GVHR » Topics » Investment Selection Options

These excerpts taken from the GVHR 10-K filed Mar 17, 2008.

Investment Selection Options

1.
One-Year rate

Under this option, We would guarantee a fixed rate of return on the Reinsurance Premium set at an enhanced spread of [*] basis points over the 6-month U.S. Constant Maturity Treasury yield as it reads the day we are in receipt of the first installment of the Reinsurance Premium. The interest rate will reset annually based on then current market conditions. Should the Captive cancel the Reinsurance Quota Share Agreement at any time prior to January 1, 2009, it is understood and agreed that interest will be deemed to have accrued from the date the premium is delivered to us, to the date of cancellation, at the 1-month U.S. Constant Maturity Treasury yield as it read the day we were in receipt of the first installment of Reinsurance Premium.

2.
Interest rate payable until all claims are closed:

Said interest shall accrue to this account at a rate of TBD%. The rate will be effective until all claims are closed. Upon settlement of all liabilities to which this Agreement applies we shall pay to You the balance of funds in this account. Interest will accrue to the collateral and will be paid annually. Note that accrued interest paid to the captive will not exceed the rate associated with the amount of time that has elapsed, as per the below referenced Interest Rate Penalty Schedule. Should you choose to secure the payment of your Obligations with an alternative form of collateral prior to all claims are closed, interest shall be calculated at the rate specified in the Interest Rate Penalty Schedule listed below in accordance to the date of the conversion to an alternative form of collateral.

Interest Rate Penalty Schedule

A penalty rate will apply. Below is a sample rate based on a rate of 5.01%, and penalty schedule will be provided when rate is set.

Cancellation Date

  Interest rate
  Cancellation Date
  Interest rate
 
Prior to 12/31/2008   3.50 % 1/1/2014 to 12/31/2014   4.30 %
1/1/2009 to 12/31/2009   3.60 % 1/1/2015 to 12/31/2015   4.45 %
1/1/2010 to 12/31/2010   3.70 % 1/1/2016 to 12/31/2016   4.60 %
1/1/2011 to 12/31/2011   3.85 % 1/1/2017 to 12/31/2017   4.75 %
1/1/2012 to 12/31/2012   4.00 % 1/1/2018 to 12/31/2018   4.95 %
1/1/2013 to 12/31/2013   4.15 % 1/1/2019 to All Claims Closed   5.01 %

*
THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

14


Under either Investment Selection Option, the Captive will receive a monthly accrued interest statement, detailing the opening fund balance, less losses paid in each particular month, along with interest earned on the average investable balance. This Binder contemplates that we will not collect Escrow. Therefore, the monthly accrued interest statement will evidence losses being paid at the mid-point of each month.

Should the Federal Reserve lower the targeted Federal Funds rate at any time prior to the receipt of the first installment of the reinsurance premium, both investment selection options will become null and void.

Investment Selection Options




1.
One-Year
rate


Under
this option, We would guarantee a fixed rate of return on the Reinsurance Premium set at an enhanced spread of [*] basis points over the 6-month
U.S. Constant Maturity Treasury yield as it reads the day we are in receipt of the first installment of the Reinsurance Premium. The interest rate will reset annually based on then current market
conditions. Should the Captive cancel the Reinsurance Quota Share Agreement at any time prior to January 1, 2009, it is understood and agreed that interest will be deemed to have accrued from
the date the premium is delivered to us, to the date of cancellation, at the 1-month U.S. Constant Maturity Treasury yield as it read the day we were in receipt of the first installment of
Reinsurance Premium.




2.
Interest
rate payable until all claims are closed:


Said
interest shall accrue to this account at a rate of TBD%. The rate will be effective until all claims are closed. Upon settlement of all liabilities to which this Agreement applies we shall pay to
You the balance of funds in this account. Interest will accrue to the collateral and will be paid annually. Note that accrued interest paid to the captive will not exceed the rate associated with the
amount of time that has elapsed, as per the below referenced Interest Rate Penalty Schedule. Should you choose to secure the payment of your Obligations with an alternative form of collateral prior to
all claims are closed, interest shall be calculated at the rate specified in the Interest Rate Penalty Schedule listed below in accordance to the date of the conversion to an alternative form of
collateral.



Interest Rate Penalty Schedule



A
penalty rate will apply. Below is a sample rate based on a rate of 5.01%, and penalty schedule will be provided when rate is set.











































































Cancellation Date

 Interest rate
 Cancellation Date
 Interest rate
 
Prior to 12/31/2008 3.50%1/1/2014 to 12/31/2014 4.30%
1/1/2009 to 12/31/2009 3.60%1/1/2015 to 12/31/2015 4.45%
1/1/2010 to 12/31/2010 3.70%1/1/2016 to 12/31/2016 4.60%
1/1/2011 to 12/31/2011 3.85%1/1/2017 to 12/31/2017 4.75%
1/1/2012 to 12/31/2012 4.00%1/1/2018 to 12/31/2018 4.95%
1/1/2013 to 12/31/2013 4.15%1/1/2019 to All Claims Closed 5.01%






*
THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

14









Under
either Investment Selection Option, the Captive will receive a monthly accrued interest statement, detailing the opening fund balance, less losses paid in each particular month, along with
interest earned on the average investable balance.
This Binder contemplates that we will not collect Escrow. Therefore, the monthly accrued interest statement will evidence
losses being paid at the mid-point of each month.



Should
the Federal Reserve lower the targeted Federal Funds rate at any time prior to the receipt of the first installment of the reinsurance premium, both investment selection options will become
null and void.



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Mar 17, 2008
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