REINSURANCE AGREEMENT #6550-1
(AUTOMATIC YEARLY RENEWABLE TERM BULK UNIVERSAL LIFE)
(hereinafter referred to as "Agreement")
between
STANDARD LIFE INSURANCE COMPANY OF INDIANA
(INDIANAPOLIS, INDIANA)
(hereinafter referred to as the "Company")
and
LIFE REASSURANCE CORPORATION OF AMERICA
(STAMFORD, CONNECTICUT)
(hereinafter referred to as "Life Re")
EFFECTIVE: SEPTEMBER 1, ▇▇▇▇
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TABLE OF CONTENTS
PREAMBLE 1
ARTICLE I - METHOD OF REINSURANCE AND INSURANCE 1
1. Effective Date 1
2. Method 1
3. Amounts 1
4. Minimum Amounts 2
ARTICLE II - AUTOMATIC REINSURANCE 2
1. Insurance 2
2. Coverages 3
3. Jumbo Risk 3
4. Waiver Acceptance and Participation Limits 3
5. Regular Limits of Retention 3
ARTICLE III - FACULTATIVE REINSURANCE 3
ARTICLE IV - PROCEDURES FOR REPORTING 4
1. General Information 4
2. Self-Administered Reporting 4
ARTICLE V - PREMIUMS 6
1. Life Insurance and Waiver 6
2. Associated Riders 6
3. Premium Taxes 7
4. Payments 7
5. Nonpayment of Reinsurance Premiums 7
6. Interest on Delinquent Payments 7
7. Misstatements 7
ARTICLE VI - CLAIMS 8
1. Notice 8
2. Contested Claims 8
3. Expenses 8
4. Misstatements 9
5. Payment 9
6. Assistance and Advice 9
ARTICLE VII - REDUCTIONS, REINSTATEMENTS & CHANGES 9
1. Reductions and Terminations 9
2. Reinstatements 10
3. Nonforfeiture Benefits 10
4. Contractual Conversions and Exchanges 10
5. Non Contractual Exchanges 11
6. Program of Internal Replacement 11
LIFE RE AGREEMENT #6550-1
Table of Contents . . .
ARTICLE VIII - DAC TAX 11
ARTICLE IX - RECAPTURE 12
1. Standards for Recapture 12
2. Method of Recapture 12
ARTICLE X - INSOLVENCY 12
ARTICLE XI - ARBITRATION 13
ARTICLE XII - GENERAL PROVISIONS 14
1. Reinsurer's Right of Notice of Unusual Practices 14
2. Policy Forms and Rates 14
3. Reinsurance Conditions 14
4. Errors and Omissions 15
5. Offset 15
6. Inspection 15
7. Entire Agreement 15
8. Amendment 15
9. Counterparts 16
10. No Assignment 16
11. Binding Effect 16
12. Notices 16
ARTICLE XIII - DURATION OF AGREEMENT 17
ARTICLE XIV - EXECUTION 18
SCHEDULE A - Retention Limits, Automatic Binding Limits, Plans Covered
SCHEDULE B - Reporting Forms
SCHEDULE C
PART I - Premium Rates
PART II - Percentages
SCHEDULE D - Discounts
LIFE RE AGREEMENT #6550-1
PREAMBLE
This Reinsurance Agreement ("Agreement") is entered into by and between
STANDARD LIFE INSURANCE COMPANY OF INDIANA, an Indiana insurance
corporation (the "Company") and LIFE REASSURANCE CORPORATION OF AMERICA, a
Connecticut insurance corporation ("Life Re"). The Company and Life Re
mutually agree to reinsure on the terms and conditions set forth in this
Agreement. This Agreement is solely between the Company and Life Re, and
performance of the obligations of each party under this Agreement will be
rendered solely to the other party. In no instance will anyone other than
the Company or Life Re have any rights under this Agreement.
ARTICLE I - METHOD OF REINSURANCE AND INSURANCE
1. EFFECTIVE DATE
The reinsurance under this Agreement is effective as of SEPTEMBER 1,
1997.
2. METHOD
Reinsurance of life insurance risks ("Life Insurance") under this
Agreement and waiver of premium benefits ("Waiver") is on the yearly
renewable term ("YRT") plan for the amount at risk under the policy
reinsured. The Company will cede and Life Re will accept reinsurance under
the policies or plans set forth in Schedule A, written by the Company on
citizens of the United States or Canada, domiciled in the United States or
Canada at the time of application. The policies set forth in Schedule A
that are reinsured under this Agreement are hereinafter referred to
collectively as "Reinsured Policies" and individually as a "Reinsured
Policy." Said policies will have been underwritten in accordance with the
Company's individual ordinary life underwriting rules and practices.
3. AMOUNTS
For the purpose of this Agreement, the reinsured amount at risk (R) is
calculated as follows:
(1) For Option 1:
R = D - X - A, where
D = Death benefit
X = The Company's retention
A = The Accumulation Fund Value or Cash Value, whichever
is applicable under base plan
LIFE RE AGREEMENT #6550-1
(2) For Option 2:
R = D - X, where
D = Death benefit
X = The Company's retention
4. MINIMUM AMOUNTS
Amounts of initial reinsurance less than $5,000 will not be ceded under
this Agreement.
ARTICLE II - AUTOMATIC REINSURANCE
1. INSURANCE
The Company will cede and Life Re will accept automatically reinsurance
in amounts not exceeding the binding limits per life in Schedule A of this
Agreement. If the Company has more than one agreement with Life Re, the
total amount per life automatically ceded to Life Re under all agreements
combined will not exceed the automatic binding limit available to the
Company under the agreement with the highest binding authority. Life Re
will accept automatic reinsurance when (a) the Company already has for its
own account its maximum limit of retention on the risk and for this reason
alone is not retaining any portion of the insurance applied for on a
current application, and (b) in the Company's opinion there has been no
adverse change in the insurability of the risk since the Company's last
acceptance for its own retention. A risk as defined in the following
categories is not eligible for reinsurance under this paragraph:
(a) A jumbo risk as defined in paragraph 3 below.
(b) A risk which has been sent to Life Re or any other reinsurer for
facultative underwriting consideration.
(c) Life Insurance resulting from a group conversion, where full
evidence of insurability has not been secured.
(d) Any risk which is not fully underwritten or any risk where the
Company has not followed its usual underwriting practice.
The liability of Life Re on any automatic reinsurance under this
Agreement begins and ends at the same time as that of the Company, provided
that such an automatic application shall not have been submitted to Life Re
or to any other reinsurer for facultative underwriting consideration.
LIFE RE AGREEMENT #6550-1
2. COVERAGES
Life Insurance, Waiver for an amount not greater than the corresponding
life insurance, and Associated Riders are exclusively the coverages or
risks reinsured automatically under this Agreement. Life Re will not
participate in a unilateral enhancement of policy provisions unless agreed
to in writing prior to the granting of the enhancement. Life Insurance
includes both basic policies and term riders providing life insurance
protection.
3. JUMBO RISK
A jumbo risk is one where the papers of the Company, including all
papers that are part of the current application, indicate that the person
to be insured has or will have total insurance in force with all companies
greater than:
LIFE
All Ages $10,000,000
4. WAIVER ACCEPTANCE AND PARTICIPATION LIMITS
Life Re's maximum acceptance limit for Waiver is $2,000,000 per life,
and the maximum participation limit for such benefits is $3,000,000 per
life.
5. REGULAR LIMITS OF RETENTION
The Company may modify its regular limits of retention, detailed in
Schedule A, by giving thirty days' written notice to Life Re. The amount
of reinsurance to be ceded and accepted automatically after the new limits
take effect will be determined by mutual written agreement by Life Re and
the Company.
ARTICLE III - FACULTATIVE REINSURANCE
The Company may choose to submit for consideration by Life Re, a
request for any amount of reinsurance of the coverages in Article II that
the Company may require. Reinsurance may be requested for any amount
without regard for the limits of retention detailed in Schedule A, but the
Company will notify Life Re promptly of any changes in its limits of
retention.
LIFE RE AGREEMENT #6550-1
When the Company requests facultative reinsurance, the application will
be made by submitting to Life Re a mutually agreeable form. The Company
will send to Life Re any and all information the Company has about the
risk, including without limitation, copies of the application, medical
examiners' reports, attending physicians' statements, inspection reports,
and other reports and other papers bearing on the insurability of the risk.
Promptly upon receipt of the application, Life Re will analyze the risk and
notify the Company of Life Re's decision and Life Re's classification of
the risk. If the Company elects to accept Life Re's unconditional offer of
acceptance for reinsurance of the risk, the Company will notify Life Re
within 120 days of Life Re's offer.
The liability of Life Re on any facultative reinsurance under this
Agreement begins and ends at the same time as that of the Company, provided
that:
(a) Life Re has given the Company an unconditional offer of acceptance
after the application for reinsurance, AND
(b) the Company has notified Life Re of its acceptance of such offer
within 120 days of said offer.
ARTICLE IV - PROCEDURES FOR REPORTING
1. GENERAL INFORMATION
Life Re will accept, on a self administered basis, reinsurance in
amounts per life up to the amounts set forth in Schedule A.
2. SELF-ADMINISTERED REPORTING
The Company will remit a check for the balance indicated in the monthly
statements to Life Re along with the reporting form set forth in Schedule B
or a mutually agreed upon form submitted by the Company. If a balance is
due the Company, it will be remitted by Life Re promptly. Within ten (10)
days following the close of each calendar month, the Company will forward
to Life Re on computer tape or other acceptable form, reports in
substantial conformity with the following:
A. MONTHLY NEW BUSINESS REPORT
(1) policy number; (10) amount reinsured;
(2) full name of insured; (11) automatic/facultative indicator;
(3) date of birth; (12) state of residence;
(4) sex; (13) table rating;
(5) issue age; (14) flat extra (amount + number of years);
(6) policy date; (15) death benefit option (UL products);
(7) underwriting; (16) amount at risk classification;
(8) plan of insurance; (17) transaction code;
(9) amount issued; (18) currency if other than U.S.; and
(19) qualified pension (yes/no).
LIFE RE AGREEMENT #6550-1
B. MONTHLY CONVERSION REPORT
The Company will furnish Life Re with a separate listing of
reinsurance policies that are conversions or replacements to the
plan(s) as stated in Schedule A. The listing should provide the
following information:
(1) 1 through 19 in 2.A above; (4) attained age;
(2) original policy date; (5) duration; and
(3) original policy number; (6) effective date if other than
policy date.
C. MONTHLY PREMIUM REPORT
The Company will furnish Life Re a listing of all reinsurance
policies issued or renewing during the past month accompanied by the
reinsurance premiums for such policies. The listing should be
segregated into first year issues and renewals and should provide the
following information:
(1) 1 through 19 in 2.A above;
(2) current amount at risk; and
(3) the net reinsurance premium due for each reinsured policy with the
premium for life and each supplemental benefit separated.
D. MONTHLY CHANGE REPORT
The Company will report the details of all policy terminations and
changes on the reinsured policies. In addition to the data indicated
in 2.A, above, the report should provide information about the nature,
the effective date, and the financial result of the change with respect
to reinsurance.
E. MONTHLY POLICY EXHIBIT REPORT
The Company will provide a summary of new issues, terminations,
recaptures, changes, death claims and reinstatements during the month
and the inforce reinsurance at the end of the month.
F. QUARTERLY INFORCE AND RESERVE LISTING
Within ten (10) days after the close of each calendar quarter, the
Company will furnish Life Re with a listing of reinsurance in force by
policy, by year of issue and include statutory reserves for the same.
The listing must show sufficient detail such that reserve calculations
can be independently verified by Life Re's auditors and examiners. The
listing should be segregated into first year issues and renewals and
should provide the following information:
1 through 19 in 2.A above
For the fourth quarter, Federal Income Tax reserves must also be
furnished. They may be included in the fourth quarter statutory report
or they may be submitted separately, but in the same format as the
statutory report.
LIFE RE AGREEMENT #6550-1
G. ELECTRONIC DATA TRANSMISSION
If the Company reports its reinsurance transactions via electronic
media, the Company will consult with Life Re to determine the
appropriate reporting format. Should the Company subsequently desire
to make changes in the data format or the code structure, the Company
will communicate such changes to Life Re prior to the use of such
changes in reports to Life Re.
ARTICLE V - PREMIUMS
1. LIFE INSURANCE AND WAIVER
Premiums per $1,000 for Life Insurance are shown in Part I of
Schedule C and will be multiplied by the percentages shown in Part II of
Schedule C. The premiums per $1,000 are applied to the amount of life
reinsurance as outlined in Article I. A policy fee, when applicable, is
charged in each year in addition to the premium based on amount of life
reinsurance. Life Re anticipates that these premiums will be continued
indefinitely for all business ceded under this Agreement. For the purpose
of satisfying requirements for deficiency reserves imposed by various state
insurance departments, Life Re will guaranty for renewal the greater of the
premiums provided in this Agreement or premiums based on the 1980 CSO Table
at 2.5% interest. When the Company charges a flat extra premium, whether
alone or in addition to a premium based on a multiple table, the Company
will pay this premium less the discounts detailed in Schedule D, on the
reinsurance amount in addition to the standard or multiple table premium
for the rating and plan of reinsurance.
Premium for Waiver will be paid at the same rate as the Company charges
for the benefit on which reinsurance with Life Re is based. Discounts for
waiver are detailed in Schedule D.
2. ASSOCIATED RIDERS
Benefits under Associated Riders are shown in Schedule A, Plans
Covered. Premiums for these benefits, when they are included in the
coverage under this Agreement, are detailed in Parts I and II of
Schedule C. Discounts are outlined in Schedule D.
LIFE RE AGREEMENT #6550-1
3. PREMIUM TAXES
Life Re will not reimburse the Company for state premium taxes on
reinsurance premiums received from the Company.
4. PAYMENTS
Premiums are payable monthly in advance. If reinsurance is reduced,
terminated, increased or reinstated, monthly, pro-rata adjustment will be
made by Life Re and the Company on all premium items except policy fees.
5. NONPAYMENT OF REINSURANCE PREMIUMS
The payment of reinsurance premiums is a condition precedent to the
liability of Life Re under this Agreement. If the Company does not pay
premiums to Life Re as provided in this Agreement and such amounts are more
than 120 days in arrears, Life Re will have the right to terminate the
reinsurance under this Agreement.
6. INTEREST ON DELINQUENT PAYMENTS
If the Company is more than 90 days in arrears in remitting premiums to
Life Re, such premiums will be considered delinquent and interest will be
added to the amount to be remitted. Interest will be calculated from (i)
the time the premiums are due Life Re to (ii) the date the Company pays the
premium to Life Re. The rate of interest charged on delinquent payments
will be equal to the rate listed in the Federal Reserve Statistical
Release, as promulgated by the Board of Governors of the Federal Reserve
System, for the monthly average of Corporate bonds, ▇▇▇▇▇'▇ seasoned Aaa
(the "Interest Rate").
7. MISSTATEMENTS
If the insured's age or sex was misstated and the amount of insurance
on the Company's policies is adjusted, the Company and Life Re will share
the adjustment in proportion to the amount of liability of each at the time
of issue of the policies. Premiums will be recalculated for the correct
age or sex and amounts according to the proportion as above and adjusted
without interest. If the insured is still alive, the method above will be
used for past years and the amount of reinsurance and premium will be
adjusted for the future to the amount that would have been correct at
issue.
LIFE RE AGREEMENT #6550-1
ARTICLE VI - CLAIMS
1. NOTICE
The Company will notify Life Re promptly after receipt of any
information on a claim where reinsurance is involved. The Company will
furnish to Life Re as soon as possible the completed reinsurance claim form
and copies of all claim papers and proofs. However, if the amount
reinsured with Life Re is more than the amount retained by the Company and
the claim is contestable, all papers in connection with such claim,
including all underwriting and investigation papers must be submitted to
Life Re for its recommendation before admission of any liability on the
part of the Company.
2. CONTESTED CLAIMS
Whenever the Company has formed a preliminary opinion that a claim
might be denied or contested, and prior to any final action by the Company
indicating to the claimant that the claim is being denied or contested, the
Company will give Life Re the opportunity to review the complete claim
file. Life Re will review this file promptly and, at its option, (a) pay
Life Re's full share as if the claim was not contested, in full discharge
of Life Re's obligation to the Company for that claim, or (b) after
consultation with the Company join in the contest, or ratify the denial, in
which case Life Re will communicate to the Company in writing Life Re's
decision to participate in the contest, or ratify the denial, with respect
to that claim.
3. EXPENSES
Life Re will share in the claim expense of any contest or compromise of
a claim in the same proportion that the amount at risk reinsured under this
Agreement bears to the total risk of the Company on all policies being
contested by the Company, and Life Re will share in the total amount of any
reduction in liability in the same proportion. Claim expense will include
without limitation the cost of investigation, legal fees, court costs, and
interest charges. Compensation of salaried officers and employees and any
possible extra-contractual damages will not be considered covered expenses.
Life Re will not be liable for expenses incurred in connection with a
dispute or contest arising out of conflicting claims of entitlement to
policy proceeds or benefits.
LIFE RE AGREEMENT #6550-1
4. MISSTATEMENTS
In the event of an increase or reduction in the amount of the Company's
insurance on any policy reinsured hereunder because of an overstatement or
understatement of age or misstatement of sex, established after the death
of the insured, the Company and Life Re will share in such increase or
reduction in proportion to their respective amounts at risk under that
policy.
5. PAYMENT
For Life Insurance, Life Re will pay its share in a lump sum to the
Company, without regard to the form of claim settlement of the Company.
For a Waiver claim, the Company will continue to pay premiums for
reinsurance except the premium for disability reinsurance. Life Re 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.
6. ASSISTANCE AND ADVICE
At the request of the Company, Life Re will advise the Company on any
claim concerning business reinsured under this Agreement and, when such a
claim appears to be of doubtful validity, Life Re will assist the Company
in its determination of liability and in the best procedure to follow with
respect to the claim.
ARTICLE VII - REDUCTIONS, REINSTATEMENTS & CHANGES
1. REDUCTIONS AND TERMINATIONS
Reinsurance amounts are calculated in terms of coverages on the life of
a person. If any of the Company's policies or riders on the person are
reduced or terminated, the reinsurance in force will be reduced by the
corresponding amount. The reduction will not be applied to force the
Company to reassume more than its regular retention limit at the time of
the reduction for the age at issue, mortality rating and form of the policy
or policies for which reinsurance is being terminated. The reduction first
will be applied to reinsurance, if any, on the particular policy reduced.
If the reduction exceeds the amount of reinsurance on that policy, the
reduction will then be applied to reinsurance on other policies on that
life in the order in which the policies were effected, i.e., the first
effected will be the first terminated or reduced. If reinsurance has been
ceded to more than one reinsurer, the reduction in Life Re's reinsurance
will be in proportion to the reduction in the total. After the proportion
has been determined, the rules above will be used.
LIFE RE AGREEMENT #6550-1
2. REINSTATEMENTS
(a) AUTOMATIC REINSURANCE
A policy of the Company, ceded to Life Re on an automatic basis,
that was reduced, terminated, or lapsed, if reinstated by the
Company under its regular rules, will be reinstated automatically
to the amount that would be in force had the policy not been
reduced, terminated, or lapsed.
(b) FACULTATIVE REINSURANCE
A Reinsured Policy ceded to Life Re that was reduced, terminated,
or lapsed, on a facultative basis, (i) will require approval by
Life Re prior to reinstatement if the Company has retained less
than 50% of the risk, or (ii) will be reinstated automatically by
Life Re if the Company has retained more than 50% of the risk and
reinstates the Reinsured Policy under its regular rules. Upon
reinstatement, reinsurance for the policy will be for the amount
that would be in force had the policy not been reduced, terminated,
or lapsed.
In connection with all reinstatements the Company will pay Life Re all
reinsurance premiums and interest in like manner as the Company has
received under its policy.
3. NONFORFEITURE BENEFITS
Life Re will not participate in nonforfeiture benefits.
4. CONTRACTUAL CONVERSIONS AND EXCHANGES
In the event of a contractual conversion or exchange (i.e., conversion
or exchange that requires no evidence of insurability) Life Re will
reinsure the risk resulting from such conversion or exchange at the rates
and percentages shown in Parts I and II of Schedule C on point-in-scale
basis (using the original issue age and duration from the original issue)
and the discounts of Schedule D on a point-in-scale basis. The reinsured
amount at risk on the policy or policies being converted may not exceed the
current reinsured amount at risk on the policy or policies being converted
or exchanged. If the conversion or exchange results in an increase of
risk, the amount of increase will be subject to evidence of insurability.
LIFE RE AGREEMENT #6550-1
5. NON CONTRACTUAL EXCHANGES
Non contractual exchanges are subject to evidence of insurability.
Premiums for the risk resulting from the exchange will be reflected in
Parts I and II of Schedule C.
6. PROGRAM OF INTERNAL REPLACEMENT
Should the Company, its affiliates, successors, or assigns, initiate a
program of internal replacement, as defined below, that would include any
of the risks reinsured hereunder, the Company will immediately notify the
reinsurer. For each risk reinsured hereunder that has been replaced under
a program of internal replacement, the reinsurer shall have the option, at
its sole discretion, of either treating the risks reinsured as recaptured,
or continuing reinsurance on the new policy under this Agreement. The term
"program of internal replacement" shall mean any program offered to a class
of policy owners in which a policy or any portion of a policy is exchanged
for another policy, not reinsured under this Agreement, which is written by
the Company, its affiliates, successors, or assigns.
ARTICLE VIII - DAC TAX
Life Re and the Company hereby agree to the following pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulation under Section 848 of the
Internal Revenue Code of 1986, as amended.
(a) The term "party" will refer to either Life Re or the Company as
appropriate.
(b) The terms used in this Article are defined by reference to
Regulation 1.848-2. The term "net consideration" will refer to
either net consideration as defined in Regulation Section 1.848-
2(f) or gross amount of premiums and other consideration as defined
in Regulation Section 1.848-3(b) as appropriate.
(c) Each party shall attach a schedule to its federal income tax return
which identifies the relevant reinsurance agreements for which the
joint election under the Regulation has been made.
(d) The party with net positive consideration, as defined in the
Regulation promulgated under Code Section 848, for such agreement
for each taxable year, shall capitalize specified policy
acquisition expenses with respect to such agreement without regard
to the general deductions limitation of Section 848(c)(1).
(e) Each party agrees to exchange information pertaining to the amount
of net consideration under such agreement each year to ensure
consistency.
LIFE RE AGREEMENT #6550-1
ARTICLE IX - RECAPTURE
1. STANDARDS FOR RECAPTURE
If the Company increases its maximum retention from the maximum limit
of retention set forth in Schedule A, the Company may elect to recapture
that portion of each Reinsured Policy equal to the difference between the
Company's new limit of retention and the Company's old limit of retention,
subject to the provisions of this Article IX. If the Company elects this
type of recapture, the Company may only recapture Reinsured Policies that
meet both of the following requirements: (a) Reinsured Policies that have
been in force for ten (10) years and (b) Reinsured Policies for which the
Company maintained its maximum limit of retention at the time the Reinsured
Policy was issued.
2. METHOD OF RECAPTURE
If the Company elects to recapture, the Company will notify Life Re in
writing within ninety days from the effective date of the increase in its
limit of retention. If the Company elects to recapture one Reinsured
Policy under this provision, the Company must recapture every Reinsured
Policy that meets the requirements set forth in Article IX, Section 1,
above.
Recapture for each Reinsured Policy will occur on the later to occur of
(a) the next anniversary of the Reinsured Policy or (b) the tenth (10th)
anniversary of the Reinsured Policy. The amount of reinsurance on the
Reinsured Policy will be reduced so that the total amount of risk retained
by the Company will be equal to the Company's maximum limit of retention.
If two or more reinsurers have reinsurance on the same Reinsured
Policy, Life Re's portion of the reduction will be in proportion to Life
Re's share of the total reinsurance on the Reinsured Policy.
ARTICLE X - INSOLVENCY
All reinsurance under this Agreement will be paid on demand by Life Re
directly to the Company, its liquidator, receiver, or statutory successor,
on the basis of the liability of the Company under the policy or policies
reinsured without diminution because of the insolvency of the Company. In
the event of the insolvency of the Company, the liquidator, receiver, or
statutory successor of the Company will give written notice to Life Re of a
pending claim against Life Re or the Company on any policy reinsured within
a reasonable time after the claim is filed in the conservation,
liquidation, or insolvency proceedings. While the claim is pending,
Life Re may investigate and interpose, at its own expense, in the
proceedings where the claim is to be adjudicated, any defenses which it may
deem available to the Company or its liquidator, receiver, or statutory
successor. The expense incurred by Life Re will be charged, subject to
court approval, against the Company as an expense of the conservation,
liquidation, or insolvency to the extent of a proportionate share of the
benefit that accrues to the Company as a result of the defenses by Life Re.
Where two or more reinsurers are involved and a majority in interest elect
to defend a claim, the expense will be apportioned in accordance with the
terms of this Agreement as if the expense had been incurred by the Company.
ARTICLE XI - ARBITRATION
Life Re and the Company intend that any dispute between them under or
with respect to this Agreement be resolved without resort to any
litigation. Accordingly, Life Re and the Company agree that they will
negotiate diligently and in good faith to agree on a mutually satisfactory
resolution of any such dispute; PROVIDED, HOWEVER, that if any such dispute
cannot be so resolved by them within sixty calendar days (or such longer
period as the parties may agree) after commencing such negotiations, Life
Re and the Company agree that they will submit such dispute to arbitration
in the manner specified in, and such arbitration proceeding will be
conducted in accordance with, the rules of the American Arbitration
Association.
The arbitration hearing will be before a panel of three arbitrators,
each of whom must be a present or former officer of a life insurance or
life reinsurance company. Life Re and the Company will each appoint one
arbitrator by written notification to the other party within thirty
calendar days after the date of the mailing of the notification initiating
the arbitration. These two arbitrators will then select the third
arbitrator within sixty calendar days after the date of the mailing of the
notification initiating arbitration.
If either Life Re or the Company fails to appoint an arbitrator, or
should the two arbitrators be unable to agree upon the choice of a third
arbitrator, the president of the American Arbitration Association or of its
successor organization or (if necessary) the president of any similar
organization designated by lot of Life Re and the Company within thirty
calendar days after the request will appoint the necessary arbitrators.
The vote or approval of a majority of the arbitrators will decide any
question considered by the arbitrators; PROVIDED, HOWEVER, that if no two
arbitrators reach the same decision, then the average of the two closest
mathematical determinations will constitute the decision of all three
arbitrators. The place of arbitration will be Stamford, Connecticut. Each
decision (including without limitation each award) of the arbitrators will
be final and binding on all parties and will be nonappealable, and (at the
request of either Life Re or the Company) any award of the arbitrators may
be confirmed by a judgment entered by any court of competent jurisdiction.
No such award or judgment will bear interest. Each party will be
responsible for paying (a) all fees and expenses charged by its respective
counsel, accountants, actuaries, and other representatives in conjunction
with such arbitration and (b) one-half of the fees and expenses charged by
each arbitrator.
ARTICLE XII - GENERAL PROVISIONS
1. REINSURER'S RIGHT OF NOTICE OF UNUSUAL PRACTICES
In providing reinsurance facilities to the Company under this
Agreement, Life Re has granted the Company considerable authority with
respect to automatic binding power, reinstatements, claim settlements, and
the general administration of the reinsurance account. To facilitate
transactions, Life Re has required the minimum amount of information and
documentation possible, reflecting its utmost faith and confidence in the
Company. Life Re assumes that, except as otherwise notified by the
Company, the underwriting, claims and other insurance practices employed by
the Company with respect to reinsurance ceded under this Agreement are
generally consistent with the customary and usual practices of the
insurance industry as a whole. If the Company changes or modifies its
practices or engages in exceptional or uncustomary practices, the Company
agrees to make those practices known to Life Re before assigning any
liability to Life Re with respect to any reinsurance issued under such
practices.
2. POLICY FORMS AND RATES
Upon request, the Company will furnish Life Re with a copy of its
application forms, policy and rider forms, premium and non-forfeiture value
manuals, reserve tables, actuarial memoranda, and any other forms or tables
needed for proper handling of reinsurance under this Agreement. Life Re
must agree in writing before incurring additional liability resulting from
any changes to policies, policy riders or amendments reinsured under this
Agreement.
3. REINSURANCE CONDITIONS
The reinsurance is subject to the same limitations and conditions as
the insurance under the policy or policies written by the Company on which
the reinsurance is based.
LIFE RE AGREEMENT #6550-1
4. ERRORS AND OMISSIONS
If either the Company or Life Re unintentionally fails to perform an
obligation that affects this Agreement and such failure results in an error
on the part of the Company or Life Re, the error will be corrected by
restoring both the Company and Life Re to the positions they would have
occupied had no such error occurred. For business reported but not covered
under the provisions of this Agreement, Life Re shall be obligated only for
the return of premium paid, plus interest as provided below.
Any amounts due under this Section 4 will bear interest at a rate
agreed upon by the Company and Life Re or at a rate equal to the Interest
Rate as described in Article V.6.
5. OFFSET
Any amount which either the Company or Life Re is contractually
obligated to pay to the other party may be paid out of any amount which is
due and unpaid under this Agreement. The application of this offset
provision will not be deemed to constitute diminution in the event of
insolvency.
6. INSPECTION
Upon reasonable notice, Life Re may inspect any and all books, records,
documents or similar information relating to or affecting reinsurance under
this Agreement at the home office of the Company during normal business
hours.
7. ENTIRE AGREEMENT
This Agreement and the Schedules attached hereto supersede all prior
discussions and written and oral agreements between the parties with
respect to the subject matter of this Agreement. This Agreement and the
Schedules attached hereto contain the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
8. AMENDMENT
This Agreement may be modified or amended only with a written
instrument properly signed on behalf of the Company and Life Re.
LIFE RE AGREEMENT #6550-1
9. COUNTERPARTS
This Agreement may be executed simultaneously in any number of
counterparts, each of which will be deemed an original, but all of which
will constitute one and the same instrument.
10. NO ASSIGNMENT
Except as otherwise provided herein, neither party hereto may assign
this Agreement or any right hereunder or part hereof without the prior
written consent of the other party hereto.
11. BINDING EFFECT
This Agreement is binding upon and will inure to the benefit of the
parties and their respective successors and permitted assignees.
12. NOTICES
Any notice, request, instruction, or other document to be given
hereunder by any party hereto to the other party hereto will be in writing
and (a) delivered personally, (b) sent by facsimile, (c) delivered by
overnight express, or (d) sent by registered or certified mail, postage
prepaid, as follows:
If to the Company, to:
Standard Life Insurance Company of Indiana
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Reinsurance Administration
Facsimile: 317/574-6272
If to Life Re, to:
Life Reassurance Corporation of America
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Administration
Facsimile: 203/321-3200
LIFE RE AGREEMENT #6550-1
or at such other address for a party as will be specified by like notice.
Each notice or other communication required or permitted under this
Agreement that is addressed as provided in this Article XII will, if
delivered personally or by overnight express, be deemed given upon
delivery; will, if delivered by facsimile or similar facsimile
transmission, be deemed delivered when electronically confirmed; and will,
if delivered by mail in the manner described above, be deemed given on the
third business day after the day it is deposited in a regular depository of
the United States Mail.
Please send all cash remittances to:
Life Reassurance Corporation of America
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ARTICLE XIII - DURATION OF AGREEMENT
This Agreement will be effective on and after the effective date stated
in Article I. It is unlimited in duration but may be amended by mutual
consent of the Company and Life Re. This Agreement may be terminated as to
new reinsurance by either party giving 90 days' written notice to the
other. Termination as to new reinsurance does not affect existing
reinsurance. Existing reinsurance will remain in force until termination
of the Company's policy or policies on which the reinsurance is based in
accordance with the terms of this Agreement. Notwithstanding the
foregoing, Life Re may terminate this Agreement as to new and existing
reinsurance in the event the Company does not pay premiums to Life Re, as
provided in Article V.
LIFE RE AGREEMENT #6550-1
ARTICLE XIV - EXECUTION
IN WITNESS WHEREOF, Life Re and the Company have executed this
Agreement on the dates set forth below.
STANDARD LIFE INSURANCE COMPANY OF INDIANA
Date: December 8, 1997 By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Place: Indianapolis, IN Title: Executive Vice President and Secretary
Witness: ▇▇▇▇▇ ▇. ▇▇▇▇▇
LIFE REASSURANCE CORPORATION OF AMERICA
Date: September 29, 1997 By: ▇▇▇▇▇▇▇ Cannatara
Place: Stamford, CT Title: Vice President
Witness: ▇▇▇▇▇ ▇. ▇▇▇▇▇
LIFE RE AGREEMENT #6550-1
AGREEMENT NUMBER 6550-1
RETENTION LIMITS
A. LIFE
The Company will cede 100% of the excess over the retention shown
below:
AGES RETENTION
0 - 80 $25,000
B. WAIVER OF PREMIUM
Same as Life
LIFE RE'S SHARE
Life Re's share of the ceded reinsurance amount will be 50%.
AUTOMATIC BINDING LIMITS
A. LIFE
Fourteen times the retention up to a maximum of $350,000, of which
Life Re's share is 50% or $175,000.
B. WAIVER OF PREMIUM
Same as Life
PLANS COVERED
The preceding schedules refer to insured lives whose surnames begin
with the letters A through Z under the following plans:
PLAN Secure Life (Form ULS197U)
RIDERS Waiver of Premium
Term Insurance Rider
Spouse Term Rider
AGREEMENT NUMBER 6550-1
Reinsurance premiums will be based on Standard Life Insurance Company's
upper band ($100,000+) cost of insurance rates, age last birthday,
multiplied by the following percentages:
YEAR SELECT NON-SMOKER SELECT SMOKER
1 O% 0%
2 - 10 40% 50%
11 + 60% 80%
LIFE RE AGREEMENT #6550-1
AGREEMENT NUMBER 6550-1
The discounts granted for reinsurance amounts expressed as a percentage of
the premium rate charged by the Company are shown below for each applicable
benefit:
BENEFIT FIRST YEAR RENEWAL YEARS
LIFE INSURANCE - FLAT EXTRA PREMIUMS
Aviation Hazards 10% 10%
Temporary Extras (<= 5 years) 10% 10%
Permanent Extras (> 5 years) 75% 10%
WAIVER OF PREMIUM DISABILITY 75% 10%
* On cessions in excess of $10,000,000, Life Re reserves the right to
adjust the discounts/rates and expenses.
LIFE RE AGREEMENT #6550-1
AGREEMENT NUMBER 6550-1
RETENTION LIMITS
A. LIFE
The Company will cede 100% of the excess over the retention
shown below:
AGES RETENTION
0 - 80 $25,000
B. WAIVER OF PREMIUM
Same as Life
LIFE RE'S SHARE
Life Re's share of the ceded reinsurance amount will be 50%.
AUTOMATIC BINDING LIMITS
A. LIFE
Seven times the retention up to a maximum of $350,000, of
which Life Re's share is 50% or $162,500.
B. WAIVER OF PREMIUM
Same as Life
PLANS COVERED
The preceding schedules refer to insured lives whose surnames
begin with the letters A through Z under the following plans:
PLAN Secure Life (Form ULS197U)
RIDERS Waiver of Premium
Term Insurance Rider
Spouse Term Rider
LIFE RE AGREEMENT #6550-1
11/25/1997