SPECIMEN
Automatic Reinsurance Agreement
Between
TRAVELERS INSURANCE COMPANY
and its Subsidiary
TRAVELERS LIFE AND ANNUITY COMPANY
Hartford, Connecticut
(Hereinafter referred to collectively as the CEDING COMPANY
and
[ ] RE LIFE INSURANCE COMPANY
now known as
[ ] LIFE REINSURANCE COMPANY
as of September 14, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
(hereinafter referred to as the REINSURER)
Effective November 1, 1999
1
Contents
Articles Page
I. Scope of Agreement 3
II. Commencement and Termination of Liability 4
III. Oversights and Clerical Errors 5
IV. Net Amount at Risk 6
V. Reinsurance Premiums 7
VI. Reinsurance Administration 8
VII. Settlement of Claims 9
VIII. Reinsurance Credit 11
IX. Recapture Privileges 12
X. Inspection of Records 13
XI. Insolvency 14
XII. Negotiation 15
XIII. Arbitration 16
XIV. Right to Offset Balances Due 17
XV. Contract and Program Changes 18
XVI. Confidentiality 19
XVII. Miscellaneous 20
XVIII. Severability 21
XIX. DAC Tax 22
XX. Duration of Agreement 23
XXI. Execution of Agreement 24
2
All provisions of this Agreement are subject to the laws of the State of
Delaware
ARTICLE I
SCOPE OF AGREEMENT
A. On and after the 1st day of November 1999, the CEDEING COMPANY shall
automatically reinsure with the REINSURER and the REINSURER shall
automatically accept, a quota-share percentage (defined in Schedule A) of
the mortality net amount at risk (MNAR) as defined Article IV, generated
prior to termination (defined in Article II) by the Guaranteed Minimum
Death Benefit provisions within the variable annuity contracts issued by
the CEDING COMPANY as set forth in Schedule A.
B. The REINSURER's maximum aggregate VNAR (defined in Article IV) claim
payment in any one calendar year shall not exceed two-hundred (200) basis
points of the REINSURER'S quota-share percentage of the average aggregate
account value over each respective calendar year of coverage. This
average shall be calculated by way of a trapezoidal rule as shown in
Exhibit III.
C. The REINSURER's annual aggregate SCNAR (defined in Article IV) claim
payment has no independently calculated annual aggregate claim limit.
D. The REINSURER'S maximum MNAR (defined in Article IV) claim payment on any
individual life reinsured hereunder shall be limited to one-million
dollars ($1,000,000) multiplied by the quota-share percentage reinsured
by the REINSURER, except for contracts where the account value at any
month end has ever exceeded three million dollars. For these contracts
the maximum MNAR claim payment on any individual life reinsured hereunder
shall be limited to two million five hundred thousand dollars
($2,500,000) multiplied by the quota share percentage reinsured by the
REINSURER.
E. This Agreement covers only the CEDING COMPANY's liability for claims paid
under variable annuity contract forms specified in Schedule A and
supported by investment funds specified in Schedule B and its Amendments,
that were reviewed by the REINSURER prior to their issuance.
3
ARTICLE II
COMMENCEMENT AND TERMINATION OF LIABILITY
A. On reinsurance ceded under the terms of this Agreement, the liability of
the REINSURER shall commence simultaneously with that of the CEDING
COMPANY. The liability under this Agreement will terminate either in
accordance with the Duration of Agreement provisions of this Agreement as
stated in Article XX, or, for an individual contract, upon the earliest
of the following occurrences defined in the contract(s) reinsured
hereunder
1. the date the owner elects to fully annuitize
2. full surrender or termination of the contract
3. the death of the owner or annuitant where such death triggers the
payment of a death benefit
4. attainment of the maximum annuitization age (as described in the
policy forms shown in Schedule A)
B. The REINSURER shall be liable lo reimburse claims only on those deaths
where the date of death is on or after November 1. 1999, in accordance
with Article VII.
4
ARTICLE III
OVERSIGHTS AND CLERICAL ERRORS
A. Should either the CEDING COMPANY or the RESINURER fail to comply with any
of the terms of this Agreement, and if this is shown to be unintentional
and the result of a misunderstanding, oversight or clerical error on the
part of either the CEDING COMPANY or the REINSURER, then this Agreement
shall not be deemed abrogated thereby but both companies shall be
restored to the positions they would have occupied had no such oversight,
or clerical error occurred. Such conditions are to be reported and
corrected promptly after discovery.
B. If the CEDING COMPANY or the REINSURER discovers that the CEDING COMPANY
did not cede reinsurance on a contract it should have reinsured under
this Agreement, the CEDING COMPANY will take reasonable and necessary
steps to ensure that similar oversights do not recur. Then this Agreement
shall not be deemed abrogated thereby, but both companies shall be
restored to the positions they would have occupied had the CEDING COMPANY
ceded such reinsurance at the original date. If the REINSURER receives no
evidence that the CEDING COMPANY has taken action to remedy such a
situation, the REINSURER reserves the right to limit its liability to
reported contracts only.
C. Any negligent or deliberate acts or omissions by the CEDING COMPANY
regarding the insurance or reinsurance provided are the responsibility of
the CEDING COMPANY and its liability insurer, if any, but not that of the
REINSURER. The previous sentence does not negate the REINSURER's
liability under Article VII, Settlement of Claims, of this Agreement. Any
negligent or deliberate acts or omissions by the REINSURER regarding the
reinsurance provided are the responsibility of the REINSURER and its
liability insurer, if any, but not that of CEDING COMPANY.
5
ARTICLE IV
NET AMOUNT AT RISK
A. The mortality net amount at risk for each variable annuity contract
reinsured hereunder shall be equal to the following:
Mortality Net Amount at Risk (MNAR) = VNAR + SCNAR where:
o VNR = Maximum (a, b) multiplied by the quota-share percentage (defined
in Schedule A) where
a = (Contractual Death Benefit - Account Value)
b = 0
o SCNAR = (Surrender Charges) multiplied by the quote-share percentage
B. The death benefit and the surrender charges will be as described in the
variable annuity contract forms specified in Schedule A.
6
Article V
Reinsurance Premiums
A. The reinsurance premiums is an asset-based premium rate which is applied
to the average aggregate account value in force over the reporting period
multiplied by the quota-share percentage reinsured by the REINSURER. The
reporting period is monthly. For contracts where the Account Value at any
month end has ever equaled or exceeded three million dollars ($3,000,000)
the reinsurance premium shall be as described in Paragraph C of this
Article V.
B. The annualized reinsurance premium rates are shown in Exhibit I and are
expressed in terms of basis points. In practice, they shall be applied on
a monthly basis by utilizing one-twelfth (1/12th) of the annualized
rates.
C. For contracts where the Account Value at any month end has ever equaled
or exceeded three million dollars ($3,000,000) the reinsurance premium
shall equal a monthly YRT rate subject to a minimum and maximum
asset--based premium rate. The monthly YRT rate which is applied to the
average MNAR over the reporting period on a life-by-life basis (subject
to the maximum MNAR set forth within this Paragraph C) is equal to
one-twelfth (1/12th ) of one-hundred percent (100%) of the 1994 Variable
Annuity MGDB Mortality Table (Exhibit II) which is the 1994 GAM Basic
Table increased by ten percent (10%) for margins and contingencies,
without projection (see Exhibit II). The minimum premium rate shall be
equal to the current asset--based reinsurance premiums as described in
Paragraph A and Paragraph B above and as set forth in Exhibit I, and the
maximum premium rate shall be equal to 2.25 times the minimum premium
rate. The minimum and maximum premium rates are calculated on an
aggregate basis. Thus the total reinsurance premium due for this category
of policies is the sum of the individual YRT premiums subject to the
aggregate minimum and maximum premiums.
For these contracts, the REINSURER's liability on any one life shall be
limited to two million five hundred thousand dollars ($2,500,000)
multiplied by the quota-share percentage reinsured by the REINSURER.
D. The total reinsurance premium due and payable in any month shall at least
equal one-thousand-five-hundred dollars ($1,500).
E. The YRT rate shall be based on the oldest person of a multiple
life-status.
F. The reinsurance premium structure described above shall remain in effect
as long as the death benefit design, contract fees, mortality and expense
charges, administration fees and surrender charges in effect at the
inception of this Agreement remain unchanged.
7
Article VI
Reinsurance Administration
A. Within thirty (30) days of the end of each calendar month, the CEDING
COMPANY will furnish the REINSURER with a seriatim electronic report as
detailed in Schedule C, for each contract specified in Schedule A, valued
as of the last day of that month.
B. Additionally, within thirty (30) days of the end of each calendar month,
the CEDING COMPANY will furnish the REINSURER with a separate paper
report summarizing the following:
1. reinsurance premiums due the REINSURER separate for each premium
class as shown in Exhibit I
2. benefit claim reimbursements due the CEDING COMPANY in total and
split by VNAR and SCNAR
C. If the net balance is due the REINSURER, the amount due shall be remitted
with the report statement. If the net balance is due the CEDING COMPANY,
the REINSURER shall remit the amount to the CEDING COMPANY within ten
(10) days of receipt of the report.
D. Furthermore, the REINSURER will use the summary data in Schedule C to
calculate and monitor its maximum annual aggregate VNAR liability
throughout the calendar year. Upon the receipt of the final report for
the calendar year, the REINSURER will "true-up' benefit claim
reimbursements, if necessary, from the prior calendar year.
E. Other
1. The REINSURER reserves the right to charge interest [if (a) or (b)
below occur] based on the ninety (90) day Federal Government
Treasury ▇▇▇▇ as first published by the Wall Street Journal in the
month following the end of the ▇▇▇▇▇▇▇ period plus fifty (50)
basis points. The method of calculation shall be simple interest
(360-day year).
(a) premiums are not paid within sixty (60) days of the due
date referenced in Paragraph B.1. of this Article
(b) premiums for first year business are not paid within
one-hundred-eighty (180) days of the effective date of the
policy
2. The REINSURER will have the right to terminate this Agreement when
premium payments are more than ninety (90) days past due by giving
ninety (90) days' written notice of termination to the CEDING
COMPANY. As of the close of the last day of this ninety (90) day
notice period, the REINSURER's liability for all risks reinsured
associated with the defaulted premiums under this Agreement will
terminate. The first day of the ninety (90) day notice of
termination will be the day the notice is received in the mail by
the CEDING COMPANY or if the mail is not used, the day it is
delivered to the CEDING COMPANY. If all premiums in default are
received within the ninety (90) day time period, the Agreement
will remain in effect.
3. Payments between the CEDING COMPANY and the REINSURER may be paid
net of any amount due and unpaid under this Agreement.
8
Article VII
Settlement of Claims
A. The claims, as set forth in Article IV, that are eligible for
reimbursement are only those that the CEDING COMPANY is contractually
required to pay on deaths that occur on or after the Effective Date of
this Agreement and subject to benefit limitations as described in Article
I.
B. In the event the CEDINC Company provides satisfactory proof of claim
liability to the REINSURER, claim settlements made by the CEDING COMPANY
shall be unconditionally binding on the REINSURER. In every case of
claim, copies of the proofs obtained by the CEDING COMPANY will be taken
by the REINSURER as sufficient
C. Within thirty (30) days of the end of each calendar month, the CEDING
COMPANY shall notify the REINSURER of the reinsured contractual death
benefits paid in that month, based on the net amount at risk definition
set forth in Article IV, and the REINSURER shall reimburse the CEDING
COMPANY, as provided in Article VI, for the reinsured benefits.
D. Settlements by the REINSURER shall be a lump sum regardless of the mode
of payment made by the CEDING COMPANY.
E. In no event will the REINSURER participate in punitive or compensatory
damages, which are awarded against the CEDING COMPANY as a result of an
act, omission or course of conduct committed solely by the CEDING COMPANY
in connection with the insurance reinsured under this Agreement. The
REINSURER shall, however, pay its share of statutory penalties awarded
against the CEDING COMPANY in connection with insurance reinsured under
this Agreement if the REINSURER elected to join in the contest of the
coverage in question.
The parties recognize that circumstances may arise in which equity would
require the REINSURER, to the extent permitted by law, to share
proportionately in certain assessed situations in which the REINSURER was
an active party and directed, consented to, or ratified the act, omission
or course of conduct of the CEDING COMPANY which ultimately resulted in
the assessment of the extra contractual damages, other than statutory
damages. In such situations, the REINSURER and the CEDING COMPANY shall
share such damages so assessed, in equitable proportions. For the
purposes of this provision, the following definitions will apply:
- "PUNITIVE DAMAGES" are those damages awarded as a penalty, the
amount of which is neither governed nor fixed by statute
- STATUTORY PENALTIES" are those amounts awarded as a penalty, but
fixed in amount by statute
- COMPENSATORY DAMAGES" are those amounts awarded to compensate for
the actual damages sustained and are not awarded as a penalty, nor
fixed in amount by statute.
9
Article VII - Settlement of Claims
(continued)
If the REINSURER declines to be party to the contest, compromise, or
litigation of a claim, it will pay its full share of the amount
reinsured, as if there had been no contest, compromise, or litigation,
and its proportionate share of covered expenses incurred to the date it
notifies the CEDING COMPANY it declines to be a party.
F. In no event will the REINSURER be liable for expenses incurred in
connection with a dispute or contest arising out of conflicting or any
other claims of entitlement to policy proceeds or benefits provided the
REINSURER makes payment of the amount of reinsurance to the CEDING
COMPANY, as described in the above paragraph.
10
Article VIII
Reinsurance Credit
A. It is the intention of both the REINSURER and the CEDING COMPANY that the
CEDING COMPANY qualify for reinsurance reserve credit in all States for
reinsurance ceded hereunder. The REINSURER, at its sole cost and expense,
shall do all that is necessary to comply with the insurance laws and
regulations of all States in order to enable the CEDING COMPANY to take
reserve credit for the reinsurance ceded hereunder, including delivery of
any reports required thereunder.
B. In the event that the REINSURER loses authorization in any State in which
is was authorized on the Effective Date of this Agreement, the REINSURER
shall, within ninety (90) days of the date it loses authorization, take
any necessary actions (e.g., obtain a Letter of Credit), at its sole cost
and expense, to insure that the CEDING COMPANY continues to qualify for
reinsurance reserve credit as described in Paragraph A, above.
C. Should the REINSURER fail to take the actions described in Paragraphs A
and B of this Article, and if for this reason, and this reason alone, the
CEDING COMPANY ceases to qualify for reinsurance reserve credit as
described herein, then the CEDING COMPANY has the right immediately to
terminate this Agreement for new business and to recapture all the
reinsurance in force, without a recapture fee. The CEDING COMPANY shall
provide written notification to the REINSURER of its intent to terminate
the Agreement and recapture the reinsurance as of the effective date of
the notice. Thereafter the REINSURER's liability hereunder ceases.
11
Article IX
Recapture Privileges
The CEDING COMPANY may recapture existing reinsurance in force in accordance
with the following rules:
A. The CED1NG COMPANY will notify the REINSURER of its intent to recapture
at least ninety (90) days prior to any recaptures.
B. No recapture will be made unless reinsurance has been in force for
fifteen (15) years.
C. Recapture will only be available provided the total carry-forward is in a
positive position. The total carry- forward is defined as the sum of the
carry-forwards of this Agreement and the complementary GMIB Agreement, if
any, that reinsures the same related contracts.
D. The carry-forward for each Agreement is defined as the current period's
reinsurance premium, minus the current period's reinsurance claims paid
under this Agreement, minus a two-and-one-half (2.5) basis point annual
expense allowance applied against the average aggregate Account Value,
minus the change in treaty reserves, plus last period's loss
carry-forward. The carry-forward amount is accumulated at the ninety (90)
day Federal Government Treasury ▇▇▇▇ rate as published in the Wall Street
Journal on the first business day of the current period plus two percent
(20%).
E. Upon election, recapture shall occur ratably over a thirty-six (36) month
period (i.e., every month the initial quota-share percentage reduces
2.78% times the initial quota-share percentage). It is irrevocable once
elected.
F. It is the responsibility of the CEDING COMPANY to determine the
carry-forward, based on the method described above.
G. In addition to the right to recapture existing reinsurance in force as
described under this Article, the CEDING COMPANY may recapture in
accordance with the terms of Article VIII and Article XI hereof.
12
Article X
Inspection of Records
A. The REINSURER, or its duly appointed representatives, shall have the
right at all reasonable times and for any reasonable purpose to inspect
at the office of the CEDING COMPANY all records referring to reinsurance
ceded to the REINSURER.
C. Relating to the business reinsured hereunder, the CEDING COMPANY or its
duly appointed representatives shall have the right at all reasonable
times and for any reasonable purpose, to inspect at the office of the
REINSURER all records referring to reinsurance ceded from the CEDING
COMPANY.
13
Article XI
Insolvency
A. In the event of the insolvency of the CEDING COMPANY, all reinsurance
will be payable on the basis of the liability of the CEDING COMPANY on
the policies reinsured directly to the CEDING COMPANY or its liquidator,
receiver or statutory successor without diminution because of the
insolvency of the CEDING COMPANY.
B. In the event of insolvency of the CEDING COMPANY, the liquidator,
receiver or statutory successor will, within a reasonable time after the
claims is filed in the insolvency proceeding, give written notice to the
REINSURER of all pending claims against the CEDING COMPANY or any
policies reinsured. While a claim is pending, the REINSURER may
investigate and interpose, at its own expense, in the proceedings where
the claim is adjudicated, any defense or defenses which it may deem
available to the CEDING COMPANY or its liquidator, receiver or statutory
successor. The expenses incurred by the REINSURER will be chargeable,
subject to court approval, against the CEDING COMPANY as part of the
expense of liquidation to the extent of a proportionate share of the
benefit which may accrue to the CEDING COMPANY solely as a result of the
defense undertaken by the REINSURER. Where two or more reinsurers are
participating in the same claim and a majority in interest elect to
interpose a defense or defenses to any such claim, the expenses will be
apportioned in accordance with the terms of the Reinsurance Agreement as
though such expense had been incurred by the CEDING COMPANY.
C. Any debts or credits, matured or unmatured, liquidated or unliquidated,
in favor of or against either the REINSURER or CEDING COMPANY with
respect to this Agreement are deemed mutual debts or credits, as the case
may be, and will be offset, and any the balance will be allowed or paid.
However, in the event of liquidation, the REINSURER may offset against
undisputed amount which are due and payable to the CEDING COMPANY, only
those undisputed amounts due the REINSURER which are not more than
one-hundred-eighty (180) days past due at the date of the court order of
liquidation.
D. In the event of insolvency of the REINSURER, the CEDING COMPANY may elect
to recapture immediately all reinsured benefits upon written notice to
the REINSURER, its liquidator, receiver or statutory successor. The
CEDING COMPANY shall also have a claim on the REINSURER for any
reinsurance credit amounts including reserves, unearned premiums and
other amounts due the CEDING COMPANY on such reinsurance, at the date of
recapture. If the CEDING COMPANY does not elect to recapture such
reinsurance, the liability of the REINSURER shall not terminate, but
shall continue with respect to the reinsurance ceded to the REINSURER and
the CEDING COMPANY shall have a security interest in any and all sums
held by or under deposit in the name of the REINSURER.
14
Article XII
Negotiation
A. Within ten (10) days after one of the parties has given the other the
first written notification of a specific dispute, each party will appoint
a designated officer to attempt to resolve the dispute. The officers will
meet at a mutually agreeable location as early as possible and as often
as necessary, in order to gather and furnish the other with all
appropriate and relevant information concerning the dispute. The officers
will discuss the problem and will negotiate in good faith without the
necessity of any formal arbitration proceedings. During the negotiation
process, all reasonable requests made by one officer to the other for
information will be honored. The specific format for such discussions
will be decided by the designated officers.
B. If the officers cannot resolve the dispute within thirty (30) days of
their first meeting, the parties will agree to submit the dispute to
formal arbitration. However, the parties may agree in writing to extend
the negotiation period for an additional thirty (30) days.
15
Article XIII
Arbitration
A. It is the intention of the CEDING COMPANY and the REINSURER that the
customs and practices of the insurance and reinsurance industry will be
given full effect in the operation and interpretation of this Agreement.
The parties agree to act in all things with the highest good faith. If
after the negotiation required by Article XII, the REINSURER and the
CEDING COMPANY cannot mutually resolve a dispute that arises out of or
relates to this Agreement, the dispute will be decided through
arbitration. The arbitrators will base their decision on the terms and
conditions of this Agreement plus, as necessary, on the customs and
practices of the insurance and reinsurance industry rather than solely on
a strict interpretation of the applicable law. There will be no appeal of
their decision, and any court having jurisdiction of the subject matter
and the parties, may reduce that decision to judgement.
B. To initiate arbitration, either the REINSURER or the CEDING COMPANY will
notify the other party in writing of its desire to arbitrate, stating the
nature of its dispute and the remedy sought. The party to which the
notice is sent will respond to the notification in writing within ten
(10) days of its receipt.
C. There will be three arbitrators who will be current or former officers of
life insurance companies other than the contracting companies or
affiliates thereof. Each of the contracting companies will appoint one of
the arbitrators and these two arbitrators will select the third. If
either party refuses or neglects to appoint an arbitrator within thirty
(30) days, the other party may appoint the second arbitrator. If the two
arbitrators do not agree on a third arbitrator within thirty (30) days of
their appointment, then the appointment of said arbitrator will be left
to the President of the American Arbitration Association. Once chosen,
the arbitrators are empowered to decide all substantive and procedural
issues by majority of votes.
D. It is agreed that each of the three arbitrators should be impartial
regarding the dispute and should resolve the dispute on the basis
described in Section A of this Article.
E. The arbitration hearing will be held on the date fixed by the arbitrators
in New York City. In no even will this date be later than (3) months
after the appointment of the third arbitrator. As soon as possible, the
arbitrators will establish pre-arbitration procedures as warranted by the
facts and issues of the particular case. At least ten (10) days prior to
the arbitration hearing, each party will provide the other party and the
arbitrators with a detailed statement of the facts and arguments they
will present at the arbitration hearing. The arbitrators may consider any
relevant evidence; they will give the evidence such weight as they deem
it entitled to after consideration of any objections raised concerning
it. Each party may examine any witnesses who testify at the arbitration
hearing.
F. The cost of arbitration will be divided between the parties, unless the
arbitrators decide otherwise.
16
Article XIV
Right to Offset Balances Due
The CEDING COMPANY and the REINSURER shall have, and may exercise at any time,
the right to offset any balance or balances due one party to the other, its
successors or assignees, against balances due to the other party under this
Agreement or under any other Agreements or Contracts previously or subsequently
entered into between the CEDING COMPANY and the REINSURER. This right of offset
shall not be affected or diminished because of the insolvency of either party of
this Agreement.
17
Article XV
Contract and Program Changes.
A. The CEDING COMPANY may amend, substitute, add or delete variable
investment funds to the investment options supporting the annuity
contract as described in the contract general provisions. No such change
will be made by the CEDING COMPANY without prior notification to the
REINSURER and without the prior approval of the Securities and Exchange
Commission, if necessary. The CEDING COMPANY agrees to maintain at all
times a satisfactory selection of core investment options with
characteristics similar to those listed in Schedule B.
B. The CEDING COMPANY shall also give the REINSURER advance notice of any
other changes to its annuity product design and/or death benefit design,
its fees and charges, its distribution systems and/or methods, or the
addition of any riders to any contract forms reinsured hereunder.
C. Should any such change as stated above result in a material change in the
underlying risk, the REINSURER shall have the right to modify, for that
product line only, any of the terms of this Agreement in order to restore
the REINSURER to its original position. For the purposes of this
Agreement, material is understood to mean a substantial variance from
either the original pricing profile or the past experience on this
account, that is expected to be permanent or long-lasting.
D. The CEDING COMPANY agrees to provide the REINSURER with all
contractholder communications as though the CEDING COMPANY were a
contractholder in the State of Delaware.
18
Article XVI
Confidentiality
A. This Agreement incorporates the confidentiality agreement previously
agreed to between the parties on October 26, 1998 (Exhibit IV). All
matters with respect to this Agreement require the utmost good faith of
both parties. Both the CEDING COMPANY and the REINSURER shall hold
confidential and not disclose or make competitive use of any shared
proprietary information unless otherwise agreed to in writing, or unless
the information otherwise becomes publicly available, or the disclosure
of which is required for retrocession purposes, or has been mandated by
law, or is duly required by external auditors.
B. The REINSURER will treat all information received by the CEDING COMPANY
as confidential information and will use good faith efforts to keep such
information private and secure. The REINSURER will abide, where
appropriate, by "Citigroup's Global Privacy Promise" which is attached in
Exhibit IV-1. However, the CEDING COMPANY must recognize that, while
doing so, the REINSURER needs to share certain information with Auditors,
Regulators and Retrocessionaires in the normal course of conducting
business.
19
Article XVII
Miscellaneous
A. This Agreement shall constitute the entire Agreement between the parties
with respect to business reinsured hereunder. There is no understanding
between the parties other than as expressed in this Agreement and any
change or modification of this Agreement shall be null and void unless
made by Amendment to the Agreement and signed by both parties.
B. Any notice or communication given pursuant to this Reinsurance Agreement
must be in writing and 1) delivered personally, 2) sent by facsimile or
other similar transmission to a number specified in writing by the
recipient, 3) delivered by overnight express, or 4) sent by Registered or
Certified Mail, Postage Prepaid, Return Receipt Requested, as follows:
If to the CEDING COMPANY Travelers Life and Annuity Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
If to the REINSURER: [ ] Life Reinsurance Company
[ ADDRESS]
All notices and other communications required or permitted under this
Reinsurance Agreement that are addressed as provided in this Section will 1) if
delivered personally or by overnight express, be deemed given up delivery; 2) if
delivered by facsimile transmission or other similar transmission, be deemed
given when electronically confirmed, and 3) if sent by Registered or Certified
mail, be deemed given when marked Postage Prepaid by the sender's terminal. Any
party from time-to-time may change its address, but no such notice of change
will be deemed to have been given until it is actually received by the party
sought to be charged with the contents thereof.
C. This Agreement shall be binding to the parties and their respective
successors and permitted assignees. Neither party shall have the right to
assign or transfer any portion of the rights, duties and obligations of
the other party under the terms and conditions of this Agreement without
the prior written approval of the other party, except as provided in
article XI,D.
D. This Agreement is an indemnity reinsurance agreement solely between the
CEDING COMPANY and the REINSURER. The acceptance of reinsurance hereunder
shall not create any right or legal relation whatever between the
REINSURER and the annuitant, owner, beneficiary or any other party under
any contracts of the CEDING COMPANY which may be reinsured hereunder, the
CEDING COMPANY shall be and remain solely liable to such parties under
such contracts reinsured hereunder.
E. All financial transactions under this Agreement shall be made in U.S.
dollars.
20
Article XVIII
Severability
If any provision of this Agreement is determined to be invalid or unenforceable,
such determination will not affect or impair the validity or the enforceability
of the remaining provisions of this Agreement.
21
Article XIX
DAC Tax
Treasury Regulation Section 1.848-2(g)(8) Election
The CEDING COMPANY and the REINSURER hereby agree to the following pursuant to
the Section 1.848-2(g)(8) of the Income Tax Regulations issued December 29,
1992, under Section 848 of the Internal Revenue Code 1986, as amended. This
election shall be effective for 1993 and all subsequent taxable years for which
this Agreement remains in effect.
A. The term "party" will refer to either the CEDING COMPANY or the REINSURER
as appropriate.
B. The terms used in this Article are defined by reference to Treasury
Regulations Section 1.848-2 in effect as of December 29, 1992.
C. The party with the net positive consideration for this Agreement for each
taxable year will capitalize specified policy acquisitions expenses with
respect to this Agreement without regard to the general deduction
limitation of IRC Section 848(c)(1).
D. Both parties agree to exchange information pertaining to the amount of
net consideration under this Agreement each year to ensure consistency.
The parties also agree to exchange information, which may be otherwise
required by the IRS.
E. The CEDING COMPANY will submit to the REINSURER by April 1st of each
year, a schedule of its calculation of the net consideration for the
preceding calendar year. This schedule will be accompanied by a statement
signed by an officer of the CEDING COMPANY stating that the CEDING
COMPANY will report such net consideration in its tax return for the
preceding calendar year.
F. The REINSURER may contest such calculation by providing an alternate
calculation to the CEDING COMPANY in writing within thirty (30) days of
the RENSURER'S receipt of the CEDING COMPANY'S calculation. If the
REINSURER does not notify the CEDING COMPANY, the REINSURER will report
the net consideration as determined by the CEDING COMPANY in the
REINSURER'S tax return for the previous calendar year.
G. If the REINSURER contests the CEDING COMPANY'S calculation of the net
consideration, the parties will act in good faith to reach an agreement
as to the correct amount within thirty (30) days of the date the
REINSURER submits its alternate calculation. If the REINSURER and CEDING
COMPANY reach agreement on an amount of net consideration, each party
shall report such amount in their respective tax returns for the previous
calendar year.
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Article XX
Duration of Agreement
A. This Agreement shall be unlimited as to its duration but may be reduced
or terminated as provided in this Article, below.
B. This Agreement shall be open for new business for a minimum of two (2)
years as measured from the Effective Date of this Agreement subject to a
limit of three-billion dollars ($3,000,000,000) of total new
considerations to the CEDING COMPANY divided by the quota-share
percentage as described in Schedule A. Any time on or after the second
anniversary of this Agreement, and upon one-hundred-eighty (180) days'
written notice, or anytime on or after attainment of three-billion
dollars ($3,000,000,000) of total new deposits, either the CEDING COMPANY
or the REINSURER may cancel this Agreement for new business unilaterally
or amend the terms of reinsurance for new business by mutual agreement.
The facility may be renewed thereafter, subject to mutually accepted
terms
C. The terms of this Agreement may be altered due to the actual insolvency
(either party is in the liquidation process) of the REINSURER or the
CEDING COMPANY.
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Article XXI
Execution of Agreement
This Agreement may be executed by the parties in separate counterparts, each of
which when so executed and delivered shall be an original, but all such
counterparts together shall constitute one and the same instrument. Each
counterpart may consist of a number of copies hereof signed by less than both,
but together signed by both of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their duly authorized representatives as of November 1, 1999.
TRAVELERS INSURANCE COMPANY
TRAVELERS LIFE AND ANNUITY COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Date: March 9, 2001
2nd VP & Actuary
Attest:
[ ] LIFE INSURANCE COMPANY (now known as [ ] LIFE REINSURANCE COMPANY
as of September 14, 2000)
By: /s/ [ ], Senior Vice President Date: March 1, 2001
By: /s/ [ ], Vice President Date: ▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇: /s/ [ ], Assistant Vice President
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ADDENDUM TO BROKER/DEALER SELLING AGREEMENT
The Broker-Dealer Selling Agreement that you ("Broker Dealer") have with The
Travelers Insurance Company, The Travelers Life and Annuity Company
(collectively the "Insurance Companies") and Travelers Distribution LLC
("Underwriter") is hereby amended by Insurance Companies and Underwriter,
effective January 20, 2003. Any submission of an application for an Insurance
Contract by Broker-Dealer following its receipt of this amendment shall operate
to ratify acceptance of this Amendment.
1. The following provisions are hereby added to your Broker-Dealer Selling
Agreement. In the event of any conflict between the following provisions and any
provision in your current Broker-Dealer Selling Agreement, the following
provisions shall control:
USE OF CONFIDENTIAL INFORMATION
The parties to this Agreement agree to safeguard customer information, including
that which is provided during the application and underwriting process by
Contract Owners. Specifically, the parties understand that the Insurance
Companies provide a "Privacy Notice" substantially in the form provided to
Broker/Dealer from time to time as may be required by applicable law. The
parties agree to cooperate with each other to comply with the terms of this
Privacy Notice. The Broker/Dealer, Insurance Companies and Underwriter each
represent that they shall not use consumers' or customers' non-public personal
information in any way not anticipated under this Agreement, or in any way not
permitted under applicable state and/or federal statutes or regulations or the
rules of any self-regulatory organization having jurisdiction over the parties.
COMPENSATION
Compensation payable to Broker/Dealer on sales of the Insurance Contracts sold
by Registered Representatives will be paid to Broker/Dealer or, as necessary to
meet any legal requirements, to Selling Entities in accordance with the
Compensation Schedule(s) set forth on the Schedule Pages. Such Schedule Pages
may be amended from time to time and compensation will be paid in accordance
with the Compensation Schedule in effect at the time the premium payments are
received by the applicable Insurance Company (in the case of annuities) or in
effect as of the contract date (in the case of life insurance). The Insurance
Companies reserve the privilege of amending the Compensation Schedules set forth
in the Schedule Pages at any time with prior written notice to Broker/Dealer.
Submission of applications for Insurance Contracts following receipt of such
notice shall operate to ratify acceptance of such amendment.
ANTI-MONEY LAUNDERING
Broker-Dealer acknowledges that certain provisions of the USA PATRIOT
Act, and all applicable implementing regulations promulgated by either
the Secretary of the United States Treasury or the Securities and
Exchange Commission are applicable to it, including but not limited to:
(a) The development and implementation of an anti-money laundering
program; (b) "Know Your Customer" and "source of funds" identification
and verification procedures in compliance with implementing regulations
promulgated pursuant the USA PATRIOT Act; (c) Financial transaction
monitoring/surveillance procedures to determine whether any client is
engaging in suspicious activities that should be reported to the United
States Treasury Department's Financial Crimes Enforcement Network
office; and (d) A protocol to facilitate appropriate federal regulatory
examiners obtaining information and records regarding your anti-money
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laundering program and to conduct inspections for purposes of the
program.
Broker-Dealer agrees to not sell any product issued by Insurance
Companies to: (1) any investor listed on the U.S. Treasury Department's
Office of Foreign Assets Control ("OFAC") list of prohibited persons,
entities, and countries, and for which any Insurance Companies'
transactions with such investor are prohibited under the various
economic sanctions laws and regulations administered by OFAC, or (2) a
foreign shell bank. A foreign shell bank is defined as a bank that (a)
does not maintain a physical presence, in any jurisdiction; and (b) is
not (i) an affiliate of a bank that maintains a physical presence, and
(ii) subject to regulation by the governmental authority that regulates
the non-shell bank affiliate.
Broker-Dealer and Insurance Companies each agree to cooperate and share
information with one another pursuant to Section 314 of the USA PATRIOT
Act so as to enable each of us to reasonably assess customer activity
and determine whether that activity is suspicious and warrants
reporting to the Treasury Department. We all agree to cooperate and
share information with one another pursuant to Section 312 and 313 of
the USA PATRIOT Act so as to enable each of us to conduct enhanced due
diligence monitoring of customer activity involving any customer
identified as a senior foreign political figure or maintaining a
residence in a jurisdictions deemed non-cooperative in the fight
against international money laundering by the Financial Action Task
Force.
2. The Compensation Schedules set forth in the Schedule Pages to your
Broker-Dealer Selling Agreement are hereby amended and restated in their
entirety as set forth in the Schedule Pages attached hereto, effective January
20, 2003.
3. Your existing Broker-Dealer Selling Agreement, as amended by this Addendum,
constitutes the entire agreement between Broker-Dealer, Insurance Companies and
Underwriter with respect to the subject matter therein and herein.
THE TRAVELERS LIFE INSURANCE COMPANY
THE TRAVELERS LIFE AND ANNUITY COMPANY
By:
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Title:
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Date:
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TRAVELERS DISTRIBUTION LLC
By:
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Title:
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Date:
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