MMCapS XVII Final Offering Circular - Irish Stock Exchange

Insurance Institution is not paid when due and any applicable grace period with respect to such default has ended
with such default not having been cured or waived or ceasing to exist or (ii) the maturity of any Senior Indebtedness
of the issuing Affiliated Insurance Institution has been accelerated because of a default and such acceleration has not
been rescinded or cancelled. Similar limitations apply to the Affiliated Insurance Institution Parent in respect of the
Parent Guarantee. In the event of the bankruptcy, liquidation or dissolution of an Affiliated Insurance Institution or
an Affiliated Insurance Institution Parent, its assets would be available to pay obligations under the Corresponding
Debentures or the Parent Guarantee, as applicable, only after all payments have been made on its Senior
Indebtedness. The Affiliated Insurance Institution or any subsidiary of such Affiliated Insurance Institution may
incur additional indebtedness, liabilities and obligations (including Senior Indebtedness), which may consist of other
debt securities issued by such Affiliated Insurance Institution related to preferred securities of other subsidiaries of
such Affiliated Insurance Institution and other indebtedness ranking senior to the Corresponding Debentures to the
extent of any collateral securing such other indebtedness. In addition, the Affiliated Insurance Institution may be a
party to agreements with holders of its Senior Indebtedness that have the practical effect of further subordinating the
rights of holders of the Corresponding Debentures to such holders of Senior Indebtedness under certain
circumstances. An Affiliated Insurance Institution Parent may also incur additional indebtedness, liabilities and
obligations and be a party to such agreements. See “Security for the Notes— Description of the Insurance Capital
Securities— Terms of the Corresponding Debentures— Subordination” and “—Description of the Insurance Capital
Securities— Terms of the Guarantees.”
The holders of the Insurance Capital Securities will not be able to enforce directly any remedies available
to holders of the Corresponding Debentures other than in respect of a default that is attributable to a payment default
by the applicable Affiliated Insurance Institution under its Corresponding Debentures. See “Security for the
Notes— Description of the Insurance Capital Securities— Effect of Obligations Under the Insurance Capital
Securities, the Corresponding Debentures and the Guarantees.” Upon the bankruptcy, liquidation or dissolution of
an Affiliated Insurance Institution and in certain other circumstances, and subject to the applicable subordination
provisions, generally payment of the principal of and unpaid interest on the Corresponding Debentures of such
Affiliated Insurance Institution may be accelerated by the holders of not less than 25% in aggregate principal
amount of such Corresponding Debentures and, in one case, such acceleration is automatic. Furthermore, the Issuer
may own less than 100% of the Principal Balance of any individual Insurance Capital Securities of the Insurance
Capital Securities Issuer and therefore may not be able to control any matters as to which holders thereof are entitled
to vote, give their consent or take action.
None of the Corresponding Debentures are insured or guaranteed by any insurance regulatory authority,
any governmental agency or instrumentality or any insurance guaranty fund. The ability of Affiliated Insurance
Institutions that are holding companies to make payments on its Corresponding Debentures and to satisfy its other
obligations will be highly dependent upon the earnings of, and the receipt of dividends, fees, loans or distributions
from, its subsidiaries, including its insurance company subsidiaries. The subsidiaries of each Affiliated Insurance
Institution are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any
amounts under the related Corresponding Debentures, Guarantee or, if applicable, Parent Guarantee or to make any
funds available therefor, whether by dividends, loans or other payments. There are also various statutory,
contractual and regulatory limitations and business considerations on the extent, if any, to which an Affiliated
Insurance Institution’s insurance company subsidiaries may extend credit, pay dividends or otherwise supply funds
to such Affiliated Insurance Institution or Affiliates thereof. In particular, payments of dividends or other
distributions to an Affiliated Insurance Institution or its Affiliates by such Affiliated Insurance Institution’s U.S.
domiciled insurance company subsidiaries are subject to the various insurance regulatory restrictions of the states
having jurisdiction over such insurance company subsidiaries. Such laws typically vary from state to state. Certain
states generally require that any statutory surplus following any dividend or distribution be reasonable in relation to
such subsidiary’s outstanding liabilities and adequate to meet its financial needs and permit the payment of
dividends only out of earned (unassigned), as opposed to contributed, statutory surplus. In addition, many states
prohibit an insurance company, without prior notice to and approval of the Applicable Regulator, to declare or pay
an extraordinary dividend, which is typically defined as any dividend or distribution of cash or other property whose
fair market value, together with other dividends or distributions made within the preceding 12 months, exceeds the
greater of such subsidiary’s statutory net gain from operations of the preceding calendar year or 10% of statutory
surplus as of the preceding December 31. For insurance regulatory purposes, the surplus of an insurance company is
generally determined on the basis of Statement of Statutory Accounting Principles (“SAP”) rather than generally
accepted accounting principles (“GAAP”). SAP generally is a more conservative measure of an insurance
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