U.S. Tax Compliance

The Bastion Life Flexible Premium Variable Life Insurance policy is designed to qualify as a life insurance policy under the United States Internal Revenue Code.

The Policy is issued offshore as a private placement in accordance with Regulation D ("Reg D") and Regulation S ("Reg S") of the U.S. Securities Act of 1933 (the "1933 Act") and is therefore not registered with the Securities and Exchange Commission (SEC).

Bastion Life's Flexible Premium Variable Life Insurance policies fulfill all current compliance requirements including investment diversification tests.

Moreover, Bastion Life meets such regulatory requirements as the USA Patriot Act Section 352. This Act requires the establishment of anti-money laundering programs, including the development of internal policies, procedures and controls, designation of a compliance officer, ongoing employee training programs and an independant audit function to test these programs. Bastion Life has a Compliance Officer who is responsible for compliance with all Patriot Act requirements.

Additionally, Milliman USA conducts regular compliance tests to ensure that each policy is, and continues to be, classified as a variable life insurance policy under the guideline premium test of IRC Section 7702(c) and the cash value corridor test of IRC Section 7702(d). These tests are conducted:

• when each policy is issued
• at the end of each policy month
• quarterly, and
• at each anniversary of the policy

These procedures and compliance audits are also required to ensure Non-Modified Endowment Contract status is maintained for all nominated Non-Modified Endowment policies at all times.