EX-g.4.
REINSURANCE AGREEMENT #7827-1
THIS AUTOMATIC SELF ADMINISTERED YRT REINSURANCE AGREEMENT
Effective MARCH 8, 2004
(hereinafter referred to as the "Agreement")
is made between
▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY
of Lansing, Michigan
(hereinafter referred to as "the Company")
and
SWISS RE LIFE & HEALTH AMERICA INC.
of Stamford, Connecticut
(hereinafter referred to as "the Reinsurer")
TABLE OF CONTENTS
PREAMBLE
ARTICLE 1
1.1 Scope of Coverage
ARTICLE 2
2.1 Automatic Reinsurance
2.2 Facultative Reinsurance
ARTICLE 3
3.1 Automatic Submissions
3.2 Facultative Submissions
ARTICLE 4
4.1 Liability
4.2 Commencement of Automatic Reinsurance Liability
4.3 Commencement of Facultative Reinsurance Liability
4.4 Conditional or Interim Receipt Liability
ARTICLE 5
5.1 Premium Accounting
5.2 Non-Payment of Premiums
ARTICLE 6
6.1 Right of Offset
ARTICLE 7
7.1 Conversions
7.2 Policy Changes
7.3 Reductions
7.4 Lapses
7.5 Reinstatements
7.6 Minimum Reinsurance Limit
ARTICLE 8
8.1 Retention Limit Changes
8.2 Recapture
ARTICLE 9
9.1 Claims Notice
9.2 Claims Payment
9.3 Contested Claims
9.4 Claims Expenses
9.5 Extra Contractual Obligations
9.6 Misstatement of Age or Sex
ARTICLE 10
10.1 Errors and Omissions
10.2 Dispute Resolution
10.3 Arbitration
ARTICLE 11
11.1 Insolvency
ARTICLE 12
12.1 DAC Tax
12.2 Taxes and Expenses
ARTICLE 13
13.1 Entire Agreement
13.2 Inspection of Records
13.3 Utmost Good Faith
13.4 Confidentiality
ARTICLE 14
14.1 Duration of Agreement
14.2 Severability
14.3 Construction
14.4 Regulatory Compliance
EXECUTION
EXHIBITS
A Business Covered
A-1 Required Forms, Manuals & Issue Rules - Conditional Receipt Amount
B Reinsurance Application
C General Terms (including Reinsurance Rates and Allowances)
D The Company's Retention Limits
E The Reinsurer's Automatic Acceptance Limits
F Reinsurance Reports
PREAMBLE
This Agreement is solely between the Company and the Reinsurer. The
acceptance of risks under this Agreement will create no right or legal
relation between the Reinsurer and the insured, owner, or beneficiary
of any insurance policy or other contract of the Company.
This Agreement will be binding upon the parties hereto and their
respective successors and assigns.
ARTICLE 1
1.1 SCOPE OF COVERAGE
This Agreement applies to all insurance policies and supplementary
benefits and riders attached thereto (hereinafter referred to as
"policies") listed in Exhibit A, which have been issued directly by the
Company in accordance with its new business underwriting rules, premium
rates and policy forms as provided to the Reinsurer. The issuance of
such business by the Company to lives resident in the countries stated
in Exhibit A, constitutes the transaction of business in a jurisdiction
in which the Company is properly licensed.
On and after the effective date of this Agreement, the Company will
cede, and the Reinsurer will accept risk on the above referenced
policies in accordance with the terms and conditions of this Agreement.
The policies accepted by the Reinsurer will be hereinafter referred to
as "Reinsured Policies".
The Company may not reinsure the amount it has retained on the business
covered hereunder on any basis whatsoever without the Reinsurer's
written consent.
This Agreement does not cover the following unless specified elsewhere
in this Agreement:
1.1.1 Noncontractual conversions, rollovers, exchanges or group
conversions; or
1.1.2 Any business issued under a program where full current
evidence of insurability consistent with the amount of
insurance is not obtained, or where conventional selection
criteria are not applied in underwriting the risk; or
1.1.3 Any conversion of a previously issued policy that had been
reinsured with another reinsurer.
Each policy covered under this Agreement must provide for the maximum
normal periods of suicide and contestability protection permitted in
the state in which the policy is executed.
ARTICLE 2
2.1 AUTOMATIC REINSURANCE
The Company will automatically cede the Reinsurer's share of the
policies, supplementary benefits and riders covered under this
Agreement to the Reinsurer in accordance with the Automatic Acceptance
Limits specified in Exhibit E, provided that:
2.1.1 the Company has retained the amount stipulated in Exhibit D
according to the age and mortality rating at the time of
underwriting; and
2.1.2 the total of the new reinsurance required and the amount
already reinsured on that life under this Agreement and all
other life agreements between the Reinsurer and the Company,
does not exceed the Automatic Acceptance Limits set out in
Exhibit E; and
2.1.3 the amount of insurance on that life in all companies does
not exceed the Inforce Limits stated in Exhibit E; and
2.1.4 the application is on a life for which an application has
not been submitted by the Company on a facultative basis to
the Reinsurer or any other reinsurer within the last 3
years, unless the original reason for submitting
facultatively no longer applies.
If the Company is already on the risk for its retention under
previously issued policies, the Reinsurer will automatically accept
reinsurance according to the Automatic Acceptance Limits set out in
Exhibit E, provided the Company has applied the same underwriting
guidelines it would have applied if the new policy had fallen
completely within its retention.
2.2 FACULTATIVE REINSURANCE
If the Company receives an application for a policy covered under this
Agreement that does not meet the automatic coverage criteria listed in
section 2.1 above, it may submit the application facultatively to the
Reinsurer for its consideration.
The reinsurance will also be on a facultative basis if the Company
submits an application to the Reinsurer for its consideration on a plan
or rider that qualifies for automatic reinsurance under this Agreement.
The relevant terms and conditions of this Agreement will apply to those
facultative offers made by the Reinsurer which are accepted by the
Company.
ARTICLE 3
3.1 AUTOMATIC SUBMISSIONS
The Company will submit automatic policies to the Reinsurer according
to the reporting terms set out in Exhibit F.
Upon the request of the Reinsurer, the Company will send to the
Reinsurer copies of the application, underwriting papers and other
papers on a life reinsured automatically under this Agreement.
3.2 FACULTATIVE SUBMISSIONS
The Company will apply for reinsurance on a facultative basis by
sending to the Reinsurer an Application for Reinsurance, a sample of
which is included as Exhibit B. Unless specified elsewhere in the
Agreement, accompanying this Application for Reinsurance will be copies
of all underwriting evidence that is available for risk assessment
including, but not limited to, copies of the application for insurance,
medical examiners' reports, attending physicians' statements,
inspection reports, and other papers bearing on the insurability of the
risk. The Company will also notify the Reinsurer of any outstanding
underwriting requirements at the time of the facultative submission.
Any subsequent information received by the Company that is pertinent to
the risk assessment will be transmitted to the Reinsurer immediately.
After consideration of the Application for Reinsurance and related
papers, the Reinsurer will promptly inform the Company of its
underwriting decision. The Reinsurer's offer will expire at the end of
the period stated in Exhibit A, unless otherwise specified by the
Reinsurer. If the underwriting decision is acceptable to the Company
and the Company's policy is subsequently placed in force in accordance
with the issue rules provided to the Reinsurer, the Company will duly
notify the Reinsurer according to the terms outlined in Exhibit F.
If any risk is submitted to more than one reinsurer for consideration,
the Allocation Rules for placement of facultative cases as referenced
in Exhibit A-1 will apply.
ARTICLE 4
4.1 LIABILITY
Unless specified elsewhere in the Agreement, the Reinsurer's liability
for the Reinsured Policies is restricted to its share of the Company's
liability as limited by the terms and conditions of the particular
policy under which the Company is liable.
The Reinsurer may terminate its liability for any policies for which
reinsurance premium payments are in arrears, according to the terms set
out in Article 5.2 of this Agreement.
4.2 COMMENCEMENT OF AUTOMATIC REINSURANCE LIABILITY
The Reinsurer's liability for any Reinsured Policy accepted
automatically will begin simultaneously with the Company's contractual
liability for that policy.
4.3 COMMENCEMENT OF FACULTATIVE REINSURANCE LIABILITY
If a facultative application is submitted by the Company to the
Reinsurer only, then the Reinsurer's liability will begin
simultaneously with the Company's contractual liability for this
facultative policy. The amount of the Reinsurer's liability will be the
lesser of the Reinsurer's offer, the Conditional Receipt Amount set out
in Exhibit A-1 or the Automatic Acceptance Limits set out in Exhibit E.
The Reinsurer's liability ceases when the Reinsurer declines the risk
and duly notifies the Company. The Reinsurer's liability would also
cease when the Company declines the Reinsurer's offer.
If, however, a facultative application is submitted by the Company to
any other reinsurer, in addition to the Reinsurer, the liability of the
Reinsurer will commence when the Reinsurer has received notice from the
Company, during the lifetime of the insured, that the Reinsurer's offer
has been accepted. The Company will have the number of days specified
in Exhibit A from the date of the Reinsurer's final offer in which to
place the policy with the insured/owner, after which time the
Reinsurer's offer will expire unless the Reinsurer explicitly states in
writing that the offer is extended for some further period.
4.4 CONDITIONAL OR INTERIM RECEIPT LIABILITY
Conditional or Interim Receipt coverage applicable to automatic
reinsurance under this Agreement will be limited to amounts accepted
within the company's usual cash-with-application procedures that
provide temporary coverage up to the limits shown in Exhibit A-1.
However, for facultative reinsurance, the Reinsurer's liability will
not commence until the Reinsurer's facultative offer has been accepted
by the Company; and then is limited to the company's usual
cash-with-application procedures, which provide temporary coverage up
to the limits shown in Exhibit A-1.
ARTICLE 5
5.1 PREMIUM ACCOUNTING
The Company will pay the Reinsurer premiums in accordance with the
terms specified in Exhibit C.
The method and requirements for reporting and remitting premiums are
outlined in Exhibit F.
The Reinsurer reserves the right to charge interest on overdue
premiums. The interest will be calculated according to the terms and
conditions specified in Exhibit C.
5.2 NON-PAYMENT OF PREMIUMS
The payment of reinsurance premiums is a condition precedent to the
liability of the Reinsurer for reinsurance covered by this Agreement.
In the event that reinsurance premiums are not paid within 60 days of
the Due Date stated in Exhibit F, the Reinsurer will have the right to
terminate the reinsurance under all policies having reinsurance
premiums in arrears. If the Reinsurer elects to exercise its right of
termination, it will give the Company 15 days written notice of its
intention to terminate said reinsurance. If all reinsurance premiums in
arrears, including any which may become in arrears during the 15 day
period, are not paid before the expiration of said period, the
Reinsurer will be relieved of all liability under those policies as of
the last date for which premiums have been paid for each policy.
This right to terminate reinsurance will not prejudice the Reinsurer's
right to collect premiums for the period during which reinsurance was
in force prior to the expiration of the 15 days notice. The Company is
still obligated to pay such overdue premiums, plus interest to the date
of payment.
The Company will not force termination under the provisions of this
Article solely to avoid the recapture requirements of this Agreement or
to transfer the Reinsured Policies to another reinsurer.
ARTICLE 6
6.1 RIGHT OF OFFSET
The Company and the Reinsurer will have the right to offset any balance
or balances whether on account of premiums, allowances or claims due
from one party to the other, under this Agreement or under any other
reinsurance agreement between the Company and the Reinsurer.
The right of offset will not be affected or diminished because of the
insolvency of either party.
ARTICLE 7
7.1 CONVERSIONS
If a Reinsured Policy is converted, the Company will promptly notify
the Reinsurer. The policy arising from the conversion will be reinsured
with the Reinsurer. The amount to be reinsured will be determined on
the same basis as used for the original policy (e.g. excess of
retention or quota share) but will not exceed the amount reinsured as
of the date of conversion unless mutually agreed otherwise.
If the policy arising from a conversion is on a plan that is:
7.1.1 Reinsured on a coinsurance basis with the Reinsurer either
under this Agreement or under a different agreement, the
appropriate premium at the attained age will be used and the
policy year for the purpose of commission rates will be
based on the duration of the original policy; or
7.1.2 Reinsured on a YRT basis with the Reinsurer, either under
this Agreement or under a different agreement, the
appropriate YRT rate at the attained age and duration of the
original policy will be used and any allowance will be based
on the duration of the original policy; or
7.1.3 Not covered by any reinsurance agreement with the Reinsurer,
reinsurance will be on a YRT basis using the YRT rates
specified in Exhibit C-1, at the attained age and duration
of the original policy.
The above terms will apply unless specified otherwise in Exhibit C-1.
Unless mutually agreed otherwise, policies that had been reinsured with
another reinsurer and which convert to a plan covered under this
Agreement will not be reinsured with the Reinsurer.
7.2 POLICY CHANGES
If the plan, the amount of reinsurance or the premiums of a Reinsured
Policy are changed, the Company will promptly inform the Reinsurer.
Whenever a Reinsured Policy is changed and the COMPANY'S UNDERWRITING
RULES DO NOT REQUIRE that full evidence be obtained, the reinsurance
will remain in effect with the Reinsurer. The suicide, contestability
and recapture periods applicable to the original Reinsured Policy will
apply to the reissued Reinsured Policy and the duration will be
measured from the effective date of the original Reinsured Policy.
Whenever a Reinsured Policy is changed and the COMPANY'S UNDERWRITING
RULES REQUIRE that full evidence be obtained, the change will be
subject to the Reinsurer's approval, if:
7.2.1 The new amount of the Reinsured Policy would be in excess of
the Automatic Acceptance Limit, in effect at the time of the
change, as set out in Exhibit E; or
7.2.2 The new amount of the policy and the amount already in force
on the same life exceeds the Inforce Limit stated in Exhibit
E; or
7.2.3 The Reinsured Policy is on a facultative basis.
The amount of any non-contractual increase will be subject to the terms
stated in Exhibit C.
The Company will report the details of all changes according to the
terms outlined in Exhibit F, Reinsurance Reports.
For changes not covered under this Agreement, which affect the terms of
any Reinsured Policy, the Company must obtain the Reinsurer's approval
before such changes become effective.
7.3 REDUCTIONS
Unless specified otherwise in this Agreement, if the amount of
insurance of a policy issued by the Company is reduced and
7.3.1 the amount of reinsurance is on excess basis, then the
amount of reinsurance on that life will be reduced effective
the same date by the full amount of the reduction under the
original policy. If the amount of insurance terminated
equals or exceeds the amount of reinsurance, the full amount
of reinsurance is terminated, or
7.3.2 the amount of reinsurance is on a quota share basis, then
the amount of reinsurance on that life will be reduced
effective the same date by the same proportion as the
reduction under the original policy.
The reduction will first apply to any reinsurance on the policy being
reduced and then if applicable in a chronological order according to
policy date ("first in, first out") to any reinsurance on the other
policies in force on the life. However, the Company will not be
required to assume a risk for an amount in excess of its regular
retention for the age at issue and the mortality rating of the policy
under which reinsurance is being terminated.
If the reinsurance for a policy has been placed with more than one
reinsurer, the reduction will be applied to all reinsurers pro rata to
the amounts originally reinsured with each reinsurer.
7.4 LAPSES
When a policy lapses, the corresponding Reinsured Policy will be
terminated effective the same date.
Unless specified otherwise in this Agreement, if a policy fully
retained by the Company lapses, the terms under the preceding
Reductions clause would apply.
If a policy lapses and extended term insurance is elected under the
terms of the policy, the corresponding Reinsured Policy will continue
on the same basis as the original policy until the expiry of the
extended term period.
If a policy lapses and reduced paid-up insurance is elected under the
terms of the policy, the amount of the corresponding Reinsured Policy
will be reduced according to the terms under the preceding Reductions
clause.
If the Company allows the policy to remain in force under its automatic
premium loan regulations, the reinsurance will continue unchanged and
in force as long as such regulations remain in effect, except as
provided for otherwise in this Agreement.
The Reinsurer does not participate in policy loans or other forms of
indebtedness on policies reinsured under this Agreement. Therefore,
policy loans do not affect the amount of reinsurance.
7.5 REINSTATEMENTS
If a policy reinsured on an automatic basis is reinstated in accordance
with its terms or the rules of the Company the Reinsurer will, upon
notification of reinstatement, reinstate the Reinsured Policy
automatically. The Reinsurer's approval is required only for the
reinstatement of a facultative policy when the Company's regular
reinstatement rules indicate that more evidence than a Statement of
Good Health is required.
The Company's liability with respect to the premiums in arrears is set
out in Exhibit F.
7.6 MINIMUM REINSURANCE LIMIT
The Company will not submit a policy to the Reinsurer unless the amount
of the policy to be reinsured exceeds the Minimum Initial Reinsurance
Limit specified in Exhibit C. The Reinsured Policy will be canceled
when its net amount at risk becomes less than the Minimum Final
Reinsurance Limit set out in Exhibit C.
ARTICLE 8
8.1 RETENTION LIMIT CHANGES
If the Company changes its maximum retention limits as applied to all
or substantially all of the Company's life insurance products then in
force, it will provide the Reinsurer with written notice of the new
maximum retention limits and the effective date.
A change to the Company's Retention Limits in Exhibit D will not affect
the Reinsured Policies in force at the time of such a change except as
specifically provided for elsewhere in this Agreement. Furthermore,
such a change will not affect the Automatic Acceptance Limits in
Exhibit E unless mutually agreed by the Company and the Reinsurer.
8.2 RECAPTURE
The Company may apply its increased maximum retention limits to reduce
the amount of in force Reinsured Policies provided:
8.2.1 The Company gives the Reinsurer irrevocable written notice
of its intention to recapture within 90 days of the
effective date of the maximum retention limit increase; and
8.2.2 Such recaptures are made on the next anniversary of each
Reinsured Policy affected unless mutually agreed otherwise
by the Company and the Reinsurer and with no recapture being
made until the Reinsured Policy has been in force for the
period stated in Exhibit C-1. For a conversion or re-entry,
the recapture terms of the original policy will apply and
the duration for the recapture period will be measured from
the effective date of the original policy; and
8.2.3 The Company has maintained from the time the policy was
issued, its full retention as set out in Exhibit D for the
plan and the insured's classification. (Reinsured policies
on a first dollar quota share basis will not be eligible for
recapture;) and
8.2.4 The Company has applied its increased Retention Limits in a
consistent manner to all categories of its Retention Limits
set out in Exhibit D unless otherwise agreed to by the
Reinsurer; and
8.2.5 Other than as respects bona fide catastrophe or financial
reinsurance arrangements, the Company will retain all risks
so recaptured and is prohibited from ceding in any form any
of the recaptured business without the Reinsurer's prior
written consent.
In applying its increased Retention Limits to Reinsured Policies, the
age and mortality rating at the time of issue will be used to determine
the amount of the Company's increased maximum retention. The amount of
reinsurance eligible for recapture is based on the reinsurance net
amount at risk as of the date of recapture. If there is reinsurance
with other companies on risks eligible for recapture, the necessary
reduction is to be applied pro rata to the total outstanding
reinsurance.
Recapture as provided herein is optional with the Company, but if any
Reinsured Policy is recaptured, all Reinsured Policies eligible for
recapture under the provisions of this Article must be similarly
recaptured as well as all eligible life risks reinsured under any other
reinsurance agreement in force between, on one hand, the Reinsurer and,
on the other hand, the Company or any common retention affiliate
thereof as to which any recapture rights may then be available to the
Company or such affiliate. For purposes of this provision, the term
"common retention affiliate" means any affiliate of the Company as to
which corporate mortality risk retention levels have been managed on a
coordinated basis with the Company's risk retention program.
The Company may not revoke its election to recapture for Reinsured
Policies becoming eligible at future anniversaries.
No recapture of Reinsured Policies will occur if the Company has either
obtained or increased stop loss reinsurance coverage as justification
for the increase in maximum retention.
The Reinsurer will not be liable, after the effective date of
recapture, for any Reinsured Policies or portions of such Reinsured
Policies eligible for recapture that the Company has overlooked. The
Reinsurer will be liable only for a credit of the premiums, received
after the recapture date, less any allowance.
The terms and conditions for the Company to recapture in force
Reinsured Policies due to the insolvency of the Reinsurer are set out
in the Insolvency clause in Article 11.
If the Company transfers business which is reinsured under this
Agreement to a successor company, then the successor company has the
option to recapture the reinsurance, in accordance with the recapture
criteria outlined in this Article, only if the successor company has or
adopts a higher retention limit than the Company.
ARTICLE 9
9.1 CLAIMS NOTICE
The Company will notify the Reinsurer as soon as reasonably possible
after the Company receives a claim on a Reinsured Policy. Copies of all
claims papers will be sent promptly by the Company to the Reinsurer.
The settlement made by the Company will be binding on the Reinsurer.
However, for claims made during the contestable period or in any case
where the total amount of reinsurance ceded to the Reinsurer is greater
than the amount retained by the Company, or if the Company retained
less than, or none of, its usual retention on the policy, then the
Company will seek the Reinsurer's recommendation before conceding
liability or making settlement to the claimant.
The Company will provide the Reinsurer with all further reports and
papers required by the Reinsurer for its consideration of the claim.
For Joint Life Last Survivor business, the Company, if notified, will
in turn notify the Reinsurer of the first death.
9.2 CLAIMS PAYMENT
The payment of death claims by the Reinsurer will be in one lump sum
regardless of the mode of settlement under the original policy. The
Reinsurer's share of interest, which is based on the death proceeds
paid by the Company, will be payable in addition to the death claim
settlement.
For a waiver claim, the Company will continue to pay premiums for
reinsurance except the premium for disability reinsurance. The
Reinsurer will pay its proportionate share of the gross premium waived
by the Company on the original policy, including its share of the
premiums for benefits that remain in effect during disability.
For claims on Accelerated Benefits riders reinsured under this
Agreement, the benefit amount payable by the Reinsurer will be
calculated by multiplying the total accelerated death benefit rider
payout by the ratio of the reinsured net amount at risk to the face
amount.
9.3 CONTESTED CLAIMS
The Company will notify the Reinsurer of its intention to contest,
compromise or litigate a claim involving a Reinsured Policy. The
Company will also provide the Reinsurer prompt notice of any legal
proceedings initiated against the Company in response to its denial of
a claim on a reinsured policy. Should any claim be settled on a reduced
compromise basis, or should a contested claim be settled for a reduced
sum, the Company and the Reinsurer will participate in such reductions
in proportion to their respective liabilities under the policy or
policies reinsured.
The Reinsurer may pay its share of the death benefit if it does not
deem it advisable to contest the claim.
9.4 CLAIMS EXPENSES
The Reinsurer will pay its share of reasonable investigation and legal
expenses incurred in adjudicating or litigating the claim. The
Reinsurer will not be liable for any portion of any routine
investigative or administrative expenses incidental to the settlement
of claims (such as compensation of salaried employees) which are
incurred by the Company; nor for any expenses incurred in connection
with a dispute or contest arising out of conflicting claims of
entitlement to policy proceeds or benefits that the Company admits are
payable.
In the event that the Reinsurer pays its share of the death benefit of
a policy for which the Company is contesting the claim, the Reinsurer
will not be liable for any subsequent expenses incurred by the Company.
9.5 EXTRA CONTRACTUAL OBLIGATIONS
Extra Contractual Obligations are obligations outside of the
contractual obligations and include but are not limited to punitive
damages, bad faith damages, compensatory damages, and other damages or
statutory penalties which may arise from the willful and/or negligent
acts or omissions by the Company.
The Reinsurer is not liable for Extra Contractual Obligations unless it
concurred in writing and in advance with the actions of the Company
which ultimately led to the imposition of the Extra Contractual
Obligations. In such situations, the Company and the Reinsurer will
share in Extra Contractual Obligations, in equitable proportions, but
all factors being equal, the division of any such assessments would be
in proportion to the total risk accepted by each party for the plan of
insurance involved.
Notwithstanding anything stated herein, this Agreement will not apply
to any Extra Contractual Obligations incurred by the Company as a
result of any negligence, fraud or wrong doing by any employee or
officer of the Company or an agent representing the Company.
9.6 MISSTATEMENT OF AGE OR SEX
In the event of an increase or reduction in the amount payable under a
policy due to a misstatement in age or sex, the proportionate
liabilities under this Agreement will be the basis for determining each
party's share of any increase or reduction. The Reinsured Policy will
be rewritten from commencement on the basis of the adjusted amounts
using premiums and amounts at risk for the correct ages and sex, and
the proper adjustment for the difference in reinsurance premiums,
without interest, will be made.
ARTICLE 10
10.1 ERRORS AND OMISSIONS
Any unintentional or accidental failure to comply with the terms of
this Agreement which can be shown to be the result of an oversight,
misunderstanding or clerical error, by either the Company or the
Reinsurer, will not be deemed to be a breach of this Agreement. Upon
discovery, the error will be corrected so that both parties are
restored to the position they would have occupied had the oversight,
misunderstanding or clerical error not occurred, including the effect
of the time value of money. Should it not be possible to restore both
parties to such a position, the party responsible for the oversight,
misunderstanding or clerical error will be responsible for any
resulting liabilities and expenses.
This provision will apply only to oversights, misunderstandings or
clerical errors relating to the administration of reinsurance covered
by this Agreement and not to the administration of the insurance
provided by the Company to its insured.
The Reinsurer will not provide reinsurance for policies that do not
satisfy the terms of this Agreement, nor will the Reinsurer be
responsible for negligent or deliberate acts or for repetitive errors
in administration by the Company.
If either party discovers that the Company has failed to cede
reinsurance as provided for under this Agreement, or failed to comply
with reporting requirements, the Reinsurer may require the Company to
audit its records for similar errors, and to take the actions necessary
to avoid similar errors in the future. If the Reinsurer receives no
evidence that the Company has taken action to remedy such a situation,
the Reinsurer reserves the right to limit its liability to correctly
reported policies only.
Any negligent or deliberate acts or omissions by the Company regarding
the insurance or reinsurance provided are the responsibility of the
Company and its liability insurer, if any, but not that of the
Reinsurer.
10.2 DISPUTE RESOLUTION
If either the Company or the Reinsurer has given written notification
of a dispute to the other party, then within 15 days of such
notification both parties must designate an officer of their respective
companies to attempt to resolve the dispute. The officers will meet at
a mutually agreeable location as soon 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.
If these officers are unable to resolve the dispute within 30 days of
their first meeting, the dispute will be submitted to formal
arbitration, unless the parties agree in writing to extend the
negotiation period for an additional 30 days.
10.3 ARBITRATION
If the Company and Reinsurer are unable to mutually resolve a dispute
or controversy relating to policies covered under this Agreement or the
breach thereof, the matter will be referred to arbitration.
To initiate arbitration, either the Company or the Reinsurer will
notify the other party in writing of its desire to arbitrate, stating
the nature of its dispute and the remedy sought. There will be three
arbitrators selected who will be officers of Life Insurance Companies
or Life Reinsurance Companies excluding officers of the parties to this
Agreement, their affiliates or subsidiaries or past employees of any of
these entities. The arbitrators who will regard this Agreement from the
standpoint of practical business as well as the law, are empowered to
determine the interpretation of the treaty obligation.
Each party will appoint one arbitrator and these two arbitrators will
select a third arbitrator within 2 weeks of the appointment of the
second. If either party refuses or neglects to appoint an arbitrator
within 60 days after receipt of the written request for arbitration,
the other party may appoint a second arbitrator. Should the two
arbitrators not agree on the choice of the third, then each party will
name four candidates to serve as the arbitrator. Beginning with the
party who did not initiate arbitration, each party will eliminate one
candidate from the eight listed until one candidate remains. If this
candidate declines to serve as the arbitrator, the candidate last
eliminated will be approached to serve. This process will be repeated
until a candidate has agreed to serve as the third arbitrator.
The place of meeting of the arbitrators will be decided by a majority
vote of the arbitrators. The written decision of a majority of the
arbitrators will be final and binding on both parties and their
respective successors and assigns.
The arbitrators will render a decision within 4 months of the
appointment of the third arbitrator, unless both parties agree
otherwise. In the event no decision is rendered within 4 months, new
arbitrators will be selected as above. There will be no appeal from the
decision. Either party to the arbitration may petition any court having
jurisdiction over the parties to reduce the decision to judgment.
Alternatively, if both parties consent, any controversy may be settled
by arbitration in accordance with the rules of the American Arbitration
Association.
Unless the Arbitrators decide otherwise, each party will bear the
expense of its own arbitration, including its appointed arbitrator and
any outside attorney and witness fees. The parties will jointly and
equally bear the expense of the third arbitrator and other costs of the
arbitration.
It is specifically the intent of both parties that these arbitration
provisions will replace and be in lieu of any statutory arbitration
provision, if the law so permits.
ARTICLE 11
11.1 INSOLVENCY
A party to this Agreement will be deemed "insolvent" when it:
11.1.1 Applies for or consents to the appointment of a receiver,
rehabilitator, conservator, liquidator or statutory
successor (hereinafter referred to as the Authorized
Representative) of its properties or assets; or
11.1.2 Is adjudicated as bankrupt or insolvent; or
11.1.3 Files or consents to the filing of a petition in bankruptcy,
seeks reorganization or an arrangement with creditors or
takes advantage of any bankruptcy, dissolution, liquidation,
or similar law or statute; or
11.1.4 Becomes the subject of an order to rehabilitate or an order
to liquidate as defined by the insurance code of the
jurisdiction of the party's domicile.
In the event of the insolvency of the Company, all reinsurance made,
ceded, renewed or otherwise becoming effective under this Agreement
will be payable by the Reinsurer directly to the Company or to its
Authorized Representative, on the basis of the liability of the Company
under the Reinsured Policies without diminution because of the
insolvency of the Company.
The Reinsurer will be liable only for the amounts reinsured and will
not be or become liable for any amounts or reserves to be held by the
Company on policies reinsured under this Agreement. The Authorized
Representative will give written notice to the Reinsurer of all pending
claims against the Company on any policies reinsured within a
reasonable time after such claims are filed in the insolvency
proceedings. While a claim is pending, the Reinsurer may investigate
such claim and interpose, at its own expense, in the proceedings where
the claim is to be adjudicated, any defense or defenses which it may
deem available to the Company or the Authorized Representative.
The expense incurred by the Reinsurer will be chargeable, subject to
court approval, against the Company as part of the expense of
conservation or liquidation to the extent of a proportionate share of
the benefit which may accrue to the Company solely as a result of the
defense undertaken by the Reinsurer. Where two or more reinsurers are
involved in the same claim and a majority in interest elect to
interpose a defense to such claim, the expense will be apportioned in
accordance with the terms of the Agreement as though such expense had
been incurred by the Company.
In the event of insolvency, the Right of Offset afforded under Article
6-1 will remain in full force and effect to the extent permitted by
applicable law.
In the event of the insolvency of the Reinsurer, the Company may cancel
this Agreement for new business by promptly providing the Reinsurer,
its receiver, rehabilitator, conservator, liquidator or statutory
successor with written notice of the cancellation effective the date on
which the Reinsurer's insolvency is established by the authority
responsible for such determination. Any requirement for a notification
period prior to the cancellation of the Agreement would not apply under
such circumstances.
In addition, the Company may provide the Reinsurer, its receiver,
rehabilitator, conservator, liquidator or statutory successor with
written notice of its intent to recapture all reinsurance in force
under this Agreement regardless of the duration the reinsurance has
been in force or the amount retained by the Company on the policies
reinsured hereunder. The effective date of a recapture due to
insolvency would be at the election of the Company and would not be
earlier than the date on which the Reinsurer's insolvency is
established by the authority responsible for such determination. Any
Recapture Fee applicable will be mutually agreed upon by the Company
and the Reinsurer, its rehabilitator, conservator, liquidator or
statutory successor.
ARTICLE 12
12.1 DAC TAX
The Company and the Reinsurer agree to the DAC Tax Election pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulations effective December
29, 1992, under Section 848 of the Internal Revenue code of 1986, as
amended, whereby:
12.1.1 The party with the net positive consideration for this
Agreement for each taxable year will capitalize specified
policy acquisition expenses with respect to this Agreement
without regard to the general deductions limitation of
Section 848(c)(1); and
12.1.2 Both parties agree to exchange information pertaining to the
amount of net consideration under this Agreement each year
to ensure consistency.
The term "net consideration" will refer to the net consideration as
defined in Regulation Section 1.848-2(f).
The Company and the Reinsurer will report the amount of net
consideration in their respective federal income tax returns for the
previous calendar year.
The Company and the Reinsurer will also attach a schedule to their
respective federal income tax returns which identifies the Agreement as
a reinsurance agreement for which the DAC Tax Election under Regulation
Section 1.848.2 (g) (8) has been made.
This DAC Tax Election will be effective for all years for which this
Agreement remains in effect.
The Company and the Reinsurer represent and warrant that they are
subject to U.S. taxation under either the provisions of subchapter L of
Chapter 1 or the provisions of subpart F of subchapter N of Chapter 1
of the Internal Revenue Code of 1986, as amended.
12.2 TAXES AND EXPENSES
Apart from any taxes, allowances, refunds, and expenses specifically
referred to elsewhere in this Agreement, no taxes, allowances, or
proportion of any expense will be paid by the Reinsurer to the Company
in respect of any Reinsured Policy.
ARTICLE 13
13.1 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the business reinsured hereunder. There are no
understandings between the Company and the Reinsurer other than as
expressed in this Agreement.
Any alteration to this Agreement will be null and void unless made by
written amendment, attached to the Agreement and signed by both
parties.
13.2 INSPECTION OF RECORDS
The Reinsurer, or its duly appointed representatives, will have access
to the records of the Company concerning the business reinsured
hereunder for the purpose of inspecting, auditing and photocopying
those records. Such access will be provided at the office of the
Company and will be during reasonable business hours.
Provided there is business in force under this Agreement, the
Reinsurer's right of access as specified above will survive the term of
the Agreement.
13.3 UTMOST GOOD FAITH
All matters with respect to this Agreement require the utmost good
faith of both parties.
Each party represents and warrants to the other party that it is
solvent on a statutory basis in all states in which it does business or
is licensed. Each party will promptly notify the other if it is
subsequently financially impaired.
The Company confirms that it has made full disclosure to the Reinsurer
of all information Material (as defined below) to the risks being
assumed by the Reinsurer hereunder. "Material" for purposes of this
Article will mean information that a prudent insurance executive would
consider as reasonably likely to have a material affect on the
Reinsurer's experience under this Agreement. Prior to the execution of
this Agreement, the Company has provided to the Reinsurer certain
documents and materials for use in connection with its assessment of
the risks covered hereby (together, the "Underwriting Information").
The Company affirms that:
13.3.1 all factual information contained in the Underwriting
Information was true, complete and accurate as at the time
of disclosure and not materially misleading (whether by
omission or otherwise) and was prepared in an orderly
fashion so as to be capable of reasonable commercial
analysis, and
13.3.2 to the best of the Company's knowledge, there has been no
material adverse change in the anticipated profitability of
the Reinsured Policies between the latest "as of" date of
the documents included as Underwriting Information and the
Effective Date of this Agreement.
Not withstanding the foregoing, the Company makes no representations
and warranties as to the actual experience or profitability to be
realized from the Reinsured Policies.
For as long as either party retains any liability hereunder, the
Company acknowledges and confirms that:
13.3.3 the information and data supplied to the Reinsurer pursuant
to its obligations hereunder shall be true, complete and
accurate, and not misleading (whether by omission or
otherwise) as of the time of disclosure, and
13.3.4 it will make prompt full disclosure to the Reinsurer on a
continuing basis of all information and data that is
material to the risks being assumed by the Reinsurer under
this Agreement.
This Agreement has been entered into on the basis that the Company
adheres to established business practices as documented and disclosed
to the Reinsurer prior to the entry of the Agreement, including
business practices concerning marketing and distribution, pricing and
underwriting, policy issuance and administration and claims management
described in the Underwriting Information. Material changes to any of
the Company's significant business practices as to the Reinsured
Policies will be reported by the Company to the Reinsurer and must be
accepted by the Reinsurer in its sole discretion in writing before
continuing reinsurance on any business written under revised business
practices. If the Reinsurer has not replied to the Company within 30
days of notification by the Company, the Reinsurer shall be deemed to
have accepted the notified change in business practices. The Company
affirms that it has and will continue to disclose all matters material
to this Agreement. Examples of such matters include, but are not
limited to, changes in underwriting or issue practices or philosophy,
changes in senior underwriting or claims management personnel,
distribution, sales practices, target markets, or changes in the
Company's ownership or control.
It shall be a condition precedent to the Reinsurer's liability in
respect of a Reinsured Policy that the Company has not been negligent
or reckless in its underwriting and/or claims management in respect of
that policy and has materially implemented the business practices with
respect to marketing and distribution, pricing and underwriting, policy
issuance and administration and claims management described in the
Underwriting Information. Specifically with regard to the Company's
claim handling, policy standards and procedures, unless otherwise
agreed, it shall be a condition precedent to the Reinsurer's liability
in respect of claims on Reinsured Policies that the Company has adhered
to the claims handling policy, philosophy, standards and
procedures disclosed to the Reinsurer as in effect at the policy
inception date. The Company shall perform underwriting, pricing, claims
and administrative services with respect to the Reinsured Policies:
13.3.5 except as otherwise provided in this Agreement, at its own
expense and without any rights to reimbursement from the
Reinsurer,
13.3.6 with the skill, diligence and expertise commonly expected
from experienced and qualified personnel performing such
duties, and
13.3.7 in conformity with applicable law and the requirements of
the Reinsured Policies.
Notwithstanding anything to the contrary contained in this Agreement,
the acknowledgements of the Company provided hereby will not terminate
or expire until all Reinsured Policy liabilities have been discharged
or terminated in full.
13.4 CONFIDENTIALITY
Both the Company and the Reinsurer will hold confidential and not
disclose or make competitive use of any shared Proprietary Information,
as defined below, unless:
13.4.1 Otherwise agreed to by the parties in writing; or
13.4.2 The information otherwise becomes publicly available; or
13.4.3 The disclosure is required for retrocession purposes; or
13.4.4 The disclosure is required by external auditors; or
13.4.5 The disclosure is mandated by law.
"Proprietary Information" includes, but is not limited to, underwriting
manuals and guidelines, applications, contract forms, and premium rates
and allowances of the Reinsurer and the Company.
In addition, the Reinsurer and its representatives and service
providers will protect the confidentiality of Non-public Personal
Information, as defined below, by:
13.4.6 Holding all Non-public Personal Information transmitted to
them by or on behalf of the Company in strict confidence; or
13.4.7 Maintaining appropriate measures that are designed to
protect the security, integrity and confidentiality of
Non-public Personal Information; or
13.4.8 Using Non-public Personal Information only in the ordinary
course of business to carry out the Reinsurer's obligations
under the Agreement; and
13.4.9 Disclosing Non-public Personal Information to third parties
only as necessary to perform services under the Agreement,
for purposes of retrocession, or as may be required or
permitted by law.
"Non-public Personal Information" is personally identifiable medical,
financial, and other personal information about proposed, current and
former applicants, policyowners, contractholders, insureds, annuitants,
claimants, and beneficiaries of policies or contracts issued by the
Company, and their representatives, that is not publicly available.
Non-public Personal Information does not include de-identified personal
data.
ARTICLE 14
14.1 DURATION OF AGREEMENT
This Agreement is unlimited as to its duration. The Reinsurer or the
Company may terminate this Agreement with respect to the reinsurance of
new business by giving at least 90 days written notice of termination
to the other party.
During the 90 day notification period, the Company will continue to
cede and the Reinsurer will continue to accept policies covered under
the terms of this Agreement.
Further, the Reinsurer remains liable for all Reinsured Policies in
force at the date of the termination stated in the notice of
termination, until their natural expiration, unless the parties
mutually decide otherwise or as specified otherwise in this Agreement.
14.2 SEVERABILITY
If any provision of this Agreement shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state,
such provision shall be considered void in such state, but this shall
not affect the validity or enforceability of any other provision of
this Agreement or the enforceability of such provision in any other
jurisdiction.
14.3 CONSTRUCTION
The rights and obligations under this Agreement will be construed and
administered in accordance with the laws of the Company's state of
domicile stated in Exhibit A.
14.4 REGULATORY COMPLIANCE
The Company warrants that it has secured all necessary federal and
state licenses and approvals and that it is operating in compliance
with federal and state insurance laws and regulations.
The parties intend that the Company will receive full statutory reserve
credit for the Reinsured Policies in its state of domicile. In the
event the Reinsurer is not qualified or accredited in the Company's
state of domicile such that collateralization of the Reinsurer's
obligations hereunder is required as a condition to the Company's
receipt of such reserve credit, then the parties agree to make all
reasonable efforts to promptly arrange such collateralization.
EXECUTION
This Agreement has been made in duplicate and hereby executed by both parties.
Signed for and on behalf of ▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY
By: ▇▇▇▇ ▇. ▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- -----------------------------------
Title: SVP & Chief Actuary Title: AVP & Associate General Counsel
----------------------------------- -----------------------------------
Date: 03/09/05 Place: 3/9/05
----------------------------------- -----------------------------------
Signed for and on behalf of SWISS RE LIFE & HEALTH AMERICA INC.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- -----------------------------------
Title: Sr. Vice Presdident Title: VP
----------------------------------- -----------------------------------
Date: ▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇: 3-3-05 Ft. ▇▇▇▇▇, IN
----------------------------------- -----------------------------------
EXHIBIT A
BUSINESS COVERED
AGREEMENT EFFECTIVE DATE:
March 8, 2004. The commencement dates for specific plans are shown below.
COVERAGE:
The policies on the plans shown below which have policy issue dates falling in
the period that begins with the Commencement Date and ends with the Termination
Date and that qualify for automatic reinsurance are covered according to the
Basis specified below provided:
1. The policies are on lives resident in the United States or Mexico.
2. The policies are on lives with surnames commencing with the letters
A to Z inclusive.
BASIS:
30% of the excess over the Company's retention stated in Exhibit D, to the
maximum of the Automatic Acceptance Limits stated in Exhibit E.
CURRENCY: US$
COMPANY'S STATE OF DOMICILE: Michigan
PLANS, RIDERS AND BENEFITS:
PLAN EXHIBIT REFERENCE COMMENCEMENT TERMINATION
IDENTIFICATION FOR RATES DATE DATE
Perspective Investor C-1 March 8, 2004
(single life variable
universal life)
RIDERS:
Other Insured Rider
Extended Maturity Rider
Scheduled Term Rider
Terminal Illness Rider
EXHIBIT A
PAGE 2
FACULTATIVE SUBMISSIONS:
The Company may submit, on a facultative basis, to the Reinsurer any application
for a policy on a plan or rider listed above which qualifies for automatic
reinsurance.
The Company will submit on a facultative basis to the Reinsurer any application
for a policy on a plan or rider listed above which does not meet the criteria
listed in Article 2 under Automatic Reinsurance.
The Reinsurer's facultative offer will expire at the end of 120 days, unless
otherwise specified by the Reinsurer.
EXHIBIT A-1
REQUIRED FORMS, MANUALS AND ISSUE RULES
The Company affirms that its retention schedule, underwriting guidelines, issue
rules, premium rates and policy forms applicable to the Reinsured Policies and
in use as of the effective date of this Agreement have been supplied to the
Reinsurer. This includes:
1. Policy Application Form(s)
2. Underwriting Manual and Agent's Guide
3. Policy Delivery Rules and Reinstatement Rules
4. Non-medical and Medical Requirements
5. Financial Questionnaires
6. Tobacco Use Guidelines and Questionnaires
7. Preferred Underwriting Guidelines
8. Premium Rates
9. Retention Schedule
10. Allocation Rules for Facultative Cases Among Reinsurers
The Company will promptly notify the Reinsurer of any proposed material changes
to the above underwriting guidelines, issue rules, premium rates, retention
schedule and policy forms. This Agreement will not extend to policies issued
pursuant to such changes unless the Reinsurer has consented in writing to accept
policies subject to such changes.
It is the Company's responsibility to ensure that the applicable forms are in
compliance with current Medical Information Bureau (M.I.B.) regulations.
CONDITIONAL RECEIPT AMOUNT
The amount of coverage provided by the Reinsurer under a Conditional Receipt (or
Interim Receipt) will not exceed the lesser of:
1. The Reinsurer's share of $[REDACTED]; or
2. The Automatic Acceptance Limits; or
3. The Reinsurer's share of the difference between the amount of
insurance provided by the Conditional Receipt (or Interim Receipt) and
the Company's maximum retention assuming the life had been
underwritten as standard. The Company's retention will include any
amounts retained under any in force policies on the life.
EXHIBIT B
REINSURANCE APPLICATION
From: Company Name
Company Name
------------------------------------------------------------------------------------------------------------------------------------
Last First Middle Date of Birth Age Sex
Applicant's Name
---------------------------------------------------------------------------------------------------------------
Plan Preferred Smoker Nonsmoker Reunderwriting
-------------------------------------------
Curr Residence For Premium Tax Policy Number Policy Date Preliminary Term From
------------------------------------------------------------------------------------------------------------------------------------
Type of Application
Facultative Automatic PLACEMENT DATE SELF ADMINISTERED (Bulk) Terms YRT Coinsurance
------------------------------------------------------------------------------------------------------------------------------------
Decrement Cash Values Reserves AGE BASIS RETENTION CODE Full Reduced Nil
---------------------------------------------------------- --------------------------------------
Reinsurance Amounts Basic Coverage Additional Coverage Waiver Premium Accidental Death Other Benefits
Benefit Benefit
Previous Insurance In Force
-----------------------------------------------------------------------------------------------------
Of Which We Retained -
-----------------------------------------------------------------------------------------------------
Insurance Now Applied For -
-----------------------------------------------------------------------------------------------------
Of Which We Retain -
-----------------------------------------------------------------------------------------------------
Reinsurance This Cession -
-----------------------------------------------------------------------------------------------------
Extra Premium
-----------------------------------------------------------------------------------------------------
Rating If Substandard -
-----------------------------------------------------------------------------------------------------
Coinsurance Premium -
-----------------------------------------------------------------------------------------------------
*For YRT cases state Gross Premiums WP AD Other Amount of Premium Annual Decrement for
and Expiry Ages for benefits to be Waived Amount at Risk
----------------------------------------------------------------------------------------------
Additional Information or Remarks
Date By
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT C
GENERAL TERMS
1. REINSURANCE RATES: The Company will pay the Reinsurer premiums based on the
rates and terms set out in the sub-section(s) of Exhibit C for the
Reinsured Policies.
2. PREMIUM TAX: The Reinsurer will not reimburse the Company for premium
taxes.
3. DIVIDEND PAYMENTS: The Reinsurer will not reimburse the Company for
dividends paid to policyholders.
4. POLICY LOANS: The Reinsurer will not participate in policy loans or other
forms of indebtedness on policies reinsured under this Agreement.
5. CASH SURRENDER VALUES: The Reinsurer will not reimburse the company for
cash surrender values paid to the policyholder.
6. MINIMUM AUTOMATIC REINSURANCE LIMIT: Nil. MINIMUM FACULTATIVE REINSURANCE
LIMIT: $[REDACTED] to age 70 and $[REDACTED] over age 70
7. INTEREST RATE FOR OVERDUE PREMIUMS: The interest rate payable by the
Company to the Reinsurer for overdue premiums will be the 90 Day Federal
Government Treasury ▇▇▇▇ rate as first published in the Wall Street Journal
in the month following the end of the billing period plus 50 basis points.
The method of calculation will be simple interest "Bankers' Rule" (or 360
day year).
8. RATES APPLICABLE TO INCREASES: First year reinsurance premium rates and
allowances will apply to the amount normally underwritten of a
non-contractual increase.
EXHIBIT C-1
SPECIFIC TERMS
1. REINSURANCE BASIS: YRT.
2. AGE BASIS: Nearest.
3. PREMIUMS: The Company will pay to the Reinsurer a basic premium calculated
by multiplying the net amount at risk of the Reinsured Policy by twelve
times the appropriate rate from THE SET OF RATES INCLUDED AT THE END OF
THIS SUB-SECTION, SUBJECT TO THE PERCENTAGES SHOWN BELOW. Premiums will be
payable on a policy year basis, regardless of the premium payment mode
under the original insurance, and the Company will continue to pay the
appropriate premium to the Reinsurer as long as the Reinsured Policy is in
force.
Perspective Investor VUL and Scheduled Term Rider - The following
percentages will be applied to the base monthly rates labelled "Form Number
VUL1802":
YEAR 1 YEARS 2+
Preferred Plus Non Tobacco 0% 59%
Preferred Non Tobacco 0% 59%
Standard Non Tobacco 0% 59%
Preferred Tobacco 0% 75%
Standard Tobacco 0% 75%
Extended Maturity Rider - 1% will be added to the Year 2 percentages
outlined above. For example, for Preferred Plus Non Tobacco with the
Extended Maturity Rider, the percentage applied to the base rate will be
60%.
Other Insured Rider - The following percentages will be applied to twelve
times the base monthly rates labelled "Other Insured Term Insurance Rider
(form 9443):
YEAR 1 YEARS 2+
Other Insured Rider 0% 87%
Any extra premiums payable on account of additional mortality risk will be
payable to the Reinsurer.
4. MULTIPLE EXTRAS: For substandard risks issued at table ratings, the
applicable rate shall be increased by an extra 25% per table of assessed
rating.
EXHIBIT C-1
PAGE 2
5. ALLOWANCES:
ON BASIC PREMIUM(S)
There are no allowances payable.
ON FLAT EXTRA PREMIUMS
When a flat extra premium is payable for 5 years or less, an allowance of
10% of the gross flat extra charged by the Company will be made each year.
When a flat extra premium is payable for more than 5 years, an allowance of
100% of the gross flat extra charged by the Company will be made in the
first year and an allowance of 10% in each year thereafter.
ON MULTIPLE EXTRA PREMIUMS
The same allowances as those payable on the basic policy.
ON BENEFITS
There are no allowances payable for the Scheduled Term Rider, Other Insured
Rider or Extended Maturity Rider.
6. NET AMOUNTS AT RISK:
a) For Fixed Benefit Plans, the reinsured net amount at risk will be the
difference between the reinsured face amount and the cash values
applicable to the face amount reinsured. The reinsured face amount is
the initial amount reinsured under this Agreement, or as reset by
subsequent scheduled or fully underwritten increases. Commuted values,
if applicable, or any comparable approximation agreed to between the
Company and the Reinsurer, may be used to determine the net amount at
risk.
b) For term plans the net amount at risk will be based on the reinsured
face amount.
c) For Variable Benefit Plans, the reinsured net amount at risk will be
the difference between the reinsured face amount and the account value
applicable to the face amount reinsured. The reinsured face amount is
the initial amount reinsured under this Agreement, or as reset by
subsequent scheduled or fully underwritten increases. For reinsured
net amount at risk purposes, the account value is that which is in
effect for each reinsurance premium accounting period.
EXHIBIT C-1
PAGE 3
For UL Life type plans, if the death benefit is Option A, the
reinsured net amount at risk will be the difference between the
reinsured face amount and the account values applicable to the face
amount reinsured. If the death benefit is Option B, the reinsured net
amount at risk will be the reinsured face amount.
Increases in the amount at risk due to Cost of Living Rider increases or
fluctuations in the amount at risk caused by the normal workings of the
cash value fund in Universal Life type plans will be shared by the Company
and the Reinsurer using the same retention method as for the base policy.
7. RATE GUARANTEE:
The YRT reinsurance rates set out in this sub-section are guaranteed to the
extent that in the 2nd year and later the Reinsurer reserves the right to
increase the premiums for reinsurance but not above the statutory net
premium.
If the Reinsurer exercises this right and the Company has not increased its
rates to the policy owner, the Company may recapture the Reinsured Policies
on which the rates have been increased regardless of the Reinsured
Policies' duration in force. Such a recapture would be subject to a
recapture fee mutually agreed upon by the Company and the Reinsurer.
8. DEFICIENCY RESERVES:
No Deficiency Reserves will be held by the Reinsurer for the Reinsured
policies.
9. RECAPTURE:
Reinsured Policies on an excess basis may be recaptured under the following
situations provided the Reinsured Policies have been in force for the
specified period:
Increase in Company's Retention
Inforce Period: 20 years
Insolvency of Reinsurer
Inforce Period: Not applicable
10. REDUCTIONS: Reinsured Policies will be reduced in proportion to the
reduction under the original policy or policies. A reduction to one of the
Company's policies not reinsured hereunder will not affect any Reinsured
Policy on the same life.
EXHIBIT C-1
PAGE 4
11. TERMINAL ILLNESS RIDER: It is understood that this rider provides an
accelerated payment of life insurance proceeds up to a maximum of
$[REDACTED] at no extra cost in the event an insured incurs a terminal
illness as defined in the policy while the policy is in force. For
reinsurance purposes, if the face amount of the policy is greater than
$[REDACTED], the reinsured amount will not be reduced by the amount of
accelerated benefit and the Company will continue to pay reinsurance
premiums until the actual date of death. If, however, the face amount of
the policy is less than $[REDACTED] and the full amount is paid by the
Company as an accelerated benefit, then reinsurance will cease as of the
date of the acceleration.
MONTHLY PROJECTED COST OF INSURANCE RATES PER $1000
[REDACTED]
EXHIBIT D
THE COMPANY'S RETENTION LIMITS
LIFE:
DOMESTIC BUSINESS:
ISSUE AGE STANDARD TO TABLE 2 TABLE 3 TO 8 TABLE 9 TO 16
0 - 65 $[REDACTED] $[REDACTED] $[REDACTED]
66 - 75 $[REDACTED] $[REDACTED] $[REDACTED]
76 - 85 $[REDACTED] $[REDACTED] $[REDACTED]
MEXICAN BUSINESS:
ISSUE AGE STANDARD TO TABLE 2 TABLE 3 TO 8 TABLE 9 TO 16
0 - 65 $[REDACTED] $[REDACTED] $[REDACTED]
66 - 75 $[REDACTED] $[REDACTED] $[REDACTED]
76 - 85 $[REDACTED] $[REDACTED] $[REDACTED]
It is understood that the amount retained by the Company includes its retention
under any inforce policies.
PROPORTIONATE RISK RETENTION
Any change in the net amount at risk due to changes in the cash value applicable
to the policy will be shared proportionately between the Company and its
reinsurers.
It is also understood that, where the ultimate projected amount of a policy
requires reinsurance due to the Scheduled Term Rider, the Company's share of the
risk on the policy will be set at issue as a first dollar quota share
percentage, equal to the Company's maximum available retention for the insured's
age and rating at issue divided by the anticipated ultimate projected face
amount of the policy including the Scheduled Term Rider. The Reinsurer will
reinsure its share as stated in Exhibit A of the remaining risk amount. In no
event will the Company cede a higher percentage of the risk on an automatic
basis to the Reinsurer than that shown in Exhibit A. The Company's methodology
for administering Scheduled Term Riders is attached to this Exhibit as page 2.
EXHIBIT E
THE REINSURER'S AUTOMATIC ACCEPTANCE LIMITS
LIFE:
The Reinsurer will automatically accept the excess share of each policy over the
Company's Retention, as specified in Exhibit A, of the following maximum limits
on a per life basis:
DOMESTIC BUSINESS:
ISSUE AGE STANDARD TO TABLE 2 TABLE 3 TO 8 TABLE 9 TO 16
0 - 65 $[REDACTED] $[REDACTED] $[REDACTED]
66 - 75 $[REDACTED] $[REDACTED] $[REDACTED]
76 - 85 $[REDACTED] 0 0
MEXICAN BUSINESS:
ISSUE AGE STANDARD TO TABLE 2 TABLE 3 TO 8 TABLE 9 TO 16
0 - 65 $[REDACTED] $[REDACTED] $[REDACTED]
66 - 75 $[REDACTED] $[REDACTED] $[REDACTED]
76 - 85 $[REDACTED] 0 0
INFORCE LIMITS
DOMESTIC BUSINESS: $[REDACTED] inforce and applied for on any one life.
MEXICAN BUSINESS: $[REDACTED] inforce and applied for on any one life.
EXHIBIT F (BULK)
REINSURANCE REPORTS
REMITTANCE REPORTING:
The Company will self-administer reinsurance transactions. Reinsurance premiums
are payable annually in advance. During each accounting period, as defined
below, the Company will report to the Reinsurer all first year and renewal
premiums which became due during the previous accounting period. Any adjustments
made necessary by changes in reinsurance effective during a previous accounting
period will also be reported.
The Company will take credit, without interest, for any unearned premiums
arising due to reductions, cancellations or death claims. The unearned premiums
refunded will be net of allowances and policy fees.
The Company will pay the balance of arrears of premiums due under a reinstated
Reinsured Policy.
If a balance is due to the Reinsurer, the Company will forward a remittance in
settlement with its report. If the balance is due to the Company, the Reinsurer
will forward a remittance in settlement within 15 days of receipt of the report.
REPORT REQUIREMENTS:
The Company will send to the Reinsurer the following reports electronically, by
the times indicated below:
REPORT ACCOUNTING PERIOD DUE DATE
1. New Business Monthly 21st day after
(New issues only- first time month end
policy reported to the Reinsurer)
2. Renewal Business Monthly 21st day after
(Policies with renewal dates month end
within Accounting Period)
3. Changes & Terminations Monthly 21st day after
(including conversions, replacements month end
reinstatements, increases, decreases,
recaptures, lapses, claims, etc.)
4. Inforce Quarterly 21st day after
(Listing of each policy in force) quarter end
EXHIBIT F (BULK)
PAGE 2
5. Accounting Information Monthly 21st day after (See Exhibit F-1 for
Sample month end
Summary Reporting Form, section I)
6. Statutory Reserves Quarterly 21st day after (See Exhibit F-1 for Sample
quarter end
Summary Reporting Form, section II)
7. Policy Exhibit Monthly 21st day after (See Exhibit F-1 for Sample month
end
Summary Reporting Form, section III)
8. Valuation Reserve Annually October 31st Certification
(See Exhibit F-2 for Sample)
9. Tax Reserve Certification Annually June 1st (See Exhibit F-3 for
Sample)
REPORT DETAILS:
The reports for New Business, Renewal Business, Changes & Terminations and
Inforce, will include the following data:
1. Reporting Date 10. Underwriting Risk Classification (including table
2. Policy Number rating and flat extra amount & applicable number of
3. Insured Data: Full Name, Date of Birth, Sex years)
4. Residence 11. Automatic or Facultative
5. Policy Date 12. Direct Face Amount
6. Issue Age 13. Reinsured Amount and Net Amount at Risk
7. Plan Name and/or Code 14. Death Benefit Option (for UL policies only)
8. Premium (not applicable to Inforce Report) 15. Transaction Code (not applicable to Inforce Report)
9. Smoker Code
In addition, for the Changes and Terminations Report the effective date of each
transaction will be provided. If the change is a conversion or replacement the
attained age and duration will also be provided.
EXHIBIT F (BULK)
PAGE 3
REPORTING SYSTEM: The system used by the Company to administer its reinsurance
is:
TAI
The Company will inform the Reinsurer of any change in the reporting format or
data prior to use in reports to the Reinsurer.
NOTIFICATION OF ACCEPTANCE OF FACULTATIVE OFFER: The Company will advise the
Reinsurer of its acceptance of the Reinsurer's underwriting decision pertaining
to facultative business by sending notice to the Reinsurer. The Company will
provide the full details of the facultative new business on the next New
Business Report.
ADDITIONAL INFORMATION: The Company will provide the Reinsurer upon request,
with any additional information related to the Reinsured Policies and which the
Reinsurer requires in order to complete its financial statements.
EXHIBIT F-1
SWISS RE LIFE & HEALTH
SELF ADMINISTERED REINSURANCE SUMMARY REPORTING FORM
Ceding Company Reinsurer
---------------------------------- -------------------------------------
Treaty/Account # Period Experience is for
-------------------------------- ----------------------
Coin YRT Mod Co Other Interest Sensitive: Yes No
---- ---- ---- ---- ---- ----
Reinsurance Premium Mode: Monthly Quarterly Annual In Advance In Arrears
---- ---- ---- ---- ----
Reinsurance Reporting Mode: Monthly Quarterly Annual
---- ---- ----
Contact Date Phone #
------------------------------- ---------------------- ------------------------------
---------------------------------------------------------------------------------------------------------------------------
SECTION I - ACCOUNTING
---------------------------------------------------------------------------------------------------------------------------
* * Premiums * * * * Allowances Other* *
-----------------------------------------------------------------------------
First Year Renewal Year First Year Renewal Year Benefit Total
-----------------------------------------------------------------------------------------------------------
Life
---------------------------------------------------------------------------------------------------------------------------
ADB
---------------------------------------------------------------------------------------------------------------------------
Waiver of Premium
---------------------------------------------------------------------------------------------------------------------------
TOTAL
---------------------------------------------------------------------------------------------------------------------------
SECTION II - RESERVE INFORMATION
---------------------------------------------------------------------------------------------------------------------------
Amount of Rein (000) Issue Reserves Reinsured
------------------------------ Year -----------------------------------------------------------------------------
Life ADB Life ADB Waiver Subst'd Deficiency
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
SECTION III - POLICY EXHIBIT INFORMATION
---------------------------------------------------------------------------------------------------------------------------
Current Period Year to Date
------------------------------ -------------------------------
No. of Amt of * No. of Amt. of *
Policies Rein (000) Policies Rein (000)
------------------------------ -------------------------------
A. Inforce Beg. of Period A.
------------------------------ -------------------------------
1. New Business Auto ▇.▇▇▇▇
------------------------------ -------------------------------
Fac Fac
------------------------------ -------------------------------
2. Conversions/Replacements - On 2.
------------------------------ -------------------------------
3. Reinstatements 3.
------------------------------ -------------------------------
4. Other Increases 4.
------------------------------ -------------------------------
5. Not Takens 5.
a) Total Inc (1+2+3+4-5) a)
------------------------------ -------------------------------
------------------------------ -------------------------------
6. Death 6.
------------------------------ -------------------------------
7. Conversions/Replacements - Off 7.
------------------------------ -------------------------------
8. Lapses 8.
------------------------------ -------------------------------
9. Surrenders 9.
------------------------------ -------------------------------
10. Expiry 10.
------------------------------ -------------------------------
11. Recapture 11.
------------------------------ -------------------------------
12. Other Decreases 12.
------------------------------ -------------------------------
b) Total Dec (6+7+8+9+10+11+12) b)
------------------------------ -------------------------------
B. Inforce End of Period (A+a-b) B.
------------------------------ -------------------------------
EXHIBIT F-2
VALUATION RESERVE FOR SELF-ADMINISTERED BUSINESS CEDED TO SWISS RE LIFE AND HEALTH AMERICA INC. FROM ▇▇▇▇▇▇▇ NATIONAL
LIFE INSURANCE COMPANY
Inforce and Reserves at 200x:
Plan: Type: SM/NSM/AGGR/TOTAL
Inforce Reinsured Amount: _____________
Inforce Number of Policies: _____________
Valuation Reserve as at 200x:
RESERVE RESERVE BASIS
TYPE AMOUNT ($) (TABLE, INTEREST
RATE AND METHOD)
Active Life Reserve
Unearned Premium Reserve
Disabled Life Reserve
Liability for Incurred But Not Reported Claims (IBNR)
Liability for Due and Unpaid Claims
Liability for claims in Course of Settlement
Other** (specify)
Total
**If credit for deficiency reserves is being taken, please specify under "other".
As the valuation actuary of the above named company I certify that the information above is correct as shown. *
Name:
Signature:
Actuarial Designation:
Title:
Date:
* Required only for Year End Valuation Reserves.
EXHIBIT F- 3
TAX RESERVE CERTIFICATION FOR SELF-ADMINISTERED BUSINESS CEDED TO SWISS RE LIFE AND HEALTH AMERICA INC. FROM ▇▇▇▇▇▇▇
NATIONAL LIFE INSURANCE COMPANY
Inforce and Reserves at December 31, 200x:
Plan: Type: SM/NSM/AGGR/TOTAL
Inforce Reinsured Amount: _____________
Inforce Number of Policies: _____________
Tax Reserve as at December 31, 200x:
RESERVE RESERVE BASIS
TYPE AMOUNT ($) (TABLE, INTEREST
RATE AND METHOD)
Active Life Reserve
Unearned Premium Reserve
Disabled Life Reserve
Liability for Incurred But Not Reported Claims (IBNR)
Liability for Due and Unpaid Claims
Liability for Claims in Course of Settlement
Other** (specify)
Total
**If credit for deficiency reserves is being taken, please specify under "other".
As the valuation actuary of the above named company I certify that the information above is correct as shown.
Name:
Signature:
Actuarial Designation:
Title:
Date: