule 1 Notice of Enforcement 35

Schedule 2 Derivative Contracts 37

Schedule 3 Form of Notice to Counterparties and Acknowledgement 38

6/34/003

THIS DEED is made on [ ]

BETWEEN:

(1) STANDARD LIFE ASSURANCE LIMITED, a limited company registered in Scotland with company registration number SC286833 and with its registered office at Standard Life House, 30 Lothian Road, Edinburgh, EH1 2DH (the “Chargor”); and

(2) STANDARD LIFE INTERNATIONAL DAC a designated activity company incorporated in the Republic of Ireland under the registered number 408507 and with its registered office at 90 St. Stephen’s Green, Dublin 2, Ireland (the “Secured Party”),

(each a “Party” and together the “Parties”).

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Deed:

“Account Control Agreement” means the account control agreement entered into on or about the date of this Deed by the Chargor, the Secured Party and the Custodian.

“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

“Benchmark Credit Rating Criteria” means in respect of any person, at any time, that such person has a long term credit rating (as rated by Moody’s, Fitch or Standard & Poor’s) equal to or better than the long-term credit rating (as rated by Moody’s, Fitch or Standard & Poor’s) of any one of the four largest professional custodians (based on such entities custodial activities in England) established or operating a branch in England at that time as determined by the Secured Party acting reasonably.

“Brexit Scheme” means the insurance business transfer scheme, sanctioned by the Court of Session in Edinburgh under Part VII of the Financial Services and Markets Act 2000 on or around the date of this Deed, to transfer the euro denominated business of the Chargor from the Chargor to the Secured Party.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Dublin, Edinburgh and Frankfurt.

“Cash” means any cash, whether representing capital or income in any currency (whether arising out of or in connection with the securities in the Securities Accounts, the Derivative Contracts or otherwise).

“Cash Account” means the cash account(s) maintained by the Custodian pursuant to the Custody Agreement and the Account Control Agreement in the name of the Chargor and designated [•] with the sort code [•] and the account number [•] (or as re-designated or

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re-numbered from time to time, or such other substituted or additional accounts as may be from time to time established pursuant to Clause 22.1 or 22.4 or otherwise with the prior written agreement of the Secured Party), together with all balances from time to time being held in or standing to the credit of the Cash Accounts, all interest from time to time accruing thereon and all Related Rights. [Note: TBD whether schedule of account details necessary.]

“Charged Assets” has the meaning given to the term in Clause 4 (Charge).

“Clearing Agreement” means the deemed clearing agreement (constituted of Barclays Bank plc’s terms of business and an associated agency letter) which applies between the Chargor and Barclays Bank plc pursuant to an agency letter dated [•] and listed in Schedule 2.

“Custodian” means Citibank, N.A. acting through its branch located in London having its principal place of business at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, in its capacities as custodian and as bank under the Custody Agreement, or such other person as may from time to time be appointed as custodian of the Custodian Accounts in accordance with Clause 22.1 or 22.4.

“Custodian Accounts” means each of the Cash Accounts and the Securities Accounts.

“Custody Agreement” means the custody agreement dated on or about the date of this Deed made between the Custodian and the Chargor and identified as [•], as varied from time to time or such other custody agreement as may be entered into by the Chargor and a new custodian in accordance with Clause 22.1 or 22.4.

“Deed of Floating Charge” means the deed of floating charge dated [•] between the Chargor as chargor and the Secured Party as secured party.

“Derivative Contracts” means the ISDA master agreements and other derivative arrangements (including the Clearing Agreement) specified in Schedule 2 and any additional ISDA master agreements or other derivative arrangements that the Chargor and the Secured Party specify from time to time as ISDA master agreements or other derivative arrangements which shall be “Derivative Contracts” for the purposes of this Deed, and each transaction entered into under any such ISDA master agreement or other derivative arrangement (including, for the avoidance of doubt, credit support annex or credit support deed). [Note: To be confirmed in conjunction with engagement with counterparties.]

“Eligible Collateral” means any (i) HWPF Eligible Collateral as defined in Schedule 1 of the HWPF Reinsurance Agreement, (ii) GWPF Eligible Collateral as defined in Schedule 1 of the GWPF Reinsurance Agreement, and (iii) GSMWPF Eligible Collateral as defined in Schedule 1 of the GSMWPF Reinsurance Agreement.

An “Enforcement Event” means the occurrence of any Event of Default under (and as defined in) any of the Reinsurance Agreements and the giving by the Secured Party of a notice to the Chargor in respect of such event.

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“FCA Regulations” means the Financial Collateral Arrangements (No 2) Regulations 2003 (SI 2003 / 3226), as amended from time to time.

“Financial Collateral” has the meaning given to the term in the FCA Regulations.

“GWPF Reinsurance Agreement” means the reinsurance agreement dated [•] between the Secured Party as cedant and the Chargor as reinsurer entitled “Reinsurance Agreement relating to SL Intl GWPF Policies”.

“GWPF Termination Amount” means the “Termination Amount” as defined in and calculated in accordance with the GWPF Reinsurance Agreement.

“GSMWPF Reinsurance Agreement” means the reinsurance agreement dated [•] between the Secured Party as cedant and the Chargor as reinsurer entitled “Reinsurance Agreement relating to SL Intl GSMWPF Policies”.

“GSMWPF Termination Amount” means the “Termination Amount” as defined in and calculated in accordance with the GSMWPF Reinsurance Agreement.

“Holding Company” means, in relation to a company or a corporation, any other company or corporation in respect of which it is a Subsidiary.

“HWPF Reinsurance Agreement” means the reinsurance agreement dated [•] between the Secured Party as cedant and the Chargor as reinsurer entitled “Reinsurance Agreement relating to SL Intl HWPF Policies”.

“HWPF Termination Amount” means the “Termination Amount” as defined in and calculated in accordance with the HWPF Reinsurance Agreement.

“Insolvency Act” means the Insolvency Act 1986, as varied from time to time.

“Insolvency Event” has the meaning given to it in the HWPF Reinsurance Agreement.

“Insurance Debts” has the meaning attributed to that expression by Regulation 2 of The Insurers (Reorganisation and Winding Up) Regulations 2004.

“Investment Management Agreement” means the agreement between the Chargor and the Investment Manager relating to the management of the Charged Assets. [Note: TBC whether a related services agreement between the Chargor and the Investment Manager need also be charged – current assumption is not.]

“Investment Manager” means the investment manager appointed pursuant to the Investment Management Agreement.

“Liability” means any liability, damage, loss, cost, claim or expense of any kind or nature (including VAT), whether present, future, prospective, contingent, direct, indirect, special, consequential or otherwise.

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“LPA” means the Law of Property Act 1925, as varied from time to time.

“Notice of Enforcement” means a notice in the form appearing in Schedule 1 served by the Secured Party on the Custodian in accordance with Clause 10.2 of this Deed.

“Permitted Custodian” means a financial institution which:

(A) is not an Affiliate of a Party;

(B) has all governmental and regulatory authorisations and permissions necessary to enable it to carry on the business of a professional custodian of cash and securities in England;

(C) then satisfies the Benchmark Credit Rating Criteria (or such other creditworthiness related criteria as the Parties may agree from time to time);

(D) is established in England or operates from a branch registered in England; and

(E) establishes and maintains the Custodian Accounts in England.

“Permitted Security Interest” means any Security Interest arising in favour of the Secured Party under this Deed.

“Posted Collateral” means:

(A) all Cash for the time being held in or standing to the credit of the Cash Accounts together with all interest from time to time accruing thereon which has been credited to the Cash Accounts; and

(B) all securities that qualify as Eligible Collateral being recorded or held in or standing to the credit of the Securities Accounts from time to time.

“Receiver” has the meaning given to the term in Clause 10.1 (Secured Party’s Powers).

“Reinsurance Agreements” means the HWPF Reinsurance Agreement, the GWPF Reinsurance Agreement and the GSMWPF Reinsurance Agreement.

“Reinsured Policies” means any Reinsured Policies under and as defined in each of the Reinsurance Agreements.

“Related Assets” means all coupons, distributions of any kind, any other sum (including principal) received or receivable in respect of Cash from time to time standing to the credit of the Cash Accounts or, as the case may be, any of the securities from time to time recorded or held in or standing to the credit of the Securities Accounts, and all other rights, benefits and proceeds of any kind in respect of or derived from such Cash or securities.

“Related Rights” means, in relation to a Charged Asset:

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(A) any proceeds of sale, transfer or other disposal or agreement for sale, transfer or other disposal of that Charged Asset;

(B) any monies or proceeds paid or payable deriving from that Charged Asset;

(C) any rights, claims, guarantees, indemnities, Security Interest or covenants for title in relation to that Charged Asset including, but not limited to, any rights to enforce and compel performance of any of the provisions of that Charged Asset and otherwise to exercise all claims, rights and remedies arising out of or in connection with the same (including as a result of a breach of or a default under or in connection with the same);

(D) any awards or judgments in favour of the Chargor in relation to that Charged Asset;

(E) in the case of a Derivative Contract, all confirmations, credit support annexes or deed and any other ancillary documents and rights entered into in respect thereof; and

(F) any other assets deriving from, or relating to, that Charged Asset.

“Replacement Custodian” means a new custodian appointed or to be appointed (as the case may be) pursuant to Clause 22.1 (Replacement Custodian) or 22.4 (Failure to appoint Replacement Custodian).

“Risk Transfer Time” means [23:59] GMT on: (i) [28 February 2019] or (ii) such other date on which the Brexit Scheme takes effect, by order of the Court of Session in Edinburgh.

“Secured Liabilities” means the HWPF Termination Amount, the GWPF Termination Amount and the GSMWPF Termination Amount.

“Secured Liabilities Discharge Date” means the date on which all Secured Liabilities have been unconditionally and irrevocably paid or discharged in full to the reasonable satisfaction of the Secured Party.

“Securities Account” means the securities account(s) maintained by the Custodian pursuant to the Custody Agreement and the Account Control Agreement in the name of the Chargor and designated “[•]” with the account number(s) [•] (or as re-designated or renumbered from time to time, or such other substituted or additional accounts as may from time to time be established pursuant to Clause 22.1 (Replacement Custodian) or 22.4 (Failure to appoint Replacement Custodian) or otherwise with the prior written agreement of the Secured Party) and all Related Rights. [Note: TBD whether schedule of account details necessary. Identification of accounts/assets to be confirmed in conjunction with finalisation of operational arrangements regarding how assets are held.]

“Security” means the security created under or pursuant to or evidenced by this Deed.

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“Security Interest” means any right or interest arising out of:

(A) any mortgage, charge, pledge, assignment (whether or not expressed to be by way of security), hypothecation, lien, encumbrance or other priority or security interest of any kind, howsoever created or arising;

(B) any deferred purchase, title retention, trust, sale-and-repurchase, sale-and-leaseback, hold back or “flawed asset” arrangement;

(C) any other agreement or arrangement of any kind having the same or a similar commercial or economic effect as security; and

(D) any agreement for any of the foregoing.

“SLAL WP Actuary” means the person appointed from time to time to perform the duties set out in SUP 4.3.16 AR in the FCA Handbook in respect of SLAL.

“SL Intl Head of Actuarial Function” has the meaning given to it in the HWPF Reinsurance Agreement.

“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.

“Termination Amount” means the aggregate of the HWPF Termination Amount, the GWPF Termination Amount and the GSMWPF Termination Amount.

“VAT” means:

(A) within the European Union, any tax imposed by any Member State in conformity with the Directive of the Council of the European Union on the common system of value added tax (2006/112/EC); and

(B) outside the European Union, any tax corresponding to, or substantially similar to, the common system of value added tax referred to in paragraph (A) of this definition.

1.2 Construction of particular terms

Unless a contrary intention appears, in this Deed:

(A) “assets” includes properties, revenues and rights of every kind, present, future and contingent, and whether tangible or intangible;

(B) a “company” includes any company, corporation or other body corporate, wherever and however incorporated or established;

(C) an Enforcement Event is “continuing” if it has not been remedied or waived;

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(D) “this Deed” or any other deed, agreement or instrument is a reference to this Deed or other deed, agreement or instrument as it may have been varied from time to time and includes a reference to any document which varies or is entered into or made pursuant to or in accordance with any of the terms of this Deed or, as the case may be, the relevant deed, agreement or instrument;

(E) “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

(F) “law” includes any present or future common or customary law, principles of equity and any constitution, decree, judgment, decision, legislation, statute, order, ordinance, regulation, bye-law or other legislative measure in any jurisdiction or any present or future official directive, regulation, guideline, request, rule, code of practice, treaty or requirement (in each case, whether or not having the force of law but, if not having the force of law, the compliance with which is in accordance with the general practice of a person to whom the directive, regulation, guideline, request, rule, code of practice, treaty or requirement is intended to apply) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or such other authority or organisation;

(G) a “person” includes any person, firm, company, government, state or agency of a state, any local or municipal authority, trust or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing;

(H) “rights” includes all rights, title, benefits, powers, privileges, interests, claims, authorities, discretions, remedies, liberties, easements, quasi-easements and appurtenances (in each case, of every kind, present, future and contingent);

(I) “securities” includes debt securities and negotiable debt obligations issued by entities of all types, equity securities and equity obligations issued by entities of all types, and interests in collective investment schemes;

(J) “set-off” includes analogous and corresponding rights, claims and actions under other applicable laws; and

(K) “variation” includes any variation, amendment, accession, novation, restatement, modification, assignment, transfer, supplement, extension, deletion or replacement however effected and “vary” and “varied” shall be construed accordingly.

1.3 Interpretation of this Deed

(A) A reference to any Party or person shall be construed as including its and any subsequent successors-in-title, permitted transferees and permitted assigns, in each case in accordance with their respective interests.

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(B) The terms “include”, “includes” and “including” shall be construed without limitation.

(C) References in this Deed to any Clause or Schedule shall be to a clause or schedule contained in this Deed.

(D) Clause headings are for ease of reference only and shall be ignored in construing this Deed.

(E) References to any provision of any law are to be construed as referring to that provision as it may have been, or may from time to time be, amended or re-enacted, and as referring to all bye laws, instruments, orders, decrees, ordinances and regulations for the time being made under or deriving validity from that provision.

2. EFFECTIVE DATE

Notwithstanding any other provision of this Deed, the Parties agree that Clause 3 to Clause 31 shall become effective at the Risk Transfer Time.

3. COVENANT TO PAY SECURED LIABILITIES

The Chargor hereby covenants that it will pay or discharge when due to the Secured Party all Secured Liabilities owing by it to the Secured Party in accordance with the terms of the Reinsurance Agreements.

4. CHARGE

4.1 Charge

As continuing security for the payment or discharge of the Secured Liabilities, with full title guarantee and free of any other security interest, the Chargor charges all its rights, title and interest from time to time in, to, under and in respect of each of the following assets by way of first fixed charge in favour of the Secured Party:

(A) the Custodian Accounts;

(B) all securities recorded or held in or standing to the credit of the Securities Accounts from time to time and all Related Assets;

(C) all Cash being held in or standing to the credit of the Cash Accounts from time to time and all Related Assets;

(D) the Custody Agreement including all monies payable to the Chargor pursuant thereto and all Related Rights;

(E) the Investment Management Agreement and all Related Rights; and

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(F) the Derivative Contracts and all Related Rights,

(together, the “Charged Assets”).

4.2 Voting Rights and Distributions etc.

(A) Unless and until an Enforcement Event occurs, the Chargor shall be entitled to exercise, or direct the Custodian to exercise, any voting rights attached to any of the securities in the Custodian Accounts , but only in a manner consistent with the terms of this Deed and the Reinsurance Agreements.

(B) All distributions on any assets in the Custodian Accounts shall be credited to the applicable Custodian Account and shall form part of the Charged Assets.

4.3 Investment Management Agreement

Unless and until an Enforcement Event occurs, the Charged Assets shall be managed in accordance with the Investment Management Agreement.

5. REPRESENTATIONS AND WARRANTIES OF THE CHARGOR

The Chargor represents and warrants to the Secured Party that:

(A) this Deed creates the Security Interests which it purports to create and, subject to general principles of equity and creditors’ rights generally, the Security is legally binding, valid, effective and enforceable and the Security created by this Deed has (or will have upon its perfection) the ranking in priority which it is expressed to have in this Deed and it is not subject to any prior ranking or pari passu ranking Security Interests (other than any Permitted Security Interest), subject to any ranking imposed by law;

(B) it is the full beneficial owner of the Charged Assets in each case free from any Security Interest other than any Permitted Security Interest;

(C) it has the capacity and power to execute and deliver this Deed and to perform its obligations under it and has taken all necessary action to authorise such execution, delivery and performance;

(D) the persons signing this Deed on its behalf are duly authorised to do so on its behalf;

(E) it has obtained all authorisations of any governmental or regulatory body required in connection with execution, delivery and performance of this Deed and such authorisations are in full force and effect;

(F) the execution, delivery and performance of this Deed has not, and will not, violate any law or rule applicable to it;

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(G) it is acting as a principal in entering into this Deed and performing its obligations hereunder; and

(H) it has the right to charge the Charged Assets in favour of the Secured Party under this Deed.

6. UNDERTAKINGS OF THE CHARGOR

6.1 Disposals of the Charged Assets

The Chargor shall not enter into a single transaction or a series of transactions (whether related or not and whether voluntary or involuntary) to sell, lease, assign, transfer or otherwise dispose of any Charged Asset, other than as expressly permitted under this Deed or the Reinsurance Agreements.

6.2 Title to Charged Assets

Save as expressly contemplated by this Deed or the Reinsurance Agreements, the Chargor shall not permit its rights in the Charged Assets (or any of them) to be conferred on any person.

6.3 Negative pledge

The Chargor shall not create or permit to subsist any Security Interest over all or any part of the Charged Assets other than any Permitted Security Interest.

7. PERFECTION OF SECURITY AND CERTAIN UNDERTAKINGS

7.1 Perfection: Custody Agreement

The Chargor shall deliver to the Secured Party on the [date of this Deed] (and, if any variation occurs thereafter, within one Business Day of such variation), a copy of the Custody Agreement and the Account Control Agreement.

7.2 Perfection: Derivative Contracts

The Chargor shall:

(A) deliver to the Secured Party on the date of this Deed, or, in respect of any ISDA master agreement which is a Derivative Contract entered into after the date of this Deed, as soon as reasonably practicable after the date of such Derivative Contract, a copy of each ISDA master agreement which is a Derivative Contract and the Clearing Agreement;

(B) [deliver (or procure the delivery of) a duly executed notice [on the date of this Deed or, in respect of the Clearing Agreement and any ISDA master agreement which is a Derivative Contract entered into after the date of this Deed, as soon as reasonably practicable after the date of such Derivative Contract] substantially

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in the form set out in Schedule 3 to each relevant counterparty in respect of the Clearing Agreement and each ISDA master agreement which is a Derivative Contract]; and

(C) [use all reasonable endeavours to] procure that such notice be acknowledged by the recipient [on the date of this Deed] substantially in the form set out in Schedule 3 or otherwise in a form satisfactory to the Secured Party.] [Note: Form of notice subject to arrangements with counterparties]

7.3 Undertakings: Derivative Contracts

(A) The Chargor shall, subject to Clause 10.4:

(i) pay all moneys received under any Derivative Contract into [the Cash Accounts] for application in accordance with the terms of this Deed;

(ii) deposit all cash collateral received under any Derivative Contract into [the Cash Accounts] for application in accordance with the terms of this Deed;

(iii) deposit all non-cash collateral received under any Derivative Contract into [the Securities Accounts] for application in accordance with the terms of this Deed; and

(iv) duly perform its obligations and diligently pursue its rights under each of the Derivative Contracts, provided that the exercise of such rights is not inconsistent with the terms of this Deed.

(B) The Chargor shall remain liable to perform all its obligations under the Derivative Contracts. Neither the Secured Party nor any Receiver or nominee shall be under any obligation or liability to the Chargor or any other person under or in respect of the Derivative Contracts or in respect of the rights or obligations of the Chargor under or in respect of the Derivative Contracts.

(C) The Chargor will provide the Secured Party, as soon as practicable upon receipt, copies of all notices which it may from time to time receive from any counterparty to any Derivative Contract in respect of any event of default or termination event under that Derivative Contract.

(D) The Chargor undertakes that it shall not vary, give waivers, terminate or suspend any provision of or performance of any obligation under, or exercise any discretion under any Derivative Contract unless:

(i) it has the prior written consent of the Secured Party;

(ii) it is given pursuant to the Investment Management Agreement; or

(iii) it (A) is of the reasonable opinion that such variation, waiver, termination or suspension is likely to be beneficial or unlikely to be prejudicial to the

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interest of the Secured Party under this Deed and does not result in any Security Interest arising or being created in favour of any third party, (B) has given to the Secured Party not less than 30 Business Days’ prior written notice of such variation, waiver, termination or suspension, accompanied by such supporting documentation as it reasonably believes supports such conclusion, and (C) has not received any notification from the Secured Party that the Secured Party is not satisfied with such documentation or that it objects to the relevant variation, waiver, termination or suspension (in each case acting reasonably) before the expiry of such 30 Business Day period.

(E) The Chargor undertakes that it will maintain and take all reasonable steps to enforce its rights and exercise its discretions under the Derivative Contracts (subject to sub-paragraph (D) above) where failure to do so could adversely affect the ability of the Chargor to comply with any of its obligations in respect of the Charged Assets, or could be material to the interests of the Secured Party with respect to the Charged Assets.

(F) The Chargor shall procure that the Investment Manager shall notify the Secured Party of:

(i) any breach of or default under any Derivative Contract by it or any other party;

(ii) any right of any party (other than the Chargor) arising to rescind, cancel or terminate any Derivative Contract; and

(iii) any claim made or to be made by it or any other party under or in connection with any Derivative Contract,

in each case, promptly upon becoming aware of the same.

8. TOP-UP AND WITHDRAWAL

8.1 Instructions

The Parties agree that:

(A) any instructions given to withdraw or deal with any Posted Collateral pursuant to this Deed shall, subject to Clause 10 (Control and Enforcement) be given to the Custodian by (i) the Investment Manager or (ii) the Chargor and the Secured Party in accordance with the terms of the Account Control Agreement; and

(B) they, or their agents or nominees as applicable, shall act in accordance with the terms of this Deed when signing or counter-signing such instructions. [Note: to reflect what is agreed with Citi in ACA]

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8.2 Top Up: Valuation

The Chargor shall transfer to the Custodian Accounts Eligible Collateral in the circumstances required by paragraph [4.1] of Schedule [1] of each Reinsurance Agreement.

8.3 Withdrawals: Valuation

The Chargor shall be permitted to withdraw (or to instruct the Investment Manager to withdraw) Posted Collateral in the circumstances allowed by paragraph [4.2] of Schedule [1] of each Reinsurance Agreement.

8.4 Withdrawals: Derivative Contracts

Where the Chargor has an obligation under the terms of any Derivative Contract to:

(A) pay moneys to any counterparty to any Derivative Contract; and/or

(B) post collateral in favour of any counterparty to any Derivative Contract,

upon a demand made by the Chargor specifying the details of such obligation, then the Investment Manager shall be permitted to withdraw Posted Collateral specified by the Chargor in that demand having a value as of the date of transfer as close as practicable to the applicable amount of moneys and/or collateral required to be paid or posted in favour of the relevant counterparty.

8.5 Withdrawals: Payments to the Secured Party

Amounts required to be paid from the Chargor to the Secured Party in respect of Net Amounts (as defined in the relevant Reinsurance Agreement) owing from the Chargor to the Secured Party under each of the Reinsurance Agreements may be met by withdrawal of such amounts from the Custodian Accounts and payment of such amounts to the Secured Party, and the Investment Manager shall be permitted to withdraw such amounts from the Custodian Accounts and pay such amounts to the Secured Party.

8.6 Investment Management Agreement

Prior to the occurrence of an Enforcement Event which is continuing, the Charged Assets shall be managed in accordance with the Investment Management Agreement. The Secured Party hereby consents to such management and any change or substitution of assets inherent in such management provided that the Investment Management Agreement shall not be amended without the prior written consent of the Secured Party.

9. ADDITIONAL PROPERTY

The Chargor may, at any time and in its absolute discretion, transfer to the Custodian Accounts additional Eligible Collateral which shall, immediately upon such transfer, be automatically subject to the Security created hereunder.

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10. CONTROL AND ENFORCEMENT

10.1 Secured Party’s Powers

At any time when an Enforcement Event has occurred and is continuing, the Security shall be enforceable and the Secured Party may, unless precluded by law:

(A) appoint one or more persons as a receiver or receiver and manager (together, a “Receiver”) of any Charged Assets;

(B) manage the Charged Assets or any of them;

(C) exercise any of the Chargor’s rights under the Custody Agreement and the Derivative Contracts;

(D) enforce all or any part of the Security and take possession of or dispose of all or any part of the Charged Assets in each case at such times and upon such terms as it sees fit, including by way of appointment of a Receiver;

(E) whether or not the Secured Party has appointed a Receiver, exercise all of the powers, authorities and discretions granted from time to time to a Receiver by this Deed and any applicable law (including all powers, authorities and discretions conferred from time to time on mortgagees by the LPA, as varied or extended by this Deed); and

(F) exercise its rights under Clause 16.

10.2 Service of Notice of Enforcement

The Secured Party shall be entitled at any time when an Enforcement Event has occurred and is continuing to serve on the Custodian a Notice of Enforcement, with a copy to the Chargor, provided that no failure to serve a copy of a Notice of Enforcement on the Chargor shall invalidate the Notice of Enforcement. In addition (and without limiting the above or the provisions of Clause 10.5), the Secured Party shall be entitled at any time on or after the occurrence of an Enforcement Event to notify the Custodian that such an event has occurred and that, unless a contrary notice is received from the Secured Party, no amounts should be transferred out of the Custodian Accounts.

10.3 Power to give instructions

In addition to and without prejudice to the foregoing or to Clause 16, the Chargor hereby irrevocably authorises the Secured Party, at any time when an Enforcement Event has occurred and is continuing, to give instructions to the Custodian for the transfer out of the Cash Accounts to the Secured Party of any amount then due and payable to the Secured Party by the Chargor, as certified to the Custodian by the Secured Party, or, if the balance standing to the credit of the Cash Accounts is not sufficient for that purpose, to give instructions to the Custodian:

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(A) to sell or otherwise realise all or such part of the assets held in or standing to the credit of the Securities Accounts as is necessary to fund such transfer and to apply the proceeds of sale for that purpose, and the Secured Party shall use its reasonable efforts to ensure that a reasonable market price in all the circumstances is obtained for any such sale or realisation of Charged Assets; or

(B) to transfer out of the Securities Accounts to the Secured Party such assets as may be selected by the Secured Party and whose transfer to the Secured Party is certified by the Secured Party as being necessary to fund payment in or towards discharge of the amount then owing to the Secured Party by the Chargor.

10.4 Chargor’s obligations

At any time when an Enforcement Event has occurred and is continuing, if the Chargor receives any monies under the Custody Agreement, the Derivative Contracts or the Investment Management Agreement the Chargor shall hold such monies on trust for the Secured Party, pending payment to the Secured Party for application in accordance with Clause 15.

10.5 Chargor not to give instructions following Enforcement Event

The Chargor shall not, and shall procure that no other person acting on the Chargor’s behalf will, give any instructions to the Custodian in respect of the Custodian Accounts on or after the occurrence of an Enforcement Event until the Security hereunder is released and discharged in accordance with Clauses 19.1 and 21.

10.6 Powers under the LPA

(A) The provisions of the LPA relating to the power of sale conferred by that Act are:

(i) varied so that sections 103 and 109(1) of the LPA shall not apply; and

(ii) extended to authorise the Secured Party at any time when an Enforcement Event has occurred and is continuing, to sell or otherwise dispose of (or instruct any nominee to do so), or instruct the Custodian to sell or otherwise dispose of all or any part of the Charged Assets and, in relation to any securities (as it may elect and without prejudice to any later exercise of this power) the whole or part of the equitable or other interest divested of or separately from the legal title for such consideration, upon such terms and generally in such manner as the Secured Party thinks fit.

(B) The power of sale and all other powers conferred on a Secured Party by law (including by section 101 of the LPA) as varied or extended by this Deed will arise upon the date of this Deed (and the Secured Liabilities shall be deemed to have become due and payable for such purpose) but shall only be exercised at any time when an Enforcement Event has occurred and is continuing.

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10.7 Power of Sale

(A) A certificate in writing by an officer, attorney or agent of the Secured Party or of a Receiver that any power of sale or other disposal has arisen and is exercisable in favour of a purchaser of all or any part of the Charged Assets shall be conclusive evidence of that fact and no purchaser shall be concerned to enquire whether any power exercised or purported to be exercised by the Secured Party or any Receiver has become exercisable or whether any Secured Liability remains due or owing or be concerned with any propriety or regularity on the part of the Secured Party or such Receiver.

(B) The Chargor shall not have any right or claim against the Secured Party in respect of any loss arising out of such sale or other realisation howsoever such loss may have been caused and whether or not a better price could or might have been obtained on the sale of the Charged Assets or any part of it by either deferring or advancing the date of such sale or other realisation or otherwise howsoever unless caused by the Secured Party’s gross negligence or wilful default.

10.8 Receivers

(A) The Secured Party may appoint any Receiver upon such terms as to remuneration and otherwise as the Secured Party thinks fit at any time when an Enforcement Event has occurred and is continuing.

(B) Any Receiver will be the agent of the Chargor for all purposes and the Chargor will be responsible for such Receiver’s acts and defaults and for their remuneration, costs, fees, taxes and expenses (excluding any recoverable VAT thereon and any tax on, or in respect of, the Receiver’s net income, profits or gains) to the exclusion of liability on the part of the Secured Party.

(C) Where two or more persons are appointed as Receiver any act authorised to be done by the Receiver may be done by all of them acting jointly or by any one or more of them acting independently or severally.

(D) The Secured Party may at any time by writing remove any Receiver whether or not the Secured Party appoints any other person as Receiver in his place.

11. POWERS OF RECEIVER AND SECURED PARTY

11.1 Statutory powers

A Receiver shall have and be entitled to exercise all the powers conferred on a receiver or mortgagee in possession by the LPA (as the same may be varied or extended by the provisions of this Deed) and, whether or not such a Receiver is an administrative receiver, all the powers conferred upon an administrative receiver by Schedules 1 and 2 to the Insolvency Act which powers are incorporated in this Deed.

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11.2 Additional powers

By way of addition to and without limiting any other powers referred to in this Clause 11 a Receiver shall have power (both before and after the commencement of any liquidation of the Chargor) to do every act and thing and exercise every power:

(A) which a legal and beneficial owner or beneficial owner of the Charged Assets would have been entitled to do or exercise if no Receiver (and, as the case may be, no liquidator) had been appointed; and

(B) which such Receiver in his absolute discretion considers necessary or desirable for maintaining or enhancing the value of any Charged Assets or for or in connection with the enforcement of the Security or the realisation of any Charged Assets or the exercise of any powers under this Deed,

and may use the name of the Chargor in connection with any exercise of such powers.

11.3 Prior encumbrances

At any time when an Enforcement Event has occurred and is continuing, the Secured Party may redeem any prior Security Interest against such Charged Assets or procure a transfer of such Security Interest to itself and may agree the accounts of the person entitled to that Security Interest and any accounts so agreed will be binding on the Chargor. Any money paid by the Secured Party in connection with a redemption or transfer of any prior Security Interest will form part of the Secured Liabilities.

11.4 Possession

If the Secured Party, any Receiver or any delegate of either of them takes possession of any Charged Assets it may relinquish such possession at any time.

12. PROTECTION OF THE SECURED PARTY AND RECEIVER

12.1 Limitation

Neither the Secured Party, any delegate, attorney, manager, agent or other person appointed by the Secured Party pursuant to this Deed, nor any Receiver shall be liable in respect of any Liability which arises out of the exercise or the attempted or purported exercise of, or the failure to exercise, any of their respective powers under or by virtue of this Deed, unless directly caused by its fraud, gross negligence or wilful misconduct.

12.2 Entry into possession

Without prejudice to the generality of Clause 12.1, neither the Secured Party nor any Receiver shall be liable to account as mortgagee in possession or otherwise for any sum not actually received by it or him respectively.

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13. ROLE OF SECURED PARTY

13.1 Authorisation of Release

Upon a disposal of any of the Charged Assets pursuant to (A) the management of the Charged Assets following an Enforcement Event or (B) the enforcement of the Security by a Receiver, the Secured Party shall (at the cost of the Chargor) release for the purposes of that disposal that property from the Security and is authorised to execute any release of the Security or other claim over all or the relevant part (as the case may be) of the Charged Assets.

13.2 Powers Supplemental

The rights conferred upon the Secured Party by this Deed shall be supplemental to and in addition to any which may be vested in the Secured Party by general law or otherwise.

13.3 Delegation

(A) The Secured Party may, at any time, delegate by power of attorney or otherwise to any person (a “nominee”) for any period, all or any of the rights, powers and discretions vested in it by this Deed, including, but not limited to, the power of attorney granted by the Chargor pursuant to Clause 18.

(B) The delegation may be made upon any terms and conditions (including the power to sub-delegate) and subject to any restrictions as the Secured Party may think fit and it shall not be bound to supervise, or be in any way responsible for any loss incurred by reason of any misconduct or default on the part of any nominee or sub-delegate of that nominee, provided the Secured Party has exercised reasonable care in selecting such nominee.

14. COSTS, EXPENSES AND LIABILITIES

The Chargor will, within 10 Business Days of the Secured Party’s written demand, pay to the Secured Party, on a full indemnity basis, the amount of all Liabilities (excluding any recoverable VAT thereon and any tax on, or in respect of, the Receiver’s net income, profits or gains) incurred by the Secured Party or to its order in connection with the exercise, enforcement and/or preservation of any of its rights under this Deed including the remuneration of a Receiver or any proceedings instituted by or against the Secured Party, in any jurisdiction (other than any proceedings which have been instituted against the Secured Party in connection with (i) any breach by the Secured Party of any contract to which the Secured Party is party or any arrangement by which it is otherwise bound, or (ii) its fraud, gross negligence or wilful misconduct). The Chargor will, within 10 Business Days of the Secured Party’s written demand, pay to the Secured Party, on a full indemnity basis, any stamp duty, stamp duty reserve tax or similar tax which may be payable as a result of the performance or enforcement of this Deed.

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15. APPLICATION OF SUMS REALISED – ORDER OF APPLICATION

15.1 Suspense Account

The Secured Party may, at its sole discretion, place and retain in an interest-bearing suspense account in the name of the Secured Party, for as long as it considers fit, any monies received, recovered or realised under or in connection with this Deed to the extent of such Secured Liabilities without any obligation on the part of the Secured Party to apply them in or towards the discharge of such Secured Liabilities.

15.2 Payments

Subject to Clause 15.1 and claims having priority to the Security Interests created by or pursuant to this Deed, all money recovered by the Secured Party or a Receiver as a result of the enforcement of this Deed or otherwise by reason of the Security Interests created by or pursuant to this Deed shall be applied in the following order:

(A) in payment of all costs, fees, taxes and expenses (excluding any recoverable VAT thereon and any tax on, or in respect of, the Receiver’s net income, profits or gains) incurred by the Receiver in or pursuant to the exercise of the powers set out in this Deed and of all other outgoings properly payable by the Receiver;

(B) in payment of remuneration to the Receiver;

(C) in or towards payment of the Secured Liabilities; and

(D) in payment of any surplus to the Chargor or other person entitled to it.

16. RIGHT OF APPROPRIATION

(A) The Secured Party may, at any time when an Enforcement Event has occurred and is continuing and any Secured Liabilities are due and payable, by notice in writing to the Chargor appropriate with immediate effect any or all of the Charged Assets comprising Financial Collateral which is subject to a security financial collateral arrangement (within the meaning of the FCA Regulations) and apply such assets in or towards the discharge of the Secured Liabilities in such manner as the Secured Party may determine, whether such Charged Assets are held by the Secured Party or otherwise.

(B) The value of any Charged Assets appropriated under this Clause 16 shall be:

(i) in the case of Cash, its face value at the time the right of appropriation is exercised; and

(ii) in the case of financial instruments or other Financial Collateral, their market value at the time of appropriation as determined (after appropriation) by the Secured Party (acting reasonably) by reference to a public index or other applicable generally recognised source or such

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other process, method or source of valuation as the Secured Party may reasonably select, including a valuation carried out by an independent investment bank, firm of accountants or other valuers appointed by the Secured Party.

(C) The Secured Party will account to the Chargor for any amount by which the value of the appropriated Charged Assets exceeds the amount recoverable under this Deed and the Deed of Floating Charge (taken together) and the Chargor shall remain liable to the Secured Party for any amount by which the value of the appropriated Charged Assets is less than the amount recoverable under this Deed and the Deed of Floating Charge (taken together).

(D) The Chargor agrees that the method of valuing such Charged Assets under sub-paragraph (B) is commercially reasonable.

17. FURTHER ACTION

17.1 Execution of further documents and further actions

The Chargor shall, at its own expense, promptly take any action and sign or execute any further documents which the Secured Party may reasonably require in order to:

(A) give effect to the requirements of this Deed;

(B) create, protect, preserve and perfect the Security created or intended to be created by or pursuant to this Deed;

(C) protect and preserve the ranking of the Security created or intended to be created by or pursuant to this Deed with any other Security Interests over all or any of the Charged Assets;

(D) facilitate the realisation of all or any of the Charged Assets at any time when an Enforcement Event has occurred and is continuing; or

(E) facilitate the exercise of any rights conferred on the Secured Party, any Receiver or any administrator in connection with all or any of the Charged Assets.

17.2 Execution of further documents and doing of further things by the Custodian

Promptly on demand by the Secured Party, the Chargor shall (if so requested by the Secured Party) use its reasonable endeavours to procure that the Custodian or the Custodian’s nominee will execute all such documents and do or procure the doing of all such things as the Secured Party may reasonably specify (and in such manner and in such form as the Secured Party may reasonably require) for the purpose of (a) securing and perfecting the Security; (b) at any time when an Enforcement Event has occurred and is continuing, enabling the Secured Party to enforce the Security; or (c) exercising its other rights under this Deed.

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17.3 Protection of security

The Chargor shall itself (if so requested by the Secured Party) use reasonable endeavours to procure that the Custodian or the Custodian’s nominee will, take all such action as the Secured Party may reasonably require (including making all filings and registrations) for the purpose of the constitution, perfection, protection or maintenance of the Security conferred or intended to be conferred on the Secured Party by or pursuant to this Deed.

18. POWER OF ATTORNEY

18.1 Appointment as attorney

The Chargor irrevocably and by way of security appoints each of the Secured Party, any Receiver and any authorised nominee of any of them independently or severally as the Chargor’s attorney, in the Chargor’s name, on its behalf and in such manner as the attorney may in its or his absolute discretion think fit, to take any action and sign or execute any further documents which the Chargor is required to take, sign or execute in accordance with this Deed but has failed to do (including to do all such acts or execute all such documents, assignments, transfers, mortgages, charges, notices, instructions, filings and registrations (and in such form as the Secured Party may reasonably require in favour of the Secured Party or its nominees)).

18.2 Ratification by the Chargor

The Chargor agrees, promptly on the request of the Secured Party or any Receiver, to ratify and confirm all such actions taken and documents signed or executed by the Secured Party, any Receiver and any authorised nominee of any of them (or any of the foregoing) in the exercise of the power of attorney conferred under this Clause 18.

18.3 Power of attorney irrevocable

The Chargor hereby declares that the power of attorney conferred under this Clause 18 shall be irrevocable and shall not be affected by the liquidation or receivership of the Chargor or the making of an administration order or the appointment of an administrator or administrative receiver or any other similar officer in respect of the Chargor.

19. SAVING PROVISIONS

19.1 Continuance of Security

The Security created by this Deed shall remain in force as a continuing security to the Secured Party, notwithstanding any partial release, settlement of account or any other act, event or matter whatsoever, until the execution by the Secured Party of an absolute and unconditional release by deed or the release and discharge of this Deed in whole pursuant to Clause 21.

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19.2 Waiver of defences

Neither the obligations of the Chargor under this Deed nor the Security created or intended to be created by or pursuant to this Deed will be affected by any act, omission, matter or thing which, but for this Clause 19.2, would reduce, release or prejudice any of its obligations under this Deed or the Security created or intended to be created by or pursuant to this Deed (without limitation and whether or not known to it or any other person) including:

(A) any time, waiver or consent granted to, or composition with, the Chargor or any other person;

(B) the release of the Chargor or any other person under the terms of any composition or arrangement with any creditor of any such person;

(C) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, the Chargor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(D) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Chargor or any other person;

(E) any variation (however fundamental and whether or not more onerous) or replacement of any of the Reinsurance Agreements or any other document relating to any Secured Liabilities;

(F) any unenforceability, illegality or invalidity of any obligation of any person under any of the Reinsurance Agreements or any other document or security; or

(G) any Insolvency Event or similar proceedings.

19.3 Chargor intent

Without prejudice to the generality of Clause 19.2, the Chargor expressly confirms that it intends that the Security intended to be created by or pursuant to this Deed shall extend from time to time to any (however fundamental) variation, increase or addition of or to any of the Secured Liabilities and/or any of the Reinsurance Agreements, the Custody Agreement, the Investment Management Agreement, any Derivative Contract or any other document relating to any Secured Liabilities in writing after the date of this Deed.

19.4 Immediate recourse

The Chargor waives any right it may have of first requiring the Secured Party (or any nominee or assignee or any other person acting on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Chargor under this Deed. This waiver applies irrespective of any law or any

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provision of any other document to the contrary, unless expressly agreed by the Secured Party otherwise.

20. SECURED PARTY’S UNDERTAKING

If the Secured Party is notified in advance in writing that a meeting of creditors of the Chargor is to be convened or held for the purposes of approving a proposal for a scheme of arrangement under Part 26 of the Companies Act 2006 or for a voluntary arrangement under Part 1 of the Insolvency Act 1986 in respect of the Chargor, the Secured Party undertakes that it will agree to be bound by the proposal and (to the extent necessary to give effect to the intention of this Clause) to release the security constituted by this Deed, provided that:

(A) the proposal has the effect of ensuring that the Secured Party will receive the amount recoverable under this Deed; and

(B) if (but only if) the Secured Party had notified the Chargor at or prior to the meeting that the Secured Party opposed the proposal, the proposal would have been passed by the requisite majority(ies) even if the Secured Party had been entitled to vote on the proposal in respect of the Secured Liabilities as an Insurance Debt and had voted against the proposal in respect of that amount.

21. RELEASE

21.1 Release of Security Assets

(A) Promptly following the Secured Liabilities Discharge Date, the Secured Party shall at the request and expense of the Chargor take whatever action is necessary to release the Charged Assets and re-assign the Charged Assets to the Chargor.

(B) Upon the transfer or withdrawal of any Posted Collateral (“Released Property”) by the Chargor which is permitted by this Deed, the Security Interest granted under this Deed in respect of such Released Property will be released immediately without any further action by the Chargor, the Secured Party or the Custodian, but without prejudice to any Security Interest granted over any Charged Assets other than such Released Property.

22. COVENANTS RELATING TO CUSTODY AGREEMENT

22.1 Replacement Custodian

(A) Subject to sub-paragraph (B) below, the Chargor may at any time, at its own expense and with the prior written consent of the Secured Party (such consent not to be unreasonably withheld or delayed) terminate the Custody Agreement and the Account Control Agreement and, pursuant to a new custody agreement between the Chargor and the new custodian in a form approved by the Secured Party (acting reasonably), appoint a new custodian being a Permitted Custodian,

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and agree a new account control agreement between the Chargor, the Secured Party and the Replacement Custodian. The Chargor shall procure that all Posted Collateral shall be transferred out of the Custodian Accounts to the Replacement Custodian, and such custodian shall thereafter be the Custodian, the custody agreement between the Chargor and the Replacement Custodian shall thereafter be the Custody Agreement, the account control agreement between the Chargor, the Secured Party and the Replacement Custodian shall thereafter be the Account Control Agreement and the cash and securities accounts relating thereto shall thereafter be the Cash Accounts and the Securities Accounts for the purposes of this Deed.

(B) The Chargor shall not terminate the prior-existing Custody Agreement or Account Control Agreement or appoint a Replacement Custodian or transfer or procure the transfer of any Posted Collateral to the Replacement Custodian unless and until the proposed new custody agreement and account control agreement have been agreed with the Secured Party (and executed and delivered by the Chargor and the Replacement Custodian), the Chargor has entered into such supplemental or new security documents as may be necessary or as are reasonably requested by the Secured Party (i) to ensure the continuation of the Security or, as the case may be, the creation of new Security Interests over such assets (as reasonably required by the Secured Party); and (ii) if the Secured Party’s rights under this Deed have been assigned by way of security pursuant to Clause 25, to ensure the continuation of that security, or as the case may be, the creation of new Security Interests over the rights under this Deed or any new Security Interests created pursuant to (i) above (as reasonably required by the Secured Party), and in each case has complied with the terms thereof (including in relation to the giving of a Notice of Charge to the Replacement Custodian) the Replacement Custodian has agreed, executed and delivered an acknowledgement to a Notice of Charge (with such amendments as the Secured Party may in its absolute discretion agree).

22.2 Invalid Instructions

If, at any time:

(A) a Notice of Charge becomes invalid or ineffective for any reason; or

(B) a Custodian or Replacement Custodian refuses or fails to act upon any instruction validly given by the Secured Party or the Chargor (or both) in each case in accordance with the terms of a Notice of Charge or this Deed,

the Chargor shall, unless agreed otherwise with the Secured Party, appoint a Replacement Custodian pursuant to Clause 22.4 and prior to such replacement taking effect, ensure that (i) no instructions are given by the Chargor to that Custodian unless such instructions are consented to in writing by the Secured Party, and (ii) the provisions of Clause 22.4 are complied with.

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22.3 Undertakings: Custody Agreement and Account Control Agreement

(A) The Chargor shall remain liable to perform all its obligations under the Custody Agreement and the Account Control Agreement and in relation to the Charged Assets. Neither the Secured Party nor any Receiver or nominee shall be under any obligation or liability to the Chargor or any other person under or in respect of the Custody Agreement, the Account Control Agreement or in respect of the rights or obligations of the Chargor under or in respect of the Charged Assets.

(B) The Chargor shall promptly provide a copy to the Secured Party of any notices or communications received from the Custodian pursuant to the Custody Agreement or the Account Control Agreement not copied by the Custodian directly to the Secured Party. In addition, the Chargor agrees to provide or procure read only information or access to the Secured Party during working hours, so that the Secured Party can confirm what Posted Collateral is in the Custodian Accounts.

(C) The Chargor undertakes that it shall not vary, give waivers, terminate or suspend any provision of or performance of any obligation under, or exercise any discretion under the Custody Agreement or the Account Control Agreement with respect to the Charged Assets or the Custodian Accounts unless:

(i) it has the prior written consent of the Secured Party; or

(ii) it (A) is of the reasonable opinion that such variation, waiver, termination or suspension is likely to be beneficial or unlikely to be prejudicial to the interest of the Secured Party under this Deed and does not result in any Security Interest arising or being created in favour of the Custodian or any other third party, (B) has given to the Secured Party not less than 30 Business Days’ prior written notice of such variation, waiver, termination or suspension, accompanied by such supporting documentation as it reasonably believes supports such conclusion, and (C) has not received any notification from the Secured Party that the Secured Party is not satisfied with such documentation or that it objects to the relevant variation, waiver, termination or suspension (in each case acting reasonably) before the expiry of such 30 Business Day period.

(D) The Chargor undertakes that it will maintain and take all reasonable steps to enforce its rights and exercise its discretions under the Custody Agreement and relating to the Custodian Accounts (subject to sub-paragraph (C) above) where failure to do so could adversely affect the ability of the Chargor to comply with any of its obligations in respect of the Charged Assets, or could be material to the interests of the Secured Party with respect to the Charged Assets.

(E) The Chargor shall not remove or permit the withdrawal of any Charged Assets from the Custodian Accounts or the sale or other disposition of the Charged Assets except as expressly permitted pursuant to this Deed.

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(F) Subject to Clauses 22.1 and 22.4, the Chargor undertakes that it will perform all its obligations under the Custody Agreement and the Account Control Agreement and shall not (except in accordance with sub-paragraph (C) above) terminate, repudiate or rescind it or any of its rights or obligations relating thereto or claim that any of the foregoing is frustrated, or postpone or subordinate or vary or waive any of its rights and remedies thereunder, or agree to do so, with respect to the Charged Assets without the prior written consent of the Secured Party.

(G) The Chargor shall notify the Secured Party of:

(i) any breach of or default under the Custody Agreement or the Account Control Agreement by it or any other party;

(ii) any right of any party (other than the Chargor) arising to rescind, cancel or terminate the Custody Agreement or the Account Control Agreement; and

(iii) any claim made or to be made by it or any other party under or in connection with the Custody Agreement or the Account Control Agreement or a Custodian Account,

in each case, promptly upon becoming aware of the same.

(H) The Chargor undertakes that it will, on request by the Secured Party (acting reasonably), use all reasonable endeavours to ensure that the Custodian promptly takes all such steps as may be necessary for it to take for full effect to be given to the provisions of this Deed.

22.4 Failure to appoint Replacement Custodian

(A) Following the occurrence of any of the following:

(i) the Custodian (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4)(A) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and such proceeding or

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petition is instituted or presented by a person or entity not described in sub-paragraph 4(A) above and either (I) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (II) is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 15 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in sub-paragraphs (1) to (7) above (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or

(ii) the Chargor ceases to be (or receives notice that it will cease to be) a Client (as such term is defined in the Custody Agreement) for the purposes of the Custody Agreement; or

(iii) any notice to the Custodian of the Security becomes invalid or ineffective for any reason (unless agreed otherwise with the Secured Party); or

(iv) the Custodian refuses or fails to act upon any instruction validly given by the Secured Party or Chargor in accordance with the terms of the Account Control Agreement, or this Deed or breaches any term of the Account Control Agreement, or the Custody Agreement and the Secured Party, acting reasonably, determines that such failure or breach is material; or

(v) the Custodian purports to terminate or repudiate the Custody Agreement or the Account Control Agreement whether by giving notice to terminate or otherwise,

the Chargor shall upon actual awareness of such event, promptly provide notice to the Secured Party.

(B) Following service of notice under sub-paragraph (A) above, the Secured Party and Chargor shall consult in good faith on a Replacement Custodian.

(C) If the Parties have not agreed the identity of a Replacement Custodian pursuant to sub-paragraph (B) above within 10 days, the Chargor shall promptly, and in any event no later than within 60 days thereafter, use reasonable endeavours to

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replace the Custodian with a Replacement Custodian subject to the following conditions:

(i) the Replacement Custodian must be a Permitted Custodian; and

(ii) the terms of the new custody agreement, account control agreement, and acknowledgement of the notice of charge must not be materially less favourable to the Secured Party than the existing custody agreement, account control agreement and acknowledgement.

(D) If the Chargor fails to appoint a Replacement Custodian pursuant to sub-paragraph (C) above, the Secured Party shall be entitled to appoint within 30 days at the Chargor’s expense, a Replacement Custodian subject to the following conditions:

(i) the Replacement Custodian must be a Permitted Custodian; and

(ii) the terms of the new custody agreement, account control agreement, notice and any acknowledgement of the Security must not be materially less favourable, including (without limitation) with respect to fees payable by the Chargor to the proposed replacement custodian, to the Chargor than the existing custody agreement, account control agreement and acknowledgement,

provided that if the Secured Party gives notice to the Chargor that it does not intend to exercise its rights under this sub-paragraph (D), upon receipt by the Chargor of such notice, the 30 days in this sub-paragraph (D) shall be deemed to have expired for the purposes of sub-paragraph (F) below.

(E) The Chargor or Secured Party, as applicable, shall following the appointment of a Replacement Custodian pursuant to sub-paragraphs (B), (C) or (D) above procure that all Posted Collateral shall be transferred out of the old custodian accounts into the new custodian accounts with the Replacement Custodian in the name of the Chargor and designated in order to clearly identify the accounts as relating to the transaction to which this Deed relates, and such accounts shall thereafter be the Custodian Accounts and such Replacement Custodian shall thereafter be the Custodian and the custody agreement between the Chargor and the Replacement Custodian shall thereafter be the Custody Agreement. Prior to any such transfer the Chargor or the Secured Party (as applicable) shall (unless agreed otherwise by the other Party), ensure the Replacement Custodian has agreed, executed and delivered an acknowledgement of the Security and, if the Replacement Custodian is being appointed by the Chargor, ensure the Chargor has entered into such supplemental or new security documents as may be necessary or as are reasonably requested by the Secured Party (i) to ensure the continuation of the Security or, as the case may be, the creation of new Security Interests over such assets (as reasonably required by the Secured Party); and (ii) if the Secured Party’s rights under this Deed have been assigned by way of security pursuant to Clause 25, to ensure the continuation of that security, or as

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the case may be, the creation of new Security Interests over the rights under this Deed or any new Security Interests created pursuant to (i) above (as reasonably required by the Secured Party), and in each case has complied with the terms thereof.

(F) If the Parties have not appointed a Replacement Custodian within 100 days of notice under sub-paragraph (A) above, the Parties agree they shall negotiate in good faith, acting reasonably, to enter into one or more of the following alternative arrangements as soon as reasonably practicable but in any event within 60 days:

(i) title transfer of cash and/or securities based on the ISDA CSA;

(ii) a fixed charge over cash in a bank account with a third party bank;

(iii) a letter of credit or bank guarantee to be provided by the Chargor to the Secured Party; or

(iv) any other security agreed between the Parties,

each in a form and on such terms and conditions to be agreed by the Parties provided that: (A) for the avoidance of doubt nothing in this Clause 22.4 shall require the Chargor to agree to enter into title transfer arrangements; and (B) at the Chargor’s request and provided that the Secured Party is satisfied that no event exists which might be considered likely to give rise to an Insolvency of the Chargor, such arrangements may be entered into as a temporary arrangement only until such time as a Replacement Custodian can be agreed upon by the Parties and appointed.

23. ADDITIONAL SECURITY

The Security contained in this Deed is in addition to, and shall neither be merged in, nor in any way exclude or prejudice, any other Security Interest, right of recourse or other right whatsoever which the Secured Party may now or in the future hold or have (or would apart from this Deed hold or have) as regards the Chargor or any other person in respect of the Secured Liabilities, whether by virtue of contract, statute or otherwise.

24. THIRD PARTY RIGHTS

No person other than a Party to this Deed shall have any right by virtue of the Contracts (Rights of Third Parties) Act 1999 or the Contract (Third Party Rights) (Scotland) Act 2017 to enforce any term (express or implied) of this Deed, but without prejudice to any right or remedy of the third party which may exist or be available apart from that Act.

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25. VARIATIONS AND ASSIGNMENT

25.1 Variation

A waiver or variation of this Deed will only be effective if it is in writing, is signed by each Party and has been consented to in writing by the SLAL WP Actuary and the SL Intl Head of Actuarial Function (on the basis that the proposed waiver or variation is not expected materially and adversely to affect (i) the contractual rights of the holders of Reinsured Policies; or (ii) their reasonable expectations regarding non-contractual rights under such policies).

25.2 Assignment

Except pursuant to the Reinsurance Agreements and as provided under this Deed, no Party to this Deed shall assign or transfer, or attempt to assign or transfer, any of its rights or obligations (including by way of granting a Security Interest) under this Deed.

26. FORBEARANCE AND ILLEGALITY

26.1 Delay etc

All rights, powers and privileges under this Deed shall continue in full force and effect, regardless of the Secured Party exercising, delaying in exercising or omitting to exercise any of them.

26.2 Illegality, invalidity, unenforceability

Any provision of this Deed which is or becomes illegal, invalid or unenforceable shall be ineffective only to the extent of such illegality, invalidity and unenforceability, without invalidating the remaining provisions of this Deed.

27. DEMANDS, NOTICES ETC

27.1 Demands

A demand for payment or other demand or notice to the Chargor under this Deed shall be made or given by any director or officer of the Secured Party in accordance with Clause 27.2.

27.2 Addresses for notice and deemed service

Each Party shall notify to the other Party an authorised address and email address in the United Kingdom or the Republic of Ireland for the purpose of this Clause and the first such authorised address for each Party shall be the address and email address stated in Clause 27.3. Any demand, notice, consent or approval or other communication to be given under this Deed shall be in writing and shall either be delivered personally or sent by pre-paid first class post or email to the relevant Party’s address or email address stated in Clause 27.3 (or such other address or email address (in each case in the United

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Kingdom or the Republic of Ireland) as is notified in writing from time to time by such Party to the other Party in accordance with the requirements of this Clause). Any such notice shall be effective upon receipt and shall be deemed to have been received:

(A) if delivered personally, at the time of delivery;

(B) if sent by pre-paid first class post, at noon two Business Days following posting; and

(C) if communicated by email, upon receipt by the recipient,

PROVIDED that where, in the case of delivery by hand or email, delivery or transmission occurs after 3.00pm on a Business Day or on a day which is not a Business Day, receipt shall be deemed to occur at 9.00am on the next following Business Day.

27.3 Addresses for service

For the purposes of this Clause the authorised address of each Party shall be the address set out below:

(A) Chargor:

Address: Standard Life House, 30 Lothian Road, Edinburgh, EH1 2DH

Email address: [ ]

Attention: Chief Executive Officer

(B) Secured Party:

Address: 90 St. Stephen’s Green, Dublin 2, Ireland

Email address: [ ]


28. EXECUTION AS A DEED

Each of the Parties intends this Deed to be a deed and confirms that it is executed and delivered as a deed, notwithstanding the fact that any one or more of the Parties may only execute it under hand.

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29. COUNTERPARTS

This Deed may be executed in any number of counterparts, and by the Parties to this Deed on separate counterparts, but will not be effective until each such Party has executed at least one counterpart. Each counterpart shall constitute an original of this Deed, but all the counterparts will together constitute one and the same instrument.

30. JURISDICTION

(A) The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed (including a dispute regarding the existence, validity or termination of this Deed) (a “Dispute”).

(B) The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(C) This Clause 30 is for the benefit of only the Secured Party. As a result, the Secured Party shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Secured Party may take concurrent proceedings in any number of jurisdictions.

31. GOVERNING LAW

This Deed is governed by and is to be construed in accordance with English law. Any matter, claim or dispute arising out of or in connection with this Deed, whether contractual or non-contractual, is to be governed by and construed in accordance with English law.

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IN WITNESS of which this document has been executed as a deed by each Party to it and is delivered on the date stated at the beginning of this Deed.

EXECUTION AS A DEED

CHARGOR

Signed as a deed by STANDARD LIFE ASSURANCE LIMITED acting by two authorised signatories

) ) )

..................................................................

(Signature of authorised signatory)

..................................................................

Name of authorised signatory (print)

..................................................................


..................................................................


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SECURED PARTY

Signed as a deed by STANDARD LIFE INTERNATIONAL DAC acting by two authorised signatories

) ) )

..................................................................


..................................................................


..................................................................


..................................................................


6/34/037

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Schedule 1 Notice of Enforcement

To: [Custodian]

Copy to: Standard Life Assurance Limited

We refer to (1) the Deed of Fixed Charge (the “Deed”) dated [●] entered into by Standard Life Assurance Limited as the Chargor and Standard Life International DAC as the Secured Party; (2) the Custody Agreement between you and the Chargor dated [●] (as amended or re-stated) (the “Custody Agreement”); and (3) the Account Control Agreement between you, the Chargor and the Secured Party (the “Account Control Agreement”).

We hereby notify you that our right to enforce the security created pursuant to the Deed has arisen.

This Notice of Enforcement takes effect immediately. We hereby irrevocably authorise and instruct you to accept instructions solely from us in relation to the Custody Agreement, the Account Control Agreement and the relevant accounts that were opened in the name of the Chargor pursuant to the Custody Agreement and not to accept any instructions from the Chargor in respect of the same.

Please sign and return the acknowledgement below.

Yours faithfully

…………………….

[Position]

For and on behalf of

STANDARD LIFE INTERNATIONAL DAC

Date: …………………….

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[On duplicate]

From: [ ] in its capacity as Custodian

To: Standard Life International DAC

Date: [●]

We acknowledge receipt of the Notice of Enforcement of which this is a copy and confirm that we agree to each of the matters referred to therein.

Signed:

……………………………………………

[For and on behalf of the Custodian]

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Schedule 2 Derivative Contracts

[List of ISDA Master Agreements and Clearing Agreement relating to Charged Assets to be inserted per the below.

A. The deemed Clearing agreement (constituted of Barclays Bank plc’s terms of business and an associated agency letter) which applies between Standard Life Assurance Limited and Barclays Bank plc pursuant to an agency letter dated [•];

B. The deemed ISDA Master Agreement between Standard Life Assurance Limited (Segregated) and Bank A pursuant to the Framework Agreement dated [●] as amended from time to time.

C. Ibid with Bank B;

D. Ibid with Bank C;

E. Ibid with Bank D;

F. Ibid with Bank E;

G. Ibid with Bank F;

H. Ibid with Bank G;

I. Ibid with Bank H;

J. Ibid with Bank I;

K. Ibid with Bank J;

L. Ibid with Bank K;

M. Ibid with Bank L;

N. Ibid with Bank M;

O. Ibid with Bank N;

P. Ibid with Bank O; and

Q. Ibid with Bank P.

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Schedule 3 Form of Notice to Counterparties and Acknowledgement

To: [Counterparty] [Address]

Date: [●]

Dear Sirs,

NOTICE OF CHARGE

We give you notice that we have charged in favour of Standard Life International DAC (the “Secured Party”) all our rights under or in respect of the [describe relevant contract] (the “Contract”).

We also give you notice that we have agreed with the Secured Party that we will not amend, supplement, vary, waive, discharge, terminate, supersede, assign or novate the Contract without the prior written consent of the Secured Party.

We hereby instruct and authorise you as follows (notwithstanding any prior instructions to the contrary):

(a) to disclose to the Secured Party any information relating to the Contract required by it from time to time;

(b) to pay or release all amounts payable to us under or in connection with the Contract to the following bank account:

Account Bank: [Citibank N.A., London Branch]

Account Name: [ ]

Account Number: [ ];

(c) pending payment or release of any amounts payable to us under or in connection with the Contract as specified above, to hold all such amounts to the order of the Secured Party;

(d) to comply with any written instruction received by you from the Secured Party in relation to the Contract from time to time (although save as expressly specified above, pending receipt of any such instructions you should continue to deal with us or [Standard Life Investments Limited] our investment manager, in relation to all matters relating to the Contract).

The instructions in this notice shall remain in full force and effect until the Secured Party gives you notice in writing revoking them.

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You may comply with the instructions in this notice without any further permission from us and without any enquiry by you as to the justification for or validity of any instruction. In the event of any conflict between communications received from us and from the Secured Party, you shall treat the communication from the Secured Party as prevailing over the communication from us.

Please confirm your agreement to the contents of this notice by executing and returning an original copy of the Form of Acknowledgement attached to this notice to the Secured Party at [address] with a copy to us.

This notice is governed by English law.

Yours faithfully,

.....................................

For and on behalf of [Standard Life Assurance Limited]

c.c. Standard Life International DAC

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To: Standard Life International DAC (the “Secured Party”) [Address]

Date: [●]

Dear Sirs,

ACKNOWLEDGEMENT OF NOTICE OF CHARGE

We acknowledge receipt of a notice dated [ ] (the “Notice”) (a copy of which is attached to this letter). Words and expressions defined in the Notice shall have the same meanings in this letter.

At the request of the Secured Party and Chargor, we confirm that:

(a) we accept the instructions and authorisations in the Notice and undertake to act in accordance with its terms;

(b) we have not received notice of any previous assignment, charge, trust, claim or other third party interest or action affecting the Contract and if, we receive any such notice, we shall immediately notify the Secured Party.

This letter is governed by English law.

Yours faithfully,

Signed for and on behalf of [Counterparty]

by ____________________ (Print Name):

c.c. Standard Life Assurance Limited

6/34/043

DATED

STANDARD LIFE ASSURANCE LIMITED as Chargor

- and -

STANDARD LIFE INTERNATIONAL DAC

as Secured Party

______________________________________

DEED OF FLOATING CHARGE

______________________________________


London EC1Y 8YY (SRBP/JNXC)

548150753

6/35/001

CONTENTS

CLAUSE PAGE

1. DEFINITIONS AND INTERPRETATION 1

2. EFFECTIVE DATE 5

3. COVENANT TO PAY SECURED LIABILITIES 5

4. CREATION OF FLOATING CHARGE AND CRYSTALLISATION 5

5. REPRESENTATIONS AND WARRANTIES 6

6. RANKING 6

7. ORDINARY COURSE OF DEALINGS 7

8. SAVING PROVISIONS 7

9. SECURED PARTY’S UNDERTAKING 8

10. RELEASE 8

11. ADDITIONAL SECURITY 9

12. THIRD PARTY RIGHTS 9

13. VARIATIONS AND ASSIGNMENT 9

14. FORBEARANCE AND ILLEGALITY 9

15. DEMANDS, NOTICES ETC. 9

16. EXECUTION AS A DEED 10

17. COUNTERPARTS 11

18. JURISDICTION 11

19. GOVERNING LAW 11

6/35/002

THIS DEED is made on [ ]

BETWEEN:

1. STANDARD LIFE ASSURANCE LIMITED, a limited company registered in Scotland with company registration number SC286833 and with its registered office at Standard Life House, 30 Lothian Road, Edinburgh, EH1 2DH (the “Chargor”); and

2. STANDARD LIFE INTERNATIONAL DAC, a designated activity company incorporated in the Republic of Ireland under the registered number 408507 and with its registered office at 90 St. Stephen’s Green, Dublin 2, Ireland (the “Secured Party”),

(each a “Party” and together the “Parties”).

WITNESSES as follows:

1. DEFINITIONS AND INTERPRETATION

1.1 In this Deed:

“Brexit Scheme” means the insurance business transfer scheme, sanctioned by the Court of Session in Edinburgh under Part VII of the Financial Services and Markets Act 2000 on or around the date of this Deed, to transfer the euro denominated business of the Chargor from the Chargor to the Secured Party.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Dublin, Edinburgh and Frankfurt.

“Charged Property” means all of the Chargor’s present and future assets (including, but not limited to, any such assets, agreements or contracts located in Scotland or otherwise governed by Scots law) with the exception of (i) any such assets constituting Property-Linked Charged Property (for the purposes of and as defined in the Existing Property-Linked Charge); (ii) any such assets constituting or intended to constitute Charged Assets (for the purposes of and as defined in the Deed of Fixed Charge); and (iii) any other assets over which the Chargor is from time to time unable to grant security, whether through contractual restrictions or otherwise.

“Deed of Fixed Charge” means the deed of fixed charge dated [•] between the Chargor as chargor and the Secured Party as secured party.

An “Enforcement Event” means the occurrence of any Event of Default under (and as defined in) any of the Reinsurance Agreements and the giving by the Secured Party of a notice to the Chargor in respect of such event.

“Existing Property-Linked Charge” means the property-linked floating charge in relation to unit-linked liabilities between SLAL and The Law Debenture Trust Corporation PLC originally dated 12 October 2006 as amended and restated from time to time.

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“GWPF Reinsurance Agreement” means the reinsurance agreement dated [•] between the Secured Party as cedant and the Chargor as reinsurer entitled “Reinsurance Agreement relating to SL Intl GWPF Policies”.

“GWPF Termination Amount” means the “Termination Amount” as defined in and calculated in accordance with the GWPF Reinsurance Agreement.

“GSMWPF Reinsurance Agreement” means the reinsurance agreement dated [•] between the Secured Party as cedant and the Chargor as reinsurer entitled “Reinsurance Agreement relating to SL Intl GSMWPF Policies”.

“GSMWPF Termination Amount” means the “Termination Amount” as defined in and calculated in accordance with the GSMWPF Reinsurance Agreement.

“HWPF Reinsurance Agreement” means the reinsurance agreement dated [•] between the Secured Party as cedant and the Chargor as reinsurer entitled “Reinsurance Agreement relating to SL Intl HWPF Policies”.

“HWPF Termination Amount” means the “Termination Amount” as defined in and calculated in accordance with the HWPF Reinsurance Agreement.

“Insolvency Event” has the meaning given to it in the HWPF Reinsurance Agreement.

“Insurance Debts” has the meaning attributed to that expression by Regulation 2 of The Insurers (Reorganisation and Winding Up) Regulations 2004.

“Liabilities” means any liability, damage, loss, cost, claim or expense of any kind or nature (including VAT), whether present, future, prospective, contingent, direct, indirect, special, consequential or otherwise.

“Pari Secured Liabilities” means the amounts secured by any other floating charge granted by the Chargor which is expressed to rank pari passu with the floating charge created by Clause 4.1 or with unsubordinated Insurance Debts of the Chargor.

“Reinsurance Agreements” means the HWPF Reinsurance Agreement, the GWPF Reinsurance Agreement and the GSMWPF Reinsurance Agreement.

“Reinsured Policies” means any Reinsured Policies under and as defined in each of the Reinsurance Agreements.

“Risk Transfer Time” means [23:59] GMT on: (i) [28 February 2019] or (ii) such other date on which the Brexit Scheme takes effect, by order of the Court of Session in Edinburgh.

“Secured Liabilities” means the HWPF Termination Amount, the GWPF Termination Amount and the GSMWPF Termination Amount.

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“Security” means the security interests constituted or expressed to be constituted in favour of the Secured Party by or pursuant to this Deed.

“Security Interest” means any right or interest arising out of:

(A) any mortgage, charge, pledge, assignment (whether or not expressed to be by way of security), hypothecation, lien, encumbrance or other priority or security interest of any kind, howsoever created or arising;

(B) any deferred purchase, title retention, trust, sale-and-repurchase, sale-and-leaseback, hold back or “flawed asset” arrangement;

(C) any other agreement or arrangement of any kind having the same or a similar commercial or economic effect as security; and

(D) any agreement for any of the foregoing.

“SLAL WP Actuary” means the person appointed from time to time to perform the duties set out in SUP 4.3.16 AR in the FCA Handbook in respect of SLAL.

“SL Intl Head of Actuarial Function” has the meaning given to it in the HWPF Reinsurance Agreement.

“VAT” means:

(A) within the European Union, any tax imposed by any Member State in conformity with the Directive of the Council of the European Union on the common system of value added tax (2006/112/EC); and

(B) outside the European Union, any tax corresponding to, or substantially similar to, the common system of value added tax referred to in paragraph (A) of this definition.

1.2 Unless a contrary intention appears, in this Deed:

(A) “assets” includes properties, revenues and rights of every kind, present, future and contingent, and whether tangible or intangible;

(B) a “company” includes any company, corporation or other body corporate, wherever and however incorporated or established;

(C) an Enforcement Event is “continuing” if it has not been remedied or waived;

(D) “this Deed” or any other deed, agreement or instrument is a reference to this Deed or other deed, agreement or instrument as it may have been varied from time to time and includes a reference to any document which varies or is entered into or made pursuant to or in accordance with any of the terms of this Deed or, as the case may be, the relevant deed, agreement or instrument;

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(E) “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

(F) “law” includes any present or future common or customary law, principles of equity and any constitution, decree, judgment, decision, legislation, statute, order, ordinance, regulation, by-law or other legislative measure in any jurisdiction or any present or future official directive, regulation, guideline, request, rule, code of practice, treaty or requirement (in each case, whether or not having the force of law but, if not having the force of law, the compliance with which is in accordance with the general practice of a person to whom the directive, regulation, guideline, request, rule, code of practice, treaty or requirement is intended to apply) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or such other authority or organisation;

(G) a “person” includes any person, firm, company, government, state or agency of a state, any local or municipal authority, trust or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing;

(H) “rights” includes all rights, title, benefits, powers, privileges, interests, claims, authorities, discretions, remedies, liberties, easements, quasi-easements and appurtenances (in each case, of every kind, present, future and contingent);

(I) “set-off” includes analogous and corresponding rights, claims and actions under other applicable laws; and

(J) “variation” includes any variation, amendment, accession, novation, restatement, modification, assignment, transfer, supplement, extension, deletion or replacement however effected and “vary” and “varied” shall be construed accordingly.

1.3 Interpretation:

(A) A reference to any Party or person shall be construed as including its and any subsequent successors-in-title, permitted transferees and permitted assigns, in each case in accordance with their respective interests.

(B) The terms “include”, “includes” and “including” shall be construed without limitation.

(C) References in this Deed to any Clause shall be to a clause contained in this Deed.

(D) Clause headings are for ease of reference only and shall be ignored in construing this Deed.

(E) References to any provision of any law are to be construed as referring to that provision as it may have been, or may from time to time be, amended or re-enacted, and as referring to all by-laws, instruments, orders, decrees, ordinances

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and regulations for the time being made under or deriving validity from that provision.

2. EFFECTIVE DATE

Notwithstanding any other provision of this Deed, the Parties agree that Clause 3 to Clause 19 shall become effective at the Risk Transfer Time.

3. COVENANT TO PAY SECURED LIABILITIES

The Chargor hereby covenants that it will pay or discharge when due to the Secured Party all Secured Liabilities owing by it to the Secured Party in accordance with the terms of the Reinsurance Agreements.

4. CREATION OF FLOATING CHARGE AND CRYSTALLISATION

4.1 With effect from the Risk Transfer Time and as continuing security for the payment or discharge of the Secured Liabilities, the Chargor hereby charges to the Secured Party by way of floating charge all its right to and title in the Charged Property, provided that the amount recoverable under this Deed shall be such that the amount recoverable under this Deed and the Deed of Fixed Charge (taken together) shall not exceed such amount (up to the Secured Liabilities) as the Secured Party would have been entitled to receive from the Chargor if the Secured Liabilities (and any Pari Secured Liabilities) had been unsubordinated Insurance Debts of the Chargor and had not been secured. For the avoidance of doubt, this provision shall not affect the amount recoverable under the Deed of Fixed Charge.

4.2 Without prejudice to the right of the Secured Party to make any petition or application in a competent court, the Secured Party shall not appoint out of court a receiver, an administrator or other person in a similar capacity and shall not take possession of the Charged Property without a court order. The floating charge created by Clause 4.1 shall crystallise if and when:

(A) an Enforcement Event has occurred and is continuing; and

(B) a liquidator, administrator, director, agent, supervisor, scheme administrator or other person whatsoever (including but not limited to persons in foreign jurisdictions) decides or resolves to take or takes any step to distribute a dividend to creditors (other than preferential creditors) of the Chargor or gives notice or otherwise expresses his intention to do so to such creditors.

In any such event, the floating charge created by Clause 4.1 shall automatically and instantly crystallise into a fixed charge over the Charged Property. The Secured Party may crystallise the floating charge by giving notice to the Chargor in respect of any or all of the Charged Property at any time when the Secured Party reasonably considers that there is both (i) a serious risk that the Chargor is or may become insolvent; and (ii) a serious risk that any person (for the avoidance of doubt, including (without limitation) a liquidator, administrator, director, agent, supervisor, scheme administrator or other person

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whatsoever (including but not limited to persons in foreign jurisdictions)) may distribute a dividend to creditors (other than preferential creditors) of the Chargor.

4.3 A charge which has crystallised under Clause 4.2 may, by notice in writing given at any time by the Secured Party, be reconverted into a floating charge in relation to the Charged Property specified in such notice.

4.4 For the avoidance of doubt, the amount recoverable in accordance with Clause 4.1 shall be calculated on the basis of the assets of the Chargor at the time that the amount recoverable in respect of unsubordinated Insurance Debts of the Chargor has been determined.

4.5 The floating charge created by Clause 4.1 may not be converted into a fixed charge in respect of any property or assets situated in Scotland if, and to the extent that, a receiver would not be capable of exercising his powers in Scotland pursuant to section 72 of the Insolvency Act by reason of such automatic conversion.

5. REPRESENTATIONS AND WARRANTIES

The Chargor represents and warrants to the Secured Party that:

(A) it has the capacity and power to execute and deliver this Deed and to perform its obligations under it and has taken all necessary action to authorise such execution, delivery and performance;

(B) the persons signing this Deed on its behalf are duly authorised to do so on its behalf;

(C) it has obtained all authorisations of any governmental or regulatory body required in connection with the execution, delivery and performance of this Deed and such authorisations are in full force and effect;

(D) the execution, delivery and performance of this Deed has not, and will not, violate any law or rule applicable to it;

(E) it is acting as a principal in entering into this Deed and performing its obligations hereunder; and

(F) it has the right to charge the Charged Property in favour of the Secured Party under this Deed.

6. RANKING

6.1 The Parties hereby acknowledge that the floating charge hereby created shall rank pari passu with any prior, contemporaneous or subsequent floating charge that secures Liabilities incurred by the Chargor which is expressed to rank pari passu with it or with unsubordinated Insurance Debts of the Chargor.

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7. ORDINARY COURSE OF DEALINGS

7.1 At all times prior to the crystallisation of the floating charge created by this Deed, the Chargor shall be at liberty to deal with the Charged Property in the ordinary course of business.

7.2 Without any intention to limit the scope of paragraph 7.1, it is hereby agreed that the Chargor may, in the ordinary course of business, enter into any agreement for the transfer of securities, financial instruments, money and/or other assets by way of a stock lending or borrowing, repurchase arrangement or sale and buy-back, as well as enter into collateralised derivatives contracts, and perform its obligations under any such agreement, arrangement or contract.

8. SAVING PROVISIONS

8.1 Continuance of Security: The Security created by this Deed shall remain in force as a continuing security to the Secured Party, notwithstanding any partial release, settlement of account or any other act, event or matter whatsoever, until the execution by the Secured Party of an absolute and unconditional release by deed or the release and discharge of this Deed in whole pursuant to Clause 10.

8.2 Waiver of defences: Neither the obligations of the Chargor under this Deed nor the Security created or intended to be created by or pursuant to this Deed will be affected by any act, omission, matter or thing which, but for this Clause 8.2, would reduce, release or prejudice any of its obligations under this Deed or the Security created or intended to be created by or pursuant to this Deed (without limitation and whether or not known to it or any other person) including:

(A) any time, waiver or consent granted to, or composition with, the Chargor or any other person;

(B) the release of the Chargor or any other person under the terms of any composition or arrangement with any creditor of any such person;

(C) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, the Chargor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(D) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Chargor or any other person;

(E) any variation (however fundamental and whether or not more onerous) or replacement of any of the Reinsurance Agreements or any other document relating to any Secured Liabilities;

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(F) any unenforceability, illegality or invalidity of any obligation of any person under any of the Reinsurance Agreements or any other document or security; or

(G) any Insolvency Event or similar proceedings.

8.3 Chargor intent: Without prejudice to the generality of Clause 8.2, the Chargor expressly confirms that it intends that the Security intended to be created by or pursuant to this Deed shall extend from time to time to any (however fundamental) variation, increase or addition of or to any of the Secured Liabilities and/or any of the Reinsurance Agreements or any other document relating to any Secured Liabilities in writing after the date of this Deed.

8.4 Immediate recourse: The Chargor waives any right it may have of first requiring the Secured Party (or any nominee or assignee or any other person acting on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Chargor under this Deed. This waiver applies irrespective of any law or any provision of any other document to the contrary, unless expressly agreed otherwise by the Secured Party.

9. SECURED PARTY’S UNDERTAKING

If the Secured Party is notified in advance in writing that a meeting of creditors of the Chargor is to be convened or held for the purposes of approving a proposal for a scheme of arrangement under Part 26 of the Companies Act 2006 or for a voluntary arrangement under Part 1 of the Insolvency Act 1986 in respect of the Chargor, the Secured Party undertakes that it will agree to be bound by the proposal and (to the extent necessary to give effect to the intention of this Clause) to release the security constituted by this Deed, provided that:

(A) the proposal has the effect of ensuring that the Secured Party will receive the amount recoverable under this Deed up to the limit specified in Clause 4.1; and

(B) if (but only if) the Secured Party had notified the Chargor at or prior to the meeting that the Secured Party opposed the proposal, the proposal would have been passed by the requisite majority(ies) even if the Secured Party had been entitled to vote on the proposal in respect of the Secured Liabilities as an Insurance Debt and had voted against the proposal in respect of that amount.

10. RELEASE

Once the Secured Liabilities are repaid and discharged in full and the Chargor has no further obligation (whether actual, prospective or contingent) in relation to the Reinsurance Agreements with the Secured Party, the Chargor shall be entitled to redeem the security constituted by this Deed and to require the Secured Party to effect a full release and discharge of it, including performing all such deeds, acts and things as are necessary to release the Charged Property from the security created by this Deed.

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11. ADDITIONAL SECURITY

The charge contained in this Deed is in addition to, and shall neither be merged in, nor in any way exclude or prejudice, any other Security Interest, right of recourse or other right whatsoever which the Secured Party may now or in the future hold or have (or would apart from this Deed hold or have) as regards the Chargor or any other person in respect of the Secured Liabilities, whether by virtue of contract, statute or otherwise.

12. THIRD PARTY RIGHTS

No person other than a Party to this Deed shall have any right by virtue of the Contracts (Rights of Third Parties) Act 1999 or the Contract (Third Party Rights) (Scotland) Act 2017 to enforce any term (express or implied) of this Deed, but without prejudice to any right or remedy of the third party which may exist or be available apart from that Act.

13. VARIATIONS AND ASSIGNMENT

13.1 Variation: A waiver or variation of this Deed will only be effective if it is in writing, is signed by each Party and has been consented to in writing by the SLAL WP Actuary and the SL Intl Head of Actuarial Function (on the basis that the proposed waiver or variation is not expected materially and adversely to affect (i) the contractual rights of the holders of Reinsured Policies; or (ii) their reasonable expectations regarding non-contractual rights under such policies).

13.2 Assignment: Except pursuant to the Reinsurance Agreements and as provided under this Deed, no Party to this Deed shall assign or transfer, or attempt to assign or transfer, any of its rights or obligations (including by way of granting a Security Interest) under this Deed.

14. FORBEARANCE AND ILLEGALITY

14.1 Delay etc.: All rights, powers and privileges under this Deed shall continue in full force and effect, regardless of the Secured Party exercising, delaying in exercising or omitting to exercise any of them.

14.2 Illegality, invalidity, unenforceability: Any provision of this Deed which is or becomes illegal, invalid or unenforceable shall be ineffective only to the extent of such illegality, invalidity and unenforceability, without invalidating the remaining provisions of this Deed.

15. DEMANDS, NOTICES ETC.

15.1 Demands: A demand for payment or other demand or notice to the Chargor under this Deed shall be made or given by any director or officer of the Secured Party in accordance with Clause 15.2.

15.2 Addresses for notice and deemed service: Each Party shall notify to the other Party an authorised address and email address in the United Kingdom or the Republic of Ireland for the purpose of this Clause and the first such authorised address for each Party shall

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be the address and email address stated in Clause 15.3. Any demand, notice, consent or approval or other communication to be given under this Deed shall be in writing and shall either be delivered personally or sent by pre-paid first class post or email to the relevant Party’s address or email address stated in Clause 15.3 (or such other address or email address (in each case in the United Kingdom or the Republic of Ireland) as is notified in writing from time to time by such Party to the other Party in accordance with the requirements of this Clause). Any such notice shall be effective upon receipt and shall be deemed to have been received:

(A) if delivered personally, at the time of delivery;

(B) if sent by pre-paid first class post, at noon two Business Days following posting; and

(C) if communicated by email, upon receipt by the recipient,

PROVIDED that where, in the case of delivery by hand or email, delivery or transmission occurs after 3.00pm on a Business Day or on a day which is not a Business Day, receipt shall be deemed to occur at 9.00am on the next following Business Day.

15.3 Addresses for service: For the purposes of this Clause the authorised address of each Party shall be the address set out below:

(A) Chargor:

Address: Standard Life House, 30 Lothian Road, Edinburgh, EH1 2DH

Email address: [ ]


(B) Secured Party:

Address: 90 St. Stephen’s Green, Dublin 2, Ireland

Email address: [ ]


16. EXECUTION AS A DEED

Each of the Parties intends this Deed to be a deed and confirms that it is executed and delivered as a deed, notwithstanding the fact that any one or more of the Parties may only execute it under hand.

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17. COUNTERPARTS

This Deed may be executed in any number of counterparts, and by the Parties to this Deed on separate counterparts, but will not be effective until each such Party has executed at least one counterpart. Each counterpart shall constitute an original of this Deed, but all the counterparts will together constitute one and the same instrument.

18. JURISDICTION

(A) The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed (including a dispute regarding the existence, validity or termination of this Deed) (a “Dispute”).

(B) The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(C) This Clause 18 is for the benefit of only the Secured Party. As a result, the Secured Party shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Secured Party may take concurrent proceedings in any number of jurisdictions.

19. GOVERNING LAW

This Deed is governed by and is to be construed in accordance with English law. Any matter, claim or dispute arising out of or in connection with this Deed, whether contractual or non-contractual, is to be governed by and construed in accordance with English law.

THIS DEED has been executed by the Parties as a deed and is delivered on the day and year first above written.

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CHARGOR

Signed as a deed by STANDARD LIFE ASSURANCE LIMITED acting by two authorised signatories

) ) )

.................................. (Signature of authorised signatory)

.................................. Name of authorised signatory (print)

) ) )



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SECURED PARTY

Signed as a deed by STANDARD LIFE INTERNATIONAL DAC acting by two authorised signatories

) ) )



) ) )



6/35/015

DATED

STANDARD LIFE ASSURANCE LIMITED as Cedant

- and -

STANDARD LIFE INTERNATIONAL DAC as Reinsurer

___________________________________________________

RETROCESSION AGREEMENT: EURO DENOMINATED PROPERTY-LINKED FUNDS

___________________________________________________

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CONTENTS

Page

1. INTERPRETATION 1

2. RISK TRANSFER TIME 10

3. REINSURANCE 10

4. PREMIUMS 11

5. FUND VALUATION, PRICING, ALLOCATION AND DEALLOCATION 11

6. PAYMENTS 11

7. SETTLEMENT AND RECONCILIATION 11

8. COVENANTS 12

9. WARRANTIES 13

10. NOTICES 14

11. TERMINATION ON NOTICE 15

12. EFFECT OF TERMINATION 17

13. CROSS DEFAULT 17

14. TAX EVENT, REGULATORY EVENT OR CHANGE IN APPLICABLE LAW 17

15. PROVISIONS SURVIVING TERMINATION 18

16. INTEREST 18

17. VAT 18

18. WITHHOLDINGS AND DEDUCTIONS 18

19. DATA PROTECTION 19

20. CONFIDENTIALITY 19

21. ANNOUNCEMENTS 20

22. TRANSFERS AND ASSIGNMENT 20

23. INVALIDITY, REMEDIES AND WAIVERS 20

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24. ENTIRE AGREEMENT 21

25. FURTHER ASSURANCE 21

26. SET-OFF 21

27. GENERAL 21

28. GOVERNING LAW AND JURISDICTION 21

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RETROCESSION AGREEMENT: EXISTING BUSINESS – EURO DENOMINATED PROPERTY-LINKED FUNDS

THIS AGREEMENT is made on [ ]

BETWEEN:

1. STANDARD LIFE ASSURANCE LIMITED, a company registered in Scotland (number 286833) whose registered office is at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH (“SLAL”).

2. STANDARD LIFE INTERNATIONAL DAC, a company registered in Ireland (number 408507) whose registered office is at 90 St. Stephen’s Green, Dublin 2, Ireland (“SL Intl”),

(each a “party” and together the “parties”).

WHEREAS:

A. It is intended that, pursuant to the Brexit Scheme (as defined below), SLAL shall transfer its euro denominated business to SL Intl immediately following the Brexit Scheme taking effect, and SLAL shall reinsure and indemnify SL Intl in respect of certain of the liabilities transferred pursuant to the Brexit Scheme, in accordance with the terms of the HWPF Reinsurance Agreement (as defined below).

B. It is proposed that, conditional on both the Brexit Scheme and the HWPF Reinsurance Agreement becoming effective, certain liabilities under the euro denominated property-linked policies which were transferred under the Brexit Scheme to SL Intl and then reinsured by SLAL pursuant to the HWPF Reinsurance Agreement, will be retroceded to SL Intl under this Agreement.

C. The parties wish to record the terms of such reinsurance in this Agreement.

The parties agree as follows:

1. INTERPRETATION

1.1 In this Agreement (including the recitals):

“2006 Scheme” means the scheme pursuant to Part VII of, and Schedule 12 to, FSMA, under which substantially all of the long-term insurance business of The Standard Life Assurance Company was transferred to SLAL, and which was sanctioned by the Court on 9 June 2006 and became effective on 10 July 2006 (as amended from time to time);

“2011 Scheme” means the scheme pursuant to Part VII of, and Schedule 12 to, FSMA, under which the long-

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term business of Standard Life Investment Funds Limited was transferred to SLAL, which was sanctioned by the Court of Session on 20 December 2011 and became effective on 31 December 2011 (as amended from time to time);

“Actual Costs” means the portion of the charges and expenses that Standard Life Investments Limited charges to SL Intl attributable to the Reinsured Irish Property-Linked Policies;

“Adjustment Assets” has the meaning given to it in clause 7.4 (Settlement and Reconciliation);

“Affiliates” means, in relation to a party, a subsidiary or a holding company of that party and any other subsidiaries of such holding companies from time to time (and for the purposes of this Agreement subsidiary and holding company shall have the meanings ascribed to them in the Companies Act 2006);

“Applicable Law” means any and all law (whether civil, criminal or administrative), common law, statutes, statutory instruments, treaties, conventions, directives, regulations or rules made thereunder, by-laws, demands, decrees, injunctions, resolutions, orders or judgments in any applicable jurisdiction, including the principles, rules and guidance set out in the CBI Consumer Protection Code 2012, the (Ireland) Code of Practice on Data Protection in the Insurance Sector 2013, FCA Handbook, the PRA Rulebook and any applicable data protection legislation and any related or similar rules of any other Governmental Authority, binding on or applicable to the relevant person or in respect of the relevant matter, as the context requires;

“Boxes” means the difference between the number of Units in existence in the Linked Funds and the number of customer Units allocated in those Linked Funds;

“Brexit Scheme” means the insurance business transfer scheme, sanctioned by the Court of Session in Edinburgh under Part VII of the Financial Services and Markets Act 2000 on or around

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the date of this Agreement, to transfer the euro denominated business of SLAL, from SLAL to SL Intl;

“Business Day” means a day (other than a Saturday or a Sunday) on which banks are open for general business in Dublin and Edinburgh;

“Business Guidelines” means the collective term for the risk management policies, business standards, governance and internal control systems from time to time, providing consistent risk management practices across the Group;

“CBI” means the Central Bank of Ireland;

“Claim” means, in relation to any Reinsured Irish Property-Linked Policy, the notification by the insured of a claim under such Reinsured Irish Property-Linked Policy and a Claim shall be deemed to have been made where there is a settlement, compromise, commutation and/or policy buy-back entered into by or on behalf of SL Intl, as the insurer under the Reinsured Irish Property-Linked Policy;

“Change of Control” means, in respect of a party, a change in Control of that party which causes it to be Controlled by a different ultimate Parent Undertaking to the other party to this Agreement;

“Consideration” has the meaning given in clause 4 (Premiums);

“Control” means, in relation to a company, the ability of a person, directly or indirectly, to ensure that the activities and business of the company are conducted in accordance with the wishes of that person, and a person shall be deemed to have Control of a company if it possesses or acquires the majority of the issued share capital or the voting rights in that company, or the right to appoint a majority of directors on the board of the company, or the right to receive the majority of the income of that company on any distribution by it of all of its income or the majority of its assets on a winding up, and “Controlled” shall be construed accordingly;

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“Daily Premium” means all Relevant Premiums received by SL Intl, as insurer under the Reinsured Irish Property-Linked Policies, from insureds, and paid to SLAL under the HWPF Reinsurance Agreement on a day, in respect of the Reinsured Irish Property-Linked Policies;

“Default Interest” means EURIBOR at the relevant time plus a margin of 100 basis points, or such other rate as may be agreed from time to time pursuant to clause 16 (Interest);

“EURIBOR” means, in respect of any period, the rate per annum quoted on the relevant Bloomberg screen (ticker EE00O/N) at close of business for each day of the period, for the offering of deposits in euros overnight and if such rate is below zero, EURIBOR will be deemed to be zero. If such Bloomberg page or service ceases to be available, the payee party may specify another page or service displaying the relevant rate after consultation with the paying party;

“euro” or “€” means the lawful currency of the participating member states of the European Union, in accordance with the legislation relating to Economic and Monetary Union;

“FCA” means the Financial Conduct Authority;

“FCA Handbook” means the handbook or rules and guidance issued by the FCA from time to time pursuant to FSMA;

“FSMA” means the Financial Services and Markets Act 2000;

“Fund Management Charge” means the monetary value of charges made through the accumulation Unit pricing of Linked Funds other than Tax Charges;

“Fundamental Provisions” means (i) in respect of SLAL, clause 6 (Payments); clauses 7.1; 7.2 and 7.5 (Settlement and Reconciliation) and clause 8.1(A) (Covenants) of this Agreement; and (ii) in respect of SL Intl, clause 5 (Fund Valuation, Pricing, Allocation and Deallocation); clause 6 (Payments); clauses 7.3, 7.4 and 7.5 (Settlement and Reconciliation) and clause 8.2(A) (Covenants) of this Agreement;

“Governmental Authority” means any government, quasi-governmental, statutory or regulatory, administrative, judicial

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body department, commission, authority, tribunal, supervisory body, or any other competent authority or entity in any part of the world having responsibility for the regulation or governance of the business in respect of the Reinsured Irish Property-Linked Liabilities and/or the subject matter of this Agreement, and/or having regulatory or supervisory jurisdiction over either party, including the CBI, the PRA and the FCA, as applicable;

“Group” means the ultimate Parent Undertaking of the parties and its Affiliates from time to time;

“HWPF Reinsurance Agreement” means the reinsurance agreement entitled “Reinsurance Agreement: HWPF” between SLAL and SL Intl of even date herewith;

“HWPF Termination Amount” means the Termination Amount, as such term is defined in the HWPF Reinsurance Agreement;

“Independent Actuary” means the independent actuary appointed by the parties from time to time, and, where the parties are unable to agree, the Institute and Faculty of Actuaries shall nominate the independent actuary;

“Initial Premium” has the meaning given to it in clause 4.1(A);

“Irish Corporation Tax” means taxes imposed by any taxing authority in the Republic of Ireland on income, profits or gains (including any income, profits or gains which are deemed to be earned, accrued or received);

“Linked Fund” means an internal linked fund established and maintained for accounting purposes by SL Intl to enable benefits payable under Property-Linked Policies to be calculated and, for the avoidance of doubt, includes internal linked funds that are connected to the collective investment funds of a third party and excludes With Profits Funds;

“Parent Undertaking” has the meaning ascribed to it in the Companies Act 2006;

"Policy" has the meaning set out in the Financial Services and Markets Act 2000 (Meaning of

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“Policy” and “Policyholder”) Order 2001 (SI 2001/2361) and “Policyholder” shall be construed accordingly;

“PRA” means the Prudential Regulatory Authority;

“PRA Rulebook” means the book of rules applicable to Solvency II firms issued by the PRA from time to time, pursuant to FSMA;

“Premiums” means premiums of every description including:

(A) increases to premiums (whether by way of regular premium or single premium and whether contractual or otherwise); and

(B) other sums (including payments in specie);

“Property-Linked Policy” means any Policy of the type described in paragraph III of Part II of Schedule 1 to the Regulated Activities Order to the extent to which the benefits payable are determined by reference to the value of, or income from, property of any description (whether or not specified in the Policy) but excluding, for the avoidance of doubt, any part of any Policy which is invested in any With Profits Fund maintained by SL Intl;

“Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544);

“Regulatory Event” means, at any time after the Risk Transfer Date, a change in Applicable Law, including any change in official or generally published interpretation of Applicable Law by a Governmental Authority or by a court or other judicial body of competent jurisdiction relating to the conduct of insurance or reinsurance business or companies and/or financial services businesses or firms or the sale or marketing of insurance contracts, or any action taken by any Governmental Authority;

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“Reinsurance” means the reinsurance provided by SL Intl pursuant to this Agreement, as described in clause 3 (Reinsurance);

“Reinsured Irish Property-Linked Liabilities”

means liabilities of SLAL under the HWPF Reinsurance Agreement, in respect of Claims arising on or after the Risk Transfer Date in respect of the Reinsured Irish Property-Linked Policies but only to the extent that these liabilities are directly in respect of Units, of an amount equal to the Unit Fund Value of the relevant Reinsured Irish Property-Linked Policy;

"Reinsured Irish Property-Linked Policies" means all Irish euro denominated Property-Linked Policies transferred and allocated to SL Intl HWPF pursuant to the Brexit Scheme and any other Irish euro denominated Property-Linked Policies written in or allocated to SL Intl HWPF after the Risk Transfer Date;

"Relevant Premium" means that part of any Premium in respect of a Reinsured Irish Property-Linked Policy which is used to purchase Units in Linked Funds calculated with due regard to the charging structure of the Policy (allowing, where appropriate, for allocation factors, bid/offer pricing spreads and actuarial funding of initial Units);

“Risk Transfer Time” means 23:59 GMT on: (i) 28 February 2019 or (ii) such other date on which the Brexit Scheme takes effect, by order of the Court of Session in Edinburgh;

“SL Intl HWPF” means the “SL Intl HWPF” fund maintained by SL Intl;

“Solvency II” means Directive 2009/138/EC, any regulation, directive, enactment, statutory provision or other legislation implementing that directive, and any associated or consequential amendments or changes to the FCA Handbook or PRA Rulebook (unless otherwise stated);

"Tax or Taxation" means any kind of tax, duty or levy or any similar charge, whether or not similar to any in force at the date of this Agreement, and whether of the United Kingdom or the Republic

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of Ireland or elsewhere, and any related fine, penalty, interest or other amount;

“Tax Authority” means any government, state or municipality or any local, state, federal or other authority, body or official anywhere in the world exercising a fiscal, revenue, customs or excise function (including, without limitation, HM Revenue & Customs in the UK and the Office of the Revenue Commissioners in the Republic of Ireland);

“Tax Charges” means the monetary value of charges made through the accumulation Unit pricing of Linked Funds by SL Intl in respect of Taxation;

“Tax Event” means, at any time after the Risk Transfer Time, a change in Applicable Law relating to Tax or its interpretation, or prevailing practice or action taken by any Tax Authority or any court or tribunal in the United Kingdom, Germany, Austria or the Republic of Ireland;

“Termination Amount” means an amount equivalent to those assets which are held by SL Intl in relation to the Linked Funds and which are equal to 100 per cent. of the Unit Fund Value on the Termination Date, as determined by SL Intl (acting in good faith and in accordance with Applicable Law (and, where the Total Amount as defined in Part B of Schedule 3 to the HWPF Reinsurance Agreement is calculated in accordance with the Insurers (Winding Up) (Scotland) Rules 2001 or other Applicable Law, the Termination Amount shall be calculated in accordance with the same methodology));

“Termination Amount Dispute Notice” has the meaning given to it in clause 12.2;

“Termination Date” means (a) in the case of a termination in accordance with clause 11 (Termination on Notice), the date of receipt of a Termination Notice; and (b) in the case of a termination in accordance with clause 13 (Cross Default), the Termination Date as defined in the relevant agreement;

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“Termination Notice” means a written notice of termination served by one party on the other party in accordance with clause 11 (Termination on Notice);

“Transaction Documents” means this Agreement and the HWPF Reinsurance Agreement;

“Unit Cancellations” means the monetary value of cancellations of Units in a Linked Fund in respect of a Policy;

“Unit Charges” means the monetary value of deductions made from a Linked Fund in respect of charges to a Policy (excluding any Fund Management Charges);

“Unit Creations” means the monetary value of additions made to a Linked Fund (in the form of the allocation of additional Units) in respect of a Policy, other than to reflect the receipt of a Daily Premium;

“Unit Fund Value” means the monetary value of holdings in Linked Funds for a Policy allowing for actuarial funding where it applies;

“Units” means notional units whose value or number vary by reference to the value of the Linked Fund (or the value of the directly held assets) for the purposes of calculating benefits payable under Property-Linked Policies;

“VAT” means:

(i) within the European Union, any Tax imposed by any Member State in conformity with the Directive of the Council of the European Union on the common system of value added tax (2006/112/EC); and

(ii) outside the European Union, any Tax corresponding to, or substantially similar to, the common system of value added Tax referred to in paragraph (i) of this definition; and

“With Profits Fund” shall have the meaning given to it in the Handbook of Rules and Guidance published by the Financial Conduct Authority.

1.2 In this Agreement, unless otherwise specified:

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(A) references to the singular shall include the plural and vice versa;

(B) references to clauses are to clauses of this Agreement;

(C) use of any gender includes the other genders;

(D) references to a “company” shall be construed so as to include any corporation or other body corporate, wherever and however incorporated or established;

(E) references to a “person” shall be construed so as to include any individual, firm, company, corporation, body corporate, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality);

(F) a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted and shall include any subordinate legislation made from time to time under that statute or statutory provision;

(G) any reference to any regulator (including the PRA, FCA and CBI) shall be deemed to include a reference to any successor regulators;

(H) any reference to a “day” (including within the phrase “Business Day”) shall mean a period of 24 hours running from midnight to midnight;

(I) references to times are to Dublin time; and

(J) all headings and titles are inserted for convenience only and are to be ignored in the interpretation of this Agreement.

2. RISK TRANSFER TIME

This Agreement shall be effective on the Risk Transfer Time and shall continue in force until natural expiry or termination in accordance with clause 11 (Termination on Notice) or clause 13 (Cross Default), (the “Term”).

3. REINSURANCE

3.1 SLAL shall cede, and SL Intl shall reinsure, all the Reinsured Irish Property-Linked Liabilities. Such cession and reinsurance shall:

(A) be effected immediately and automatically on, and with effect from, the Risk Transfer Time; and

(B) be implemented on the basis set out in this Agreement.

3.2 SL Intl shall be entitled to retrocede (subject at all times to maintenance of confidentiality and compliance with clause 19 (Data Protection)) all or part of its liabilities under this Agreement without the consent of SLAL if:

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(A) such retrocession does not adversely affect SLAL’s rights, obligations or security under this Agreement and/or the Transaction Documents; and

(B) SL Intl’s obligations to SLAL under this Agreement and/or the Transaction Documents shall continue and not in any way be affected by such retrocession.

4. PREMIUMS

4.1 As consideration for the Reinsurance, SLAL agrees that SL Intl shall be entitled to:

(A) an initial reinsurance premium equal to the monetary value of the Linked Funds in respect of the Reinsured Irish Property-Linked Policies at the Risk Transfer Time (the “Initial Premium”); and

(B) all Relevant Premiums received by SLAL under the HWPF Reinsurance Agreement on or after the Risk Transfer Time in respect of the Reinsured Irish Property-Linked Policies,

(the Initial Premium and the Relevant Premiums, together, the "Consideration").

4.2 The payment of the Consideration shall be made in accordance with clause 7 (Settlement and Reconciliation).

4.3 SL Intl acknowledges and confirms that, except as expressly set out in this Agreement, no further amount will be due or payable from SLAL to SL Intl under this Agreement in connection with the provision of the Reinsurance.

5. FUND VALUATION, PRICING, ALLOCATION AND DEALLOCATION

SL Intl shall continue to manage the Reinsured Property-Linked Liabilities and the related Linked Funds (including in respect of valuation, pricing, allocation and deallocation of Units) on a basis consistent with and by reference to (and in compliance with) the Business Guidelines and the terms of the Reinsured Irish Property-Linked Policies.

6. PAYMENTS

All payments between the parties under this Agreement shall be settled in euros electronically to such accounts as the parties may notify to each other in writing from time to time.

7. SETTLEMENT AND RECONCILIATION

7.1 At the Risk Transfer Time, SLAL shall transfer to SL Intl the Initial Premium. SLAL’s obligation to transfer the Initial Premium pursuant to this clause 7.1 shall be set off against SL Intl’s obligation in clause 3.1(B) of the HWPF Reinsurance Agreement.

7.2 In relation to each day, SLAL shall pay to SL Intl (no later than the Business Day immediately following SLAL having provided written notice to SL Intl of such amounts (such notice not to be unreasonably withheld or delayed) or, if later, on the payment date specified in such notice):

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(A) an amount equal to the Daily Premium attributable to that day;

(B) an amount equal to any Unit Creations attributable to that day; and

(C) an amount equal to the Actual Costs billed to SL Intl on that day or by reference to the period to which the Actual Costs relate.

7.3 In relation to each day, SL Intl shall pay to SLAL (no later than the Business Day immediately following SLAL having provided written notice to SL Intl of such amounts or, if later, on the payment date specified in such notice):

(A) an amount equal to any Unit Cancellations attributable to that day;

(B) an amount equal to the monetised Fund Management Charge attributable to that day or by reference to the period to which the Fund Management Charge relates; and

(C) an amount equal to any monetised Unit Charges attributable to that day or by reference to the period to which the Unit Charges relate.

7.4 If either party transfers any assets which are in excess of, or which are less than the payments required to be made pursuant to this Agreement to the other party (the assets representing the value of the overpayment or the underpayment being referred to as the “Adjustment Assets”), the relevant party shall, within five (5) Business Days of identifying such an error or of having received notice of such an error from the other Party, pay to that other party an amount equal to the value of the Adjustment Assets (together with accrued interest on that amount at the rate of EURIBOR plus 1% per annum).

7.5 Each party acknowledges and agrees that:

(A) unless expressly stated otherwise, all payments required to be made pursuant to this Agreement shall be made, subject to clause 26 (Set-off), on a gross basis without any withholding or deduction whatsoever, save as may be required by law or expressly permitted by the terms of this Agreement;

(B) all cash payments to be made pursuant to this Agreement shall be made in immediately available funds to the bank account specified by the recipient of the relevant payment; and

(C) there shall be no transfer of the Boxes pursuant to the terms of this Agreement.

7.6 The parties agree that, without prejudice to the parties' obligations to any third party, the payments to be made on each Business Day pursuant to clauses 7.2 to 7.4 may be settled on a net basis.

8. COVENANTS

8.1 SLAL covenants in relation to its performance of its obligations under the Transaction Documents that:

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(A) it shall comply in all material respects with Applicable Law;

(B) subject to Applicable Law, it shall at all times during the Term comply in all material respects with the Business Guidelines; and

(C) it shall obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all authorisations, approvals, licences and consents required in or by Applicable Law to enable it lawfully to enter into and perform its obligations under the Transaction Documents.

8.2 SL Intl covenants in relation to its performance of its obligations under the Transaction Documents that:




9. WARRANTIES

9.1 No term of this Agreement shall be a warranty except where the term expressly so provides.

9.2 No terms of this Agreement which are expressed to be warranties (or which might otherwise be construed as warranties) shall take effect as warranties within the meaning of the Marine Insurance Act 1906 but shall, instead, be construed and take effect as innominate terms and there shall be no right to terminate or avoid for breach of warranty save as expressly set out in this Agreement.

9.3 SLAL warrants to SL Intl that, as at the date of execution of this Agreement:

(A) it has the power to enter into and perform its obligations under the Transaction Documents and all necessary authorisations have been obtained;

(B) the obligations expressed to be assumed by it under the Transaction Documents constitute valid and binding obligations (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law));

(C) the execution, delivery and performance of the Transaction Documents does not violate or conflict with any Applicable Law, any direction or order or judgment of any court or any agency of government, or any contractual restriction binding on or affecting it or any of its assets or its constitutive documents;

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(D) it is duly registered and validly exists under Scots law; and

(E) it carries on its business in all material respects in accordance with Applicable Law.

9.4 SL Intl warrants to SLAL that, as at the date of execution of this Agreement:

(A) it has the power to enter into and perform its obligations under the Transaction Documents and all necessary authorisations have been obtained;

(B) the obligations expressed to be assumed by it under the Transaction Documents constitute valid and binding obligations (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law));

(C) the execution, delivery and performance of the Transaction Documents does not violate or conflict with any Applicable Law, any direction or order or judgment of any court or any agency of government, or any contractual restriction binding on or affecting it or any of its assets or its constitutive documents;

(D) it is duly registered and validly exists under Irish law; and


10. NOTICES

10.1 A notice under this Agreement shall only be effective if it is in writing. Writing includes e-mail (other than in the case of legal notices or notices to terminate this Agreement, which must be sent by post).

10.2 Notices under this Agreement shall be sent to a party at its address or number and for the attention of the individual set out below:

SLAL SL Intl

Address: Standard Life House 30 Lothian Road Edinburgh EN1 2DH

Address: 90 St Stephen’s Green Dublin 2 Ireland

Email: [●]

Email: [●]

Marked for the attention of: the Chief Executive Officer


provided that a party may change its notice details on giving notice to the other party of the change in accordance with this clause 10.2. That notice shall only be effective on the

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date falling five (5) clear Business Days after the notification has been received or such later date as may be specified in the notice.

10.3 Subject to clause 10.4, any notice given under this Agreement shall, in the absence of earlier receipt, be deemed to have been duly given as follows:

(A) if delivered personally, on delivery;

(B) if sent by first class post, two (2) clear Business Days after the date of posting; and

(C) if sent by email, when despatched.

10.4 Any notice given under this Agreement outside normal business hours (being 9 a.m. to 5 p.m. (Dublin time) on a Business Day) shall be deemed not to have been given until the start of the next period of normal business hours in such place.

11. TERMINATION ON NOTICE

11.1 Subject to clause 11.3, SLAL shall have the right to terminate this Agreement in full by serving a Termination Notice on SL Intl on or after the occurrence of any of the following events:

(A) SL Intl fails to make a payment which is due and payable to SLAL as required under this Agreement and such failure is not rectified within five (5) Business Days of being notified by SLAL of such failure;

(B) a material breach by SL Intl of a Fundamental Provision of this Agreement, which is either incapable of remedy or, if capable of remedy, is not remedied within thirty (30) Business Days of being notified by SLAL of such breach;

(C) it becomes unlawful in any relevant jurisdiction for SLAL or SL Intl to perform all or any material part of this Agreement and such unlawfulness is not remedied within thirty (30) Business Days after SLAL gives notice in writing to SL Intl in respect of such unlawfulness;

(D) SL Intl ceases to hold any authorisation, permission, approval, registration, consent or licence which it requires in order to perform its material obligations under this Agreement and fails to obtain such permission, approval, registration, consent or licence within thirty (30) Business Days of notice in writing from SLAL requiring it to do so;

(E) a Change of Control occurs;

(F) any procedure is commenced with a view to the winding up or reorganisation of SL Intl except in the case of (i) a solvent reorganisation or (ii) any winding-up petition which is frivolous or vexatious or is discharged, stayed or dismissed within ten (10) Business Days of commencement or, if earlier, the date on which it is advertised;

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(G) any step is taken or any procedure is commenced with a view to the appointment of an administrator, receiver, administrative receiver, examiner or liquidator (or other insolvency officer) in relation to SL Intl or all or a substantial part of its assets except in the case of any winding-up petition or administration application which is frivolous or vexatious or is discharged, stayed or dismissed within ten (10) Business Days of commencement or, if earlier, the date on which it is advertised as the case may be;

(H) the holder of any security over all or a substantial part of the assets of SL Intl takes any step to enforce that security or all or a substantial part of the assets of SL Intl are subject to attachment, sequestration, execution or any similar process;

(I) SL Intl is unable to pay its debts as they fall due within the meaning of section 123(1)(e) or 123(2) of the Insolvency Act 1986; or

(J) anything analogous to the matters set out in sub-clauses (F) to (I) above occurs in relation to SL Intl in any jurisdiction.

11.2 Subject to clause 11.3, SL Intl shall have the right to terminate this Agreement in full by serving a Termination Notice on SLAL on or after the occurrence of any of the following events:

(A) SLAL fails to make a payment which is due and payable to SL Intl as required under this Agreement and such failure is not rectified within five (5) Business Days of being notified by SL Intl of such failure;

(B) a material breach by SLAL of a Fundamental Provision of this Agreement, which is either incapable of remedy or, if capable of remedy, is not remedied within thirty (30) Business Days of being notified by SL Intl of such breach;

(C) a Change of Control occurs;

(D) it becomes unlawful in any relevant jurisdiction for SLAL or SL Intl to perform all or any material part of this Agreement and such unlawfulness is not remedied within thirty (30) Business Days after SL Intl gives notice in writing to SLAL in respect of such unlawfulness; or

(E) SLAL ceases to hold any authorisation, permission, approval, registration, consent or licence which it requires in order to perform its material obligations under this Agreement and fails to obtain such permission, approval, registration, consent or licence within thirty (30) Business Days of notice in writing from SL Intl requiring it to do so.

11.3 Following the occurrence of one of the events described in clause 11.1 or 11.2, the relevant party may only exercise its related right to terminate this Agreement by giving notice in writing to the other party at any time from the date on which the event occurs until the date that falls sixty (60) Business Days after:

(A) the later of (i) the date on which the relevant event occurs, or (ii) the date on which the relevant party became aware of the occurrence of the event; or

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(B) if a period of time is specified to remedy, rectify or dismiss the event described in clause 11.1 or 11.2, the date on which such period of time ends.

12. EFFECT OF TERMINATION

12.1 If either party serves a Termination Notice in accordance with clause 11 (Termination on Notice) or this Agreement terminates in accordance with clause 13 (Cross Default):

(A) SL Intl shall, within three (3) Business Days of the Termination Date, calculate, in good faith, the Termination Amount and notify this amount to SLAL, which amount will be used to calculate the HWPF Termination Amount pursuant to the HWPF Reinsurance Agreement; and

(B) the parties shall negotiate in good faith to agree any amendments to the Brexit Scheme, the 2006 Scheme and the 2011 Scheme as may be required as a result of the termination of this Agreement.

12.2 If SLAL wishes to dispute the calculation of the Termination Amount by SL Intl, SLAL must notify SL Intl of such dispute within thirty (30) Business Days of receipt of the Termination Amount. Such notice (a “Termination Amount Dispute Notice”) shall set out in reasonable detail a description of the matter(s) disputed, together with any relevant calculations. The parties shall use reasonable endeavours to reach agreement on the matters set out in a Termination Amount Dispute Notice within thirty (30) Business Days of receipt by SL Intl of such Termination Amount Dispute Notice. If the parties are unable to agree within this period, either party may escalate the matter to the Independent Actuary, whose determination regarding the Termination Amount shall be binding on the parties. Failure by SLAL to issue a Termination Amount Dispute Notice within thirty (30) Business Days of receipt of the Termination Amount calculation (as applicable) shall constitute SLAL’s deemed agreement to the Termination Amount as originally calculated by SL Intl.

12.3 Termination of this Agreement shall be without prejudice to each party's accrued rights and liabilities arising prior to such termination taking effect.

13. CROSS DEFAULT

13.1 This Agreement shall terminate automatically upon termination (for whatever reason) of the HWPF Reinsurance Agreement.

13.2 This Agreement and HWPF Reinsurance Agreement are entered into in reliance on the fact that this Agreement and the HWPF Reinsurance Agreement form a single agreement between the parties, and the parties would not otherwise enter into this Agreement or the HWPF Reinsurance Agreement.

14. TAX EVENT, REGULATORY EVENT OR CHANGE IN APPLICABLE LAW

In the event that a Tax Event, a Regulatory Event or a change in Applicable Law occurs or is announced which results in, or is reasonably likely to result in (in a party’s opinion, acting in good faith):

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(A) a material adverse effect on a party’s ability to effect and carry out its obligations under this Agreement and/or the HWPF Reinsurance Agreement; or

(B) the benefit of this Agreement and/or the HWPF Reinsurance Agreement to a party becoming materially less favourable than is the case as of the date of the respective agreements (as appropriate),

then the party affected by the Tax Event, Regulatory Event or change in Applicable Law shall give notice to the other party and the parties shall enter into negotiations in good faith and use reasonable endeavours to agree an amendment to this Agreement and/or the HWPF Reinsurance Agreement (as appropriate) so that the performance of each party is no longer affected by such Tax Event, Regulatory Event or change in Applicable Law. If the parties are not able to agree an amendment to the relevant agreement within thirty (30) Business Days of the notice, the parties shall escalate to their respective Chief Executive Officers, who will seek (acting in good faith) to agree such an amendment.

15. PROVISIONS SURVIVING TERMINATION

15.1 The accrued rights and obligations of the parties under this Agreement (including any amounts which have become due and payable prior to the Termination Date) shall survive the termination of this Agreement.

15.2 Clauses 11 (Notices), 21 (Confidentiality), 27 (Set-off) and 29 (Governing Law and Jurisdiction) (and, to the extent necessary for the interpretation thereof, clause 1 (Interpretation) shall survive the termination of this Agreement.

16. INTEREST

16.1 Unless provided otherwise in this Agreement, any amounts due by either party under this Agreement which are outstanding for more than five (5) Business Days after the date on which payment of such amount is due shall be subject to the payment of Default Interest by the debtor for the period from (but excluding) the date on which payment is due to (and including) the date of actual payment.

16.2 In the event that either party wishes to review the rate of Default Interest it shall provide written notice to the other party. The parties shall negotiate in good faith to reach agreement on a change to the rate of Default Interest within thirty (30) Business Days of receipt of such notice by the receiving party, and in the absence of such agreement, the rate of Default Interest shall remain unchanged.

17. VAT

All amounts are stated in this Agreement exclusive of any applicable VAT. If VAT is or becomes chargeable in respect of any amount payable hereunder then the paying party shall pay to the other party, in addition to any amounts otherwise payable under this Agreement by the paying party, a sum equal to the amount of VAT for which the other party is required to account as output tax against delivery of a valid VAT invoice to the paying party.

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18. WITHHOLDINGS AND DEDUCTIONS

18.1 All sums paid under this Agreement shall be paid free and clear of all deductions or withholdings whatsoever save only as may be required by law.

18.2 For the avoidance of doubt, if any deductions or withholdings are required by law in respect of any sum paid by SL Intl under this Agreement, SL Intl shall not be required to pay any additional amounts as a result of such withholding. In the event that SL Intl shall be required to make such deduction or withholding, it shall be deemed to have paid the full sum due, including the amount so withheld.

18.3 If any deductions or withholdings are required by law in respect of any sum paid by SLAL under this Agreement, SLAL shall pay such sum as will, after such deduction or withholding has been made, leave the recipient the amount it would have received in the absence of any deduction or withholding.

19. DATA PROTECTION

Each party confirms that it will comply with its obligations under the Data Protection Act 1998, the General Data Protection Regulation and all other relevant Applicable Law and regulation (particularly in relation to the protection of personal and/or sensitive data relating to individuals) from time to time.

20. CONFIDENTIALITY

20.1 Each party agrees to keep confidential and not disclose to any other person the material terms of this Agreement and the transaction contemplated hereby and all information received by it from the other party relating to the material terms of this Agreement and such transaction.

20.2 This clause 20 shall not prevent any party from disclosing any information:

(A) relating to the existence and the general nature of this Agreement;

(B) already in the public domain (other than as a result of a breach by such party of this Agreement);

(C) already known to such party prior to receipt of such information from the other party;

(D) as reasonably required for the proper administration of this Agreement, including in pursuit of the settlement of a dispute in relation to this Agreement via a settlement process agreed by the parties;

(E) to retrocessionaires, Affiliates and their representatives;

(F) as may be required or requested by any Governmental Authority to which such party is subject;

(G) to the extent required by any Applicable Law;

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(H) to its professional advisers and auditors; or

(I) to an expert, to a member of a tribunal or to any court of competent jurisdiction.

21. ANNOUNCEMENTS

21.1 No party (nor any of its Affiliates or representatives) shall make any announcement or issue any circular in connection with the existence or subject matter of this Agreement without the prior written approval of the other party, such approval not to be unreasonably withheld or delayed.

21.2 The restriction in clause 21.1 shall not apply to the extent that the announcement or circular (i) is required by Applicable Law, by any stock exchange or any Governmental Authority or authority of competent jurisdiction, whether or not the requirement has the force of law, or (ii) contains only information which has previously become publicly available other than through that party’s fault (or that of any of its Affiliates or representatives).

22. TRANSFERS AND ASSIGNMENT

22.1 No party shall, without the prior written consent of the other party (such consent not to be unreasonably withheld or delayed), assign, transfer or declare a trust over all or any part of its rights or obligations under this Agreement.

22.2 Each party shall be responsible for its own costs and expenses incurred in respect of any such transfer or assignment

23. INVALIDITY, REMEDIES AND WAIVERS

23.1 If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, the parties agreed to co-operate with one another to seek to resolve or rectify any such issues and agree that this shall not affect or impair:

(A) the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or

(B) the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Agreement.

23.2 A waiver or variation of this Agreement will only be effective if it is in writing and is signed by each party.

23.3 Except as provided for in this Agreement:

(A) any failure by a party to exercise or delay in exercising a right or remedy provided by this Agreement or by law shall not impair or constitute a waiver of that or any other right or remedy;

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(B) no single or partial exercise of a right or remedy provided by this Agreement or by law shall prevent any further exercise of that or any other right or remedy; and

(C) the parties’ rights and remedies contained in this Agreement are cumulative and not exclusive of rights or remedies provided by law.

24. ENTIRE AGREEMENT

The Transaction Documents set out the entire agreement between the parties in relation to the subject matter hereof. The Transaction Documents supersede any previous agreement in respect of the same subject matter between the parties whether written or oral. Each party acknowledges that in entering into this Agreement it places no reliance on any representation in relation to the subject matter of this Agreement otherwise than as expressly set out herein. Nothing in this Agreement may operate to limit or exclude any liability for fraud.

25. FURTHER ASSURANCE

Each party shall and shall, if relevant, procure that each of its Affiliates (other than the other party) shall upon request, at its own expense, at all times from the date of this Agreement do or procure the doing of all things as may be required to give full effect to this Agreement, including the execution of all deeds and documents.

26. SET-OFF

Either party may set-off any obligation owed by the other party under this Agreement or under the HWPF Reinsurance Agreement (but only to the extent that the amount under the HWPF Reinsurance Agreement relates to the euro denominated unit linked assurance business of SL Intl which has been reinsured to SLAL pursuant to the terms of the HWPF Reinsurance Agreement) against any obligation owed to that party.

27. GENERAL

27.1 No person shall have any right to enforce any term or condition of this Agreement under the Contracts (Rights of Third Parties) Act 1999 or the Contracts (Third Party Rights) (Scotland) Act 2017, but this does not affect any right or remedy which exists or is available apart from those Acts.

27.2 This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart. Each counterpart shall constitute an original of this Agreement but all of the counterparts taken together shall constitute one and the same agreement.

27.3 The parties acknowledge and agree that, so far as permitted by Applicable Law, the provisions of the UK Insurance Act 2015 shall not apply to this Agreement. Accordingly, the parties agree that the rights and remedies of each party pursuant to this Agreement may differ from those that might otherwise be available under the UK Insurance Act 2015.

27.4 Each party shall pay its own costs incurred in connection with the negotiation, and entry into, of this Agreement.

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28. GOVERNING LAW AND JURISDICTION

This Agreement and any non-contractual obligations arising from or in connection with it shall be governed by, and shall be construed in accordance with, English law. The courts of England and Wales are to have jurisdiction to settle any dispute, whether contractual or non-contractual, arising out of or in connection with this agreement.

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IN WITNESS WHEREOF each party has executed this Agreement on the date first written above.

SIGNED by

………………………………

for and on behalf of STANDARD LIFE INTERNATIONAL DAC

) ) ) )

…………………………………………….. Director

SIGNED by

……………………………………

for and on behalf of STANDARD LIFE ASSURANCE LIMITED

) ) ) )

…………………………………………….. Director

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DATED

STANDARD LIFE INTERNATIONAL DAC as Cedant

- and -

STANDARD LIFE ASSURANCE LIMITED

as Reinsurer

_________________________________________

REINSURANCE AGREEMENT RELATING TO SL INTL GSMWPF POLICIES

_________________________________________


London EC1Y 8YY (ACC/ FAXP)

6/32/0016/32/001

Contents

Page

1. INTERPRETATION 1

2. REINSURANCE 15

3. REINSURANCE PREMIUMS 16

4. REINSURANCE CLAIMS 16

5. CEDING COMMISSION 16

6. RECOVERIES 17

7. NET AMOUNTS 17

8. PAYMENTS 18

9. REPORTING 18

10. MANAGEMENT OF BUSINESS 18

11. BUSINESS OVERSIGHT 19

12. COVENANTS 21

13. WARRANTIES 22

14. INSPECTION OF RECORDS 23

15. TERM 23






21. INTEREST 28

22. SECURITY ARRANGEMENTS 29

23. VAT 29

6/32/0026/32/002





28. NOTICES 30





33. GENERAL 32


Schedule 1 Fixed Collateral 35

Schedule 2 Back-Book Premium 42

Schedule 3 Calculation of Termination Amount 43

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BETWEEN

1. STANDARD LIFE INTERNATIONAL DAC a company registered in Ireland (number 408507) whose registered office is at 90 St Stephen’s Green, Dublin 2, Ireland (“SL Intl”); and

2. STANDARD LIFE ASSURANCE LIMITED a company registered in Scotland (number SC286833) whose registered office is at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH (“SLAL”),

each a “party” and together the “parties”.

WHEREAS:

(A) On or around the date of this Agreement, SLAL shall transfer its euro denominated business to SL Intl by way of an insurance business transfer scheme, sanctioned by the Court of Session in Edinburgh and under Part VII of the Financial Services and Markets Act 2000 and pursuant to the BTAs (as that term is defined below).

(B) SL Intl and SLAL have agreed that, following such insurance business transfer scheme, SLAL shall reinsure and indemnify SL Intl in respect of the Reinsured Liabilities (as that term is defined below), subject to the terms, conditions and limitations set forth in this Agreement and the Transaction Documents.

WHEREBY IT IS AGREED as follows:

1. INTERPRETATION

1.1 In this Agreement and the schedules:

“2006 Scheme” means the scheme pursuant to Part VII of, and Schedule 12 to, FSMA, under which substantially all of the long-term insurance business of The Standard Life Assurance Company was transferred to SLAL, which was sanctioned by the Court on 9 June 2006 and became effective on 10 July 2006 (as amended from time to time);

“Account Control Agreement” has the meaning given to it in the Deed of Fixed Charge;

“Accounting Liabilities” means any provision held on SLAL’s balance sheet in respect of the Reinsured Liabilities;

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“Adjustment Amount” means the amount calculated in accordance with the methodology set out in paragraph 4 of Part A of Schedule 3 (as applicable);


“Annuity Benefit Cost” has the meaning given in paragraph 52.2(a) of the Brexit Scheme;

“Applicable Law” means any and all law (whether civil, criminal or administrative), common law, statutes, statutory instruments, treaties, conventions, directives, regulations or rules made thereunder, by-laws, demands, decrees, injunctions, resolutions, orders or judgments in any applicable jurisdiction, including the principles, rules and guidance set out in the CBI Consumer Protection Code 2012, the (Ireland) Code of Practice on Data Protection in the Insurance Sector 2013, FCA Handbook, the PRA Rulebook and any applicable data protection legislation and any related or similar rules of any other Governmental Authority, binding on or applicable to the relevant person or in respect of the relevant matter as the context requires;

“Back-Book Premium” means the amount determined by SLAL and notified to SL Intl in accordance with the principles set out in Schedule 2 (Back-Book Premium);

“BEL” means the best estimate liabilities, calculated using generally accepted actuarial techniques and in a manner consistent with the applicable PPFM and Solvency II. This shall include applying the Solvency II regulatory reporting assumptions (save for in cases where the SLAL Chief Actuary, acting in good faith

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and following accepted actuarial practice, deems these assumptions to be inappropriate). For the purposes of calculating the Target Collateral Amount, the basis will be mutually agreed between the parties, acting in good faith and following accepted actuarial practice;

“Brexit Scheme” means the insurance business transfer scheme, sanctioned by the Court of Session in Edinburgh under Part VII of the Financial Services and Markets Act 2000 on or around the date of this Agreement, to transfer the euro denominated business of SLAL, from SLAL to SL Intl;

“BTAs” means the business transfer agreements of even date between SL Intl and SLAL in relation to each of SL Intl’s German, Austrian and Irish business being transferred pursuant to the Brexit Scheme;

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Dublin, Edinburgh and Frankfurt;


“Cash Account” has the meaning given to it in the Deed of Fixed Charge;


“Ceding Commission” means the amount determined by SL Intl and notified to SLAL in accordance with clause 5 (Ceding Commission);

“Change of Control” means, in respect of a party, a change in Control of that party which causes it to be Controlled by a different ultimate Parent Undertaking to the other party to

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this Agreement;

“Claim Amount” has the meaning given to it in clause 4 (Reinsurance Claims);

“Consent Claim” means any claim under a Reinsured Policy where:

(i) the disability annuity benefit is equal to or in excess of €72,000 per annum; and/or

(ii) in the case of any other claim, the lump sum benefit is equal to or in excess of €1 million;

and/or such other amount or criteria as the parties may agree in writing from time to time;


“Cost of Capital” means the costs of raising and providing the capital resources required to meet the Solvency Capital Requirement in respect of the Reinsured Liabilities on the Termination Date, calculated using generally accepted actuarial techniques in a manner consistent with the IPPFM and Solvency II, and using an appropriate cost of capital rate;

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“Current WP Liability” means the with profits policy liabilities (other than Future Policy-Related Liabilities) and shall be calculated in accordance with 3.2 of the Surplus Funds section of the PRA Rulebook;

“Custodian Accounts” means each of the Cash Account and the Securities Account;

“Custody Agreement” has the meaning given to it in the Deed of Fixed Charge;

“Customer Servicing Expenses” has the meaning given to it in clause 5.3 (Ceding Commission);

“Deed of Fixed Charge” means the deed of fixed charge dated [•] between SLAL as chargor and SL Intl as secured party;

“Deed of Floating Charge” means the deed of floating charge dated [•] between SLAL as chargor and SL Intl as secured party;

“Deed Poll” means the deed poll entitled “Deed Poll of Irrevocable Undertaking (GSMWPF)” granted by SL Intl in accordance with paragraph 66 of the Brexit Scheme;


“Derivative Contracts” has the meaning given to it in the Deed of Fixed Charge;

“EIOPA” means the European Insurance and Occupational Pensions Authority;

“Estimated Cost of Capital” means the amount calculated to be the product of the cost of capital rate used in SLAL’s Pillar 2 capital assessment under Solvency II and the sum of the value of the GSMWPF SCR Reinsured Liabilities Shareholder Cost over all future time periods, discounted using the basic risk-free interest rate for the maturity period corresponding to each year, based on the latest risk free interest rate provided by

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EIOPA for that year;

“EURIBOR” means, in respect of any period, the rate per annum quoted on the relevant Bloomberg screen (ticker EE00O/N) at close of business for each day of the period, for the offering of deposits in euro overnight and if such rate is below zero, EURIBOR will be deemed to be zero. If such Bloomberg page or service ceases to be available, the payee party may specify another page or service displaying the relevant rate after consultation with the paying party;


“Event of Default” has the meaning given to it in clause 16.1;


“FCA Handbook” means the handbook of rules and guidance issued by the FCA from time to time pursuant to FSMA;

“Fixed Charging Arrangements” means the Deed of Fixed Charge, the Account Control Agreement and the Custody Agreement;


“Fundamental Provisions” means (i) in respect of SL Intl, clause 8 (Payments); clause 10 (Management of Business) and clause 12.1(A) (Covenants) of this Agreement; and (ii) in respect of SLAL, clause 8 (Payments); clause 10 (Management of Business) and clause 12.2(A) (Covenants) of this Agreement; clause 3 (Covenant to Pay Secured Liabilities) of the Deed of Fixed Charge and clause 3 (Covenant to Pay Secured Liabilities) of the Deed of Floating Charge;

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“Future Policy-Related Liabilities” has the meaning given in the Glossary of the PRA Rulebook and shall be calculated in accordance with the Solvency II Reporting assumptions (save for in cases where the SLAL Chief Actuary, acting in good faith and following accepted actuarial practice, deems these assumption to be inappropriate);

“Governmental Authority” means any government, quasi-governmental, statutory or regulatory, administrative, judicial body department, commission, authority, tribunal, or any other competent authority or entity in any part of the world having responsibility for the regulation or governance of the business in respect of the Reinsured Liabilities and/or the subject matter of this Agreement, and/or having regulatory or supervisory jurisdiction over either party, including the CBI, the PRA and the FCA, as applicable;


“GSMWPF SCR Reinsured Liabilities Shareholder Cost”

means an amount equal to the Solvency Capital Requirement arising in respect of all Reinsured Policies that is borne by SLAL's shareholders and not the SLAL GSMWPF;

“GSMWPF Terminated Policy” means any euro denominated life insurance policy written by or allocated to the German branch (including the Austrian services) of SLAL which matured or terminated prior to the Risk Transfer Time in respect of which SLAL had certain obligations or potential liabilities to the policyholder after maturity or termination and which, had that policy not matured or terminated, would have been a SL Intl GSMWPF Transferred Policy;

“GWPF Reinsurance Agreement” means the agreement of even date entitled “Reinsurance Agreement: GWPF” between SLAL and SL Intl;

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“HWPF Reinsurance Agreement” means the agreement of even date entitled “Reinsurance Agreement: HWPF” between SLAL and SL Intl;

“Independent Actuary” means the independent actuary appointed by the parties from time to time, or, where the parties are unable to agree, the Institute and Faculty of Actuaries shall nominate the independent actuary;

“Initial Termination Amount” means the amount calculated in accordance with the methodology set out in paragraph 1 of Part A of Schedule 3 (Calculation of Termination Amount);

“Insolvency Event” means, in respect of SLAL, the occurrence of any of the events set out in clauses 16.1(B) to 16.1(F) inclusive;

“Interim Termination Amount” means the amount calculated in accordance with the methodology set out in paragraph 2 of Part A of Schedule 3 (Calculation of Termination Amount);

“Investment Management Agreement” has the meaning given to it in the Deed of Fixed Charge;

“IPPFM” means the Principles and Practices of Financial Management maintained by SLAL in effect from time to time in respect of the SLAL GSMWPF;

“Monthly Report” has the meaning given to it in the Reporting Agreement;

“Net Amount” has the meaning given to it in clause 7 (Net Amounts);

“Non-Profit BEL” means the BEL in respect of non-profit Reinsured Policies or non-profit elements of Reinsured Policies;

“Non-Default Interest” means EURIBOR (subject to any adjustment agreed between the parties in accordance with clause 17.3) at the time of payment of the Adjustment Amount;

“Notice of Reinsurance Business has the meaning given to it in clause

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Committee Meeting” 11.2;

“Notifiable Matter” means:

(i) any new business approved by SL Intl (in accordance with paragraph 47 of the Brexit Scheme) where the value, annual premium equivalent or increment attributable to that new business in respect of any Reinsured Policy is equal to or in excess of €250,000;

(ii) in connection with the investment element of any with profits or property-linked policy, where the maturity, surrender or switch approved by SL Intl in connection with any Reinsured Policy is equal to or in excess of €300,000,

(iii) in the case of any other claim, any claim approved by SL Intl in respect of any Reinsured Policy where the lump sum benefit is equal to or in excess of €300,000,

or such other amount or criteria as the parties may agree in writing from time to time;




“Premium Payment” has the meaning given to it in clause 3 (Reinsurance Premiums);

“Proposed Settlement” has the meaning given to it in clause 11.6 (Business Oversight);

“Recoverable Amounts” means any amounts Recovered by SL

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Intl;

“Recovery” means any part of any Reinsured Liability that is or may be recovered by SL Intl, as insurer under the Reinsured Policies from a policyholder, intermediary, third party (including pursuant to third party reinsurance arrangements where SL Intl is the Cedant) or otherwise and "Recovered" shall be construed accordingly;

“Regulatory Event” means, at any time after the Risk Transfer Time, a change in Applicable Law, including any change in any official or generally published interpretation of Applicable Law by a Governmental Authority or by a court or other judicial body of competent jurisdiction relating to the conduct of insurance or reinsurance business or companies and/or financial services businesses or firms or the sale or marketing of insurance contracts, or any action taken by any Governmental Authority;

“Reinsurance Business Committee” has the meaning given to it in clause 11 (Business Oversight);

“Reinsured Liabilities” means any and all liabilities paid or settled, or which become due for payment or settlement, by (or on behalf of) SL Intl at or after the Risk Transfer Time, in respect of (i) the Reinsured Policies and the Deed Poll and including, without limitation, any liabilities in respect of a SL Intl GSMWPF Transferred Policy in accordance with paragraph 52.2(c) of the Brexit Scheme; and (ii) GSMWPF Terminated Policies;

“Reinsured Policies” means the euro denominated life insurance policies which are (i) transferred and allocated to the SL Intl Euro PBF pursuant to the Brexit Scheme with the investment element allocated to the GSMWPF; or (ii) written by SL Intl following the Risk Transfer Time in accordance with paragraph 47 of the Brexit Scheme (save that any SL Intl

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GSMWPF Transferred Policy shall cease to be a Reinsured Policy immediately following settlement by SLAL of all liabilities that it has under the terms of this Agreement by the payment of an amount that is equal to the amount that SL Intl shall debit from the SL Intl GSMWPF in accordance with paragraph 52 of the Brexit Scheme);

“Reporting Agreement” means the ancillary reporting agreement between SLAL and SL Intl dated [●];


“Securities Account” has the meaning given to it in the Deed of Fixed Charge;

“Significant Claims” means any Notifiable Matters and/or any Consent Claims;

“SLAL Board” means the board of directors of SLAL from time to time;

“SLAL Chief Actuary” means the person appointed from time to time to perform the duties and have the responsibility for actuarial function specified in Chapter 7 of the Senior Insurance Managers Regime Instrument 2015;

“SLAL GSMWPF” means the German With Profits Fund as such term is defined in the 2006 Scheme;

“SLAL With Profits Committee” means the with profits committee of SLAL from time to time;

“SLAL WP Actuary”

means the person appointed from time to time to perform the duties set out in SUP 4.3.16 AR in the FCA Handbook;

“SL Intl Euro PBF” means the “SL Intl Euro PBF” established and maintained in accordance with the Brexit Scheme;

“SL Intl GSMWPF” means the “SL Intl GSMWPF” established and maintained in

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accordance with the Brexit Scheme;

“SL Intl GSMWPF Transferred Policy” has the meaning given to it in the Brexit Scheme;

“SL Intl Head of Actuarial Function” means SL Intl’s head of actuarial function within the meaning of the CBI Domestic Actuarial Regime and Related Governance Requirements under Solvency II or, if those requirements are no longer in effect, the person appointed by SL Intl from time to time as head of the function described at Regulation 50 of the European Union (Insurance and Reinsurance) Regulations 2015 or, if SL Intl is no longer required to maintain such a function, a person possessing appropriate actuarial qualifications nominated for the purposes of this Agreement by SL Intl;


“Solvency Capital Requirement” has the meaning given to under Solvency II;

“Sub-CQS3 Rating” means a rating assigned to credit quality step 4 or below, in accordance with then-current Solvency II standards;

“Tax or Taxation” means any kind of tax, duty or levy or any similar charge, whether or not similar to any in force at the date of this Agreement, and whether of the United Kingdom, Germany, Austria or the Republic of Ireland or elsewhere, and any related fine, penalty, interest or other amount;

“Tax Authority” means any government, state or municipality or any local, state, federal or other authority, body or official anywhere in the world exercising a fiscal, revenue, customs or excise function (including,

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without limitation, HM Revenue & Customs in the UK, and the Office of the Revenue Commissioners in the Republic of Ireland);


“Term” has the meaning given to it in clause 15 (Term);

“Termination Amount” means the amount calculated in accordance with the methodology set out in (i) paragraph 3 of Part A; or (ii) Part B, of Schedule 3 (Calculation of Termination Amount) (as applicable);

“Termination Amount Dispute Notice” has the meaning given to it in clause 17.4 (Effect of Termination);

“Termination Date” means (a) in the case of a termination in accordance with clause 16.1, the date of receipt of a Termination Notice; (b) in the case of a termination in accordance with clause 16.2 or 16.3, the Business Day immediately following the date of receipt of a Termination Notice; and (c) in the case of a termination in accordance with clause 18 (Cross Default), the Termination Date as defined in the relevant agreement;


“Transaction Documents” means this Agreement, the Deed Poll, Fixed Charging Arrangements and the Deed of Floating Charge;

“VAT” means:

(i) within the European Union, any Tax imposed by any Member State in

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conformity with the Directive of the Council of the European Union on the common system of value added tax (2006/112/EC); and

(ii) outside the European Union, any Tax corresponding to, or substantially similar to, the common system of value added tax referred to in paragraph (i) of this definition; and

“With Profits BEL” means the BEL in respect of with profits Reinsured Policies or with profits elements of Reinsured Policies.



(B) references to clauses are to clauses of, and schedules to, this Agreement;







(I) references to times are to Dublin time;

(J) references to "costs" and/or "expenses" incurred by a person shall not include any amount in respect of VAT comprised in such costs or expenses for which either that person or, if relevant, any other member of the VAT group to which that person belongs is entitled to credit as input tax;

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(K) all headings and titles are inserted for convenience only and are to be ignored in the interpretation of this Agreement; and

(L) the schedules form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement, and any reference to this Agreement shall include the schedules.

2. REINSURANCE

2.1 With effect from the Risk Transfer Time, SL Intl shall cede to SLAL and SLAL shall reinsure and indemnify SL Intl in respect of the Reinsured Liabilities on the terms and conditions set out in this Agreement.

2.2 SLAL’s obligations to SL Intl pursuant to clause 2.1 shall be fully and exclusively discharged by the calculation and settlement of the Net Amount as provided in clause 7 (Net Amounts).

2.3 (A) Without prejudice to clause 2.3(B) and clause 10 (Management of Business), SLAL shall follow all the decisions and fortunes and settlements, including any ex gratia payments, compromises or commutation payments, payments for mis-selling, late payments of SL Intl (including, for the avoidance of doubt, such decisions, fortunes and settlements made on SL Intl’s behalf) in respect of the Reinsured Liabilities.

(B) SLAL shall:

(i) not be liable for any liabilities arising in connection with SL Intl’s operational risk in respect of any actions or omissions occurring following the Risk Transfer Time, in respect of the Reinsured Liabilities;;

(ii) only be liable for an amount determined by SL Intl (in accordance with the SL Intl GSMWPF Internal PPFM (as defined in the Brexit Scheme)) to be due for the benefit of a policyholder, where SLAL (in accordance with the PPFM) has determined an amount to be due under an equivalent policy allocated to the SLAL GSMWPF in the same proportion as the Reinsured Policy and then, only to the extent of the amount determined by SLAL in respect of the equivalent policy; and

(iii) not be liable for an amount that is otherwise determined by SL Intl to be due for the benefit of a policyholder, where such amount has been determined by SL Intl in a manner which is inconsistent with the established practices of SLAL.

2.4 SL Intl shall use reasonable endeavours to maintain all third party reinsurance arrangements that are in place in respect of the Reinsured Liabilities at the Risk Transfer Time and shall not amend or terminate any such arrangements without SLAL’s prior written consent (such consent not to be unreasonably withheld).

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2.5 SLAL shall be entitled to retrocede (subject at all times to maintenance of confidentiality and compliance with clause 25 (Data Protection)) all or part of its liabilities under this Agreement without the consent of SL Intl if:

(A) such retrocession does not adversely affect SL Intl’s rights, obligations or security under this Agreement and/or any other Transaction Document; and

(B) SLAL’s obligations to SL Intl under this Agreement and/or any other Transaction Document shall continue and not in any way be affected by such retrocession.

3. REINSURANCE PREMIUMS

3.1 At the Risk Transfer Time, SL Intl shall pay (or procure the payment of) the Back-Book Premium to SLAL. The payment of the Back-Book Premium shall be made on the following basis, if the terms of the Brexit Scheme are sanctioned by the Court of Session in Edinburgh and be satisfied by the set-off and retention of assets by SLAL that would otherwise be transferred to SL Intl pursuant to the Brexit Scheme, in accordance with the terms of paragraph 4.2 of the Brexit Scheme.

3.2 From the Risk Transfer Time, an amount equal to the aggregate insurance premiums received by (or on behalf of) SL Intl in respect of the Reinsured Liabilities on any Business Day (the “Premium Payment”) shall become due for payment by SL Intl to SLAL on the next Business Day following SL Intl providing SLAL with written notice of such Premium Payment (such notice not to be unreasonably withheld or delayed), or if later, the payment date specified in such notice. The Premium Payment shall be payable in accordance with clause 7 (Net Amounts).

4. REINSURANCE CLAIMS

From the Risk Transfer Time, an amount equal to the aggregate amounts payable by (or on behalf of) SL Intl to (or on behalf of) policyholders in respect of the Reinsured Liabilities (including, without limitation, payments made pursuant to paragraph 52.2(C) of the Brexit Scheme) on that Business Day and, where an annuity benefit is to be provided on the vesting of a Reinsured Policy on that Business Day, an amount that is equal to the amount that SL Intl shall debit from the SL Intl GSMWPF in accordance with paragraph 52 of the Brexit Scheme (together, the “Claim Amount”) shall become due for payment (subject to clause 11 (Business Oversight)) by SLAL to SL Intl on the next Business Day following SL Intl providing SLAL with written notice of such Claim Amount, or if later, the payment date specified in such notice. The Claim Amount shall be payable in accordance with clause 7 (Net Amounts).

5. CEDING COMMISSION

5.1 SLAL shall pay to SL Intl a Ceding Commission in respect of the Reinsured Liabilities, which shall be determined by SL Intl and notified to SLAL in accordance with this clause 5.

5.2 The Ceding Commission shall comprise the amount determined by SL Intl (acting reasonably and in good faith) to represent a reasonable allocation of the costs,

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expenses, commissions, premiums payable to external reinsurers and taxes incurred by SL Intl in respect of the Reinsured Liabilities.

5.3 Where the expenses incurred by SL Intl are in respect of customer servicing activities (“Customer Servicing Expenses”) performed for the Reinsured Policies by a service company on behalf of SL Intl or by SL Intl directly, the parties shall determine the profit margin as a percentage of the Customer Servicing Expenses which should be applied to the Ceding Commission.

5.4 For the avoidance of doubt, where expenses incurred by SL Intl are costs paid to external parties, such as external reinsurance premiums or commissions, or are costs incurred in respect of back-office activities performed on behalf of SL Intl, no profit margin shall be applied to these amounts when calculating the Ceding Commission.

5.5 The Ceding Commission shall become due for payment by SLAL to SL Intl on the next Business Day following SL Intl providing SLAL with written notice of such amount. The Ceding Commission shall be payable in accordance with clause 7 (Net Amounts).

6. RECOVERIES

Where all or any part of any Reinsured Liability is Recovered by SL Intl, SL Intl shall pay to SLAL the amount so Recovered on the next Business Day following receipt by SL Intl, in accordance with clause 7 (Net Amounts).

7. NET AMOUNTS

7.1 Notwithstanding the references in clauses 3 (Reinsurance Premiums) and 4 (Reinsurance Claims) to any Premium Payment or Claim Amount becoming due for payment by one party to the other party, the payments to be made by the parties in respect of such amounts shall be determined on a net basis in accordance with clause 7.2 and paid in accordance with clause 7.3. The relevant payment obligations of each of SL Intl and SLAL under clauses 3 (Reinsurance Premiums) and 4 (Reinsurance Claims) shall be deemed satisfied and discharged by the payment by the relevant party of any such net amount.

7.2 The net amount due on each Business Day (the “Net Amount”) shall be an amount equal to “p”, where:

p = q plus r minus s minus t;

q = the Premium Payment due for payment on the relevant Business Day from SL Intl to SLAL under clause 3 (Reinsurance Premiums);

r = Recoverable Amounts received by SL Intl and notified to SLAL in respect of the relevant Business Day;

s = Ceding Commission (as determined by SL Intl and notified to SLAL) arising in respect of the relevant Business Day; and

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t = the Claim Amount due for payment on the next Business Day from SLAL to SL Intl under clause 4 (Reinsurance Claims).

7.3 Where, in relation to that Business Day, the Net Amount is:

(A) a positive number, SL Intl shall pay SLAL; or

(B) a negative number, SLAL shall pay SL Intl,

an amount equal to the Net Amount, in each case, with payment being due on the Business Day immediately following the day by reference to which the Net Amount is calculated unless otherwise agreed in writing by both parties.

8. PAYMENTS

8.1 All payments between the parties under this Agreement shall be made without delay and in a manner consistent with the orderly payment of insurance claims.

8.2 For the avoidance of doubt, SLAL’s payment obligations pursuant to this Agreement shall not be affected by, and shall be paid without diminution on, the insolvency of SL Intl.

8.3 All amounts payable under this Agreement shall be settled in euros electronically, to such accounts (including custody accounts) as the parties may notify to the other in writing from time to time.

9. REPORTING

The parties shall each comply with their reporting obligations to the other party, as set out in the ancillary reporting agreement entered into between SLAL and SL Intl dated [●] (the “Reporting Agreement”).

10. MANAGEMENT OF BUSINESS

10.1 SL Intl shall be responsible for carrying out the business in respect of the Reinsured Liabilities, including (but not limited to) the entry into and administering of all policies and insurance contracts, the managing of all contact with policyholders, the conduct of all claims that have arisen or which may arise under any policy and of any incidental negotiations relating to such claims and SL Intl shall consult with SLAL prior to entering into any agreements for the provision of such services to it by either third parties or other members of the Group.

10.2 Without prejudice to the provisions of paragraph 47 of the Brexit Scheme, any new business written by SL Intl which is to be reinsured pursuant to the terms of this Agreement, shall be on a pricing basis which SLAL considers (acting reasonably) to be acceptable.

10.3 The SL Intl Board shall be entitled to make representations to the SLAL With Profits Committee and the SLAL Board on matters affecting the Reinsured Policies and receive

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an explanation of the basis for decisions which affect holders of such Reinsured Policies.

10.4 SLAL shall have the right to review and approve, such approval not to be unreasonably withheld or delayed, all policyholder and intermediary documents and communications relating to the Reinsured Policies where the subject matter or content of such documents could create or materially extend SLAL’s obligations in relation to the Reinsured Liabilities, prior to any such documents or communications being circulated by SL Intl to the relevant policyholders. If any such documents or communications that are circulated to the relevant policyholders without SLAL’s consent (in breach of this clause 10.4), create or materially extend any obligation in connection with the Reinsured Policies, that additional obligation or exposure shall not constitute a Reinsured Liability under this Agreement.

10.5 SLAL shall maintain and comply with the IPPFM and shall consult with SL Intl before making any amendments to the principles of the IPPFM.

11. BUSINESS OVERSIGHT

11.1 The parties acknowledge and agree that a committee comprising three (3) representatives of each party shall be established for the purpose of monitoring SL Intl’s management of the business that is reinsured to SLAL pursuant to the terms of this Agreement, the HWPF Reinsurance Agreement and the GWPF Reinsurance Agreement (the “Reinsurance Business Committee”).

11.2 Each of the parties shall, within one (1) Business Day of the date of this Agreement, nominate its representatives for the Reinsurance Business Committee. The Reinsurance Business Committee shall be convened (as required by either party), by any representative serving notice to all other representatives of the Reinsurance Business Committee (“Notice of Reinsurance Business Committee Meeting”). Unless the representatives agree otherwise, the Reinsurance Business Committee shall be convened within one (1) Business Day of the date of the Notice of Reinsurance Business Committee Meeting. The quorum for the Reinsurance Business Committee shall be two (2) representatives, provided that at least one (1) representative from each party is present.

11.3 The Reinsurance Business Committee shall be responsible for overseeing Significant Claims which are Reinsured Liabilities, as well as the acceptability of pricing of new business (as set out in clause 10.2 above).

11.4 SL Intl shall notify SLAL of any Notifiable Matters (such notification to be to an e-mail address notified by SLAL to SL Intl in writing) at or before the next meeting of the Reinsurance Business Committee which takes place after SL Intl has identified the Notifiable Matter. Subject to clause 11.6 below, nothing in this clause shall prevent SL Intl from settling any such claims to which a Notifiable Matter relates.

11.5 The Reinsurance Business Committee shall discuss any and all Notifiable Matters notified by SL Intl to SLAL. SLAL shall have the opportunity to make representations at any meeting of the Reinsurance Business Committee as to the amount that they would consider reasonable for SL Intl to pay or have paid (and SLAL to reinsure) in respect of

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any claim under a Reinsured Policy which is notified to SLAL as a Notifiable Matter. For the avoidance of doubt, no vote shall be taken in respect of any Notifiable Matter and, subject to clause 11.7 below, all Notifiable Matters shall be included, as appropriate, within the relevant Monthly Report.

11.6 SL Intl shall not agree to settle any Consent Claim without SLAL’s prior written consent (such consent not to be unreasonably withheld or delayed). SL Intl shall notify SLAL of all Consent Claims, such notification to be to an e-mail address notified by SLAL to SL Intl in writing, and shall include the amount which SL Intl proposes to pay in settlement of the Consent Claim (the “Proposed Settlement”), (the “Consent Claim Notice”).

11.7 Where:

(A) SL Intl has notified SLAL of a Consent Claim and the Proposed Settlement in accordance with clause 11.6 and SLAL, acting reasonably, disagrees with the Proposed Settlement;

(B) SL Intl has failed to notify SLAL of a Consent Claim prior to its settlement; or

(C) SL Intl has notified SLAL of a Consent Claim and the Proposed Settlement in accordance with clause 11.6 and SL Intl subsequently settles the Consent Claim for an amount in excess of the Proposed Settlement,

then SLAL shall be entitled (in the case of clause 11.7(A), within two (2) Business Days of the date of the Consent Claim Notice and in the case of clause 11.7(B) or 11.7(C), within two (2) Business Days of the date on which SLAL became aware of such Consent Claim and reasonable details relating thereto, including the quantum of such Consent Claim) to escalate the matter to the parties’ respective Chief Executive Officers, who will seek (acting in good faith) to agree settlement of the Consent Claim.

11.8 The parties shall use all reasonable endeavours to resolve any disputes under and in accordance with this clause 11 by no later than:

(A) in respect of Consent Claims which have not yet been paid by (or on behalf of) SL Intl, the best estimate of the date (or, if known, the actual date) on which SL Intl, acting reasonably, considers it appropriate to pay the Consent Claim; and

(B) in respect of Consent Claims which have been paid by SL Intl, twenty (20) Business Days prior to the date on which SL Intl must provide the Monthly Report reflecting payment of the relevant Consent Claim to SLAL in accordance with the terms of the Reporting Agreement.

11.9 If a dispute under and in accordance with this clause 11 is not resolved five (5) Business Days prior to the date on which SL Intl must provide the Monthly Report reflecting payment of the relevant Consent Claim to SLAL in accordance with the Reporting Agreement:

(A) the Monthly Report reflecting payment of the relevant Consent Claim shall reflect only such amount of the Consent Claim as is not disputed between the

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parties (and such proportion of any amount of reinsurance attaching to such Consent Claim as is equal to the undisputed proportion of such Consent Claim);

(B) an amount equal to the amount of the Consent Claim as is disputed between the parties shall be rolled over into the next Monthly Report; and

(C) the parties shall agree to escalate the disputed Consent Claim to their respective Chief Executive Officers, who will (acting in good faith) seek to agree all disputes in respect of the relevant Consent Claim.

11.10 Notwithstanding clauses 11.1 to 11.9 above, the parties shall agree to accelerate the processes set out above in order to resolve any disputes and agree settlements in respect of any Consent Claim where such earlier settlement is required by Applicable Law.

12. COVENANTS







(B) subject to Applicable Law, it shall at all times during the Term comply in all material respects with the Business Guidelines and the IPPFM;

(C) it shall provide written notice to SL Intl in advance (where practicable) or after the event (where advance notice is not practicable), in either case on a timely basis, in respect of:

(i) SLAL ceasing to satisfy the “Minimum Capital Requirement” under Solvency II; or

(ii) if SLAL is assigned a credit rating which is a Sub-CQS3 Rating; and

(D) it shall obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all authorisations, approvals, licences and consents

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required in or by Applicable Law to enable it lawfully to enter into and perform its obligations under the Transaction Documents.

13. WARRANTIES




(A) it has the power to enter into and perform its obligations under this Agreement, the Fixed Charging Arrangements and the Deed of Floating Charge and all necessary authorisations have been obtained;

(B) the obligations expressed to be assumed by it under this Agreement, the Fixed Charging Arrangements and the Deed of Floating Charge constitute valid and binding obligations (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law));

(C) the execution, delivery and performance of this Agreement, the Fixed Charging Arrangements and the Deed of Floating Charge does not violate or conflict with any Applicable Law, any direction or order or judgment of any court or any agency of government, or any contractual restriction binding on or affecting it or any of its assets or its constitutive documents;






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(D) it is duly registered and validly exists under Scots law;

(E) it carries on its business in all material respects in accordance with Applicable Law; and

(F) it is not the subject of an Insolvency Event and no Insolvency Event will occur in respect of SLAL as a (direct or indirect) result of it entering into this Agreement, the Fixed Charging Arrangements or the Deed of Floating Charge.

14. INSPECTION OF RECORDS

14.1 SLAL or its appointed representatives may at any time during normal office hours of SL Intl and at a time and place to be mutually agreed between the parties, inspect and take copies, at SLAL’s own expense, of such of SL Intl’s records and documents which relate to the Reinsured Liabilities.

14.2 SL Intl or its appointed representatives may at any time during normal office hours of SLAL and at a time and place to be mutually agreed between the parties, inspect and take copies, at SL Intl’s own expense, of such of SLAL’s records and documents which relate to the Reinsured Liabilities.

14.3 It is agreed that SLAL’s and SL Intl’s rights of inspection shall continue as long as any liability remains hereunder.

14.4 The right of inspection being provided shall not be construed to allow either party the right to delay or withhold payment for any amounts which fall due under this Agreement in accordance with terms and conditions as specified herein.

15. TERM

This agreement shall take effect from the Risk Transfer Time and shall continue in force until natural expiry or termination in accordance with clause 16 (Termination on Notice) or clause 18 (Cross Default), (the “Term”).


16.1 SL Intl shall have the right to terminate this Agreement in full, subject to clause 16.4, by serving a Termination Notice on or after the occurrence of any of the following events (each, an “Event of Default”):

(A) SLAL fails to make a payment which is due and payable to SL Intl as required under this Agreement, the Fixed Charging Arrangements or the Deed of Floating Charge and such failure is not rectified within three (3) Business Days of being notified by SL Intl of such failure;

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(B) any procedure is commenced with a view to the winding up or reorganisation of SLAL except in the case of (i) a solvent reorganisation or (ii) any winding-up petition which is frivolous or vexatious or is discharged, stayed or dismissed within ten (10) Business Days of commencement or, if earlier, the date on which it is advertised;

(C) any step is taken or any procedure is commenced with a view to the appointment of an administrator, receiver, administrative receiver, examiner or liquidator (or other insolvency officer) in relation to SLAL or all or a substantial part of its assets except in the case of any winding-up petition or administration application which is frivolous or vexatious or is discharged, stayed or dismissed within ten (10) Business Days of commencement or, if earlier, the date on which it is advertised as the case may be;

(D) the holder of any security over all or a substantial part of the assets of SLAL takes any step to enforce that security or all or a substantial part of the assets of SLAL are subject to attachment, sequestration, execution or any similar process;

(E) SLAL is unable to pay its debts as they fall due within the meaning of section 123(1)(e) or 123(2) of the Insolvency Act 1986; or

(F) anything analogous to the matters set out in sub-clauses (B) to (E) above occurs in relation to SLAL in any jurisdiction.

16.2 SL Intl shall have the right to terminate this Agreement in full, subject to clause 16.4, by serving a Termination Notice on or after the occurrence of any of the following events:

(A) a material breach by SLAL of a Fundamental Provision, which is either incapable of remedy or, if capable of remedy, is not remedied within thirty (30) Business Days of being notified by SL Intl of such breach;

(B) it becomes unlawful in any relevant jurisdiction for SL Intl or SLAL to perform all or any material part of this Agreement, the Fixed Charging Arrangements or the Deed of Floating Charge, and such unlawfulness is not remedied within thirty (30) Business Days after SL Intl gives notice in writing to SLAL in respect of such unlawfulness;

(C) SLAL ceases to hold any authorisation, permission, approval, registration, consent or licence which it requires in order to perform its material obligations under this Agreement, the Fixed Charging Arrangements or the Deed of Floating Charge, and fails to obtain such permission, approval, registration, consent or licence within thirty (30) Business Days of notice in writing from SL Intl requiring it to do so;

(D) a Change of Control occurs;

(E) SLAL is assigned a credit rating which is a Sub-CQS3 Rating;

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(F) SLAL ceases to satisfy the “Minimum Capital Requirement” under Solvency II; or

(G) SLAL amends any principle of the IPPFM in a way in which SL Intl considers, acting reasonably, to have a materially adverse impact on holders of the Reinsured Policies.


(A) SL Intl fails to make a payment which is due and payable to SLAL as required under this Agreement and such failure is not rectified within five (5) Business Days of being notified by SLAL of such failure (including, for the avoidance of doubt, the Back-Book Premium);

(B) a material breach by SL Intl of a Fundamental Provision of this Agreement which is either incapable of remedy or, if capable of remedy, is not remedied within thirty (30) Business Days of being notified by SLAL of such breach;


(D) it becomes unlawful in any relevant jurisdiction for SL Intl or SLAL to perform all or any material part of this Agreement and such unlawfulness is not remedied within thirty (30) Business Days after SLAL gives notice in writing to SL Intl in respect of such unlawfulness; or

(E) SL Intl ceases to hold any authorisation, permission, approval, registration, consent or licence which it requires in order to perform its material obligations under this Agreement and fails to obtain such permission, approval, registration, consent or licence within thirty (30) Business Days of notice in writing from SLAL requiring it to do so.

16.4 Following the occurrence of one of the events described in clause 16.1, 16.2 or 16.3, the relevant party may only exercise its related right to terminate this Agreement by giving notice in writing to the other party at any time from the date on which the event occurs until the date that falls sixty (60) Business Days after:


(B) if a period of time is specified to remedy, rectify or dismiss the event described in clause 16.1, 16.2 or 16.3, the date on which such period of time ends.

16.5 Where SLAL proposes a change to the terms of the Investment Management Agreement in accordance with the terms of the Investment Management Agreement, and SLAL and SL Intl are unable to reach agreement in respect of such change following conclusion of the applicable dispute resolution process set out in the ancillary agreement relating to security and investment management arrangements between

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SLAL, SL Intl and the Investment Manager (as defined in the Deed of Fixed Charge) dated [•], then this Agreement shall terminate automatically.


17.1 Where this Agreement is terminated by the mutual agreement of the parties hereto, the Termination Amount shall be calculated in accordance with paragraph 3 of Part A of Schedule 3 (Calculation of Termination Amount) and shall be paid by SLAL to SL Intl subject to and in accordance with the provisions of clauses 17.2, 17.3 and 17.4 below, unless alternative terms are agreed between the parties at the time of termination (provided that both the SLAL WP Actuary and the SL Intl Head of Actuarial Function have given their written consent to such alternative terms).

17.2 If either party serves a Termination Notice in accordance with clause 16 (Termination on Notice) (other than following the occurrence of an Event of Default):

(A) SLAL shall, within three (3) Business Days of the Termination Date, calculate in good faith, the Initial Termination Amount (in accordance with paragraph 1 of Part A of Schedule 3 (Calculation of Termination Amount)) and pay this amount to SL Intl;

(B) SLAL shall within twenty (20) Business Days of the Termination Date, calculate in good faith the Interim Termination Amount (in accordance with paragraph 2 of Part A of Schedule 3 (Calculation of Termination Amount)) and pay this amount to SL Intl;

(C) the parties shall negotiate in good faith to agree any amendments to the Brexit Scheme and the 2006 Scheme as may be required as a result of the termination of this Agreement;

(D) SL Intl shall have regard to the steps that it is required to take pursuant to paragraph 54 of the Brexit Scheme in the event of the termination of this Agreement; and

(E) SLAL shall, as soon as reasonably practicable, calculate in good faith, the Termination Amount (in accordance with paragraph 3 of Part A of Schedule 3 (Calculation of Termination Amount)) and promptly following such determination, deliver written notice of this Termination Amount to SL Intl.

17.3 Within thirty (30) Business Days of agreement (including deemed agreement in accordance with clause 17.4 below) of the Termination Amount (as calculated in accordance with paragraph 3 of Part A of Schedule 3 (Calculation of Termination Amount) and notified to SL Intl in accordance with clause 17.2(E)), the parties shall calculate the Adjustment Amount and:

(A) where the Adjustment Amount is a positive number, SLAL shall pay SL Intl; or

(B) where the Adjustment Amount is a negative number, SL Intl shall pay SLAL,

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an amount equal to the Adjustment Amount and such amount shall be subject to the payment of Non-Default Interest (subject to any reasonable adjustment to the Non-Default Interest rate agreed between the parties (acting in good faith) to reflect any material market changes during the period to which the Non-Default Interest is being applied).

17.4 If SL Intl wishes to dispute the calculation of the Termination Amount prepared by SLAL (as calculated in accordance with paragraph 3 of Part A of Schedule 3 (Calculation of Termination Amount) and notified to SL Intl in accordance with clause 17.2(E)), SL Intl must notify SLAL of such dispute within thirty (30) Business Days of receipt of Termination Amount calculation (as applicable). Such notice (a “Termination Amount Dispute Notice”) shall set out in reasonable detail a description of the matter(s) disputed, together with any relevant calculations. The parties shall use reasonable endeavours to reach agreement on the matters set out in a Termination Amount Dispute Notice within thirty (30) Business Days of receipt by SLAL of such Termination Amount Dispute Notice. If the parties are unable to agree within this period, either party may escalate the matter to the Independent Actuary, whose determination regarding the Termination Amount shall be binding on the parties. Failure by SL Intl to issue a Termination Amount Dispute Notice within thirty (30) Business Days of receipt of the Termination Amount calculation (as applicable) shall constitute SL Intl’s deemed agreement to the Termination Amount as originally calculated by SLAL.

17.5 If SL Intl serves a Termination Notice in accordance with clause 16.1 (Termination on Notice) or this Agreement terminates in accordance with clause 18 (Cross Default), in either case following the occurrence of an Event of Default either pursuant to the terms of this Agreement or the terminating agreement to which the cross-default relates:

(A) the Termination Amount, calculated in accordance with Part B of Schedule 3 (Calculation of Termination Amount), shall become immediately due and payable by SLAL to SL Intl;

(B) the parties shall negotiate in good faith to agree any amendments to the Brexit Scheme, the 2006 Scheme and the 2011 Scheme as may be required as a result of the termination of this Agreement; and

(C) SL Intl shall have regard to the steps that it is required to take pursuant to paragraph 54 of the Brexit Scheme in the event of the termination of this Agreement.

17.6 Notwithstanding clause 21.1, the Termination Amount payable in accordance with clause 17.5(A) shall be subject to Non-Default Interest (rather than Default Interest), and for the period from (but excluding) the date on which the payment is due to (and including) the date of actual payment.

18. CROSS DEFAULT

This Agreement shall terminate automatically upon termination following the occurrence of an Event of Default (as defined under the relevant agreement) of either of the following agreements:

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(A) HWPF Reinsurance Agreement; or

(B) GWPF Reinsurance Agreement.



(A) a material adverse effect on a party’s ability to effect and carry out its obligations under this Agreement; or

(B) the benefit of this Agreement to a party becoming materially less favourable than is the case as of the date of this Agreement,

then the party affected by the Tax Event, Regulatory Event or a change in Applicable Law shall give notice to the other party and the parties shall enter into negotiations in good faith and use reasonable endeavours to agree an amendment to this Agreement so that the performance of each party is no longer affected by such Tax Event, Regulatory Event or change in Applicable Law. If the parties are not able to agree an amendment to this Agreement within thirty (30) Business Days of the notice, the parties shall escalate to their respective Chief Executive Officers, who will seek (acting in good faith) to agree such an amendment.



20.2 Clauses 26 (Confidentiality), 28 (Notices), and 34 (Governing Law and Jurisdiction) (and, to the extent necessary for the interpretation thereof, clause 1 (Interpretation)) shall survive the termination of this Agreement.

21. INTEREST



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22. SECURITY ARRANGEMENTS

22.1 At or by the Risk Transfer Time, the parties shall enter into the Fixed Charging Arrangements.

22.2 The parties agree that SLAL shall ensure that collateral is deposited into the Custodian Accounts in accordance with Schedule 1 (Fixed Collateral) and the Deed of Fixed Charge.

22.3 At or by the Risk Transfer Time, the parties shall enter into the Investment Management Agreement, pursuant to which the parties shall agree the terms upon which the collateral deposited in the Custodian Accounts and the Derivative Contracts will be managed. The Investment Management Agreement shall contain provisions setting out appropriate requirements in respect of the composition, duration and nature of the assets deposited in the Custodian Accounts and the Derivative Contracts in the context of the applicable Reinsured Liabilities backed by such assets.

22.4 At or by the Risk Transfer Time, the parties shall enter into the Deed of Floating Charge.

23. VAT

Any consideration given under this Agreement for the transactions contemplated by this Agreement is expressed to be inclusive of amounts in respect of VAT.





25. DATA PROTECTION


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26. CONFIDENTIALITY







(E) to retrocessionaires, Affiliates and representatives;





27. ANNOUNCEMENTS


27.2 The restriction in clause 27.1 shall not apply to the extent that the announcement or circular (i) is required by Applicable Law, by any stock exchange or any Governmental Authority or supervisory body or authority of competent jurisdiction, whether or not the requirement has the force of law, or (ii) contains only information which has previously become publicly available other than through that party’s fault (or that of any of its Affiliates or representatives).

28. NOTICES

28.1 Any notice, request, instruction or other document given under this Agreement must be made in writing. Writing includes e-mail (other than in the case of legal notices or

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notices to terminate this Agreement, which must be sent by post) and must be sent to the address, or email address (where relevant) of the relevant party given in this clause 28, unless another address or email address has been notified in writing by the relevant party in accordance with clause 28.3. If sent by post, the relevant notice must be delivered or sent by prepaid first class recorded delivery post or by courier.

28.2 Subject to clause 28.3, the notice details of the parties for the purposes of this clause 28 are as follows:

SL Intl SLAL



E-mail: [●]

E-mail: [●]

Marked for the attention of: the Chief Executive

Marked for the attention of: the Chief Executive

28.3 A party may change its notice details by giving notice to the other party of the change in accordance with this clause. That notice shall only be effective on the date falling five (5) Business Days after the notification has been received or such later date as may be specified in the notice.



29.2 Each party shall be responsible for its own costs and expenses incurred in respect of any such transfer or assignment.





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30.2 A waiver or variation of this Agreement will only be effective if it is in writing, is signed by each party and has been consented to in writing by both the SLAL WP Actuary and the SL Intl Head of Actuarial Function (on the basis that the proposed waiver or variation is not expected to materially and adversely affect (i) the contractual rights of the holders of Reinsured Policies and the holders of policies written in or allocated to the SL Intl GSMWPF or their contractual rights under the Deed Poll; or (ii) their reasonable expectations regarding non-contractual rights under such policies).









33. GENERAL

33.1 No person shall have any right to enforce any term or condition of this Agreement under the Contracts (Rights of Third Parties) Act 1999 or the Contract (Third Party Rights) (Scotland) Act 2017, but this does not affect any right or remedy which exists or is available apart from those Acts.


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6/32/0366/32/036

34


SIGNED by

………………………………


) ) ) )

…………………………………………….. Director

SIGNED by

……………………………………


) ) ) )

…………………………………………….. Director

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Schedule 1 Fixed Collateral

1. Definitions

For the purposes of this Schedule 1, the following definitions shall have the following meanings:

“Base Currency” means euro.

“Base Currency Equivalent” means, with respect to an amount on a Valuation Date, in the case of an amount denominated in the Base Currency, such Base Currency amount and, in the case of an amount denominated in a currency other than the Base Currency (the “Other Currency”), the amount in the Base Currency required to purchase such amount of the Other Currency at the spot exchange rate determined by the Valuation Agent for value on such Valuation Date.

“Cash” means any cash, whether representing capital or income in any currency (whether arising out of or in connection with the Securities, the Derivative Contracts or otherwise).

“Delivery Amount” has the meaning given to it in Paragraph 4.1.

“GSMWPF Eligible Collateral” has the meaning given to it in Paragraph 2.

“GSMWPF Posted Collateral” means:

(a) all Cash for the time being held in or standing to the credit of the Cash Account together with all interest from time to time accruing thereon which has been credited to the Cash Account; and

(b) all Securities being recorded or held in or standing to the credit of the Securities Account from time to time,

in each case, which have been posted in the Cash Account or the Securities Account (as applicable) pursuant to this Agreement.

“Minimum Transfer Amount” means €100,000.

“Resolution Date” means the final date for resolution of any dispute relating to the Value of the Posted Collateral and/or the Derivative Contracts pursuant to the dispute resolution process set out in the ancillary agreement relating to security and investment management arrangements between SLAL, SL Intl and the Investment Manager (as defined in the Deed of Fixed Charge) dated [•].

“Return Amount” has the meaning given to it in Paragraph 4.2.

“Securities” means securities (including, without limitation, any interests in collective investment schemes) that qualify as GSMWPF Eligible Collateral.

“Settlement Day” means in relation to a date (i) with respect to a transfer of cash or other property (other than Securities), the next Business Day and (ii) with respect to a transfer of

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Securities, the first Business Day after such date on which settlement of a trade in the relevant Securities, if effected on such date, would have been settled in accordance with customary practice when settling through the clearance system agreed between the parties for delivery of such Securities or, otherwise, on the market in which such Securities are principally traded (or, in either case, if there is no such customary practice, on the first Business Day after such date on which it is reasonably practicable to deliver such Securities).

“Target Collateral Amount” means the greater of:

(a) 90% of the sum of Current WP Liability and Non-Profit BEL in respect of the Reinsured Liabilities; and

(b) A + B - C + D + E, where:

A = 100% of the Current WP Liability in respect of the Reinsured Liabilities.

B = 100% of the Non-Profit BEL in respect of the Reinsured Liabilities, where Non-Profit BEL is non-negative and greater than the Minimum Transfer Amount.

C = the market value of any asset which is either:

(i) backing the Current WP Liability in respect of the Reinsured Liabilities; or

(ii) backing the Non-Profit BEL in respect of the Reinsured Liabilities,

and which does not qualify as GSMWPF Eligible Collateral.

D = 100% of any reserves held for outstanding claims in respect the Reinsured Liabilities.

E = 100% of any Accounting Liabilities held in respect of the Reinsured Liabilities (for the avoidance of doubt, including (without limitation) any amounts owed to the custodian of the Custodian Accounts or any other third party).

“Valuation Agent” means SLAL unless a notice has been served under clause 16.1 or clause 18 applies, in which case it shall be SL Intl.

“Valuation Date” means:

(a) the last day of each calendar month; and

(b) any date upon which a valuation occurs following a demand by SLAL or SL Intl pursuant to Paragraph 4.4.

“Valuation Percentage” means, for any item of GSMWPF Posted Collateral, the percentage specified in Paragraph 2.

“Valuation Time” means 5:00 p.m. Edinburgh time on the Business Day before each Valuation Date, or (if different) the time on such date at which the relevant Reinsured Liabilities are valued for the purposes of Solvency II regulatory reporting.

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“Value” means for any Valuation Date or other date for which Value is calculated, with respect to:

(a) GSMWPF Posted Collateral that is:

(i) an amount of cash, the Base Currency Equivalent of such amount multiplied by the applicable Valuation Percentage, if any; and

(ii) a security, the Base Currency Equivalent of the bid price obtained by the Valuation Agent multiplied by the applicable Valuation Percentage, if any; and

(b) the Derivative Contracts, the Base Currency Equivalent of the marked to market value of the applicable Derivative Contract and related rights under such Derivative Contract (including rights to return of posted margin) multiplied by the applicable Valuation Percentage, if any.

2. Eligible Collateral

The following items will qualify as “GSMWPF Eligible Collateral”:

Valuation Percentage

(A) cash in any currency 100%

(B) debt securities and negotiable debt obligations issued by governments, quasi government entities, corporates and other entities of all types

100%

(C) equity obligations issued by entities of all types

100%

(D) interests in collective investment schemes 100%

(E) Derivative Contracts …………………………………………….

100%

3. Target Collateral Amount

SLAL shall procure that on or promptly following each Valuation Date the Value of the GSMWPF Posted Collateral deposited in the Custodian Accounts plus the Value of the applicable Derivative Contracts, in each case together with all related rights, shall be at least equal to the Target Collateral Amount, subject to the provisions set out in this Schedule and the Deed of Fixed Charge.

4. Top Up and Withdrawal


Subject to Paragraph 5 (Conditions Precedent, Calculations and Substitutions) and Paragraph 6 (Dispute Resolution), upon a demand made by SL Intl on or promptly following a Valuation Date, if the Delivery Amount for that Valuation Date equals or exceeds the Minimum Transfer Amount, then SLAL will transfer to the Custodian

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Accounts GSMWPF Eligible Collateral having a Value as of the date of transfer at least equal to the applicable Delivery Amount. The “Delivery Amount” applicable to SLAL for any Valuation Date will equal the amount by which:

(i) the Target Collateral Amount for that Valuation Date

exceeds

(ii) the Value as of that Valuation Date of all GSMWPF Posted Collateral and the applicable Derivative Contracts, in each case together with all related rights (as adjusted to include any prior Delivery Amount and to exclude any prior Return Amount, the transfer of which, in either case, has not yet been completed and for which the relevant Settlement Day falls on or after such Valuation Date).


Subject to Paragraph 5 (Conditions Precedent, Calculations and Substitutions) and Paragraph 6 (Dispute Resolution), upon a demand made by SLAL on or promptly following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the Minimum Transfer Amount, then SLAL shall be permitted to withdraw GSMWPF Posted Collateral specified by SLAL in that demand having a Value as of the date of transfer as close as practicable to the applicable Return Amount. The “Return Amount” applicable for any Valuation Date will equal the amount by which:

(i) the Value as of that Valuation Date of all GSMWPF Posted Collateral and the applicable Derivative Contracts, in each case together with all related rights (as adjusted to include any prior Delivery Amount and to exclude any prior Return Amount, the transfer of which, in either case, has not yet been completed and for which the relevant Settlement Day falls on or after such Valuation Date),

exceeds

(ii) the Target Collateral Amount for that Valuation Date.

4.3 Rounding

The Delivery Amount and the Return Amount will be rounded up or down to the nearest integral multiple of €100,000 respectively.

4.4 Additional Valuation Dates

Where either of SLAL or SL Intl reasonably believes that there has been a material change in the Value of the GSMWPF Posted Collateral or the Derivative Contracts since the previous Valuation Date, it may demand an additional valuation of such assets, and such valuation shall occur on a date as soon as reasonably practicable following the date of such demand.

5. Conditions Precedent, Calculations and Substitutions

5.1 Conditions Precedent

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Each obligation of SLAL under Paragraph 4 (Top Up and Withdrawal), Paragraph 5.3 (Substitutions) and Paragraph 6 (Dispute Resolution) and of SL Intl under Paragraph 4 (Top Up and Withdrawal) and Paragraph 6 (Dispute Resolution) is subject to the conditions precedent that no Enforcement Event (as defined in the Deed of Fixed Charge) has occurred and is continuing.

5.2 Calculations

All calculations of Value and of the Target Collateral Amount for the purposes of Paragraph 4 (Top Up and Withdrawal), Paragraph 5.3 (Substitutions) and Paragraph 6.1 (Dispute of Valuation) will be made by the Valuation Agent as of the relevant Valuation Time. The Valuation Agent will notify each party (or the other party, if the relevant Valuation Agent is a party) of its calculations not later than close of business (Edinburgh time) on the applicable Valuation Date (or, in the case of Paragraph 6.1, following the date of calculation).

5.3 Substitutions

(i) SLAL may on any Business Day by notice (a “Substitution Notice”) inform SL Intl that it wishes to transfer to the Custodian Accounts GSMWPF Eligible Collateral (the “Substitute Collateral”) specified in that Substitution Notice in substitution for certain GSMWPF Eligible Collateral (the “Original Collateral”) specified in the Substitution Notice comprised in SLAL’s GSMWPF Posted Collateral.

(ii) If SL Intl notifies SLAL that it has consented to the proposed substitution, (a) SLAL will be obliged to transfer the Substitute Collateral on the first Settlement Day following the date on which it receives notice (which may be oral telephonic notice) from SL Intl of its consent and (b) subject to Paragraph 5.1 (Conditions Precedent), SLAL will be entitled to withdraw the Original Collateral not later than the Settlement Day following the date on which the Substitute Collateral is transferred to the Custodian Accounts (the “Substitution Date”); provided that SLAL will only be entitled to the return of Original Collateral with a Value as of the date of transfer as close as practicable to, but in any event not more than, the Value of the Substitute Collateral as of that date.

6. Dispute Resolution

6.1 Dispute of Valuation

(i)

(a) If one of the parties disputes on reasonable grounds the calculation under any notice and/or instruction served pursuant to Paragraph 4 (Top Up and Withdrawal) or Paragraph 5.3 (Substitutions) (including any calculation of the Target Collateral Amount) (each a "Notice") the disputing party will notify the other party not later than the close of business three (3) Business Days following the receipt of such Notice; or

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(b) If a party disputes the Value of any Securities posted, withdrawn or substituted, or any Derivative Contracts entered into, pursuant to Paragraph 4 (Top Up and Withdrawal) or Paragraph 5.3 (Substitutions), the disputing party will notify the other party within ten (10) Business Days of such posting, withdrawal, substitution or entry into (as applicable),

(each, a “Value Dispute Date”),

(ii) the parties will then consult with each other in an attempt to resolve the dispute in accordance with the terms of the ancillary agreement relating to security and investment management arrangements between SLAL, SL Intl and the Investment Manager (as defined in the Deed of Fixed Charge) dated [•];

(iii) if the parties fail to resolve the dispute by the Resolution Date, then SL Intl will procure a recalculation of the Value or the Target Collateral Amount (as applicable) (and any accompanying calculation required pursuant to Paragraph 4 (Top Up and Withdrawal) or Paragraph 5.3 (Substitutions)) by:

(a) utilising any calculations of that part of the GSMWPF Posted Collateral or Substitute Collateral or Target Collateral Amount (as applicable) that the parties have agreed are not in dispute;

(b) calculating that part of the GSMWPF Posted Collateral or Substitute Collateral or Target Collateral Amount (as applicable) in dispute and attributable to Securities by requesting Qualifying Bid Prices for such Securities from at least two and up to five Approved Dealers;

(c) calculating the Value of any Derivative Contracts in dispute by requesting quotations (either firm or indicative) for replacement transactions for such Derivative Contracts from at least two and up to five Approved Dealers;

Where:

“Qualifying Bid Price” means, with respect to a particular series of Securities, a firm, unconditional and immediately executable bid price for a notional amount of such Securities being not less than the notional amount of Securities comprising the GSMWPF Posted Collateral or Substitute Collateral that are subject to dispute, which has been obtained between 10.00 am and 3.00 pm (Edinburgh time) on the Business Day following the Resolution Date; and

“Approved Dealer” means one of the five leading dealers in the United Kingdom in the relevant market selected by SL Intl (acting reasonably).

SL Intl shall notify SLAL of, and provide reasonable evidence with respect to, the Qualifying Bid Prices and/or quotations for replacement transactions it has obtained, as soon as reasonably practicable and in any event no later than close of business (Edinburgh time) on the

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Business Day following the Resolution Date (the date of such notice, the "Recalculation Date"), and the Value of such Securities or Derivative Contracts shall be determined to be the highest of such Qualifying Bid Prices or quotations for replacement transactions, as applicable,, multiplied by the applicable Valuation Percentage.

6.2 Notification of dispute resolution

(i) If a dispute is resolved pursuant to Paragraph 6.1(ii), then:

(a) if the dispute relates to Paragraph 6.1(i)(a), the date on which the dispute is resolved pursuant to such consultation shall be treated as the date of receipt of the applicable Notice (such notice to be deemed amended as necessary pursuant to the agreement reached by the parties pursuant to Paragraph 6.1(ii)), for the purposes of Paragraph 4 (Top Up and Withdrawal) or Paragraph 5.3 (Substitutions); and

(b) if the dispute relates to Paragraph 6.1(i)(b) the parties shall make any adjustments to the GSMWPF Posted Collateral and/or the Derivative Contracts as may be required pursuant to the agreement reached by the parties pursuant to Paragraph 6.1(ii) within two (2) Business Days of such resolution.

(ii) If a dispute is resolved following a recalculation pursuant to Paragraph 6.1(iii), then:

(a) if the dispute relates to Paragraph 6.1(i)(a), the Recalculation Date shall be treated as the date of receipt of the applicable Notice (such notice to be deemed amended as necessary pursuant to the recalculation for the purposes of Paragraph 4 (Top Up and Withdrawal) or Paragraph 5.3 (Substitutions); and

(b) if the dispute relates to Paragraph 6.1(i)(b), the parties shall make any adjustments to the GSMWPF Posted Collateral and/or the Derivative Contracts as may be required pursuant to such recalculation within two (2) Business Days of the Recalculation Date.

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Schedule 2 Back-Book Premium

The back-book premium should be an amount equivalent to:

(a) the fair value of the Reinsured Liabilities (calculated by reference to the value of the Reinsured Policies as at 31 December 2018 (the “calculation date”),

as adjusted to reflect:

(b) the fair value of all maturities, claims and surrenders, as well as any changes in economic conditions, which occur between the calculation date and the Risk Transfer Time.

In determining the fair value in respect of both (a) and (b) above, the parties should have regard for generally accepted actuarial practice in assessing fair value (assessed from both SLAL and SL Intl’s perspectives).

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Schedule 3 Calculation of Termination Amount

Part A

In the event of termination of this Agreement pursuant to clause 16 (Termination on Notice) (other than following the occurrence of an Event of Default) or following termination by the mutual agreement of the parties hereto (subject to any amendments agreed in accordance with clause 17.1), the Initial Termination Amount, the Interim Termination Amount, the Termination Amount and the Adjustment Amount shall be as set out below:

1. Initial Termination Amount

The Initial Termination Amount shall be an amount, as determined by SLAL acting in good faith, of 10% of the Target Collateral Amount, as at the latest Valuation Date;

2. Interim Termination Amount

The Interim Termination Amount shall be an amount (as determined by SLAL acting in good faith) equal to:

(a) 100% of the With Profits BEL in respect of the Reinsured Liabilities, as at the Termination Date;

(b) 100% of all assets in the GSMWPF that are not included in (a);

(c) the value of the Non-Profit BEL in respect of the Reinsured Liabilities, as at the Termination Date;

(d) 80% of the Estimated Cost of Capital, as at the Termination Date; and

(e) an amount equal to the Accounting Liabilities in respect of the Reinsured Liabilities as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (d) above,

less the Initial Termination Amount.

3. Termination Amount

The Termination Amount shall be an amount equal to:




(d) SL Intl’s Cost of Capital, as at the Termination Date; and

(e) an amount equal to the Accounting Liabilities in respect of the Reinsured Liabilities, as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (d) above.

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4. Adjustment Amount

The Adjustment Amount shall be an amount equal to the difference between:

(a) the Termination Amount; and

(b) the sum of (i) the total amount paid in respect of the Initial Termination Amount and (ii) the total amount paid in respect of the Interim Termination Amount.

Part B

In the event of termination of this Agreement pursuant to clause 16.1 (Termination on Notice) or in accordance with clause 18 (Cross Default), in either case following the occurrence of an Event of Default either pursuant to the terms of this Agreement or the terminating agreement to which the cross-default relates, the Termination Amount shall be as set out below:


The Termination Amount shall be an amount equal to the Total Amount.

The Total Amount shall be an amount equal to:





(e) an amount equal to the Accounting Liabilities in respect of the Reinsured Liabilities, as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (d) above,

provided that such amounts shall be calculated in accordance with Applicable Law, including (to the extent applicable) the Insurers (Winding Up) (Scotland) Rules 2001.

6/32/0476/32/047

554257249

DATED


- and -


as Reinsurer

_________________________________________

REINSURANCE AGREEMENT RELATING TO SL INTL GWPF POLICIES

_________________________________________


London EC1Y 8YY (ACC/FAXP)

6/31/001

Contents

Page

1. INTERPRETATION 1

2. REINSURANCE 13




6. RECOVERIES 15

7. NET AMOUNTS 15

8. PAYMENTS 16

9. REPORTING 16



12. COVENANTS 19

13. WARRANTIES 20


15. TERM 22






21. INTEREST 27


23. VAT 27

6/31/002





28. NOTICES 29





33. GENERAL 31





6/31/003

1


BETWEEN




WHEREAS:




1. INTERPRETATION




“Accounting Liabilities” means any provision held on SLAL’s balance sheet in respect of the Reinsured Liabilities;


6/31/004

2




“Back-Book Premium” means the amount determined by SLAL and notified to SL Intl in accordance with the principles set out in Schedule 2 (Back-Book Premium);

“BEL” means the best estimate liabilities, calculated using generally accepted actuarial techniques and in a manner consistent with the applicable PPFM and Solvency II. This shall include applying the Solvency II regulatory reporting assumptions (save for in cases where the SLAL Chief Actuary, acting in good faith and following accepted actuarial practice, deems these assumptions to be inappropriate). For the purposes of calculating the Target Collateral Amount, the basis will be mutually agreed between the parties, acting in good faith and following accepted actuarial practice;

“Brexit Scheme” means the insurance business transfer scheme, sanctioned by the Court of Session in Edinburgh under Part VII of the Financial Services and

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3

Markets Act 2000 on or around the date of this Agreement, to transfer the euro denominated business of SLAL, from SLAL to SL Intl;










(i) the disability annuity benefit is equal to or in excess of €72,000 per annum; and/or

(ii) in the case of any other claim, the lump sum benefit is equal to or in excess of €1 million,


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4


“Cost of Capital” means the costs of raising and providing the capital resources required to meet the Solvency Capital Requirement in respect of the Reinsured Liabilities on the Termination Date, calculated using generally accepted actuarial techniques in a manner consistent with the IPPFM and Solvency II, and using an appropriate cost of capital rate;







“Deed Poll” means the deed poll entitled “Deed Poll of Irrevocable Undertaking (GWPF)” granted by SL Intl in accordance with paragraph 66 of the Brexit

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5

Scheme;




“Estimated Cost of Capital” means the amount calculated to be the product of the cost of capital rate used in SLAL’s Pillar 2 capital assessment under Solvency II and the sum of the value of the GWPF SCR Reinsured Liabilities Shareholder Cost over all future time periods, discounted using the basic risk-free interest rate for the maturity period corresponding to each year, based on the latest risk free interest rate provided by EIOPA for that year;







6/31/008

6



“Future Policy-Related Liabilities” has the meaning given in the Glossary of the PRA Rulebook and shall be calculated in accordance with the Solvency II Reporting assumptions (save for in cases where the SLAL Chief Actuary, acting in good faith and following accepted actuarial practice, deems these assumption to be inappropriate);



“GSMWPF Reinsurance Agreement” means the agreement of even date entitled “Reinsurance Agreement: GSMWPF” between SLAL and SL Intl;

“GWPF SCR Reinsured Liabilities Shareholder Cost”

means an amount equal to the Solvency Capital Requirement arising in respect of all Reinsured Policies that is borne by SLAL's shareholders and not the SLAL GWPF;

“GWPF Terminated Policy” means any euro denominated life insurance policy written by or allocated to the Irish or German branches (including the Austrian services) of SLAL which matured or terminated

6/31/009

7

prior to the Risk Transfer Time in respect of which SLAL had certain obligations or potential liabilities to the policyholder after maturity or termination and which, had that policy not matured or terminated, would have been a SL Intl GWPF Transferred Policy;

“HWPF Reinsurance Agreement” means the agreement of even date entitled “Reinsurance Agreement: HWPF” between SLAL and SL Intl;



“Insolvency Event” means, in respect of SLAL, the occurrence of any of the events set out in clauses 16.1(B) to 16.1(F) inclusive;


“Investment Management Agreement” has the meaning given to it in the Deed of Fixed Charge;

“IPPFM” means the Principles and Practices of Financial Management maintained by SLAL in effect from time to time in respect of the SLAL GWPF;




“Non-Default Interest” means EURIBOR (subject to any adjustment agreed between the parties in accordance with

6/31/010

8

clause 17.3) at the time of payment of the Adjustment Amount;

“Notice of Reinsurance Business Committee Meeting”

has the meaning given to it in clause 11.2;



(ii) in connection with the investment element of any with profits or property-linked policy, where the maturity, surrender or switch approved by SL Intl in connection with any Reinsured Policy is equal to or in excess of €300,000; and/or

(iii) in the case of any other claim, any claim approved by SL Intl in respect of any Reinsured Policy where the lump sum benefit is equal to or in excess of €300,000,







“Recoverable Amounts” means any amounts Recovered by SL Intl;

6/31/011

9



“Reinsurance Business Committee” has the meaning given to it in clause 11 (Business Oversight);

“Reinsured Liabilities” means any and all liabilities paid or settled, or which become due for payment or settlement, by (or on behalf of) SL Intl at or after the Risk Transfer Time, in respect of (i) the Reinsured Policies and the Deed Poll and including, without limitation, any liabilities in respect of a SL Intl GWPF Transferred Policy in accordance with paragraph 43.2(c) of the Brexit Scheme; and (ii) GWPF Terminated Policies;

“Reinsured Policies” means the euro denominated life insurance policies which are (i) transferred and allocated to the SL Intl Euro PBF pursuant to the Brexit Scheme with the investment element allocated to the GWPF; or (ii) written by SL Intl following the Risk Transfer Time in accordance with paragraph 37 of the Brexit Scheme (save that any SL Intl GWPF Transferred Policy shall cease to be a Reinsured Policy immediately following settlement by SLAL of all liabilities that it has under the terms of this Agreement by the payment of an amount that is equal to the amount that SL Intl shall debit from the SL Intl GWPF in accordance with paragraph 43 of the Brexit Scheme);

“Reporting Agreement” means the ancillary reporting agreement between

6/31/012

10

SLAL and SL Intl dated [●];






“SLAL GWPF” means the German With Profits Fund as such term is defined in the 2006 Scheme;




“SL Intl Euro PBF” means the “SL Intl Euro PBF” established and maintained in accordance with the Brexit Scheme;

“SL Intl GWPF” means the “SL Intl GWPF” established and maintained in accordance with the Brexit Scheme;

“SL Intl GWPF Transferred Policy” has the meaning given to it in the Brexit Scheme;

“SL Intl Head of Actuarial Function” means SL Intl’s head of actuarial function within the meaning of the CBI Domestic Actuarial Regime and Related Governance Requirements under Solvency II or, if those requirements are no longer in effect, the person appointed by SL Intl from time to time as head of the function described at Regulation 50 of the European Union (Insurance and Reinsurance) Regulations

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11

2015 or, if SL Intl is no longer required to maintain such a function, a person possessing appropriate actuarial qualifications nominated for the purposes of this Agreement by SL Intl;





“Tax Authority” means any government, state or municipality or any local, state, federal or other authority, body or official anywhere in the world exercising a fiscal, revenue, customs or excise function (including, without limitation, HM Revenue & Customs in the UK, and the Office of the Revenue Commissioners in the Republic of Ireland);




“Termination Amount Dispute Notice” has the meaning given to it in clause 17.4 (Effect of Termination);

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12



“Transaction Documents” means this Agreement, the Deed Poll, Fixed Charging Arrangements and the Deed of Floating Charge;

“VAT” means:









(E) references to a “person” shall be construed so as to include any individual, firm, company, corporation, body corporate, government, state or agency of a state,

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local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality);








2. REINSURANCE




(B) SLAL shall:

(i) not be liable for any liabilities arising in connection with SL Intl’s operational risk in respect of any actions or omissions occurring following the Risk Transfer Time, in respect of the Reinsured Liabilities;;

6/31/016

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(ii) only be liable for an amount determined by SL Intl (in accordance with the SL Intl GWPF Internal PPFM (as defined in the Brexit Scheme)) to be due for the benefit of a policyholder, where SLAL (in accordance with the PPFM) has determined an amount to be due under an equivalent policy allocated to the SLAL GWPF in the same proportion as the Reinsured Policy and then, only to the extent of the amount determined by SLAL in respect of the equivalent policy; and







3.1 At the Risk Transfer Time, SL Intl shall pay (or procure the payment of) the Back-Book Premium to SLAL. The payment of the Back-Book Premium shall be made on the following basis, if the terms of the Brexit Scheme are sanctioned by the Court of Session in Edinburgh and be satisfied by the set-off and retention of assets by SLAL that would otherwise be transferred to SL Intl pursuant to the Brexit Scheme, in accordance with the terms of paragraph 4.2 of the Brexit Scheme.



From the Risk Transfer Time, an amount equal to the aggregate amounts payable by (or on behalf of) SL Intl to (or on behalf of) policyholders in respect of the Reinsured Liabilities (including, without limitation, payments made pursuant to paragraph 43.2(C)

6/31/017

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of the Brexit Scheme) on that Business Day and, where an annuity benefit is to be provided on the vesting of a Reinsured Policy on that Business Day, an amount that is equal to the amount that SL Intl shall debit from the SL Intl GWPF in accordance with paragraph 43 of the Brexit Scheme (together, the “Claim Amount”) shall become due for payment (subject to clause 11 (Business Oversight)) by SLAL to SL Intl on the next Business Day following SL Intl providing SLAL with written notice of such Claim Amount, or if later, the payment date specified in such notice. The Claim Amount shall be payable in accordance with clause 7 (Net Amounts).



5.2 The Ceding Commission shall comprise the amount determined by SL Intl (acting reasonably and in good faith) to represent a reasonable allocation of the costs, expenses, commissions, premiums payable to external reinsurers and taxes incurred by SL Intl in respect of the Reinsured Liabilities.




6. RECOVERIES


7. NET AMOUNTS

7.1 Notwithstanding the references in clauses 3 (Reinsurance Premiums) and 4 (Reinsurance Claims) to any Premium Payment or Claim Amount becoming due for payment by one party to the other party, the payments to be made by the parties in respect of such amounts shall be determined on a net basis in accordance with clause 7.2 and paid in accordance with clause 7.3. The relevant payment obligations of each of SL Intl and SLAL under clauses 3 (Reinsurance Premiums) and 4 (Reinsurance

6/31/018

16

Claims) shall be deemed satisfied and discharged by the payment by the relevant party of any such net amount.











8. PAYMENTS




9. REPORTING

The parties shall each comply with their reporting obligations to the other party, as set out in the ancillary reporting agreement entered into between SLAL and SL Intl dated [●] (the “Reporting Agreement”).

6/31/019

17




10.3 The SL Intl Board shall be entitled to make representations to the SLAL With Profits Committee and the SLAL Board on matters affecting the Reinsured Policies and receive an explanation of the basis for decisions which affect holders of such Reinsured Policies.


10.5 SLAL shall maintain and comply with the IPPFM and shall consult with SL Intl before making any amendments to the principles of the IPPFM.


11.1 The parties acknowledge and agree that a committee comprising three (3) representatives of each party shall be established for the purpose of monitoring SL Intl’s management of the business that is reinsured to SLAL pursuant to the terms of this Agreement, the HWPF Reinsurance Agreement and the GSMWPF Reinsurance Agreement (the “Reinsurance Business Committee”).

11.2 Each of the parties shall, within one (1) Business Day of the date of this Agreement, nominate its representatives for the Reinsurance Business Committee. The Reinsurance Business Committee shall be convened (as required by either party), by any representative serving notice to all other representatives of the Reinsurance Business Committee (“Notice of Reinsurance Business Committee Meeting”). Unless the representatives agree otherwise, the Reinsurance Business Committee shall be convened within one (1) Business Day of the date of the Notice of Reinsurance Business Committee Meeting. The quorum for the Reinsurance Business Committee

6/31/020

18

shall be two (2) representatives, provided that at least one (1) representative from each party is present.



11.5 The Reinsurance Business Committee shall discuss any and all Notifiable Matters notified by SL Intl to SLAL. SLAL shall have the opportunity to make representations at any meeting of the Reinsurance Business Committee as to the amount that they would consider reasonable for SL Intl to pay or have paid (and SLAL to reinsure) in respect of any claim under a Reinsured Policy which is notified to SLAL as a Notifiable Matter. For the avoidance of doubt, no vote shall be taken in respect of any Notifiable Matter and, subject to clause 11.7 below, all Notifiable Matters shall be included, as appropriate, within the relevant Monthly Report.


11.7 Where:






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19


(B) in respect of Consent Claims which have been paid by SL Intl, twenty (20) Business Days prior to the date on which SL Intl must provide the Monthly Report reflecting payment of the relevant Consent Claim to SLAL in accordance with the terms of the Reporting Agreement.

11.9 If a dispute under and in accordance with this clause 11 is not resolved five (5) Business Days prior to the date on which SL Intl must provide the Monthly Report reflecting payment of the relevant Consent Claim to SLAL in accordance with the Reporting Agreement:

(A) the Monthly Report reflecting payment of the relevant Consent Claim shall reflect only such amount of the Consent Claim as is not disputed between the parties (and such proportion of any amount of reinsurance attaching to such Consent Claim as is equal to the undisputed proportion of such Consent Claim);




12. COVENANTS







6/31/022

20

(B) subject to Applicable Law, it shall at all times during the Term comply in all material respects with the Business Guidelines and the IPPFM;




(D) it shall obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all authorisations, approvals, licences and consents required in or by Applicable Law to enable it lawfully to enter into and perform its obligations under the Transaction Documents.

13. WARRANTIES








6/31/023

21














6/31/024

22

15. TERM











(A) a material breach by SLAL of a Fundamental Provision, which is either incapable of remedy or, if capable of remedy, is not remedied within thirty (30) Business Days of being notified by SL Intl of such breach;

6/31/025

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(F) SLAL ceases to satisfy the “Minimum Capital Requirement” under Solvency II; or

(G) SLAL amends any principle of the IPPFM in a way in which SL Intl considers, acting reasonably, to have a materially adverse impact on holders of the Reinsured Policies.


(A) SL Intl fails to make a payment which is due and payable to SLAL as required under this Agreement and such failure is not rectified within five (5) Business Days of being notified by SLAL of such failure (including, for the avoidance of doubt, the Back-Book Premium);





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16.5 Where SLAL proposes a change to the terms of the Investment Management Agreement in accordance with the terms of the Investment Management Agreement, and SLAL and SL Intl are unable to reach agreement in respect of such change following conclusion of the applicable dispute resolution process set out in the ancillary agreement relating to security and investment management arrangements between SLAL, SL Intl and the Investment Manager (as defined in the Deed of Fixed Charge) dated [•], then this Agreement shall terminate automatically.



17.2 If either party serves a Termination Notice in accordance with clause 16 (Termination on Notice) (other than following the occurrence of an Event of Default):



(C) the parties shall negotiate in good faith to agree any amendments to the Brexit Scheme and the 2006 Scheme as may be required as a result of the termination of this Agreement;

(D) SL Intl shall have regard to the steps that it is required to take pursuant to paragraph 45 of the Brexit Scheme in the event of the termination of this Agreement; and

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an amount equal to the Adjustment Amount and such amount shall be subject to the payment of Non-Default Interest (subject to any reasonable adjustment to the Non-Default Interest rate agreed between the parties (acting in good faith) to reflect any material market changes during the period which the Non-Default Interst is being applied).

17.4 If SL Intl wishes to dispute the calculation of the Termination Amount prepared by SLAL (as calculated in accordance with paragraph 3 of Part A of Schedule 3 (Calculation of Termination Amount) and notified to SL Intl in accordance with clause 17.2(E)), SL Intl must notify SLAL of such dispute within thirty (30) Business Days of receipt of Termination Amount calculation (as applicable). Such notice (a “Termination Amount Dispute Notice”) shall set out in reasonable detail a description of the matter(s) disputed, together with any relevant calculations. The parties shall use reasonable endeavours to reach agreement on the matters set out in a Termination Amount Dispute Notice within thirty (30) Business Days of receipt by SLAL of such Termination Amount Dispute Notice. If the parties are unable to agree within this period, either party may escalate the matter to the Independent Actuary, whose determination regarding the Termination Amount shall be binding on the parties. Failure by SL Intl to issue a Termination Amount Dispute Notice within thirty (30) Business Days of receipt of the Termination Amount calculation (as applicable) shall constitute SL Intl’s deemed agreement to the Termination Amount as originally calculated by SLAL.




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(C) SL Intl shall have regard to the steps that it is required to take pursuant to paragraph 45 of the Brexit Scheme in the event of the termination of this Agreement.


18. CROSS DEFAULT

This Agreement shall terminate automatically upon termination following the occurrence of an Event of Default (as defined under the relevant agreement) of either of the following agreements:

(A) HWPF Reinsurance Agreement; or

(B) GSMWPF Reinsurance Agreement.



(A) a material adverse effect on a party’s ability to effect and carry out its obligations under this Agreement; or

(B) the benefit of this Agreement to a party becoming materially less favourable than is the case as of the date of this Agreement,

then the party affected by the Tax Event, Regulatory Event or a change in Applicable Law shall give notice to the other party and the parties shall enter into negotiations in good faith and use reasonable endeavours to agree an amendment to this Agreement so that the performance of each party is no longer affected by such Tax Event, Regulatory Event or change in Applicable Law. If the parties are not able to agree an amendment to this Agreement within thirty (30) Business Days of the notice, the parties shall escalate to their respective Chief Executive Officers, who will seek (acting in good faith) to agree such an amendment.



20.2 Clauses 26 (Confidentiality), 28 (Notices), and 34 (Governing Law and Jurisdiction) (and, to the extent necessary for the interpretation thereof, clause 1 (Interpretation)) shall survive the termination of this Agreement.

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21. INTEREST




22.1 At or by the Risk Transfer Time, the parties shall enter into the Fixed Charging Arrangements.


22.3 At or by the Risk Transfer Time, the parties shall enter into the Investment Management Agreement, pursuant to which the parties shall agree the terms upon which the collateral deposited in the Custodian Accounts and the Derivative Contracts will be managed. The Investment Management Agreement shall contain provisions setting out appropriate requirements in respect of the composition, duration and nature of the assets deposited in the Custodian Accounts and the Derivative Contracts in the context of the applicable Reinsured Liabilities backed by such assets.

22.4 At or by the Risk Transfer Time, the parties shall enter into the Deed of Floating Charge.

23. VAT





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28


25. DATA PROTECTION


26. CONFIDENTIALITY












27. ANNOUNCEMENTS


6/31/031

29


28. NOTICES

28.1 Any notice, request, instruction or other document given under this Agreement must be made in writing. Writing includes e-mail (other than in the case of legal notices or notices to terminate this Agreement, which must be sent by post) and must be sent to the address, or email address (where relevant) of the relevant party given in this clause 28, unless another address or email address has been notified in writing by the relevant party in accordance with clause 28.3. If sent by post, the relevant notice must be delivered or sent by prepaid first class recorded delivery post or by courier.


SL Intl SLAL



Email: [●] Email: [●]








30.1 If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, the parties agreed to co-

6/31/032

30

operate with one another to seek to resolve or rectify any such issues and agree that this shall not affect or impair:



30.2 A waiver or variation of this Agreement will only be effective if it is in writing, is signed by each party and has been consented to in writing by both the SLAL WP Actuary and the SL Intl Head of Actuarial Function (on the basis that the proposed waiver or variation is not expected to materially and adversely affect (i) the contractual rights of the holders of Reinsured Policies and the holders of policies written in or allocated to the SL Intl GWPF or their contractual rights under the Deed Poll; or (ii) their reasonable expectations regarding non-contractual rights under such policies).









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33. GENERAL

33.1 No person shall have any right to enforce any term or condition of this Agreement under the Contracts (Rights of Third Parties) Act 1999 or the Contract (Third Party Rights) (Scotland) Act 2017, but this does not affect any right or remedy which exists or is available apart from those Acts.






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SIGNED by

………………………………


) ) ) )

…………………………………………….. Director

SIGNED by

……………………………………


) ) ) )

…………………………………………….. Director

6/31/035

33


1. Definitions






“GWPF Eligible Collateral” has the meaning given to it in Paragraph 2.

“GWPF Posted Collateral” means:







“Securities” means securities (including, without limitation, any interests in collective investment schemes) that qualify as GWPF Eligible Collateral.


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(a) 90% of the sum of Current WP Liability and Non-Profit BEL in respect of the Reinsured Liabilities; and

(b) A + B - C + D + E, where:

A = 100% of the Current WP Liability in respect of the Reinsured Liabilities.

B = 100% of the Non-Profit BEL in respect of the Reinsured Liabilities, where Non-Profit BEL is non-negative and greater than the Minimum Transfer Amount.


(i) backing the Current WP Liability in respect of the Reinsured Liabilities; or

(ii) backing the Non-Profit BEL in respect of the Reinsured Liabilities,

and which does not qualify as GWPF Eligible Collateral.



“Valuation Agent” means SLAL unless a notice has been served under clause 16.1 or clause 18 applies, in which case it shall be SL Intl.




“Valuation Percentage” means, for any item of GWPF Posted Collateral, the percentage specified in Paragraph 2.


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(a) GWPF Posted Collateral that is:





The following items will qualify as “GWPF Eligible Collateral”:




100%


100%



100%


SLAL shall procure that on or promptly following each Valuation Date the Value of the GWPF Posted Collateral deposited in the Custodian Accounts plus the Value of the applicable Derivative Contracts, in each case together with all related rights, shall be at least equal to the Target Collateral Amount, subject to the provisions set out in this Schedule and the Deed of Fixed Charge.




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Accounts GWPF Eligible Collateral having a Value as of the date of transfer at least equal to the applicable Delivery Amount. The “Delivery Amount” applicable to SLAL for any Valuation Date will equal the amount by which:


exceeds

(ii) the Value as of that Valuation Date of all GWPF Posted Collateral and the applicable Derivative Contracts, in each case together with all related rights (as adjusted to include any prior Delivery Amount and to exclude any prior Return Amount, the transfer of which, in either case, has not yet been completed and for which the relevant Settlement Day falls on or after such Valuation Date).


Subject to Paragraph 5 (Conditions Precedent, Calculations and Substitutions) and Paragraph 6 (Dispute Resolution), upon a demand made by SLAL on or promptly following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the Minimum Transfer Amount, then SLAL shall be permitted to withdraw GWPF Posted Collateral specified by SLAL in that demand having a Value as of the date of transfer as close as practicable to the applicable Return Amount. The “Return Amount” applicable for any Valuation Date will equal the amount by which:

(i) the Value as of that Valuation Date of all GWPF Posted Collateral and the applicable Derivative Contracts, in each case together with all related rights (as adjusted to include any prior Delivery Amount and to exclude any prior Return Amount, the transfer of which, in either case, has not yet been completed and for which the relevant Settlement Day falls on or after such Valuation Date),

exceeds


4.3 Rounding



Where either of SLAL or SL Intl reasonably believes that there has been a material change in the Value of the GWPF Posted Collateral or the Derivative Contracts since the previous Valuation Date, it may demand an additional valuation of such assets, and such valuation shall occur on a date as soon as reasonably practicable following the date of such demand.



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5.2 Calculations


5.3 Substitutions

(i) SLAL may on any Business Day by notice (a “Substitution Notice”) inform SL Intl that it wishes to transfer to the Custodian Accounts GWPF Eligible Collateral (the “Substitute Collateral”) specified in that Substitution Notice in substitution for certain GWPF Eligible Collateral (the “Original Collateral”) specified in the Substitution Notice comprised in SLAL’s GWPF Posted Collateral.




(i)


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(a) utilising any calculations of that part of the GWPF Posted Collateral or Substitute Collateral or Target Collateral Amount (as applicable) that the parties have agreed are not in dispute;

(b) calculating that part of the GWPF Posted Collateral or Substitute Collateral or Target Collateral Amount (as applicable) in dispute and attributable to Securities by requesting Qualifying Bid Prices for such Securities from at least two and up to five Approved Dealers;


Where:

“Qualifying Bid Price” means, with respect to a particular series of Securities, a firm, unconditional and immediately executable bid price for a notional amount of such Securities being not less than the notional amount of Securities comprising the GWPF Posted Collateral or Substitute Collateral that are subject to dispute, which has been obtained between 10.00 am and 3.00 pm (Edinburgh time) on the Business Day following the Resolution Date; and



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Business Day following the Resolution Date (the date of such notice, the "Recalculation Date"), and the Value of such Securities Derivative Contracts shall be determined to be the highest of such Qualifying Bid Prices or quotations for replacement transactions, as applicable,, multiplied by the applicable Valuation Percentage.




(b) if the dispute relates to Paragraph 6.1(i)(b) the parties shall make any adjustments to the GWPF Posted Collateral and/or the Derivative Contracts as may be required pursuant to the agreement reached by the parties pursuant to Paragraph 6.1(ii) within two (2) Business Days of such resolution.



(b) if the dispute relates to Paragraph 6.1(i)(b), the parties shall make any adjustments to the GWPF Posted Collateral and/or the Derivative Contracts as may be required pursuant to such recalculation within two (2) Business Days of the Recalculation Date.

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(a) the fair value of the Reinsured Liabilities (calculated by reference to the value of the Reinsured Policies as at 31 December 2018 (the “calculation date”),




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Part A

In the event of termination of this Agreement pursuant to clause 16 (Termination on Notice) (other than following the occurrence of an Event of Default) or following termination by the mutual agreement of the parties hereto (subject to any amendments agreed in accordance with clause 17.1), the Initial Termination Amount, the Interim Termination Amount, the Termination Amount and the Adjustment Amount shall be as set out below:






(b) 100% of all assets in the GWPF that are not included in (a);


(d) 80% of the Estimated Cost of Capital, as at the Termination Date; and

(e) an amount equal to the Accounting Liabilities in respect of the Reinsured Liabilities as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (d) above,








(e) an amount equal to the Accounting Liabilities in respect of the Reinsured Liabilities, as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (d) above.




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Part B



The Termination Amount shall be an amount equal to the Total Amount.






(e) an amount equal to the Accounting Liabilities in respect of the Reinsured Liabilities, as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (d) above,


6/31/045

554257284

DATED


- and -


as Reinsurer

_________________________________________

REINSURANCE AGREEMENT RELATING TO SL INTL HWPF POLICIES

_________________________________________


London EC1Y 8YY (ACC/FAXP)

6/30/001

Contents

Page

1. INTERPRETATION 1

2. REINSURANCE 15




6. RECOVERIES 18

7. NET AMOUNTS 18

8. PAYMENTS 19

9. REPORTING 19



12. COVENANTS 22

13. WARRANTIES 22


15. TERM 24






21. INTEREST 29


23. VAT 30

6/30/002





28. NOTICES 31





33. SET-OFF 33

34. GENERAL 33





6/30/003

1


BETWEEN




WHEREAS:




1. INTERPRETATION



“2011 Scheme” means the scheme pursuant to Part VII of, and Schedule 12 to, FSMA, under which the long-term business of Standard Life Investment Funds Limited was transferred to SLAL, which was sanctioned by the Court of Session on 20 December 2011 and became effective on 31 December 2011 (as amended from time to time);

6/30/004

2


“Accounting Liabilities” means any provision held on SLAL’s balance sheet in respect of the Reinsured Liabilities or the HWPF Reinsured Liabilities (as appropriate);





“Back-Book Premium” means the amount to be agreed between SLAL and SL Intl (acting reasonably and in good faith) as a fair price for reinsuring the Reinsured Policies to SLAL, such amount to be determined in accordance with the principles set out in Schedule 2 (Back-Book Premium);

6/30/005

3

“BEL” means the best estimate liabilities, calculated using generally accepted actuarial techniques and in a manner consistent with the applicable PPFM and Solvency II. This shall include applying the Solvency II regulatory reporting assumptions (save for in cases where the SLAL Chief Actuary, acting in good faith and following accepted actuarial practice, deems these assumptions to be inappropriate). For the purposes of calculating the Target Collateral Amount, the basis will be mutually agreed between the parties, acting in good faith and following accepted actuarial practice;

“Boxes” means the difference between the number of units in existence in the property-linked funds and the number of customer units allocated in the property-linked funds;

“Brexit Scheme” means the insurance business transfer scheme, sanctioned by the Court of Session in Edinburgh under Part VII of the Financial Services and Markets Act 2000 on or around the date of this Agreement, to transfer the euro denominated business of SLAL, from SLAL to SL Intl;






6/30/006

4





(i) the disability annuity benefit is equal to or in excess of €72,000 per annum; or

(ii) in the case of any other claim, the lump sum benefit is equal to or in excess of €1 million;



“Cost of Capital” means the costs of raising and providing the capital resources required to meet the Solvency Capital Requirement in respect of the Reinsured Liabilities on the Termination Date, calculated using generally accepted actuarial techniques in a manner consistent with the PPFM and Solvency II, and using an

6/30/007

5

appropriate cost of capital rate;







“Deed Poll” means the deed poll entitled “Deed Poll of Irrevocable Undertaking (HWPF)” granted by SL Intl in accordance with paragraph 66 of the Brexit Scheme;




“Estimated Cost of Capital” means the amount calculated to be the product of the cost of capital rate used in SLAL’s Pillar 2 capital assessment under Solvency II and the sum of the value of the HWPF SCR Reinsured Liabilities Shareholder Cost over all future time periods, discounted using the basic risk-free interest rate for the maturity period corresponding to each year, based on the latest risk free interest rate

6/30/008

6

provided by EIOPA for that year;









“Future Policy-Related Liabilities” has the meaning given in the Glossary of the PRA Rulebook and shall be calculated in accordance with the Solvency II Reporting assumptions (save for in cases where the

6/30/009

7

SLAL Chief Actuary, acting in good faith and following accepted actuarial practice, deems these assumption to be inappropriate);



“GSMWPF Reinsurance Agreement”

means the agreement of even date entitled “Reinsurance Agreement: GSMWPF” between SLAL and SL Intl;

“GWPF Reinsurance Agreement” means the agreement of even date entitled “Reinsurance Agreement: GWPF” between SLAL and SL Intl;

“HWPF Reinsured Liabilities” means the Reinsured Liabilities other than liabilities relating to the Reinsured Irish Property-Linked Liabilities (as defined in the Property-Linked Funds Retrocession Agreement);

“HWPF SCR Reinsured Liabilities Shareholder Cost”

means an amount equal:

(i) to the product of the HWPF SCR Total Shareholder Cost and the level of Future Policy-Related Liabilities attributable to the HWPF Reinsured Liabilities as a proportion of the total Future Policy-Related Liabilities for all policies in the HWPF (for the avoidance of doubt this means both Reinsured Policies and also any policies written directly by SLAL); plus

(ii) 100% of the Solvency Capital Requirement arising from the Internal Annuities Reinsurance Arrangements

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(as defined in the Brexit Scheme) attributable to the HWPF Reinsured Liabilities; plus

(iii) 100% of the Solvency Capital Requirement arising from the Additional Expenses and the Recourse Cashflow (as defined in Schedules 2 and 3 of the 2006 Scheme respectively) attributable to the HWPF Reinsured Liabilities;

“HWPF SCR Total Shareholder Cost”

means an amount equal to the portion of the Solvency Capital Requirement arising in respect of all policies in HWPF (for the avoidance of doubt this means both Reinsured Policies and also any policies written directly by SLAL) that is borne by the SLAL shareholders and not the HWPF fund;

“HWPF Terminated Policy” means any euro denominated life insurance policy written by or allocated to the Irish or German branches (including the Austrian services) of SLAL which matured or terminated prior to the Risk Transfer Time in respect of which SLAL had certain obligations or potential liabilities to the policyholder after maturity or termination and which, had that policy not matured or terminated, would have been a SL Intl HWPF Transferred Policy;


“Inherited Estate” means the surplus funds of SLAL HWPF (calculated in accordance with 3.1 of the Surplus Funds section of the PRA Rulebook) and, in calculating the quantum of the Inherited Estate, any liability to distribute the Inherited Estate in the future shall be disregarded;


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“Insolvency Event” means, in respect of SLAL, the occurrence of any of the events set out in clauses 16.1(B) to 16.1(F)(F) inclusive;


“Investment Management Agreement”

has the meaning given to it in the Deed of Fixed Charge;




“Non-Default Interest” means EURIBOR (subject to any adjustment agreed between the parties in accordance with clause 17.3) at the time of payment of the Adjustment Amount;

“Notice of Reinsurance Business Committee Meeting”

has the meaning given to it in clause 11.2;



(ii) in connection with the investment element of any with profits or property-linked policy, where the maturity, surrender or switch approved by SL Intl in connection with any Reinsured Policy is equal to or in excess of €300,000; and/or

(iii) in the case of any other claim, any

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claim approved by SL Intl in respect of any Reinsured Policy where the lump sum benefit is equal to or in excess of €300,000,



“PPFM” means the Principles and Practices of Financial Management maintained by SLAL in effect from time to time in respect of the SLAL HWPF;




“Property-Linked Funds Retrocession Agreement”

means the agreement entitled “Retrocession Agreement: Euro Denominated Property-Linked Funds” between SLAL and SL Intl of even date herewith;

“Property-Linked Funds Termination Amount”

means the Termination Amount, as such term is defined in the Property-Linked Funds Retrocession Agreement (and is calculated by SL Intl and notified to SLAL, in accordance with the terms set out therein);


“Recoverable Amounts” means any amounts Recovered by SL Intl;


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“Reinsurance Business Committee”

has the meaning given to it in clause 11 (Business Oversight);

“Reinsured Liabilities” means any and all liabilities paid or settled, or which become due for payment or settlement, by (or on behalf of) SL Intl on or after the Risk Transfer Time, in respect of (i) the Reinsured Policies and the Deed Poll and including, without limitation, any liabilities in respect of a SL Intl HWPF Transferred Policy in accordance with paragraph 31.1(c) of the Brexit Scheme; and (ii) HWPF Terminated Policies;

“Reinsured Policies” means the euro denominated life insurance policies which are (i) transferred and allocated to the SL Intl HWPF pursuant to the Brexit Scheme; (ii) written by SL Intl following the Risk Transfer Time in accordance with paragraph 22 of the Brexit Scheme; or (iii) any other policy if and only to the extent that the premiums in respect of that policy are allocated to the SL Intl HWPF, (save that any SL Intl HWPF Transferred Policy shall cease to be a Reinsured Policy immediately following settlement by SLAL of the Annuity Benefit Cost, in accordance with paragraph 29.1(A) of the 2006 Scheme) or the cash payment under paragraph 29.2 of the 2006 Scheme;

“Reporting Agreement” means the ancillary reporting agreement between SLAL and SL Intl dated [];

“Risk Transfer Time” means 23:59 GMT on: (i) 28 February 2019 or (ii) such other date on which the Brexit Scheme takes effect, by order of the Court of

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Session in Edinburgh;





“SLAL HWPF” means the With Profits Fund as such term is defined in the 2006 Scheme;




“SL Intl Board” means the board of directors of SL Intl from time to time;

“SL Intl Head of Actuarial Function”

means SL Intl’s head of actuarial function within the meaning of the CBI Domestic Actuarial Regime and Related Governance Requirements under Solvency II or, if those requirements are no longer in effect, the person appointed by SL Intl from time to time as head of the function described at Regulation 50 of the European Union (Insurance and Reinsurance) Regulations 2015 or, if SL Intl is no longer required to maintain such a function, a person possessing appropriate actuarial qualifications nominated for the purposes of this Agreement by SL Intl;

“SL Intl HWPF” means the “SL Intl HWPF” established and maintained in accordance with the Brexit Scheme;

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“SL Intl HWPF Transferred Policy” has the meaning given to it in the Brexit Scheme;





“Tax Authority” means any government, state or municipality or any local, state, federal or other authority, body or official anywhere in the world exercising a fiscal, revenue, customs or excise function (including, without limitation, HM Revenue & Customs in the UK, and the Office of the Revenue Commissioners in the Republic of Ireland);




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“Termination Amount Dispute Notice”

has the meaning given to it in clause 17.4 (Effect of Termination);



“Transaction Documents” means this Agreement, the Property-Linked Funds Retrocession Agreement, the Deed Poll, Fixed Charging Arrangements and the Deed of Floating Charge;

“VAT” means:








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2. REINSURANCE




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(B) SLAL shall:

(i) not be liable for any liabilities arising in connection with SL Intl’s operational risk in respect of any actions or omissions occurring following the Risk Transfer Time, in respect of the Reinsured Liabilities;

(ii) only be liable for an amount determined by SL Intl (in accordance with the SL Intl HWPF Internal PPFM (as defined in the Brexit Scheme)) to be due for the benefit of a policyholder, where SLAL (in accordance with the PPFM) has determined an amount to be due under an equivalent policy allocated to the SLAL HWPF in the same proportion as the Reinsured Policy and then, only to the extent of the amount determined by SLAL in respect of the equivalent policy; and







3.1 At the Risk Transfer Time, SL Intl shall pay (or procure the payment of) the Back-Book Premium to SLAL. The payment of the Back-Book Premium shall be made on the following basis, if the terms of the Brexit Scheme are sanctioned by the Court of Session in Edinburgh and be satisfied:

(A) by the set-off and retention of assets by SLAL that would otherwise be transferred to SL Intl pursuant to the Brexit Scheme, in accordance with the terms of paragraph 4.2 of the Brexit Scheme; and

(B) by SL Intl paying SLAL the proportion of the Back-Book Premium that is equivalent to the “Initial Premium” (as that term is defined in the Property-Linked Funds Retrocession Agreement). The obligation of SL Intl to SLAL pursuant to this clause 3.1(B) shall be set off against the obligation of SLAL to SL Intl to pay

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the Initial Premium pursuant to clause 4.1(A) of the Property-Linked Funds Retrocession Agreement.

Each party acknowledges and agrees that there shall be no transfer of the Boxes pursuant to the terms of this Agreement.



From the Risk Transfer Time, an amount equal to the aggregate amounts payable by (or on behalf of) SL Intl to (or on behalf of) policyholders in respect of the Reinsured Liabilities (including, without limitation, payments made pursuant to paragraph 31.1(C) of the Brexit Scheme and, where an annuity benefit is to be provided on the vesting of a Reinsured Policy on that Business Day, the amounts payable under paragraphs 29.1(A) and 29.2 of the 2006 Scheme) on that Business Day (together, the “Claim Amount”) shall become due for payment (subject to clause 11 (Business Oversight)) by SLAL to SL Intl on the next Business Day following SL Intl providing SLAL with written notice of such Claim Amount, or if later, the payment date specified in such notice. The Claim Amount shall be payable in accordance with clause 7 (Net Amounts).



5.2 The Ceding Commission shall comprise the amount determined by SL Intl (acting reasonably and in good faith) to represent a reasonable allocation of the costs, expenses, commissions, premiums payable to external reinsurers and taxes incurred by SL Intl in respect of the HWPF Reinsured Liabilities.



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6. RECOVERIES


7. NET AMOUNTS

7.1 Notwithstanding the references in clauses 3 (Reinsurance Premiums) and 4 (Reinsurance Claims) to any Premium Payment or Claim Amount becoming due for payment by one party to the other party, the payments to be made by the parties in respect of such amounts shall be determined on a net basis in accordance with clause 7.2 and paid in accordance with clause 7.3. The relevant payment obligations of each of SL Intl and SLAL under clauses 3 (Reinsurance Premiums) and 4 (Reinsurance Claims) shall be deemed satisfied and discharged by the payment by the relevant party of any such net amount.











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8. PAYMENTS




9. REPORTING

The parties shall each comply with their reporting obligations to the other party, as set out in the ancillary reporting agreement entered into between SLAL and SL Intl dated [] (the “Reporting Agreement”).




10.3 The SL Intl Board shall be entitled to make representations to the SLAL With Profits Committee and the SLAL Board on matters affecting the Reinsured Policies and receive an explanation of the basis for decisions which affect holders of such Reinsured Policies.


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10.5 SLAL shall maintain and comply with the PPFM and shall consult with SL Intl before making any amendments to the principles of the PPFM.


11.1 The parties acknowledge and agree that a committee comprising three (3) representatives of each party shall be established for the purpose of monitoring SL Intl’s management of the business that is reinsured to SLAL pursuant to the terms of this Agreement, the GWPF Reinsurance Agreement and the GSMWPF Reinsurance Agreement (the “Reinsurance Business Committee”).

11.2 Each of the parties shall, within one (1) Business Day of the date of this Agreement, nominate its representatives for the Reinsurance Business Committee. The Reinsurance Business Committee shall be convened (as required by either party), by any representative serving notice to all other representatives of the Reinsurance Business Committee (“Notice of Reinsurance Business Committee Meeting”). Unless the representatives agree otherwise, the Reinsurance Business Committee shall be convened within one (1) Business Day of the date of the Notice of Reinsurance Business Committee Meeting. The quorum for the Reinsurance Business Committee shall be two (2) representatives, provided that at least one (1) representative from each party is present.



11.5 The Reinsurance Business Committee shall discuss any and all Notifiable Matters notified by SL Intl to SLAL. SLAL shall have the opportunity to make representations at any meeting of the Reinsurance Business Committee as to the amount that they would consider reasonable for SL Intl to pay or have paid (and SLAL to reinsure) in respect of any claim under a Reinsured Policy which is notified to SLAL as a Notifiable Matter. For the avoidance of doubt, no vote shall be taken in respect of any Notifiable Matter and, subject to clause 11.7 below, all Notifiable Matters shall be included, as appropriate, within the relevant Monthly Report.


11.7 Where:

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(B) in respect of Consent Claims which have been paid by SL Intl, twenty (20) Business Days prior to the date on which SL Intl must provide the Monthly Report reflecting payment of the relevant Consent Claim to SLAL in accordance with the terms of the Reporting Agreement:

11.9 If a dispute under and in accordance with this clause 11 is not resolved five (5) Business Days prior to the date on which SL Intl must provide the Monthly Report reflecting payment of the relevant Consent Claim to SLAL in accordance with the terms of the Reporting Agreement:

(A) the Monthly Report reflecting payment of the relevant Consent Claim shall reflect only such amount of the Consent Claim as is not disputed between the parties (and such proportion of any amount of reinsurance attaching to such Consent Claim as is equal to the undisputed proportion of such Consent Claim);




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12. COVENANTS







(B) subject to Applicable Law, it shall at all times during the Term comply in all material respects with the Business Guidelines and the PPFM;




(D) it shall obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all authorisations, approvals, licences and consents required in or by Applicable Law to enable it lawfully to enter into and perform its obligations under the Transaction Documents.

13. WARRANTIES




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15. TERM







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(A) material breach by SLAL of a Fundamental Provision, which is either incapable of remedy or, if capable of remedy, is not remedied within thirty (30) Business Days of being notified by SL Intl of such breach;





(F) SLAL ceases to satisfy the “Minimum Capital Requirement” under Solvency II;

(G) SLAL amends any principle of the PPFM in a way in which SL Intl considers, acting reasonably, to have a materially adverse impact on holders of the Reinsured Policies; or

(H) SLAL invokes clause 25 of the 2006 Scheme;


(A) SL Intl fails to make a payment which is due and payable to SLAL as required under this Agreement and such failure is not rectified within five (5) Business

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Days of being notified by SLAL of such failure (including, for the avoidance of doubt, the Back-Book Premium);








16.5 Where SLAL proposes a change to the terms of the Investment Management Agreement in accordance with the terms of the Investment Management Agreement, and SLAL and SL Intl are unable to reach agreement in respect of such change following conclusion of the applicable dispute resolution process set out in the ancillary agreement relating to security and investment management arrangements between SLAL, SL Intl and the Investment Manager (as defined in the Deed of Fixed Charge) dated [•], then this Agreement shall terminate automatically.



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17.2 If either party serves a Termination Notice in accordance with clause 16 (Termination on Notice) (other than following the occurrence of an Event of Default) or this Agreement terminates following termination of the Property-Linked Funds Retrocession Agreement in accordance with clause 18 (Cross Default):



(C) the parties shall negotiate in good faith to agree any amendments to the Brexit Scheme, the 2006 Scheme and the 2011 Scheme as may be required as a result of the termination of this Agreement;

(D) SL Intl shall have regard to the steps that it is required to take pursuant to paragraph 34.1 of the Brexit Scheme in the event of the termination of this Agreement; and





an amount equal to the Adjustment Amount and such amount shall be subject to the payment of Non-Default Interest (subject to any reasonable adjustment to the Non-Default Interest rate agreed between the parties (acting in good faith) to reflect any material market changes during the period which the Non-Default Interest is being applied).

17.4 If SL Intl wishes to dispute the calculation of the Termination Amount prepared by SLAL (as calculated in accordance with paragraph 3 of Part A of Schedule 3 (Calculation of Termination Amount) and notified to SL Intl in accordance with clause 17.2(E)), SL Intl must notify SLAL of such dispute within thirty (30) Business Days of receipt of Termination Amount calculation (as applicable). Such notice (a “Termination Amount Dispute Notice”) shall set out in reasonable detail a description of the matter(s)

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disputed, together with any relevant calculations. The parties shall use reasonable endeavours to reach agreement on the matters set out in a Termination Amount Dispute Notice within thirty (30) Business Days of receipt by SLAL of such Termination Amount Dispute Notice. If the parties are unable to agree within this period, either party may escalate the matter to the Independent Actuary, whose determination regarding the Termination Amount shall be binding on the parties. Failure by SL Intl to issue a Termination Amount Dispute Notice within thirty (30)Business Days of receipt of the Termination Amount calculation (as applicable) shall constitute SL Intl’s deemed agreement to the Termination Amount as originally calculated by SLAL.




(C) SL Intl shall have regard to the steps that it is required to take pursuant to paragraph 34.1 of the Brexit Scheme in the event of the termination of this Agreement.


18. CROSS DEFAULT

18.1 This Agreement shall terminate automatically upon termination (for whatever reason) of the Property-Linked Funds Retrocession Agreement or upon termination following the occurrence of an Event of Default (as defined under the relevant agreement) of either of the following agreements:

(A) GWPF Reinsurance Agreement; or

(B) GSMWPF Reinsurance Agreement.

18.2 This Agreement and the Property-Linked Funds Retrocession Agreement are entered into in reliance on the fact that this Agreement and the Property-Linked Funds Retrocession Agreement form a single agreement between the parties, and the parties would not otherwise enter into this Agreement or the Property-Linked Funds Retrocession Agreement.

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(A) a material adverse effect on a party’s ability to effect and carry out its obligations under this Agreement and/or the Property-Linked Funds Retrocession Agreement; or

(B) the benefit of this Agreement and/or the Property-Linked Funds Retrocession Agreement to a party becoming materially less favourable than is the case as of the date of the respective agreements (as appropriate),

then the party affected by the Tax Event, Regulatory Event or a change in Applicable Law shall give notice to the other party and the parties shall enter into negotiations in good faith and use reasonable endeavours to agree an amendment to this Agreement and/or the Property-Linked Funds Retrocession Agreement (as appropriate) so that the performance of each party is no longer affected by such Tax Event, Regulatory Event or change in Applicable Law. If the parties are not able to agree an amendment to the relevant agreement within thirty (30) Business Days of the notice, the parties shall escalate to their respective Chief Executive Officers, who will seek (acting in good faith) to agree such an amendment.



20.2 Clauses 26 (Confidentiality), 28 (Notices), 33 (Set-off) and 35 (Governing Law and Jurisdiction) (and, to the extent necessary for the interpretation thereof, clause 1 (Interpretation)) shall survive the termination of this Agreement.

21. INTEREST



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22.1 At or before the Risk Transfer Time, the parties shall enter into the Fixed Charging Arrangements.


22.3 At or before the Risk Transfer Time, the parties shall enter into the Investment Management Agreement, pursuant to which the parties shall agree the terms upon which the collateral deposited in the Custodian Accounts and the Derivative Contracts will be managed. The Investment Management Agreement shall contain provisions setting out appropriate requirements in respect of the composition, duration and nature of the assets deposited in the Custodian Accounts and the Derivative Contracts in the context of the applicable HWPF Reinsured Liabilities backed by such assets.

22.4 At or before the Risk Transfer Time, the parties shall enter into the Deed of Floating Charge.

23. VAT






25. DATA PROTECTION


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26. CONFIDENTIALITY












27. ANNOUNCEMENTS



28. NOTICES

28.1 Any notice, request, instruction or other document given under this Agreement must be made in writing. Writing includes e-mail (other than in the case of legal notices or

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notices to terminate this Agreement, which must be sent by post) and must be sent to the address, or email address (where relevant) of the relevant party given in this clause 28, unless another address or email address has been notified in writing by the relevant party in accordance with clause 28.3. If sent by post, the relevant notice must be delivered or sent by prepaid first class recorded delivery post or by courier.


SLAL SL Intl



Email: [●] Email: [●]











30.2 A waiver or variation of this Agreement will only be effective if it is in writing, is signed by each party and has been consented to in writing by both the SLAL WP Actuary and the

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SL Intl Head of Actuarial Function (on the basis that the proposed waiver or variation is not expected to materially and adversely affect (i) the contractual rights of the holders of Reinsured Policies and the holders of policies written in or allocated to the SL Intl HWPF or their contractual rights under the Deed Poll; or (ii) their reasonable expectations regarding non-contractual rights under such policies and taking into account the interests of the other policyholders in the SLAL HWPF).









33. SET-OFF

Either party may set-off an obligation owed by the other party under this Agreement or under the Property-Linked Funds Retrocession Agreement (but only to the extent that the amount under this Agreement relates to the euro denominated unit linked assurance business of SL Intl being reinsured to SLAL pursuant to the terms of this Agreement), against any obligation owed to that party.

34. GENERAL

34.1 No person shall have any right to enforce any term or condition of this Agreement under the Contracts (Rights of Third Parties) Act 1999 or the Contract (Third Party Rights)

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(Scotland) Act 2017, but this does not affect any right or remedy which exists or is available apart from those Acts.






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SIGNED by

………………………………


) ) ) )

…………………………………………….. Director

SIGNED by

……………………………………


) ) ) )

…………………………………………….. Director

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1. Definitions






“HWPF Eligible Collateral” has the meaning given to it in Paragraph 2.

“HWPF Posted Collateral” means:







“Securities” means securities (including, without limitation, any interests in collective investment schemes) that qualify as HWPF Eligible Collateral.


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(a) 90% of the sum of Current WP Liability and Non-Profit BEL in respect of the HWPF Reinsured Liabilities; and

(b) A + B - C + D + E, where:

A = 100% of the Current WP Liability in respect of the HWPF Reinsured Liabilities.

B = 100% of the Non-Profit BEL in respect of the HWPF Reinsured Liabilities.


(i) backing the Current WP Liability in respect of the HWPF Reinsured Liabilities; or

(ii) backing the Non-Profit BEL in respect of the HWPF Reinsured Liabilities,

and which does not qualify as HWPF Eligible Collateral.



“Valuation Agent” means SLAL unless a notice has been served under clause 16.1 or clause 18.1 applies, in which case it shall be SL Intl.




“Valuation Percentage” means, for any item of HWPF Posted Collateral, the percentage specified in Paragraph 2.


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(a) HWPF Posted Collateral that is:





The following items will qualify as “HWPF Eligible Collateral”:




100%


100%



100%


SLAL shall procure that on or promptly following each Valuation Date the Value of the HWPF Posted Collateral deposited in the Custodian Accounts plus the Value of the applicable Derivative Contracts, in each case together with all related rights, shall be at least equal to the Target Collateral Amount, subject to the provisions set out in this Schedule and the Deed of Fixed Charge.




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Accounts HWPF Eligible Collateral having a Value as of the date of transfer at least equal to the applicable Delivery Amount. The “Delivery Amount” applicable to SLAL for any Valuation Date will equal the amount by which:


exceeds

(ii) the Value as of that Valuation Date of all HWPF Posted Collateral and the applicable Derivative Contracts, in each case together with all related rights (as adjusted to include any prior Delivery Amount and to exclude any prior Return Amount, the transfer of which, in either case, has not yet been completed and for which the relevant Settlement Day falls on or after such Valuation Date).


Subject to Paragraph 5 (Conditions Precedent, Calculations and Substitutions) and Paragraph 6 (Dispute Resolution), upon a demand made by SLAL on or promptly following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the Minimum Transfer Amount, then SLAL shall be permitted to withdraw HWPF Posted Collateral specified by SLAL in that demand having a Value as of the date of transfer as close as practicable to the applicable Return Amount. The “Return Amount” applicable for any Valuation Date will equal the amount by which:

(i) the Value as of that Valuation Date of all HWPF Posted Collateral and the applicable Derivative Contracts, in each case together with all related rights (as adjusted to include any prior Delivery Amount and to exclude any prior Return Amount, the transfer of which, in either case, has not yet been completed and for which the relevant Settlement Day falls on or after such Valuation Date),

exceeds


4.3 Rounding



Where either of SLAL or SL Intl reasonably believes that there has been a material change in the Value of the HWPF Posted Collateral or the Derivative Contracts since the previous Valuation Date, it may demand an additional valuation of such assets, and such valuation shall occur on a date as soon as reasonably practicable following the date of such demand.



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5.2 Calculations


5.3 Substitutions

(i) SLAL may on any Business Day by notice (a “Substitution Notice”) inform SL Intl that it wishes to transfer to the Custodian Accounts HWPF Eligible Collateral (the “Substitute Collateral”) specified in that Substitution Notice in substitution for certain HWPF Eligible Collateral (the “Original Collateral”) specified in the Substitution Notice comprised in SLAL’s HWPF Posted Collateral.




(i)


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(a) utilising any calculations of that part of the HWPF Posted Collateral or Substitute Collateral or Target Collateral Amount (as applicable) that the parties have agreed are not in dispute;

(b) calculating that part of the HWPF Posted Collateral or Substitute Collateral or Target Collateral Amount (as applicable) in dispute and attributable to Securities by requesting Qualifying Bid Prices for such Securities from at least two and up to five Approved Dealers;


Where:

“Qualifying Bid Price” means, with respect to a particular series of Securities, a firm, unconditional and immediately executable bid price for a notional amount of such Securities being not less than the notional amount of Securities comprising the HWPF Posted Collateral or Substitute Collateral that are subject to dispute, which has been obtained between 10.00 am and 3.00 pm (Edinburgh time) on the Business Day following the Resolution Date; and



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Business Day following the Resolution Date (the date of such notice, the "Recalculation Date"), and the Value of such Securities or Derivative Contracts shall be determined to be the highest of such Qualifying Bid Prices or quotations for replacement transactions, as applicable, multiplied by the applicable Valuation Percentage.




(b) if the dispute relates to Paragraph 6.1(i)(b) the parties shall make any adjustments to the HWPF Posted Collateral and/or the Derivative Contracts as may be required pursuant to the agreement reached by the parties pursuant to Paragraph 6.1(ii) within two (2) Business Days of such resolution.



(b) if the dispute relates to Paragraph 6.1(i)(b), the parties shall make any adjustments to the HWPF Posted Collateral and/or the Derivative Contracts as may be required pursuant to such recalculation within two (2) Business Days of the Recalculation Date.

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(a) the fair value of the Reinsured Liabilities (calculated by reference to the value of the Reinsured Policies as at 31 December 2018 (the “calculation date”)),




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Part A

In the event of termination of this Agreement pursuant to clause 16 (Termination on Notice) (other than following the occurrence of an Event of Default) or this Agreement terminates as a result of termination of the Property-Linked Funds Retrocession Agreement in accordance with clause 18 (Cross Default) or following termination by the mutual agreement of the parties hereto (subject to any amendments agreed in accordance with clause 17.1), the Initial Termination Amount, the Interim Termination Amount, the Termination Amount and the Adjustment Amount shall be as set out below:





(a) the value of the assets comprising the Current WP Liability in respect of the HWPF Reinsured Liabilities as at the Termination Date;

(b) 80% of the With Profits BEL in respect of the HWPF Reinsured Liabilities, as at the Termination Date (or such lower percentage as SLAL, acting in good faith and having regard to the advice of the SLAL WP Actuary, determines to be appropriate in order to ensure that such percentage represents a conservative estimate of the total With Profits BEL in respect of the HWPF Reinsured Liabilities as at the Termination Date (such that the Adjustment Amount (once calculated) shall be a positive amount, payable by SLAL to SL Intl)), less 80% of the value of the assets comprising the Current WP Liability in respect of HWPF Reinsured Liabilities as at the Termination Date;

(c) the value of the Non-Profit BEL in respect of the HWPF Reinsured Liabilities, as at the Termination Date;

(d) 80% of the Estimated Cost of Capital, as at the Termination Date;

(e) an amount equal to three years of projected Inherited Estate distributions in respect of the HWPF Reinsured Liabilities, as at the Termination Date (except that no such amount shall be payable in circumstances where SLAL is not making (or ceases to make within twenty (20) Business Days of the Termination Date) distributions of the Inherited Estate to its policyholders); and

(f) an amount equal to the Accounting Liabilities in respect of the HWPF Reinsured Liabilities as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (e) above,




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(a) the value of the assets comprising the Current WP Liability in respect of the Reinsured Liabilities as at the Termination Date;

(b) the With Profits BEL in respect of the Reinsured Liabilities, as at the Termination Date (less the value of the Current WP Liability, as calculated in accordance with clause 3(a) above);


(d) SL Intl’s Cost of Capital, as at the Termination Date;

(e) an amount equal to the Inherited Estate in respect of the Reinsured Liabilities, as at the Termination Date, having regard to the primary role of the Inherited Estate, as set out in the 2006 Scheme; and

(f) an amount equal to the Accounting Liabilities in respect of the Reinsured Liabilities, as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (e) above; less

(g) the Property-Linked Funds Termination Amount (as determined in accordance with clause 13.1(A) of the Property-Linked Funds Retrocession Agreement).





Part B




(a) the Total Amount; less

(b) the Property-Linked Funds Termination Amount (as determined in accordance with clause 12.1(A) of the Property-Linked Funds Retrocession Agreement).


(a) the value of the assets comprising the Current WP Liability in respect of the Reinsured Liabilities as at the Termination Date;

(b) the With Profits BEL in respect of the Reinsured Liabilities, as at the Termination Date (less the value of the Current WP Liability, as calculated in accordance with (a) above);


(d) SL Intl’s Cost of Capital, as at the Termination Date;

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(e) an amount equal to 100% of the Inherited Estate in respect of the Reinsured Liabilities, as at the Termination Date, having regard to the primary role of the Inherited Estate, as set out in the 2006 Scheme; and

(f) an amount equal to the Accounting Liabilities in respect of the Reinsured Liabilities, as at the Termination Date, but only to the extent not already captured by paragraphs (a) to (e) above,


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