⚠ This is a draft package, and the gaps are the point
Gate 2 convenes 01 April 2027. This package was assembled at the status date, 167 days out, and most of its evidence does not exist yet. Nothing here is padded to look finished.
Assembling a gate package early is a diagnostic, not just preparation. A package built the week before a gate can only report what happened. A package built five months early reports what will be missing if nothing changes — which is the only version anyone can still act on. Every “awaiting evidence” marker below is a live instruction to somebody.
Lighthouse Financial Services Company — The package the Gate Review Board will receive at Gate 2. Program is in week 18 of 41 in Stage 2. The decision before the Board is whether to release the Stage 3 tranche of $7,450,000.
1. What This Gate Decides
Gate 2 decides whether to release $7,450,000 for Stage 3 — testing and validation, regulatory submission, and operations process build. It is the second-largest tranche in the program and the first one whose release the Board has not already effectively pre-committed by approving a business case.
| Outcome available | What it means here |
|---|---|
| GO | Release the Stage 3 tranche in full. Requires all five must-meets certified and a weighted score at or above 3.50. |
| GO WITH CONDITIONS | Release with named, dated, owned conditions. Requires all five must-meets certified and a score of 3.00–3.49. |
| RECYCLE | Return the package. Can be carried by any two members, and is mandatory if any criterion is rated U. |
| HOLD | Pause for a cause outside the program's control. Not available for causes inside it. |
| CANCEL | End the program and return the unspent tranche. Simple majority only — a deliberately lower bar than GO. |
2. Must-Meet Criteria — Evidence State
| ID | Criterion | Certifies | State | Evidence position |
|---|---|---|---|---|
| MM-1 | Contract forms complete and cleared by outside counsel | B. Lindqvist | Partial | Third GLWB redraft with counsel (I-05). Base contract cleared; rider language open. |
| MM-2 | Pricing signed, supported by the GC-03 external review | N. Adeyemi | Awaiting evidence | Ardmore engaged and reporting ahead of the due date. Opinion not yet received. |
| MM-3 | Illustration output validated against the filed methodology | E. Kowalczyk | Partial | Configuration complete for the three-strategy set; validation cycle not started. |
| MM-4 | Hedging readiness plan accepted under GC-05 | J. Whitmore | At risk | Second ISDA counterparty not started (DEP-06). No float left in Stage 2 to absorb it. |
| MM-5 | All Gate 1 conditions closed or formally re-issued | C. Tyrrell | Partial | 3 of 5 closed. GC-03 on track; GC-05 at risk. |
3. Gate 1 Conditions
| ID | Condition | Status |
|---|---|---|
| GC-01 | Reduce launch crediting strategies from five to three | Closed |
| GC-02 | Remove New York from launch scope and issue a deferral memorandum | Closed |
| GC-03 | Independent external actuarial peer review of GLWB rider pricing before Gate 2 | Open |
| GC-04 | Re-validate distribution volume assumptions with the three largest IMO partners | Closed |
| GC-05 | Present a hedging readiness plan with ISDA execution milestones at Gate 2 | At Risk |
Full verification methods, evidence and the post-closure efficacy findings are in the Gate Conditions Register. Worth carrying into the room: GC-04 was correctly specified, verified and closed — and left $17,000,000 of Year 1 volume uncommitted. Closed is not the same as resolved, and the Board should not read “3 of 5 closed” as 60% of a problem solved.
4. Scoring Worksheet — Deliberately Blank
Criteria and weights were locked at Gate 1. They are reproduced here so the Board sees them before the evidence, not after.
| Criterion | Weight | Score |
|---|---|---|
| Strategic fit and portfolio coherence | 15% | — |
| Product and technical readiness | 25% | — |
| Regulatory and compliance readiness | 25% | — |
| Distribution readiness | 15% | — |
| Economics still supporting the case | 20% | — |
| Weighted total | 100% | — |
5. Economics
| Measure | Value | Note |
|---|---|---|
| Base case return | 13.4% | Against an 11.0% hurdle — clears by 240 bp |
| Downside scenario | 10.1% | Does not clear. Disclosed at Gate 1, not closed |
| Volume tolerance to breakeven | 23% | Roughly two fifths already consumed pre-launch |
| Program cost released to date | $14,232,000 | Of $27,904,000 authorized |
Nothing in the economics has changed since Gate 1. The business case is not being re-opened at this gate; it is being checked for whether anything has moved against it.
6. The Case for CANCEL
- Written channel commitments stand at $168,000,000 against a $185,000,000 Year 1 target. GC-04 closed having surfaced the gap and without closing it. The program has consumed roughly two fifths of its volume tolerance before a policy has been sold.
- The downside scenario returns 10.1% against an 11.0% hurdle — it does not clear. No other program in the portfolio carries an approved case with a failing scenario in it.
- Two assumptions cannot be tested before the gate that depends on them (A-02, A-08). Releasing $7,450,000 at Gate 2 commits money against both.
- Stage 2 was compressed from 46 weeks to 41 to absorb the Gate 1 recycle. There is no remaining float to absorb a second problem, and MM-4 is currently a second problem.
The Chair's assessment of that case: it is serious and it is not yet sufficient. The base case clears the hurdle by 240 basis points on an independently checked capital charge, and every argument above describes a risk that is disclosed and monitored rather than one that has materialized. But the case would become sufficient if MM-4 fails and the response is to re-issue it as a condition rather than to fix it — because that would be the second consecutive gate at which hedging readiness was carried forward instead of closed.
7. Dissent
A dissent section is required in every gate package. It records positions held before the gate, so a member who intends to vote against is not discovering their own argument in the room.
| Member | Position recorded ahead of the gate |
|---|---|
| R. Castellanos, Head of Distribution | Has indicated he will not support GO while the Year 1 commitment gap remains open, on the grounds that GC-04 demonstrated the condition mechanism cannot close it. Abstained at Gate 1 for the same reason. |
| D. Pemberton, CRO (observer, non-voting) | Has asked that the hedging readiness position be presented by the CFO directly rather than summarized by the Chair. |
| All other members | No position recorded at the time of drafting. |
8. What the Chair Is Asking For
Not a decision — the decision belongs to the Board on 01 April 2027. What this draft asks for, 167 days out, is action on what it shows is missing.
| Ask | Of whom | By when |
|---|---|---|
| Begin negotiation with the second derivatives counterparty, or bring a written alternative | CFO / Investments | Immediately — this is the only item that can remove GO from the table |
| Confirm the rider contract language timetable with outside counsel | General Counsel | Within 30 days |
| Table the launch-footprint threshold for decision at Gate 3 | Chair, with Distribution | Before the Gate 2 package is finalized |
| Record any intended dissent in writing | Any voting member | Ten business days before the gate |
Assembled by C. Tyrrell, NPD Program Manager and Chair of the Gate Review Board, with K. Iyer, PMO Lead. Related: Gate 2 Readiness Assessment · Gate Decision Framework · Gate Conditions Register · Program Dashboard.