EFTA02679304.pdf

From: Lesley Groff Sent: Tuesday, April 9, 2013 6:36 PM To: Epstein Jeffrey Subject: Fwd: PPPVUL Product Information Attachments: Legal Summary Materials 4-2013.pdf, Untitled attachment 00540.htm; Cedarwood & Kingswood Combined Payout 4-8-13.pdf; Untitled attachment 00543.htm Below from Lou Kreisberg =ent from my iPhone Begin forwarded Subject: PPPVUL Product Information Jeffrey- As a follow up to our discussions, I wanted to share a=ditional information on the Evergreen PPVUL policy with you. Summary information regarding a $1 billion investment=in two different policies is attached. The first is a $500 million 77=2(a) compliant policy (Kingswood), and the second is a $500 million 7702(g)=compliant policy (Cedarwood). You'll see that breakeven is achieved in the year following issuance. By yea= 20, the after-tax value of the Evergreen policies exceeds taxable account p=rformance by $1.4 billion ($3.8 billion vs. $2.4 billion). By year 30= the Evergreen policies outperform the taxable account by $3 billion ($7.4 billion vs. $3.4 billion). <=0:p> The above numbers assume the following fees and charg=s. Upfront fees consist of the following: - &n=sp; Upfront charges: $11.5 million (2% on first $100=million, 1.5% on next $100 million, 1% thereafter). Note consists of a=proximately $500,000 in legal fees with the balance allocated between the p=rty arranging for the insured lives and a sales charge &n=sp; Issue fee: $3.9 million ($300 per life) EFTA_R1_01982308 EFTA02679304  - &n=sp; DAC tax: $7 million (70 bps) Ongoing fees consist of the following: &n=sp; Cost of insurance: charged at standard rates bas=d on the age/sex of underlying insureds &n=sp; M&E fee: 65 bps per annum &n=sp; Administrative fee: $100 per life Our attorneys at Mayer Brown have handled the legal w=rk associated with the structure. In order to provide an overview of t=e review and analysis performed to date, I attach a legal summary containin= the following: 1) Summary of Legal Opinions: Provides an overview o= tax, insurable interest and ERISA opinions that will be provided at closin=. The opinions are not yet written, but this reflects the scope<=p> 2) 7702(g) Opinion Overview: Provides an overview o= the legal opinion which will be provided in connection with the Cedarwood 7=02(g) product and the relevant legal analysis 2)&=bsp; Wal-Mart Case: Provides an overview of a well-known case that concern=d the issues that arose when Wal-Mart purchased life insurance policies (co=monly referred to as janitor insurance) on the lives of its employees. = The memo explains how the Evergreen programs do not violate the legal principles described in that case, includ=ng insurable interest considerations 3)&=bsp; Recovery Statutes: Explains why the risk is remote that an insured or=his estate could bring a successful claim under a recovery statute 4)&=bsp; STOLI: Provides an overview of Stranger Owned Life Insurance and its r=levance to insurable interest laws. The memo explains how Evergreen i= not STOLI and does not violate STOLI legislation S)&=bsp; Public Policy and Insurable Interest: Provides a summary of the concl=sions in the prior three memos with respect to insurable interest and publi= policy considerations) I think you'll find there are no comparable p=oducts in the marketable that allow for the acquisition of such a sizable a=ount of insurance, except for the standard 7702(g) policies. The Ceda=wood 7702(g) product does offer a major structural advantage to its competitors in that it allows for annual distributions ove= the life of the policy. As I mentioned, Withers is familiar with the structur=, and Jim Brockway has spent the most time on it. We look forward to d=scussing the above in more detail and are, of course, happy to answer any q=estions or provide more information. 2 EFTA_R1_01982309 EFTA02679305  Regards, Louis =/html>= EFTA_R1_01982310 EFTA02679306