EXHIBIT g
REINSURANCE AGREEMENT
POOL REINSURANCE AGREEMENT NO. XXXX
EFFECTIVE _____________
between
PHOENIX LIFE INSURANCE COMPANY
of
East Greenbush, New York
and
PHOENIX LIFE AND ANNUITY COMPANY
of
Hartford, Connecticut
and
PHL VARIABLE INSURANCE COMPANY
of
Hartford, Connecticut
Collectively as Ceding Company
and
XXX
of
xxx
as Reinsurer
TABLE OF CONTENTS
Article I Scope of the Agreement Page 1
Parties to the Agreement
Effective Date of the Agreement
Entire Agreement
Duration of the Agreement
Article II Reinsurance Coverage Page 2
Automatic Reinsurance
Facultative Reinsurance
Basis of Reinsurance
Article III Procedures Page 3
Article IV Liability Page 3
Article V Reinsurance Premium Rates and Payments Page 4
Article VI Changes to the Reinsurance Page 6
Article VII Recapture Page 8
Article VIII Claims Page 9
Article IX Arbitration Page 12
Article X Insolvency Page 13
Article XI Offset Page 14
Article XII Inspection of Records Page 14
Article XIII Letter of Credit Page 14
Article XIV Confidentiality Page 15
Article XV Miscellaneous Page 16
Article XVI Execution of the Agreement Page 17
EXHIBITS
--------
Exhibit A Reinsurance Coverage
Retention Limits
Automatic Acceptance Limits
Reserves
Exclusions to Automatic Reinsurance Coverage,
including Jumbo Limits
Exhibit B Reinsurance Administration
Exhibit C Reinsurance Rates and Allowances
Exhibit D Temporary Insurance Receipt Liability
ARTICLE I - SCOPE OF THE AGREEMENT
----------------------------------
1. PARTIES TO THE AGREEMENT
------------------------
The parties to this Agreement are Phoenix Life Insurance Company and
Phoenix Life and Annuity Company and PHL Variable Insurance Company
(collectively referred to as ceding company, we, us and our) and xxx
(as reinsurer referred to as you and your). The parties mutually agree
to transact reinsurance according to the terms of this Agreement. This
Agreement is for indemnity reinsurance and you and we are the only two
parties to the Agreement. There will be no right or legal relationship
whatsoever created by this Agreement in any other person having an
interest of any kind in policies that are reinsured under this
Agreement.
2. EFFECTIVE DATE OF THE AGREEMENT
-------------------------------
This Agreement will go into effect at _________________, and will cover
policies placed on and after that date.
3. ENTIRE AGREEMENT
----------------
The text of this Agreement and all Exhibits, Schedules and Amendments
constitute the entire agreement between the parties. There are no other
understandings or agreements between us regarding the policies
reinsured other than as expressed in this Agreement.
4. MODIFICATION OF THE AGREEMENT
-----------------------------
The parties may modify this Agreement, only by means of a written
amendment to this Agreement which has been signed by all parties.
5. DURATION OF THE AGREEMENT
-------------------------
The duration of this Agreement will be unlimited. However, either party
may terminate the Agreement for new issues at any time by giving the
other ninety days prior written notice. You will continue to accept new
reinsurance during the ninety-day period.
Existing reinsurance will not be affected by the termination of this
Agreement for new reinsurance. Existing reinsurance will remain in
force until the termination or expiry of the policy on which
reinsurance is based, as long as we continue to pay reinsurance
premiums as shown in Article V (Reinsurance Premium Rates and Payment).
However, you will not be held liable for any claims or premium refunds
which are not reported to you within one hundred eighty days following
the termination or expiry of the last cession reinsured under this
Agreement.
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ARTICLE II - REINSURANCE COVERAGE
---------------------------------
1. AUTOMATIC REINSURANCE
---------------------
You will accept automatically reinsurance of death benefits on our
individually underwritten life policies on any permanent resident of
the United States or Canada, in agreement with the provisions and
limitations shown in Exhibit A (Reinsurance Coverage). The individual
risk must be underwritten in accordance with our standard underwriting
practices and guidelines which are in effect at the time the policy
and/or benefit(s) is underwritten. These guidelines shall be provided
to you upon request.
You will also accept automatically reinsurance of riders and
supplementary benefits written with the covered death benefits, but
only to the extent that we specifically list the riders and
supplementary benefits in Exhibit A, Part I.
We have the right to modify our retention shown in Exhibit A, at any
time. If our retention limits are reduced as a result of the
modification, we will notify you in writing before you are required to
reinsure on the basis of the reduced retention limits for new business
issued after the effective date of the retention change. We will
prepare a treaty amendment which both parties will sign as evidence of
your agreement to the reduction in retention limits.
You have the right to amend the Automatic Acceptance Limits shown in
Exhibit A, if we modify our retention limits. You also may reserve the
right to modify the Automatic Acceptance Limits if we elect to
participate in any other arrangement(s) to secure additional automatic
binding capacity.
2. FACULTATIVE REINSURANCE
-----------------------
If we wish to submit a risk not covered automatically under this
Agreement, or if we wish your advice on any application, we may submit
and you will consider the risk on a facultative basis.
3. BASIS OF REINSURANCE
--------------------
Reinsurance under this Agreement will be on a Yearly Renewable Term
basis for the net amount at risk on the portion of the original policy
that is reinsured with you. The net amount at risk for any policy
period will be calculated according to Exhibit C.
Riders or supplementary benefits ceded with death benefits will be
reinsured as shown in Exhibit C.
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ARTICLE III - PROCEDURES
------------------------
1. AUTOMATIC REINSURANCE
---------------------
Individual notification for the placement of automatic reinsurance will
not be necessary. Subject to Article V (Reinsurance Premium Rates and
Payments) and Exhibit B (Reinsurance Administration), new business or
changes to existing reinsurance will be shown on our periodic billing
report.
2. FACULTATIVE REINSURANCE
-----------------------
When we wish to submit a risk for facultative consideration, we will
send you a reinsurance application form along with copies of all the
information we have regarding the insurability of the risk. You will
review the information and notify us of your decision promptly.
After you have given us your unconditional offer to reinsure a risk, we
will confirm in writing our acceptance of your offer and the placement
of the reinsurance. Our confirmation must be sent on or before the
expiration date you specify in your offer to reinsure.
We may request an extension of the expiration period shown in your
offer, by written request. If you agree, you will give us written
confirmation of the extension. Any such extension will terminate
automatically, if not previously accepted by us, on the expiration date
shown on the extension.
3. POLICY EXPENSES
---------------
We will bear the expenses of all medical examinations, inspection fees
and other charges incurred in connection with reinstatements or
reentries.
4. REFERENCE MATERIALS
-------------------
Upon request we will provide you with any reference materials which you
may require for proper administration of cessions under this Agreement.
ARTICLE IV - LIABILITY
----------------------
1. AUTOMATIC REINSURANCE
---------------------
Your liability for cessions ceded automatically under this Agreement
will begin and end simultaneously with our liability for the policy on
which reinsurance is based, subject to the Agreement effective date
shown in Article I (Scope of the Agreement).
-3-
2. FACULTATIVE REINSURANCE
-----------------------
Your liability for facultative reinsurance which you offer and which we
accept will begin and end simultaneously with our liability for the
policy on which reinsurance is based.
3. CONTINUATION OF LIABILITY
-------------------------
Continuation of your liability is conditioned on our payment of
reinsurance premiums as provided in Article V (Reinsurance Premium
Rates and Payments) and is subject to Article VI (Changes to the
Reinsurance) and Article VII (Recapture).
4. TEMPORARY INSURANCE RECEIPT LIABILITY
-------------------------------------
Whenever we become liable for a loss under the terms of a Temporary
Receipt, you will be liable for your share of the loss over our
retention limit as outlined in the attached Exhibit D.
ARTICLE V - REINSURANCE PREMIUM RATES AND PAYMENTS
--------------------------------------------------
1. REINSURANCE RATES
-----------------
Reinsurance premium rates that we will pay you for business reinsured
under this Agreement are shown in Exhibit C. The reinsurance rate
payable for any cession for any accounting period will be calculated on
the basis of the net amount at risk reinsured as of that period.
For reasons relating to deficiency reserve requirements by the various
state insurance departments, the rates shown in Exhibit C cannot be
guaranteed for more than one year. While we anticipate that reinsurance
rates shown in Exhibit C will continue to be charged, it may become
necessary to charge a guaranteed rate that is the greater of the rate
from exhibit C or the corresponding statutory net premium rate based on
the 1980 CSO Table at 4.5% interest for the applicable mortality
rating.
Procedures and details of reinsurance rate calculation for any benefits
or riders ceded under this Agreement are shown in Exhibit C.
All financial transactions under this Agreement will be in United
States dollars, unless we mutually agree in writing to use other
currencies. Specifications of the currencies and details of currency
conversion procedures will be shown in Exhibit C if necessary.
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2. PAYMENTS
--------
We will self-administer the periodic reporting of our statements of
account and payment of balances due to you as shown in Exhibit B.
Within thirty days after the close of each reporting period, we will
send you a statement of account for that period along with payment of
the premium due. If the statement of account shows a net balance due
us, you will remit that amount to us within thirty days of your receipt
of the statement of account.
Our timely payment of reinsurance premiums is a condition precedent to
your continued liability. If we have not paid the balance due you by
the thirty-first day following the close of the reporting period, you
have the right to give us thirty days' written notice of your intention
to terminate the reinsurance on which the balance is due and unpaid. At
the end of this thirty-day period, your liability will automatically
terminate for all reinsurance on which balances remain due and unpaid,
(the "termination date"). Even though you have terminated the
reinsurance, we will continue to be liable for the payment of unpaid
premium balances through the termination date, along with interest
charges calculated from the due date shown above to the date of
payment. The interest rate payable will be the same that we charge for
delinquent premiums on our individual life insurance policies.
We may reinstate reinsurance terminated for non-payment of premium at
any time within sixty days of the termination date, by paying you all
premium and interest charged in full. However, you will have no
liability for claims incurred between the termination date and the
reinstatement date.
3. TAX REIMBURSEMENTS
------------------
A. Premium Tax
Details of any reimbursement of premium taxes that we pay on behalf of
reinsurance payments to you are shown in Exhibit C, Section VII
(Premium Taxes).
B. Other Tax
The following will be effective where applicable:
1. In the event that the Federal Excise Tax is applicable to premiums
ceded to you, and such premiums are not exempt from the Federal
Excise Tax as a result of the operation of any statute, regulation
or tax treaty, you have agreed to allow us to deduct the Federal
Excise Tax, in the amount of 1.0% of the then applicable
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percentage of the premium payable to you. We shall collect and
remit to the appropriate taxing authority the Federal Excise Tax
due and payable.
2. The parties mutually agree to the following pursuant to Section
1.848-2 (g) (8) of the Income Tax Regulation issued December 29,
1992 under Section 848 of the Internal Revenue Code of 1986, as
amended. This election will be effective for all taxable years for
which this Agreement remains in effect.
The terms used in this Section are defined in Regulation Section
1.848-2 in effect as of December 29, 1992. The term "net
consideration" will refer to either net consideration as defined
in Section 1.848-2 (f) or "gross premium and other consideration"
as defined in Section 1.848-3 (b), as appropriate.
a) 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 IRC Section 848
(c) (1).
b) The parties mutually agree to exchange information pertaining to
the amount of net consideration under this Agreement each year to
ensure consistency. The parties also mutually agree to exchange
information otherwise required by the Internal Revenue Service.
4. EXPERIENCE REFUND
-----------------
Details of any Experience Refund payable to us will be shown in Exhibit
C, Section XI (Experience Refund).
ARTICLE VI - CHANGES TO THE REINSURANCE
---------------------------------------
1. ERRORS AND OVERSIGHTS
---------------------
If either party fails to comply with any of the provisions of this
Agreement because of an unintentional oversight or misunderstanding,
the status of this Agreement will not be changed. The parties will be
restored to the position they would have occupied had no such oversight
nor misunderstanding occurred.
2. MISSTATEMENT OF AGE OR SEX
--------------------------
If the misstatement of the age or sex of a reinsured life causes an
increase or reduction in the amount of insurance in the policy, the
parties will share in the change in proportion to the original
liabilities as of the time the policy was issued.
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3. CHANGES TO THE POLICY
---------------------
a) All changes - If any change is made to the policy, the
reinsurance will change accordingly. We will notify you of the
change and the appropriate premium adjustment on our periodic
statement of account.
b) Increases - If the amount at risk increases because of a change
in the policy, we will need your approval only if the increase
causes the amount reinsured to exceed the Automatic Acceptance
Limits shown in Exhibit A, Part III. If your approval is
necessary, we will send you copies of all papers relating to the
change in coverage.
c) Extended Term and Reduced Paid-Up Insurance - If any policy
reinsured under this Agreement converts to Extended Term
Insurance or Reduced Paid-Up Insurance, the net amount at risk
reinsured will be adjusted as appropriate and reinsurance will be
continued in accordance with the continuing provisions of the
policy. Reinsurance payments for the adjusted policy will be
calculated on the basis of the original issue age of the insured
and the duration of the original policy at the time the
adjustment became effective, i.e. point-in-scale basis.
d) Any policy covered under this Agreement which undergoes
conversion will continue to be covered under this Agreement. For
the purposes of this Agreement, and unless otherwise specifically
covered elsewhere, "conversions" will mean continuations,
rollovers, exchanges, and/or internal replacements.
4. REDUCTIONS, TERMINATIONS AND REINSTATEMENTS
-------------------------------------------
If any part of the coverage on a life reinsured under this Agreement is
reduced or terminated, the amount reinsured will also be reduced or
terminated to the extent that we will continue to maintain our
appropriate retention limit as shown in Exhibit A for the issue age and
table rating of the insured. We will not be required to assume amounts
in excess of the retention limit that was in force when the affected
policy or policies were issued.
The total amount of the reduction of a reinsured policy will be applied
directly to your net amount at risk.
If a policy reinsured under this Agreement is lapsed or terminated, the
reinsurance of such policy will also terminate.
If a policy automatically reinsured lapses and is reinstated in
accordance with our standard rules and procedures, reinsurance for the
amount at risk effective at the time of the lapse
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will be reinstated automatically at the date of reinstatement of the
policy. We will notify you of the reinstatement on our periodic
statement of account. We will send you copies of our reinstatement
papers upon request.
We have the authority to reinstate a policy reinsured under this
Agreement on a facultative basis without your prior approval when:
a) we have kept our full quota share percentage on the policy; and
b) the reinsured amount falls within the automatic acceptance limits
shown in Exhibit A.
Otherwise, we will need your prior review and approval for
reinstatement of any facultative reinsurance. We will send you prompt
written notice of our intention to reinstate the policy along with
copies of the reinstatement papers required by our standard rules and
procedures. The reinsurance will be reinstated at the same time as the
policy, subject to your written approval of the reinstatement.
We will notify you of all reinstatements on our periodic statement of
account and we will pay all reinsurance payments due from the date of
reinstatement to the date of the current statement of account.
Thereafter, reinsurance payments will be in accordance with Article V.
ARTICLE VII - RECAPTURE
-----------------------
1. BASIS OF RECAPTURE
------------------
If we increase the retention limits shown in Exhibit A, we may make a
corresponding reduction in eligible reinsurance cessions. Policies are
eligible for recapture if:
a) we have maintained the maximum retention limit for the age and
mortality rating of the insured when the underlying policy was
issued. Policies on which we retained a reduced retention or no
retention will not be eligible for recapture unless we are
partially or fully retained on the insured life in a prior
policy; AND
b) the policy has been in force under this Agreement for the
Recapture Period shown in Exhibit C. The recapture period will
always be measured from the original policy issue date.
2. METHOD OF RECAPTURE
-------------------
If we give you written notice of our intention to recapture due to an
increase in our retention limits, we will do so within ninety days of
the effective date of our retention limits increase. However, the prior
sentence not withstanding, we may elect to recapture at a later date,
provided we give you written notice before we begin the recapture.
-8-
When we have given you written notice of our intent to recapture, and
the date that we will begin the process of recapture:
a) All eligible policies will be recaptured;
b) The effective date of the recapture will be the next anniversary
date of each eligible policy;
c) Reinsurance on each eligible policy will be reduced by an amount
that will increase our retention to the current limit set forth
in Exhibit A;
d) If there is reinsurance in force in other companies on any one
insured life, the reduction of the reinsurance in force under
this Agreement will be in the same proportion that the amount
reinsured with you bears to the total reinsurance on the life in
the same proportion that each reinsurer's original percentage
bore to the total percentage reinsured.
If we omit or overlook the recapture of any eligible policy or
policies, your acceptance of reinsurance premiums after the date the
recapture would have taken place will not cause you to be liable for
the amount of the risk that would have been recaptured. You will be
liable only to refund any such reinsurance premiums received, without
interest.
If our retention limits increase is due to our purchase by or purchase
of another company, or our merger, assumption or any other affiliation
with another company, no immediate recapture will be allowed. However,
we may recapture eligible policies once the Recapture Period set out in
Exhibit C has expired.
ARTICLE VIII - CLAIMS
---------------------
1. NOTICE OF CLAIM
---------------
Claims will be reported and administered on a bulk basis. We will give
you notification of all incurred and settled claims on our monthly
statement of account. Claim payments will be applied against premium
payments. If the amount of claim payment due exceeds the amount of
premium payment due you, you will remit the balance due us within
thirty days of your receipt of the statement of account.
2. SETTLEMENT OF CLAIMS
--------------------
You will accept our good faith decision in settling any claim except as
specified in this Article.
-9-
You will be consulted and provided with claim documentation for all
contestable claims with face amounts in excess of $1,000,000; but only
where we elect to deny, rescind or reduce the claim payment for
contestable claims with face amounts of $1,000,000 and under. We will
provide notification on our monthly claims reports for non-contestable
claims and for rescissions of policies where the insured is still
alive. However, your consultation rights will not impair our freedom to
determine the proper action on and settlement of the claim.
Our claim settlements will be administered according to the standard
procedures we apply to all claims, whether reinsured or not.
3. CLAIM EXPENSES
--------------
Except as provided in Article VIII, you will pay your proportionate
share of any interest paid to the claimant on death benefit proceeds
according to our practices and either at the same rate that we use, or
at the rate prescribed by state law in connection with the settlement
of a claim.
Your share of claim expenses will be in the same proportion that your
original liability bears to our original liability.
We will be responsible for payment of the following claim expenses:
a) routine administrative expenses for the home office or elsewhere,
including our employees' salaries;
b) expenses incurred in connection with any dispute or contest
arising out of a conflict in claims of entitlement to policy
proceeds or benefits which we admit are payable.
4. CONTESTED CLAIMS
----------------
We will promptly notify you in writing by mail, email, or facsimile if
we intend to contest, compromise or litigate a claim covered by this
agreement.
a) If you prefer not to participate in the contest, you will notify
us of your decision within fifteen days of your receipt of all
documents requested, and you will immediately pay us the full
amount of reinsurance due. Once you have paid your reinsurance
liability, you will not be liable for any legal and/or
investigative expenses and you will have no further liability for
those expenses described in subparagraph b, below, which are
associated with the contest, compromise or litigation of a claim.
b) When you agree to participate in a contest, compromise or
litigation involving reinsurance, we will give you prompt notice
of the beginning of any legal proceedings involving the contested
policy. We will promptly furnish you with copies of all documents
pertaining to a lawsuit or notice of intent to file a
-10-
lawsuit by any of the claimants or parties to the policy. You
will share in the payment of reasonable investigative and
attorneys' fees, and of any penalties and interest imposed
automatically against us by statute and arising solely out of a
judgement rendered against us in a suit for policy benefits
relating to a contested claim in the same proportion as your
original liability bears to our original liability prior to the
contest of the claim. You will not reimburse expenses associated
with non-reinsured policies. If our contest, compromise or
litigation results in a reduction in the liability of the
contested policy, you will share in the reduction in the same
proportion that the amount of reinsurance bore to the amount
payable under the terms of the policy on the date of death of the
insured.
5. EXTRA CONTRACTUAL DAMAGES
-------------------------
You will not held be liable for nor will you pay any extra-contractual
damages, including but not limited to consequential, compensatory
(other than policy benefits), exemplary or punitive damages which are
awarded against us or which we pay voluntarily, in settlement of a
dispute or claim where damages were awarded as the result of any direct
or indirect act, omission or course of conduct undertaken by us, our
agents or representatives, in connection with any aspect of the
policies reinsured under this Agreement.
You recognize that special circumstances may arise in which you should
participate to the extent permitted by law in certain assessed damages.
These circumstances are difficult to describe or define in advance but
could include those situations in which you were an active party in the
act, omission or course of conduct which ultimately resulted in the
assessment of the damages. The extent of your participation is
dependent upon a good-faith assessment of the relative responsibility
for the acts, omissions or conduct in each case; but all factors being
equal, the division of any such assessment will generally be in the
same proportion of the net liability accepted by each party. If such
circumstances arise, we will seek your opinion before we proceed to
include you in participation of these damages.
ARTICLE IX - ARBITRATION
------------------------
1. BASIS FOR ARBITRATION
---------------------
The parties to this Agreement understand and agree that the wording and
interpretation of this Agreement is based on the usual customs and
practices of the insurance and reinsurance industry. While the parties
agree to act in good faith in our dealings with each other, it is
understood and recognized that situations may arise in which agreement
cannot be reached.
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In the event that the parties cannot resolve any dispute to their
mutual satisfaction, the dispute will first be subject to good-faith
negotiation as described below in an attempt to resolve the dispute
without the need to institute formal arbitration proceedings.
2. NEGOTIATION
-----------
Within ten days after one of the parties has given the other the first
written notification of the specific dispute, each party will appoint a
designated officer to attempt to resolve the dispute. The officers will
meet at a mutually agreeable location as early as possible and as often
as necessary, in order to gather and furnish the other with all
appropriate and relevant information concerning the dispute. The
officers will discuss the problem and will negotiate in good faith
without the necessity of any formal arbitration proceedings. During the
negotiation process, all reasonable requests made by one officer to the
other for information will be honored. The specific format for such
discussions will be decided by the designated officers.
If the officers cannot resolve the dispute within thirty days of their
first meeting, it is agreed that the dispute will be submitted to
formal arbitration. However, the parties may agree in writing to extend
the negotiation period.
3. ARBITRATION PROCEEDINGS
-----------------------
No later than fifteen days after the final negotiation meeting, the
officers taking part in the negotiation will give written confirmation
that they are unable to resolve the dispute and that they recommend
establishment of formal arbitration.
An arbitration panel consisting of three past or present officers of
life insurance or reinsurance companies not affiliated with any of the
parties in any way will settle the dispute. The party seeking
arbitration will appoint one arbitrator and give notice of such
appointment to the other party, who must appoint its arbitrator within
30 days of receiving such notice. If the notified party does not select
its arbitrator by the expiration of the 30 days, the party giving
notice may appoint a second arbitrator. The two arbitrators will select
a third. If the two arbitrators cannot agree on the choice of a third,
the choice will be made by the Chairman of the American Arbitration
Association.
The arbitration proceedings will be conducted according to the
Commercial Arbitration Rules of the American Arbitration Association
which are in effect at the time the arbitration begins.
The arbitration will take place in Hartford, Connecticut unless
mutually agreed otherwise.
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Within sixty days after the beginning of the arbitration proceedings
the arbitrators will issue a written decision on the dispute and a
statement of any award to be paid as a result. The decision will be
based on the terms and conditions of this Agreement as well as the
usual customs and practices of the insurance and reinsurance industry,
rather than on strict interpretation of the law. The decision will be
final and binding and there will be no further appeal, except that
either party may petition any court having jurisdiction regarding the
award rendered by the arbitrators.
The parties may agree to extend the appointment or the arbitrators
periods set forth in this Article. Unless otherwise decided by the
arbitrators, the parties will share equally in all expenses resulting
from the arbitration, including the fees and expenses of the
arbitrators, except that each party will be responsible for its own
attorneys' fees.
ARTICLE X - INSOLVENCY
----------------------
1. If we are judged insolvent, you will pay all reinsurance death benefits
due under this Agreement directly to us, our liquidator, receiver or
statutory successor on the basis of your liability under the policy or
policies reinsured without dimunition because of our insolvency. It is
understood, however, that in the event of our insolvency the
liquidator, receiver or statutory successor will give you written
notice of a pending claim on a policy reinsured within a reasonable
time after the claim is filed in the insolvency proceedings. While the
claim is pending, you may investigate and interpose at your own expense
in the proceedings where the claim is to be adjudicated, any defense
which you may deem available to us, our liquidator, receiver or
statutory successor. It is further understood that the expense you
incur will be chargeable, subject to court approval, against us as part
of the expense of liquidation to the extent of a proportionate share of
the benefit which may accrue to us solely as a result of the defense
you have undertaken. Where two or more reinsurers are involved in the
same claim and a majority in interest elect to interpose defense to the
claim, the expenses will be apportioned in accordance with the terms of
the reinsurance agreement as though we had incurred the expense.
2. If you are judged insolvent, or if you are judged insolvent and fail to
make any payment when due, you will be considered in default under this
Agreement. If you are in default under this Agreement, at our option
and with prior written notice we may terminate your rights and duties
under this Agreement, in which case we will be under no obligation to
make future premium payments to you, your liquidator, receiver or
statutory successor. However, you, your liquidator, receiver or
statutory successor will be liable for any claim payments or refunds of
premiums which remain outstanding.
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ARTICLE XI - OFFSET
-------------------
Either party to this Agreement may offset any balances, whether on
account of premiums, allowances, claims or expenses due from one party
to the other as respects business reinsured under this Agreement.
ARTICLE XII - INSPECTION OF RECORDS
-----------------------------------
Either party will have the right at any reasonable time to inspect the
original papers, records, books, files or other documents relating
directly or indirectly to the reinsurance coverage under this
Agreement.
ARTICLE XIII - LETTER OF CREDIT
-------------------------------
In the event that we are not permitted by any state, territory or the
District of Columbia to take reserve credit on our Annual Statement for
all or a part of the coverage we cede to you, then unless you have
arranged to secure your own obligation under this Agreement in some
other manner which meets the approval of that regulatory authority, you
are obligated to promptly obtain a clean, unconditional, irrevocable
Letter of Credit for our benefit. The Letter of Credit will be issued
by a qualified financial institution within the meaning of applicable
state law in an amount equal to the reserves ceded to you and will be
in a form we find acceptable. You will bear the cost of the Letter of
Credit.
It is understood that we may draw on the Letter of Credit at any time,
notwithstanding any other provisions in this Agreement.
We undertake to use and apply any amount which we may draw upon the
Letter of Credit pursuant to the terms of this Agreement under which
the Letter of Credit is held, and only for the following purposes:
a) To pay your share or to reimburse us for your share of unearned
premium or any liability for loss ceded by this Agreement;
b) To make refund of any sum which is in excess of the actual amount
required to pay your share of any unearned premium or liability
ceded under this Agreement;
c) To pay other amounts due us under this Agreement.
We agree to return to you any amounts drawn on Letters of Credit which
are in excess of the actual amounts required for (a) or (b) above, or
in the case of (c) above, such amounts as are subsequently determined
not to be due.
The amounts drawn under any Letter of Credit will be applied without
diminution because of the insolvency of either party. The financial
institution shall have no responsibility whatsoever in connection with
the propriety of withdrawals we make or the
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disposition of funds withdrawn, except to see that withdrawals are made
only upon the order of our properly authorized representatives.
We agree to allow you to substitute Trust funds, in accordance with
mutually agreed upon Trust Provisions and a Trust Agreement, for the
Letter of Credit obligations under this Agreement, provided we have
rendered written approval in advance to such substitution. You will
seek our approval by providing us with at least 30 days notice before
substitution. We shall negotiate any transfers in good faith and shall
not unreasonably or arbitrarily withhold such approval.
ARTICLE XIV - CONFIDENTIALITY
-----------------------------
1. You will hold in trust for us and will not disclose or cause to be
disclosed to any non-party to this Agreement any of our confidential
information. Confidential information is information which relates to
policy owner data, experience information (including but not limited to
mortality and/or lapse information), risk selection guidelines, any and
all information contained in our current and future underwriting
manuals, trade secrets, research, products and business affairs, but
does not include:
a) Information which is generally known or easily ascertainable by
non-parties of ordinary skill; and
b) Information acquired from non-parties who have no confidential
commitment to either party to this Agreement.
You will take all necessary and appropriate measures to ensure that
your employees and agents abide by the terms of this Article.
2. Notwithstanding the foregoing, we agree that you may aggregate our data
with that of other companies reinsured, on the condition that our data
not be identified by our corporate name, logo or any other means. We
also agree that, upon request, you may make available any necessary
data or information to your auditors, or any governmental or
administrative agencies in the course of their examination of your
records, systems and procedures.
ARTICLE XV - MISCELLANEOUS
--------------------------
1. ASSIGNMENT
----------
Rights and obligations of this Agreement cannot be assigned by either
party unless mutually agreed to by all parties.
-15-
2. NOTICES
-------
Any notices or other communications required or permitted hereunder
shall be sufficiently given only if in writing and personally delivered
or sent by mail, postage prepaid, by overnight courier, or by confirmed
facsimile, addressed as follows or to such other address as the parties
shall have given notice of pursuant hereto:
IF TO PHOENIX: Phoenix Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
Facsimile: (▇▇▇)-▇▇▇-▇▇▇▇
Telephone: (▇▇▇)-▇▇▇-▇▇▇▇
IF TO REINSURER: xxx
Facsimile:
Telephone:
3. APPLICABLE LAW
--------------
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect
to the conflict of laws provisions thereof.
4. COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same Agreement.
-16-
ARTICLE XVI - EXECUTION OF THE AGREEMENT
----------------------------------------
In witness whereof, we have caused this Agreement to be executed in duplicate at
the dates and places shown below, by the respective officers duly authorized to
do so.
PHOENIX LIFE INSURANCE COMPANY
PHOENIX LIFE AND ANNUITY COMPANY
PHL VARIABLE INSURANCE COMPANY
---------------------------------
Signature
---------------------------------
Title
---------------------------------
Date of Signature
--------------------------------- ------------------------------
Signature Signature
--------------------------------- ------------------------------
Title Title
--------------------------------- ------------------------------
Date of Signature Date of Signature
-17-
EXHIBIT A
(EFFECTIVE___________)
REINSURANCE COVERAGE
--------------------
I. REINSURANCE COVERAGE
This Agreement will cover a XX percent quota share of Death Benefits
and Other Supplementary Benefits or Riders issued with Death Benefits,
on all life insurance we issue directly, which is in excess of the sum
of our maximum limit of retention shown in this Exhibit.
Reinsurance will be placed automatically under this Agreement provided
that:
o each risk is classified using individual underwriting standards
that were in effect at the time the policy and/or benefit(s) is
underwritten.
o Each insured life is a permanent resident of the United States or
Canada.
o We have retained our maximum available retention on the life of
the insured as shown below, at the time reinsurance is required.
Riders that are covered under this Agreement are:
Reinsurance coverage will provide neither cash surrender values or loan
values.
II. RETENTION LIMITS
A. Retention limits for Single Life and Joint First-to-Die policies:
Flat Extra[less than] Flat Extra[greater than]=
$10 per 1,000 $10 per 1,000
Ages Standard or 125% - 200% or 225% and up
---- -------- ----------- -----------
B. Retention limits for Joint Second-to-Die policies:
Retention on Second-to-Die plans will be the larger of the two
individual retentions, unless one life is uninsurable. Where one life
is rated uninsurable, use the regular Single Life retention limits for
the insurable life.
Flat Extra[less than] Flat Extra[greater than]=
$10 per 1,000 $10 per 1,000
Ages Standard or 125% - 200% or 225% and up
---- -------- ----------- -----------
C. Additional Notes:
1) Retention for Civil Aviation Non-Rated Private Pilots is
$________________.
2) Amounts used to calculate our retention will include the base
policy, one year term additions (Optionterm and Fifth Dividend
Option) and additional tem insurance riders.
3) When the initial amount of reinsurance required is $_____________
or less, we will retain that amount in addition to our regular
retention limits. 4) When the net amount at risk on any policy
reinsured under this Agreement falls below $__________________,
that reinsurance will terminate as of the anniversary date on or
immediately following the change in net amount at risk.
III. AUTOMATIC ACCEPTANCE LIMITS FOR THE POOL
A. Single Life and First-to-Die Policies:
Flat Extra[less than] Flat Extra[greater than]=
$10 per 1,000 $10 per 1,000
Ages Standard or 125% - 200% or 225% and up
---- -------- ----------- -----------
B. Second-to-Die Policies:
Flat Extra[less than] Flat Extra[greater than]=
$10 per 1,000 $10 per 1,000
Ages Standard or 125% - 200% or 225% and up
---- -------- ----------- -----------
o Automatic acceptance limits for joint life second-to-die plans will be
based on the largest of the individual automatic acceptance limits.
o Automatic acceptance limits for joint life first-to-die plans will be
determined for each life individually and each life will be considered a
separate policy. However, if the life reinsurance on either life exceeds
the appropriate automatic acceptance limit for the issue age and table
rating, neither life will be eligible for automatic reinsurance under this
Agreement.
o The Jumbo Limit is defined below. However, policies we issue on an
automatic basis under other "No Jumbo" or "Guaranteed Capacity" programs
will not be eligible for reinsurance under this arrangement.
IV. EXCLUSIONS TO AUTOMATIC REINSURANCE COVERAGE
Automatic reinsurance will not be available in the following
situations:
A. The policy has been submitted on a facultative, facultative
obligatory or initial inquiry basis to you or to any other
reinsurer.
B. The risk is categorized as a Jumbo Risk and does not meet the
requirements as described above. A "Jumbo Risk" is defined as a
policy for which our underwriting papers indicate that the total
life insurance inforce and applied for on the insured's life
exceeds $______________. Jumbo limits for joint life
second-to-die or joint life first-to-die plans will be determined
for each life individually, considering the total amount in force
and applied for on each life. If the total amount of insurance in
force and applied for on either life exceeds $___________, the
current application will be considered a jumbo risk.
C. We have retained an amount less than our usual retention limits
for the age and table rating of the insured.
D. The aggregate amount of automatic reinsurance on one life in all
Pools is greater than the Automatic Acceptance Limits shown in
this Exhibit.
E. A conversion that falls under the following categories:
1) with the same new underwriting information the issuing
company would obtain in the absence of the original policy;
2) with a new suicide exclusion period or contestable period
for the new policy;
3) with the payment of the same commissions in the first policy
year that the issuing company would have paid in the absence
of the original policy.
V. JUMBO LIMIT:
The Jumbo Limit under this Agreement is $_________________.
Phoenix must notify you whenever the total amount, in force and applied
for, exceeds $__________________.
VI. RESERVES:
Our valuation actuary must certify the amount of reserves calculated on
the reinsured policies in force as of December 31st of the preceding
year. We will provide this to you annually by March 1st.
EXHIBIT B
(EFFECTIVE _____________)
REINSURANCE ADMINISTRATION
--------------------------
Reinsurance administration and premium accounting will be on a self-administered
basis. Premiums will be paid Annually.
For each MONTHLY reporting period, we will submit to you reports, via paper or
electronic media, containing information in general compliance with the
following:
o BILLING REPORT
Policy Number, Sequence, Name of Insured, Date of Birth, Sex, Original
Issue Date, Issue Date, Issue Age, Underwriting Class,
Automatic/Facultative Indicator, Substandard Rating, Premium
Information, Allowance Information, First Year/Renewal Year
Distinction, Net Amount At Risk, Transaction code, Transaction
Effective Date.
o POLICY EXHIBIT
Case
Count Volume
----- ------
Beginning In Force
New Business
Reinstatements
Other Increases
Lapses
Deaths
Other Terminations
Recaptures
Other Decreases
Natural Variance
Ending In Force
On a QUARTERLY basis we will submit to you, via paper or electronic media, an in
force listing containing information in general compliance with the following:
o IN FORCE LISTING
Policy Number, Sequence, Name of Insured, Date of Birth, Sex, Original
Issue Date, Issue Date, issue Age, Underwriting Class,
Automatic/Facultative Indicator, Substandard Rating, Net Amount At
Risk.
EXHIBIT C
(EFFECTIVE _________)
REINSURANCE RATES AND ALLOWANCES
--------------------------------
I. NET AMOUNT AT RISK CALCULATION
Single Life Plans:
------------------
The Net Amount at Risk in any policy year will be the difference
between the face amount of death benefit reinsured and the cash value,
taken to the nearest dollar, as of the policy anniversary occurring in
that year. When the original policy is issued on a decreasing term plan
or on a level term plan with a duration of twenty years or less, the
cash values will be disregarded. We will maintain a level retention in
all years.
First-to-Die Plans:
-------------------
Each insured life is considered a separate policy. The Net Amount at
Risk for First-to-Die Plans is calculated on each life individually
using the same procedures as described for Single Life Plan, above.
Second-to-Die Plans:
--------------------
Non-frasierized
During the joint lifetime of the insureds, the net amount at risk for
each insured will be equal to the difference between the cash value of
the policy after the death of that insured and the cash value of the
policy during the joint lifetimes of all insureds. After the first
death, the Net Amount at Risk will be the difference between the face
amount of life benefit reinsured and the cash value, taken to the
nearest dollar, as of the policy anniversary occurring at the end of
that year.
Frasierized
The Net Amount at Risk in any policy year will be the difference
between the face amount of death benefit reinsured and the total
terminal reserve, taken to the nearest dollar, as of the policy
anniversary occurring in that year.
II. RATES AND ALLOWANCES FOR LIFE REINSURANCE
A. Single Life
The single life YRT Rates shown in this Exhibit are a percentage of the
1975-80 Select and Ultimate Basic ANB Table and the SOA (Reinsurance
Council) extension for issue ages above age 70. These are annual rates
for standard risks and are per $1,000 of the Net Amount at Risk
reinsured. We will pay you these rates multiplied by the following
percentages:
RISK CLASS PERCENT
Preferred Plus
Preferred
Nonsmoker
Smoker
B. Joint First-To-Die
The joint first to die premium will be calculated based on the sum of
the single life rates for the two net amounts at risk for each life,
using the following percentages:
RISK CLASS PERCENT
Preferred
Nonsmoker
Smoker
C. Joint Second-To-Die Frasierized Products
The joint second to die frasierized premium will be calculated as
follows: The survivorship rate is calculated using the percentages
shown below to determine the annual premium rate applicable to each
insured life. The single life rates will then be frasierized to
determine the annual premium rate per $1,000 of NAR, subject to a
minimum of $__________.
RISK CLASS PERCENT
Preferred
Nonsmoker
Smoker
The rate charged will be the calculated rate or, if larger, $___/1000
of NAR per year.
D. Joint Second-To-Die Non-Frasierized Products
The joint second to die non-frasierized premium will be calculated as
follows: The survivorship rate is calculated using the percentages
shown below to determine the annual premium rate applicable to each
insured life. The single life rate will then be applied as follows:
If both insureds are alive, the rate will equal:
a) The sum of each single life rate multiplied by the amount of the
increase in cash value should either life die; PLUS
b) The product of the single life rates for the two insureds, plus $.10
per thousand, multiplied by the net amount at risk.
If one insured has died, the rate will equal:
a) The single life rate for the living insured multiplied by the net
amount at risk.
U/W CLASS PERCENT
Preferred
Nonsmoker
Smoker
E. Riders
Rates for riders will be the same as those for the base plans. However,
no reinsurance charge will be applied for any riders allowing for the
exchange of a Joint Second-to-Die policy for two single life policies,
one on the life of each insured.
III. POLICY FEE
No policy fee will be charged.
IV. RATES FOR SUBSTANDARD TABLE RATINGS
For substandard risks issued at table ratings, the standard rate will
be multiplied by the appropriate mortality factor as shown below. Table
ratings are applied to the single life rate prior to blending. For
Table T and Uninsurable ratings: (1) the other life must be rated
standard through table D; (2) the survivorship rate will be the single
life rate for the healthy life.
------------- -------------- ------------- --------------
Table Mortality Table Mortality
Rating Factor Rating Factor
============= ============== ============= ==============
------------- -------------- ------------- --------------
V. RATES AND ALLOWANCES FOR FLAT EXTRA RATINGS
Substandard risks issued with flat extra ratings will be coinsured. We
will pay you the appropriate portion of the flat extra premium charged
the insured less an allowance that is determined by the duration of the
flat extra premium. Allowances for flat extra premiums payable for more
than five years will be 75% in the first year and 10% in all renewal
years. Allowances for flat extra premiums payable for five years or
less will be 10% in all years.
VI. RATES AND ALLOWANCES FOR WAIVER OF PREMIUM DISABILITY BENEFIT
Waiver of Premium Disability Benefits are not reinsured under this
Agreement.
VII. RATES FOR ACCIDENTAL DEATH BENEFIT
Accidental Death Benefits are not reinsured under this Agreement.
VIII. PREMIUM TAXES
You will not reimburse us for premium taxes for reinsurance ceded under
this Agreement.
IX. RECAPTURE PERIOD
Recapture will be allowed after ten years for single life, joint first
to die, joint second to die non-frasierized. Recapture will be allowed
after twenty years for joint second to die frasierized.
X. CONVERSIONS
For the purposes of this Agreement, and unless otherwise specifically
covered elsewhere, "conversions" will mean continuations, rollovers
and/or conversions. The policy being converted to may be issued by
Phoenix Life Insurance Company, or any of its' subdsidiaries.
When the conversion is from a single life policy originally issued on a
term product or rider covered under this Agreement to a single life
policy, and when there is no new underwriting involved at time of
conversion, the rates charged will be those single life rates shown in
this Exhibit, and will be based on the original issue age of the
insured and the current duration of the original policy at the time of
the conversion, i.e. point-in-scale basis.
When the conversion is from two single life policies originally issued
on a term product or rider covered under this Agreement to a joint
second to die policy, and when there is no new underwriting involved at
time of conversion, the rates charged will be those second to die rates
shown in this Exhibit, and will be based on the original issue age for
each of the insureds. Duration for the converted policy will be that of
the most recently issued single life policy involved in the conversion.
(i.e. point-in-scale basis.)
When the conversion is from a single life policy originally issued on a
term product or rider covered under this Agreement to a first to die
policy, and when there is no new underwriting involved at time of
conversion, the rates charged will be those single life rates shown in
this Exhibit, and will be based on the original issue age of the
insured and the current duration of the original policy at the time of
the conversion, i.e. point-in-scale basis. Reinsurance coverage under
this Agreement will only apply to the insured(s) whose original policy
was covered under this Agreement.
Where the conversion includes normal underwriting on any portion of the
converted policy, for reinsurance purposes the following will apply:
o Single life to Single life - we will consider the policy as new
business, and will cede the policy accordingly. Any conversions
from policies originally covered under this Agreement, to
products that are also covered under this Agreement, where
underwriting is involved, will be ceded to this Agreement as new
business, in conjunction with all other terms included in this
Agreement.
o Single life to Joint Second to Die - Phoenix Life Insurance
Company will fully retain the converted policy.
o Single life to First to Die - Phoenix Life Insurance Company will
fully retain the life being underwritten on the converted policy.
Single Life:
The following factors will be applied to the 1975-80 Select and
Ultimate Basic ANB Table and the Society of Actuaries extension for
issue ages above 70 for converted policies.
Preferred Plus %
Preferred %
Nonsmoker %
Smoker %
Second-to-Die:
Frasierized Second-To-Die
-------------------------
The monthly survivorship rate is calculated by applying the percentages
shown below to the 1975-80 Select and Ultimate Basic ANB Table and the
Society of
Actuaries extension for issue ages above 70 for converted policy's, to
determine the annual premium rate applicable to each insured life. The
single life rates will then be frasierized to determine the annual
premium rate per $1,000 of NAR, subject to a minimum of $0.__.
The rate charged will be the calculated rate or, if larger, $__/1000 of
NAR per year.
Class Percentage
----- ----------
Preferred %
Nonsmoker %
Smoker %
Non-Frasierized Second-To-Die Plans
-----------------------------------
The monthly survivorship rate is calculated by applying the percentages
shown below to the 1975-80 Select and Ultimate Basic ANB Table and the
Society of Actuaries extension for issue ages above 70 for converted
policies, to determine the annual premium rate applicable to each
insured life. The single life rate will then be applied as follows:
If both insureds are alive, the rate will equal:
If one insured has died, the rate will equal the single life rate for
the living insured multiplied by the net amount at risk.
Class Percentage
----- ----------
Preferred %
Nonsmoker %
Smoker %
XI. EXPERIENCE REFUND
Reinsurance under this Agreement is not eligible for an Experience
Refund.
XII. REENTRIES
Administration of reentries will be on the same basis as used for the
underlying policy on which reinsurance is based.
EXHIBIT D
(EFFECTIVE__________)
TEMPORARY INSURANCE RECEIPT LIABILITY
-------------------------------------
I. AUTOMATIC REINSURANCE
You will be liable for losses under the terms of a Temporary Insurance
Receipt only when the following qualifications are met:
a) You have reviewed our Temporary Insurance Receipt Form and have
given us your written acceptance of the terms and procedures
contained in the Form;
b) The risk would have qualified for automatic coverage under this
Agreement;
c) We have kept our full retention for the age and table rating of
the insured;
d) The amount ceded to this Pool does not exceed the Automatic
Acceptance Limits set forth in Exhibit A (Reinsurance Coverage),
Part III.
If we change our application or receipt forms or our procedures and
practices for issuing life insurance covered under this Agreement, you
have the right of review, acceptance or rejection of the changes. You
will have no liability for claims incurred on policies issued on the
basis of the changes unless you have given us written acknowledgment of
your acceptance of the changes.
Temporary Insurance Receipt is a form, a copy of which has been
supplied to you and is on file at your Home Office.
II. FACULTATIVE REINSURANCE
You will not be liable for a claim incurred under the terms of a
Temporary Insurance Receipt for a risk that has been submitted to you
on a facultative basis.