AUTOMATIC AND FACULTATIVE
YEARLY RENEWABLE TERM REINSURANCE AGREEMENT
EFFECTIVE January 1, 2000
Between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
("Ceding Company")
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And
SECURITY LIFE OF DENVER INSURANCE COMPANY
("Reinsurer")
Security Life Center
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Reinsurer Agreement No. 0333-2249
AUTOMATIC AND FACULTATIVE
YEARLY RENEWABLE TERM REINSURANCE AGREEMENT
This Agreement is between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY, (Ceding Company), ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
And
SECURITY LIFE OF DENVER INSURANCE COMPANY (Reinsurer),
Security Life Center, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
The Reinsurer agrees to reinsure certain portions of the Ceding Company's
contract risks as described in the terms and conditions of this Agreement.
The reinsurance Agreement constitutes the entire Agreement between the parties
with respect to the business being reinsured hereunder and there are no
understandings between the parties other than as expressed in this Agreement.
Any change or modification to this Agreement is null and void unless made by
amendment to this Agreement and signed by both parties.
In witness of the above, the Ceding Company and the Reinsurer have by their
respective officers executed and delivered this Agreement in duplicate on the
dates indicated below, with an effective date of January 1, 2000.
FIRST ALLMERICA FINANCIAL SECURITY LIFE OF DENVER
INSURANCE COMPANY INSURANCE COMPANY
By: /s/ By: /s/
------------------------------- ---------------------------------
Title: VP Life Products Title: /s/
---------------------------- ------------------------------
Date: 5/21/01 Date: November 6, 2000
----------------------------- -------------------------------
By: /s/ By: /s/
------------------------------- ---------------------------------
Title: AVP & Actuary Title: VP of Business Operations
---------------------------- ------------------------------
Date: 5/7/01 Date: 11/13/00
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AUTOMATIC AND FACULTATIVE REINSURANCE AGREEMENT
Table of Contents
1. PARTIES TO AGREEMENT 1
2. REINSURANCE BASIS 1
3. AUTOMATIC REINSURANCE TERMS 1
a. CONVENTIONAL UNDERWRITING 1
b. RETENTION 1
c. AUTOMATIC ACCEPTANCE LIMITS 2
d. AUTOMATIC IN FORCE AND APPLIED FOR LIMIT 2
e. RESIDENCE 2
f. MINIMUM CESSION 2
g. FACULTATIVE QUOTES 2
4. AUTOMATIC REINSURANCE NOTICE PROCEDURE 2
5. FACULTATIVE REINSURANCE 2
6. COMMENCEMENT OF REINSURANCE COVERAGE 3
a. AUTOMATIC REINSURANCE 3
b. FACULTATIVE REINSURANCE 3
c. PRE-ISSUE COVERAGE 3
7. BASIS OF REINSURANCE AMOUNT AND REINSURANCE PREMIUM RATES 4
a. LIFE REINSURANCE 4
b. SUPPLEMENTAL BENEFITS 4
c. TABLE RATED SUBSTANDARD PREMIUMS 4
d. FLAT EXTRA PREMIUMS 4
e. RATES NOT GUARANTEED 4
8. CASH VALUES OR LOANS 4
9. PAYMENT OF REINSURANCE PREMIUMS 4
a. PREMIUM DUE 4
b. FAILURE TO PAY PREMIUMS 5
c. OVERPAYMENT OF REINSURANCE PREMIUM 5
d. UNDERPAYMENT OF REINSURANCE PREMIUM 5
e. RETURN OF REINSURANCE PREMIUM 5
f. UNEARNED PREMIUMS 5
10. PREMIUM TAX REIMBURSEMENT 6
11. DAC TAX AGREEMENT 6
12. REPORTS 7
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13. RESERVES FOR REINSURANCE 7
14. CLAIMS 7
a. NOTICE 7
b. PROOFS 7
c. AMOUNT AND PAYMENT OF BENEFITS 7
d. CONTESTED CLAIMS 7
e. CLAIM EXPENSES 8
f. EXTRACONTRACTUAL DAMAGES 8
15. POLICY CHANGES 8
a. NOTICE 8
b. INCREASES 9
c. REDUCTION OR TERMINATION 9
d. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC 9
e. EXTENDED TERM AND REDUCED PAID-UP INSURANCE 9
16. REINSTATEMENTS 9
a. AUTOMATIC REINSTATEMENT 9
b. FACULTATIVE REINSTATEMENT 9
c. PREMIUM ADJUSTMENT 10
d. NONFORFEITURE REINSURANCE TERMINATION 10
17. INCREASE IN RETENTION 10
a. NEW BUSINESS 10
b. RECAPTURE 10
18. ERRORS AND OMISSIONS 11
19. INSOLVENCY 11
20. ARBITRATION 12
a. GENERAL 12
b. NOTICE 12
c. PROCEDURE 12
d. COSTS 12
e. OFFSET 13
21. GOOD FAITH; FINANCIAL SOLVENCY 13
22. TERM OF THIS AGREEMENT 13
23. MEDICAL INFORMATION BUREAU 13
24. SEVERABILITY 13
ii
Listing of Schedules:
SCHEDULE A
1. Plans Reinsured
2. Automatic Portion Reinsured
3. Automatic Retention Limits
4. Automatic Acceptance Limits
5. Automatic In Force and Applied for Limits
6. Premium Due
7. Recapture Period
8. Net Amount at Risk
9. Additional Underwriting requirements
SCHEDULE B - AUTOMATIC REINSURANCE PREMIUMS
1. Life Insurance
2. Supplemental Benefits
3. Age Basis
4. Other Policy Changes, Conversions, Exchanges, Etc.
5. Facultative Rate Limit
SCHEDULE C - REPORTING INFORMATION
Information on Risks Reinsured
Policy Exhibit Summary
Reserve Credit Summary
Accounting Summary
SCHEDULED D - FACULTATIVE FORMS
Application for Reinsurance
Notification of Reinsurance
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AUTOMATIC AND FACULTATIVE YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
1. PARTIES TO AGREEMENT.
This Agreement is solely between the Reinsurer and the Ceding Company.
There is no third party beneficiary to this Agreement. Reinsurance under
this Agreement will not create any right nor legal relationship between the
Reinsurer and any other person, for example, any insured, policy owner,
agent, beneficiary, assignee, or reinsurer. The Ceding Company agrees that
it will not make the Reinsurer a party to any litigation between any such
third party and the Ceding Company. The Ceding Company will not use the
Reinsurer's name with regard to the Ceding Company's agreements or
transactions with these third parties unless the Reinsurer gives prior
approval for the use of its name.
2. REINSURANCE BASIS.
This Agreement, including the attached Schedules, states the terms and
conditions of automatic and facultative reinsurance, which is on a Yearly
Renewable Term basis. This Agreement is applicable only to reinsurance of
policies directly written by the Ceding Company. Any policies acquired
through merger of another company, reinsurance, or purchase of another
company's policies are not included under the terms of this Agreement.
3. AUTOMATIC REINSURANCE TERMS.
The Reinsurer agrees to automatically accept contractual risks on the life
insurance plans and supplemental benefits shown in Schedule A, subject to
the following requirements:
a. CONVENTIONAL UNDERWRITING.
Automatic reinsurance applies only to insurance applications
underwritten by the Ceding Company with conventional underwriting and
issue practices that are consistently applied. Conventional
underwriting and issue practices are those customarily used and
generally accepted by life insurance companies. Some examples of
non-customary underwriting practices that are not accepted for
automatic reinsurance under this Agreement are guaranteed issue, any
form of simplified underwriting, short-form applications, any form of
non-customary non-medical underwriting limits, or internal or external
policy exchanges that do not require conventional underwriting. An
example of an unacceptable issue practice is the issuance of a policy
that has contestability or suicide clauses with time limitations that
are shorter than the maximum allowed by state law.
b. RETENTION.
The Ceding Company will retain, and not otherwise reinsure, an amount
of insurance on each life equal to its retention shown in Schedule A.
If the Ceding Company's scheduled retention is zero, automatic
reinsurance is not available (unless Ceding Company has already
reached its full retention).
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c. AUTOMATIC ACCEPTANCE LIMITS.
On any one life, the amount automatically reinsured under all
agreements with all reinsurers must not exceed the Automatic
Acceptance Limits shown in Schedule A.
d. AUTOMATIC IN FORCE AND APPLIED FOR LIMIT.
On any one life, the total life insurance in force and applied for
with all companies of which the Ceding Company is aware, must not
exceed the In Force and Applied For Limits shown in Schedule A.
e. RESIDENCE.
Each insured must be a resident of the United States, Puerto Rico,
Guam, or Canada at the time of issue.
f. MINIMUM CESSION.
The minimum amount of reinsurance per cession that the Reinsurer will
accept is $1,000 and reinsurance will be terminated when the amount
reinsured is less than $1,000.
g. FACULTTIVE QUOTES.
The risk must not have been submitted on a facultative basis to the
Reinsurer or any other reinsurer.
4. AUTOMATIC REINSURANCE NOTICE PROCEDURE
After the policy has been paid for and delivered, the Ceding Company will
submit all relevant individual policy information, as defined in Schedule
C, in its next statement to the Reinsurer.
5. FACULTTIVE REINSURANCE.
The Ceding Company may apply for facultative reinsurance with the Reinsurer
on a risk if the automatic reinsurance terms are not met, or if the terms
are met and it prefers to apply for facultative reinsurance. The following
items must be submitted to obtain a facultative quote:
a. A form substantially similar to the Reinsurer's "Application for
Reinsurance" form shown in Schedule D.
b. Copies of the original insurance application, medical examiner's
reports, financial information, and all other papers and information
obtained by the Ceding Company regarding the insurability of the risk.
After receipt of the Ceding Company's application, the Reinsurer will
promptly examine the materials and notify the Ceding Company either of the
terms and conditions of the Reinsurer's offer for facultative reinsurance
or that no offer will be made. The Reinsurer's offer expires 120 days after
the offer is made, unless the written offer specifically states otherwise.
2
If the Ceding Company accepts the Reinsurer's offer, then the Ceding
Company will note its acceptance in its underwriting file and mail, as soon
as possible, a formal reinsurance cession to the Reinsurer using a form
substantially similar to the "Notification of Reinsurance" form shown in
Schedule D. If the Ceding Company does not accept the Reinsurer's offer,
then the Ceding Company will notify the Reinsurer in writing, as soon as
possible. Automatic reinsurance rates can be used for facultative business
up to the limits shown in Schedule B.
6. COMMENCEMENT OF REINSURANCE COVERAGE.
Commencement of the Reinsurer's reinsurance coverage on any policy or
pre-issue risk under this Agreement is described below:
a. AUTOMATIC REINSURANCE.
The Reinsurer's reinsurance coverage for any policy that is ceded
automatically under this Agreement will begin and end simultaneously
with the Ceding Company's contractual liability for the policy
reinsured.
b. FACULTATIVE REINSURANCE.
The Reinsurer's reinsurance coverage for any policy that is ceded
facultatively under this Agreement shall begin when;
i. Ceding Company accepts Reinsurer's offer; and
ii. The policy has been issued.
c. PRE-ISSUE COVERAGE.
The Reinsurer will not be liable for benefits paid under the Ceding
Company's conditional receipt or temporary insurance agreement unless
all the conditions for automatic reinsurance coverage under Section 3
of this Agreement are met. The Reinsurer's liability under the Ceding
Company's conditional receipt or temporary insurance agreement is
limited to the lesser of i. Or ii. Below:
i. The Automatic Acceptance Limits with the Reinsurer, as
shown in Schedule A.
ii. The amount for which the Ceding Company is liable less its
retention shown in Schedule A, less any amount of
reinsurance with other reinsurers.
The pre-issue liability applies only once on any given life regardless
of how many receipts were issued or initial premiums were accepted by
the Ceding Company. After a policy has been issued, no reinsurance
benefits are payable under this pre-issue coverage provision.
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7. BASIS OF REINSURANCE AMOUNT AND REINSURANCE PREMIUM RATES.
a. LIFE REINSURANCE.
The amount reinsured on a policy is the policy's net amount at risk,
less the Ceding Company's retention available on the policy, less any
amount of reinsurance with other reinsurers. The retention on each
life, or both lives for joint policies, is shown in Schedule A. The
net amount at risk is shown in Schedule A. The reinsurance premiums
per $1000 are shown in Schedule B.
b. SUPPLEMENTAL BENEFITS.
Supplemental benefits are not reinsured.
c. TABLE RATED SUBSTANDARD PREMIUMS.
If the Ceding Company's policy is issued with a table rated
substandard premium, the reinsurance premiums shown in Schedule B will
apply.
d. FLAT EXTRA PREMIUMS.
If the Ceding Company's policy is issued with a flat extra premium,
the reinsurance premiums shown in Schedule B will apply.
e. RATES NOT GUARANTEED.
The reinsurance premium rates are not guaranteed. The Reinsurer
reserves the right to change the rates at any time. If the Reinsurer
changes the rates, it will give the Ceding Company 90 days' prior
written notice of the change. Any change applies only to reinsurance
premiums due after the expiration of the notice period. The maximum
reinsurance premiums are equal to the statutory valuation premiums for
yearly renewable term insurance at the maximum interest rates and
minimum mortality rates for each year of issue.
8. CASH VALUES OR LOANS.
This Agreement does not provide reinsurance for cash surrender values. In
addition, the Reinsurer will not participate in policy loans or other forms
of indebtedness on reinsured business.
9. PAYMENT OF REINSURANCE PREMIUMS
a. PREMIUM DUE.
Reinsurance premiums for each reinsurance cession are due as shown in
Schedule A. All amounts due or otherwise accrued to any of the parties
hereto or any of their parents, affiliates, or subsidiaries, whether
by reason of premiums, losses, expenses, or otherwise, under this
agreement or any other contract heretofore or hereafter entered into,
will at all times be fully subject to the right of offset and only the
net balance will be due and payable.
4
b. FAILURE TO PAY PREMIUMS.
If reinsurance premiums are 60 days past due, for reasons other than
those due to error or omission as defined below in Section 19, the
premiums will be considered in default and the Reinsurer may terminate
the reinsurance upon 30 days' prior written notice. The Reinsurer will
have no further liability as of the termination date. The Ceding
Company will be liable for the prorated reinsurance premiums to the
termination date. The Ceding Company agrees that it will not force
termination under the provisions of this paragraph solely to avoid the
recapture requirements or to transfer the block of business reinsured
to another reinsurer.
c. OVERPAYMENT OF REINSURANCE PREMIUM.
If the Ceding Company overpays a reinsurance premium and the Reinsurer
accepts the overpayment, the Reinsurer's acceptance will not
constitute nor create a reinsurance liability nor result in any
additional reinsurance. Instead, the Reinsurer will be liable to the
Ceding Company for a credit in the amount of the overpayment, without
interest.
d. UNDERPAYMENT OF REINSURANCE PREMIUM.
If the Ceding Company fails to make a full premium payment for a
policy or policies reinsured hereunder, due to an error or omission as
defined below in Section 18, the amount of reinsurance coverage
provided by Reinsurer shall not be reduced. However, once the
underpayment is discovered, the Ceding Company will be required to pay
to the Reinsurer the difference between the full premium amount and
the amount actually paid, without interest. If payment or the full
premium is not made within 60 days after the discovery of the
underpayment, the underpayment shall be treated as a failure to pay
premiums and subject to the conditions of Paragraph 9.b., above.
e. RETURN OF REINSURANCE PREMIUM.
If a misrepresentation on an application of a death of an insured by
suicide results in the Ceding Company returning the policy premiums to
the policy owner rather than pay the policy benefits, the Reinsurer
will refund all of the reinsurance premiums it received on that policy
to the Ceding Company, without interest.
f. UNEARNED PREMIUMS.
Unearned premiums will be returned on deaths, surrenders and other
terminations. This refund will be on a prorated basis without interest
from the date of termination of the policy to the date to which a
reinsurance premium has been paid.
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10. PREMIUM TAX REIMBURSEMENT.
Premium taxes will not be reimbursed.
11. DAC TAX AGREEMENT.
The Ceding Company and the Reinsurer herein collectively called the
"Parties", or singularly the "Party", hereby enter into an election under
Treasury Regulations Section 1.848-2(g)(8) whereby:
a. For each taxable year under this Agreement, the party with the
net positive consideration, as defined in the regulations
promulgated under Treasury Code Section 848, will capitalize
specified policy acquisition expenses with respect to this
Agreement without regard to general deductions limitation of
Section 848(c)(1);
b. The Ceding Company and the Reinsurer agree to exchange
information pertaining to the net consideration under this
Agreement each year to insure consistency or as otherwise
required by the Internal Revenue Service;
c. The Ceding Company will submit to the Reinsurer by May 1 of each
year its calculation of the net consideration for the preceding
calendar year. This schedule of calculations will be accompanied
by a statement signed by an officer of the Ceding Company stating
that the Ceding Company will report such net consideration in its
tax return for the preceding calendar year;
d. The Reinsurer may contest such calculation by providing an
alternative calculation to the Ceding Company in writing within
30 days of the Reinsurer's receipt of the Ceding Company's
calculation. If the Reinsurer does not so notify the Ceding
Company, the Reinsurer will report the net consideration as
determined by the Ceding Company in the Reinsurer's tax return
for the previous calendar year;
e. If the Reinsurer contests the Ceding Company's calculation of the
net consideration, the parties will act in good faith to reach an
agreement as to the correct amount within 30 days of the date the
Reinsurer submits its alternative calculation. If the Ceding
Company and the Reinsurer reach agreement on the net amount of
consideration, each party will report such amount in their
respective tax returns for the previous calendar year.
Both Parties represent and warrant that they are subject to U.S.
taxation under either Subchapter L of Chapter 1, or Subpart F of
Subchapter N of Chapter 1 of the Internal Revenue Code of 1986, as
amended.
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12. REPORTS.
The reporting period is monthly. The administrating party is the Ceding
Company. For each reporting period, the Ceding Company will submit a
statement to the Reinsurer with information that is substantially similar
to the information displayed in Schedule C. The statement will include
information on the risks reinsured with the Reinsurer, premiums owed,
policy exhibit activity, and an accounting summary. Within fifteen days
after the end of each calendar quarter, the Ceding Company will submit a
reserve credit summary similar to that shown in Schedule C.
13. RESERVE FOR REINSURANCE.
Reserves for this YRT Agreement shall be based on 1/2cx, using the minimum
valuation mortality table and maximum valuation interest rate. The
statutory reserve basis for the reinsurance will be shown on the reserve
credit summary provided each quarter.
14. CLAIMS.
a. NOTICE.
The Ceding Company will notify the Reinsurer, as soon as reasonably
possible, after it receives a claim request.
b. PROOFS.
The Ceding Company will promptly provide the Reinsurer with proper
claim proofs, all relevant information respecting the claim, and an
itemized statement of the benefits paid by the Ceding Company.
c. AMOUNT AND PAYMENT OF BENEFITS.
As soon as the Reinsurer receives proper claim notice and proof of the
claim, the Reinsurer will promptly pay the reinsurance benefits due
the Ceding Company. The Ceding Company's contractual liability for
claims is binding on the Reinsurer. The maximum benefit payable to the
Ceding Company under each reinsured policy is the amount specifically
reinsured with the Reinsurer. The total reinsurance in all companies
on a policy must not exceed the Ceding Company's total contractual
liability on the policy, less its retention used on the policy. The
excess, if any, of the total reinsurance in all companies plus the
Ceding Company's retention used on the policy over its contractual
liability under the reinsured policy will first be applied to reduce
all reinsurance on the policy. This reduction in reinsurance will be
shared among all the reinsurers in proportion to their respective
amounts of reinsurance prior to the reduction.
d. CONTESTED CLAIMS.
The Ceding Company will notify the Reinsurer of its intention to
contest, compromise, or litigate a claim involving a reinsured policy.
If the Ceding Company's contest, compromise, or litigation results in
a reduction in its liability, the Reinsurer will share in the
reduction in the proportion that the Reinsurer's net liability bears
to the sum of the net liability of all reinsurers on the insured's
date of death. If the Reinsurer should decline to participate in the
contest, compromise or litigation, the Reinsurer will then release all
of its liability by paying the Ceding Company its full share of
reinsurance and not sharing in any subsequent reduction in liability.
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e. CLAIM EXPENSES.
The Reinsurer will pay its share of reasonable investigation and legal
expenses connected with the litigation or settlement of contractual
liability claims unless the Reinsurer has released its liability, in
which case the Reinsurer will not participate in any expenses after
the date of release. However, claim expenses do not include routine
claim and administration expenses, including the Ceding Company's home
office expenses. Also, expenses incurred in connection with a dispute
or contest arising out of conflicting claims of entitlement to policy
proceeds or benefits that the Ceding Company admits are payable are
not a claim expense under this Agreement.
f. EXTRA-CONTRACTUAL DAMAGES.
The Reinsurer will not participate in and shall not be liable to pay
the Ceding Company or others for any amounts in excess of the
Reinsurer's share of the net amount at risk on the mortality risk
reinsured hereunder, including extra-contractual damages or
liabilities and related expenses and fees. Extra-contractual damages
are any damages awarded against the Ceding Company, including, for
example, those resulting from negligence, reckless or intentional
conduct, fraud, oppression, or bad faith committed by the Ceding
Company in connection with the mortality risk insurance reinsured
under this Agreement.
The excluded extra-contractual damages shall include, by way of
example and not limitation:
i. Actual and consequential damages;
ii. Damages for emotional distress or oppression;
iii. Punitive exemplary or compensatory damages;
iv. Statutory damages, fines, or penalties;
v. Amounts in excess of the risk reinsured hereunder that the
Ceding Company pays to settle a dispute or claim;
vi. Third-party attorney fees, costs and expenses.
15. POLICY CHANGES.
a. NOTICE.
If a reinsured policy is changed, a corresponding change will be made
in the reinsurance for that policy. The Ceding Company will notify the
Reinsurer of the change in the Ceding Company's next accounting
statement.
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b. INCREASES.
If life insurance on a reinsured policy is increased and the increase
is subject to new underwriting evidence, then the increase of life
insurance on the reinsured policy will be handled the same as the
issuance of a new policy. If the increase is not subject to new
underwriting evidence, then the increase will be automatically
accepted by the Reinsurer, but it is not to exceed the Automatic
Acceptance Limits shown in Schedule A. The reinsurance rates will be
based on the original issue age, duration since issuance of the
original policy and the original underwriting classification.
c. REDUCTION OR TERMINATION.
If life insurance on a reinsured policy is reduced, then reinsurance
will be reduced prorata on the date of such change. If more than one
reinsurer participates in the reinsurance, the reinsurance with each
reinsurer will be reduced proportionately. If life insurance on a
reinsured policy is terminated, then reinsurance will cease on the
date of such termination.
d. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC.
Exchanges, replacements or other changes in the insurance reinsured
with the Reinsurer, where not fully underwritten as a new issue, will
continue to be ceded to the Reinsurer. The rates will be based on the
original issue age and duration since issuance of the original policy.
When these changes are fully underwritten, the policy will be handled
the same as the issuance of a new policy.
e. EXTENDED TERM AND REDUCED PAID-UP INSURANCE.
When a reinsured policy changes to extended term or reduced paid-up
insurance, the Ceding Company will notify the Reinsurer of the new
amount of reinsurance. The reinsurance rats will remain the same as
the rates used for the original policy and will be based on the
original issue age, duration since issuance of the original policy and
the original underwriting classification.
16. REINSTATEMENTS.
a. AUTOMATIC REINSTATEMENT.
If the Ceding Company reinstates a policy that was originally ceded to
the Reinsurer as automatic reinsurance using conventional underwriting
practices, the Reinsurer's reinsurance for that policy will be
reinstated.
b. FACULTATIVE REINSTATEMENT.
If the Ceding Company has been requested to reinstate a policy that
was originally ceded to the Reinsurer as facultative reinsurance, then
the Ceding Company will again submit the case to the Reinsurer for
underwriting approval before the reinsurance can be reinstated.
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c. PREMIUM ADJUSTMENT.
Reinsurance premiums for the interval during which the policy was
lapsed will be paid to the Reinsurer on the same basis as the Ceding
Company charged its policy owner for the reinstatement.
d. NONFORFEITURE REINSURANCE TERMINATION.
If the Ceding Company has been requested to reinstate a policy that
was reinsured while on extended term or reduced paid-up then such
reinsurance will terminate and either automatic or facultative
reinstatement procedures will be followed.
17. INCREASE IN RETENTION.
a. NEW BUSINESS.
If the Ceding Company increases its retention limits, then it may, at
its option and with written notice to the Reinsurer, increase its
retention shown in Schedule A for policies issued after the effective
date of the retention increase.
b. RECAPTURE.
If the Ceding Company increases its retention limits, then it may,
with 90 days' written notice to the Reinsurer, reduce or recapture the
reinsurance in force subject to the following requirements.
i. A cession is not eligible for recapture until it has been
reinsured for the minimum number of years shown in Schedule A.
The effective date of the reduction in reinsurance will be the
later of the first policy anniversary following the expiration of
the 90-day notice period to recapture and the policy anniversary
date when the required minimum of years is attained.
ii. On all policies eligible for recapture, reinsurance will be
reduced by the amount necessary to increase the total insurance
retained up to the new retention limits.
iii. If more than one policy per life is eligible for recapture, then
the eligible policies may be recaptured beginning with the policy
with the earliest issue date and continuing in chronological
order according to the remaining policies' issue dates.
iv. Recapture of reinsurance will not be allowed on any policy for
which the Ceding Company did not keep its maximum retention at
issue. The Ceding Company Company's retention limits are stated
in Section 3 of Schedule A.
v. If any policy eligible for recapture is also eligible for
recapture from other reinsurers, the reduction in the Reinsurer's
reinsurance on that policy will be in proportion to the total
amount of reinsurance on the life with all reinsurers.
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vi. Recapture will not be made on a basis that may result in any
anti-selection against the Reinsurer. The Reinsurer maintains the
discretion to determine when anti-selection has occurred.
18. ERRORS AND OMISSIONS.
Any unintentional or accidental failure of the Ceding Company or the
Reinsurer to comply with the terms of this Agreement which can be shown to
be the result of an oversight, misunderstanding or clerical error, will not
be deemed a breach of this Agreement. Upon discovery, the error will be
corrected so that both parties are restored to the position they would have
occupied had the oversight, misunderstanding or clerical error not
occurred. Should it not be possible to restore both parties to such a
position, the Ceding Company and the Reinsurer shall negotiate in good
faith to equitable apportion any resulting liabilities and expenses.
This provision applies only to oversights, misunderstanding or clerical
errors relating to the administration or reinsurance covered by this
Agreement. This provision does not apply to the administration of the
insurance provided by the Ceding Company to its insured or any other errors
or omissions committed by the Ceding Company with regard to the policy
reinsured hereunder.
19. INSOLVENCY.
In the event that the Ceding Company is deemed insolvent, all reinsurance
claims payable hereunder will be payable by the Reinsurer directly the
Ceding Company, its liquidator, receiver or statutory successor, without
diminution because of the insolvency of the Ceding Company. It is
understood, however, that in the event of such insolvency, the liquidator
or receiver or statutory successor of the Ceding Company will give written
notice to the Reinsurer of the pendency of a claim against the Reinsurer on
a risk reinsured hereunder within a reasonable time after such claim is
filed in the insolvency proceeding. Such notice will indicate the policy
reinsured and whether the claim could involve a possible liability on the
part of the Reinsurer. During the pendency of such claim, the reinsurer may
investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses it may deem
available to the Ceding Company, its liquidator, receiver or statutory
successor. It is further understood that the expense thus incurred by the
Reinsurer will be chargeable, subject to court approval, against the Ceding
Company as part of the expense of liquidation to the extent of a
proportionate share of the benefit which may accrue to the Ceding Company
solely as a result of the defense undertaken by the Reinsurer.
11
20. ARBITRATION.
a. GENERAL.
All disputes and differences under this Agreement that cannot be
amicably agreed upon by the parties will be decided by arbitration.
The arbitrators will have the authority to interpret this Agreement
and, in doing so, will consider the customs and practices of the life
insurance and reinsurance industries. The arbitrators will consider
this Agreement an honorable engagement rather than merely a legal
obligation, and they are relieved of all judicial formalities and may
abstain from following the strict rules of the law.
b. NOTICE.
To initiate arbitration, one of the parties will notify the other, in
writing, of its desire to arbitrate. The notice will state the nature
of the dispute and the desired remedies. The party to which the notice
is sent will respond to the notification in writing within 10 days of
receipt of the notice. At that time, the responding party will state
any additional dispute it may have regarding the subject of
arbitration.
c. PROCEDURES.
Arbitration will be heard before a panel of three arbitrators. The
arbitrators will be executive officers of life insurance or
reinsurance companies; however, these companies will not be either
party nor their affiliates. Each party will appoint one arbitrator.
Notice of the appointment of these arbitrators will be given by each
party to the other party within 30 days of the date of mailing of the
notification initiating the arbitration. These two arbitrators will,
as soon as possible, but no longer than 45 days after the day of the
mailing of the notification initiating the arbitration, then select
the third arbitrator. Should either party fail to appoint an
arbitrator or should the two initial arbitrators be unable to agree on
the choice of a third arbitrator, each arbitrator will nominate three
candidates, two of whom the other will decline, and the decision will
be made by drawing lots of the final selection. Once chosen, the three
arbitrators will have the authority to decide all substantive and
procedural issues by a majority vote. The arbitration hearing will be
held on the date fixed by the arbitrators at a location agreed upon by
the parties. The arbitrators will issue a written decision from which
there will be no appeal. Either party may reduce this decision to a
judgment before any court that has jurisdiction of the subject of the
arbitration.
d. COSTS.
Each party will pay the fees of its own attorneys, the arbitrator
appointed by that party, and all other expenses connected with the
presentation of its own case. The two parties will share equally in
the cost of the third arbitrator.
The arbitrators shall operate in a fair but cost efficient manner. For
example, the arbitrators are not bound by technical rules of evidence
band may limit the use of depositions and discovery.
12
e. OFFSET
All amounts due or otherwise accrued to any of the parties hereto or
any of their parents, affiliates, or subsidiaries, whether by reason
of premiums, losses, expenses, or otherwise under this agreement or
any other contract heretofore or hereafter entered into, will at all
times be fully subject to the right of offset and only the net balance
will be due and payable.
21. GOOD FAITH; FINANCIAL SOLVENCY.
The Ceding Company agrees that all matters will respect to this Agreement
require its utmost good faith. The Reinsurer or its representatives have
the right at any reasonable time to inspect the Ceding Company's records
relating to this Agreement. Each party represents and warrants to the other
party that it is solvent on a statutory basis in all states in which it
does business or is licensed. Each party agrees to promptly notify the
other if it is subsequently financially impaired. The Reinsurer has entered
into this Agreement in reliance upon the Ceding Company's representations
and warranties. The Ceding Company affirms that it has disclosed and will
continue to disclose to the Reinsurer all matters material to this
Agreement and each reinsurance cession. Examples of such matters are a
change in underwriting or issue practices or philosophy, a change in
underwriting management personnel, or a change in the Ceding Company's
ownership or control.
22. TERM OF THIS AGREEMENT.
The Ceding Company will maintain and continue the reinsurance provided in
this Agreement as long as the policy to which it relates is in force or has
not been fully recaptured. This Agreement may be terminated, without cause,
for the acceptance of new reinsurance after 90 days' written notice of
termination by either party to the other. The Reinsurer will continue to
accept reinsurance during this 90-day period. The Reinsurer's acceptance
will be subject to both the terms of this Agreement and the Ceding
Company's payment of applicable reinsurance premiums. In addition, this
Agreement may be terminated immediately for the acceptance of new
reinsurance by either party if one of the parties materially breaches this
Agreement, or becomes insolvent or financially impaired.
23. MEDICAL INFORMATION BUREAU.
The Reinsurer is required to strictly adhere to the Medical Information
Bureau Rules, and the Ceding Company agrees to abide by these Rules, as
amended from time to time. The Ceding Company will not submit a preliminary
notice, application for reinsurance, or reinsurance cession to the
Reinsurer unless the Ceding Company has an authentic, signed preliminary or
regular application for insurance in its home office and the current
required Medical Information Bureau authorization.
24. SEVERABILITY.
In the event that any provision or term of this Agreement shall be held by
any court, arbitrator, or administrative agency to be invalid, illegal or
unenforceable, all of the other terms and provisions shall remain in full
force and effect to the extent that their continuance is practicable and
13
consistent with the original intent of the parties. In addition, if any
provision or term is held invalid, illegal or unenforceable, the parties
will attempt in good faith to renegotiate the Agreement to carry out the
original intent of the parties.
14
SCHEDULE A
1. PLANS REINSURED:
The policy plans and supplemental benefits automatically and facultatively
reinsured are:
PLANS PLAN CODES
---------------------------------------------------------------------------
Variable Universal Life - Single Life 1033.99
Variable Universal Life - Survivorship 1034.99
Primary Insured Term Rider
2. AUTOMATIC PORTION REINSURED:
The Reinsurer will automatically reinsure 10% of each risk on a first
dollar quota share basis, up to the Ceding Company's retention limit as
shown below in Paragraph 3 of this Schedule A, and 12.5% thereafter. Ceding
Company will retain 20% up to their retention limit of $2,000,000.
3. AUTOMATIC RETENTION LIMITS:
For joint plans, determine the retention amount for each life and use the
larger of the two amounts.
ISSUE AGES STANDARD - TABLE H TABLES I AND HIGHER
---------------------------------------------------------------------------------------------
0 $ 500,000 $ 250,000
1-60 $ 2,000,000 $ 1,000,000
61-70 $ 1,000,000 $ 500,000
71-85 $ 500,000 $ 250,000
86+ Automatic Reinsurance not Automatic Reinsurance not
Available Available
In addition to the above retention, a corridor of $10,000 will be retained
in order to avoid administering small cessions.
1
4. AUTOMATIC ACCEPTANCE LIMITS:
On each life, the amount automatically reinsured under all agreements with
all reinsurers must not exceed the following:
ISSUE AGES STANDARD - TABLE H TABLES I-P
-------------------------------------------------------------------------------------------------------
0-70 10.0 times Ceding Company's 10.0 times Ceding Company's
Retention Limits, as shown in Retention Limits, as shown in
Section 3 of this Schedule A section 3 of this Schedule A
71-85 10.0 times Ceding Company's Automatic reinsurance is not
Retention Limits, as shown in available.
Section 3 of this Schedule A
86+ Automatic reinsurance is not Automatic reinsurance is not
available. available.
The total mortality rating on the insurable life (lives) shall not be
higher than 500% for permanent plans, and 300% for term riders, or the
equivalent on a flat extra premium basis.
5. AUTOMATIC IN FORCE AND APPLIED FOR LIMITS:
a. LIFE INSURANCE IN FORCE LIMIT:
$35 million
6. PREMIUM DUE:
Reinsurance premiums are due on the issue date and each subsequent monthly
policy due date, regardless of the policy's payment mode.
7. RECAPTURE PERIOD:
The minimum number of years for a cession to be reinsured before it is
eligible for recapture is 10 years. This minimum number of years is not
applicable if reinsurer raises rates pursuant to Article 7e.
2
8. NET AMOUNT AT RISK:
The net amount at risk on the policies and riders eligible for reinsurance
under this Agreement, is defined below:
OPTION A BASE POLICY: The Net Amount at Risk is the Death Benefit minus the
Account Value where Death Benefit is the greater of the Face Amount or the
minimum amount required under Section 7702 of the IRC.
OPTION B BASE POLICY; The Net Amount at Risk is the Death Benefit minus the
Accumulation Value, where Death Benefit is the greater of the Face Amount
plus Policy Value or the minimum amount required under Section 7702 of the
IRC.
For purposes of this Agreement, the following will apply:
Face Amount is the amount the Ceding Company uses to determine the death
benefit and proceeds payable under the policy. The Initial Base Face Amount
will be shown in the Policy Data of the policy.
9. ADDITIONAL UNDERWRITERING REQUIREMENTS:
The following requirements apply to business reinsured under this
Agreement. These requirements are in addition to the conventional
underwriting and issue practices described in Section 3.a. of this
Agreement.
BLOOD PROFILE LIMITS:
Where permitted by law, a blood profile including an AIDS test is required
according to the age and amount conditions described below. The AIDS test
is to be an HIV or, when the HIV is not permitted, a T-Cell ratio.
ISSUE AGES APPLIED FOR AMOUNTS
--------------------------------------------------------------
18+ $ 100,000
3
SCHEDULE B
AUTOMATIC REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM BASIS
1. LIFE INSURANCE:
a. Standard Reinsurance Premiums:
Standard annual reinsurance premiums per $1000 reinsured for the
Single Life are the following percentages of the 1975-80 Select and
Ultimate Table with Reinsurance Section high age extension above issue
age 70 (attached as Exhibit B1). Percentages are the same for both
males and females.
PREFERRED STANDARD PREFERRED STANDARD
NONSMOKER SMOKER SMOKER SMOKER
-----------------------------------------------------------------------------------------
All Years 32% 46% 95% 110%
For the Survivorship Life, Single Life premiums for each insured are
frasierized and subject to the minimum annual reinsurance premium of
15 CENTS per $1000 reinsured in all policy years.
If one life is uninsurable, the insurable life is charged the applicable
single life rate.
ESTATE PROTECTION RIDER (SURVIVORSHIP LIFE)
Reinsurance premium for this option are the same rates as for the base
plan.
b. Table Rated Substandard Reinsurance Premiums:
SINGLE LIFE
Table rated substandard reinsurance premiums are included by multiplying
the rates in Exhibit B.1 by the appropriate multiple of the standard
reinsurance premiums (25% per table).
c. Flat Extra Premiums
Flat Extra reinsurance premiums are the following percentages of such
premiums charged the insured:
Permanent flat extra premiums (for more than 5 years duration)
First Year 25%
Renewal Years 90%
1
Temporary flat extra premiums (for 5 years or less duration)
All Years 90%
SECOND-TO-DIE POLICY
Flat Extra reinsurance premiums are added to the LIFE REINSURANCE RATES
before Frasierizing.
2. SUPPLEMENTAL BENEFITS:
Supplemental Benefits are not reinsured.
3. AGE BASIS:
Age Nearest Birthday
4. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC.:
Annual reinsurance premiums for conversions will be the Security Life
Reinsurance Rates For After Conversion attached to this Schedule B. The
reinsurance rates will be based on the original issue age, duration since
issuance of the original policy and the original underwriting
classification.
5. FACULTATIVE RATE LIMIT:
The automatic reinsurance rates in this Agreement can be used for
facultative reinsurance amounts up to $20,000,000 at issue ages 0-75, so
long as the total amount of insurance in force and applied for, per life,
with all companies, does not exceed $35,000,000.
If either limit would be exceeded, then the reinsurance rates will be
mutually agreed upon.
2
Exhibit B1
(8 pages omitted)
SCHEDULE C
REPORTING INFORMATION
INFORMATION ON RISKS REINSURED
1. Type of Transaction
2. Effective Date of Transaction
3. Automatic/Facultative Indicator
4. Policy Number
5. Full Name of Insured
6. Date of Birth
7. Sex
8. Smoker/Nonsmoker
9. Policy Plan Code
10. Insured's State of Residence
11. Issue Age
12. Issue Date
13. Duration from Original Policy Date
14. Face Amount Issued
15. Reinsured Amount (Initial Amount)
16. Reinsured Amount (Current Amount at Risk)
17. Change in Amount at Risk Since Last Report
18. Death Benefit Option (For Universal Life Type Plans)
19. ADB Amount (If Applicable)
20. Substandard Rating
21. Flat Extra Amount Per Thousand
22. Duration of Flat Extra
23. ▇▇ ▇▇▇▇▇ (Yes or No)
24. Previous Policies (Yes or No)
25. Premiums
3
SAMPLE
POLICY EXHIBIT SUMMARY
(LIFE REINSURANCE ONLY)
(1 page omitted)
4
SAMPLE
RESERVE CREDIT SUMMARY
(1 page omitted)
5
SAMPLE
ACCOUNTING SUMMARY
(1 PAGE OMITTED)
6
SCHEDULE D
FACULTATIVE FORMS
Application for Reinsurance
Notification of Reinsurance
1
NOTIFICATION OF REINSURANCE FORM
(2 pages omitted)
AMENDMENT 1
EFFECTIVE AUGUST 1, 2000
TO THE
AUTOMATIC AND FACULTATIVE
YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
Effective January 1, 2000
(the "Agreement")
between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
("Ceding Company")
And
SECURITY LIFE OF DENVER INSURANCE COMPANY
("Reinsurer")
WHEREAS, Reinsurer currently reinsures Ceding Company's policy plans under this
Agreement; and
WHEREAS, Ceding Company wishes to cede additional policy plans to Reinsurer
under the Agreement, effective August 1, 2000 and Reinsurer wishes to accept
these policy plans; and
WHEREAS, the parties hereby agree as follows:
1. Schedule A, Paragraph 1 is hereby amended to include additional policy
plans as follows:
PLAN REINSURED:
The policy plans and supplemental benefits automatically and facultatively
reinsured are:
PLANS PLAN CODES
-------------------------------------------------------------------------
Variable Universal Life - Single Life 1033.99
Variable Universal Life - Survivorship 1034.99
Primary Insured Term Rider
Vel-93 1023-93
Select Life
Select Inheritage
Variable Inheritage
2. All remaining terms and conditions set forth in Schedule A and B of the
Agreement shall apply to the new policy plans; and
3. Except for the additional policy plans added by this Amendment 1, all other
terms and conditions of the Agreement shall remain unchanged.
In witness of the above, Ceding Company and Reinsurer have by their respective
officers executed and delivered this Amendment in duplicate on the dates
indicated below, with an effective date of August 1, 2000.
FIRST ALLMERICA FINANCIAL SECURITY LIFE OF DENVER
LIFE INSURANCE COMPANY INSURANCE COMPANY
By: /s/ By: /s/
-------------------------------- ----------------------------------
Title: VP Life Products Title: /s/
----------------------------- -------------------------------
Date: 5/2/01 Date: November 6, 2000
------------------------------ --------------------------------
By: /s/ By: ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ----------------------------------
Title: AVP & Actuary Title: V.P. of Business Operations
----------------------------- -------------------------------
Date: 5/7/2001 Date: 11/13/00
------------------------------ --------------------------------
AMENDMENT 2
EFFECTIVE JANUARY 1, 2001
TO THE
AUTOMATIC AND FACULTATIVE
YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
Effective January 1, 2000
(the "Agreement")
between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
("Ceding Company")
And
SECURITY LIFE OF DENVER INSURANCE COMPANY
("Reinsurer")
WHEREAS, Reinsurer currently reinsures Ceding Company's policy plans under this
Agreement; and
WHEREAS, Ceding Company wishes to cede additional policy plans to Reinsurer
under the Agreement, effective August 1, 2000 and Reinsurer wishes to accept
these policy plans; and
WHEREAS, the parties hereby agree as follows:
1. Schedule A, Paragraph 1 is hereby amended to include additional policy
plans as follows:
PLAN REINSURED:
The policy plans and supplemental benefits automatically and facultatively
reinsured are:
PLANS PLAN CODES
-------------------------------------------------------------------------
Variable Universal Life - Single Life 1033.99
Variable Universal Life - Survivorship 1034.99
Primary Insured Term Rider
Vel-93 1023-93 & 1018-93
Select Life 1026-94
Select Inheritage 1027-95
Variable Inheritage 1027-95
Vel Plus 1023-93
2. All remaining terms and conditions set forth in Schedule A and B of the
Agreement shall apply to the new policy plans; and
3. Except for the additional policy plans added by this Amendment 2, all other
terms and conditions of the Agreement shall remain unchanged.
Primary Insured Term Rider
Vel-93 1023-93 & 1018-93
Select Life 1026-94
Select Inheritage 1027-95
Variable Inheritage 1027-95
Vel Plus 1023-93
The policy plans reinsured on a facultative basis only are:
PLANS PLAN CODES
-------------------------------------------------------------------------
Single Premium VUL 1030-96
Single Premium ▇▇▇ - ▇▇ ▇▇▇▇-▇▇
Face amount increases for Variable Universal Life policies issued prior to
January 1, 2000 will be automatically reinsured under the agreement,
pursuant to Article 15 paragraph b of the agreement.
3. All remaining terms and conditions set forth in Schedule A and B of the
Agreement shall apply to the new policy plans; and
4. Except as herein amended, all other terms and conditions of this Agreement
shall remain unchanged.
In witness of the above, Ceding Company and Reinsurer have by their respective
officers executed and delivered this Amendment in duplicate on the dates
indicated below, with an effective date of January 1, 2001.
FIRST ALLMERICA FINANCIAL SECURITY LIFE OF DENVER
LIFE INSURANCE COMPANY INSURANCE COMPANY
By: /s/ By: /s/
-------------------------------- ----------------------------------
Title: VP Life Products Title: /s/
----------------------------- -------------------------------
Date: 5/2/01 Date: March 26, 2001
------------------------------ --------------------------------
By: /s/ By: ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ----------------------------------
Title: AVP & Actuary Title: V.P. of Business Operations
----------------------------- -------------------------------
Date: 5/7/2001 Date: 3/28/01
------------------------------ --------------------------------
AMENDMENT 3
EFFECTIVE JANUARY 1, 2001
TO THE
AUTOMATIC AND FACULTATIVE
YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
Effective January 1, 2000
(the "Agreement")
between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
("Ceding Company")
And
SECURITY LIFE OF DENVER INSURANCE COMPANY
("Reinsurer")
RECITALS
WHEREAS, the Reinsurer currently reinsures Ceding Company's plans under the
Agreement; and
WHEREAS, Ceding Company wishes to:
1. Submit additional policy plans for facultative reinsurance to the Reinsurer
under the Agreement; and
2. Automatic cede face amount increases for policies issued prior to January
1, 2000; and
WHEREAS, the Reinsurer wishes to accept these policy plans;
AGREEMENT
The parties agree to the following:
1. Article 15 paragraph b shall be amended to include the following paragraph:
All increases made to policies issued prior to January 1, 2000 shall be
subject to new underwriting evidence.
2. Schedule A, Paragraph 1 is hereby amended to include additional policy
plans as follows:
PLANS REINSURED:
The policy plans and supplemental benefits automatically and facultatively
reinsured are:
PLANS PLAN CODES
-------------------------------------------------------------------------
Variable Universal Life - Single Life 1033.99
Variable Universal Life - Survivorship 1034.99
Primary Insured Term Rider
Vel-93 1023-93 & 1018-93
Select Life 1026-94
Select Inheritage 1027-95
Variable Inheritage 1027-95
Vel Plus 1023-93
The policy plans reinsured on a facultative basis only are:
PLANS PLAN CODES
-------------------------------------------------------------------------
Single Premium VUL 1030-96
Single Premium ▇▇▇ - ▇▇ ▇▇▇▇-▇▇
Face amount increases for Variable Universal Life policies prior to January
1, 2000 will be automatically reinsured under the agreement, pursuant to
Article 15 paragraph b of the agreement.
3. All remaining terms and conditions set forth in Schedule A and B of the
Agreement shall apply to the new policy plans; and
4. Except as herein amended, all other terms and conditions of this Agreement
shall remain unchanged.
In witness of the above, Ceding Company and Reinsurer have by their respective
officers executed and delivered this Amendment in duplicate on the dates
indicated below, with an effective date of January 1, 2001.
FIRST ALLMERICA FINANCIAL SECURITY LIFE OF DENVER
LIFE INSURANCE COMPANY INSURANCE COMPANY
By: /s/ By: /s/
-------------------------------- ----------------------------------
Title: VP Life Products Title: /s/
----------------------------- -------------------------------
Date: 5/2/01 Date: March 26, 2001
------------------------------ --------------------------------
By: /s/ By: ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ----------------------------------
Title: AVP & Actuary Title: V.P. of Business Operations
----------------------------- -------------------------------
Date: 5/7/2001 Date: 3/28/01
------------------------------ --------------------------------
AMENDMENT 4
EFFECTIVE JANUARY 1, 2001
TO THE
AUTOMATIC AND FACULTATIVE
YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
Effective January 1, 2000
(the "Agreement")
between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
("Ceding Company")
And
SECURITY LIFE OF DENVER INSURANCE COMPANY
("Reinsurer")
RECITALS
WHEREAS, the Reinsurer currently reinsures Ceding Company's plans under the
Agreement; and
WHEREAS, Ceding Company wishes to:
1. Amend their underwriting requirements; and
2. Automatic cede policies which were issued as Term Plans and have been
exchanged for Permanent Plans; and
WHEREAS, the Reinsurer wishes to accept these policy plans;
AGREEMENT
The parties agree to the following:
1. Schedule A, Item 9, Additional Underwriting Requirements:
Remove the existing table under Blood Profile Limits and replace it with
the following:
TEST ISSUE AGE APPLIED FOR AMOUNT
-------------------------------------------------------------------------
Urine 0-60 Up to $ 300,000
Blood 0-60 $ 300,000+
Blood 60+ $ 100,000
2. For policies which meet the requirements of the Terms Exchange Program, as
set forth in Exhibit I attached to this Amendment 4, the Reinsurer shall
automatically reinsure said policies using the percentages of the 1975-80
Select and Ultimate Table with Society of Actuaries Reinsurance Council
high age extension above age 70 specified in Schedule B paragraph 1.a. of
the Agreement.
3. For policies that meet the requirements of the Term Exchange Program,
Schedule A and B of the Agreement will apply, except that paragraph 4 of
Schedule B will not apply.
4. Except as herein amended, all other terms and conditions of the Agreement
shall remain unchanged.
In witness of the above, Ceding Company and Reinsurer have by their respective
officers executed and delivered this Amendment in duplicate on the dates
indicated below, with an effective date of January 1, 2001.
FIRST ALLMERICA FINANCIAL SECURITY LIFE OF DENVER
LIFE INSURANCE COMPANY INSURANCE COMPANY
By: /s/ By: /s/
-------------------------------- ----------------------------------
Title: VP Life Products Title: /s/
----------------------------- -------------------------------
Date: 7/13/01 Date: May 3, 2001
------------------------------ --------------------------------
By: /s/ By: ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ----------------------------------
Title: AVP & Actuary Title: V.P. of Business Operations
----------------------------- -------------------------------
Date: 7/16/2001 Date: 5/7/01
------------------------------ --------------------------------
Exhibit I
Term Exchange Program
- Program Duration - 6 months
- Maximum Face Amount = $2.5 Million
- Maximum Age on Conversion date is 60
- Underwriting Class must be Standard or Preferred
- Term Policy must be no older than 5 years
- Front page of Term policy must be submitted
- MIB Check will be performed
- Conversions only valid to Allmerica VUL products currently available for
sale
- Statement of good health required
- Term Policy must be issued by one of the following companies:
First Colony Life
Transamerica
State Farm Life
Northwestern Mutual
American General
Allstate
New York Life
▇▇▇▇ ▇▇▇▇▇▇▇
Met Life
USAA Life
ReliaStar
Prudential
Farmers New World Life
Manulife
▇▇▇▇▇▇▇ National (Michigan)
MassMutual
Guardian
American Family Life
AMENDMENT 5
EFFECTIVE JANUARY 1, 2001
TO THE
AUTOMATIC AND FACULTATIVE
YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
Effective January 1, 2000
(the "Agreement")
between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
("Ceding Company")
And
SECURITY LIFE OF DENVER INSURANCE COMPANY
("Reinsurer")
7 RECITALS
WHEREAS, the Reinsurer currently reinsures Ceding Company's plans under the
Agreement; and
WHEREAS, Ceding Company wishes to:
1. Submit additional policy plans for facultative reinsurance to the Reinsurer
under the Agreement; and
WHEREAS, the Reinsurer wishes to accept these policy plans;
AGREEMENT
The parties agree to the following:
2. Schedule A, Paragraph 1 is hereby amended to include additional policy
plans as follows:
PLAN REINSURED:
The policy plans reinsured on a facultative basis only are:
PLANS PLAN CODES
-------------------------------------------------------------------------
Single Premium VUL 1030-96
Single Premium VUL - NY 1030-99
Individual VUL 1039-99
Group VUL 1037-99GRC
Group VUL - NY 1029-94NY-R
3. All remaining terms and conditions set forth in Schedule A of the Agreement
shall apply to the new policy plans; and
4. Except as herein amended, all other terms and conditions of this Agreement
shall remain unchanged.
In witness of the above, Ceding Company and Reinsurer have by their respective
officers executed and delivered this Amendment in duplicate on the dated
indicated below, with an effective date of January 1, 2001.
FIRST ALLMERICA FINANCIAL SECURITY LIFE OF DENVER
LIFE INSURANCE COMPANY INSURANCE COMPANY
By: /s/ By: /s/
-------------------------------- ----------------------------------
Title: VP Life Products Title: /s/
----------------------------- -------------------------------
Date: 7/1/01 Date: June 20, 2001
------------------------------ --------------------------------
By: /s/ By: ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ----------------------------------
Title: AVP & Actuary Title: V.P. of Business Operations
----------------------------- -------------------------------
Date: 7/1/2001 Date: 6/27/01
------------------------------ --------------------------------