POOL REINSURANCE AGREEMENT NO. __________
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
________________________
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 4
Article V Reinsurance Premium Rates and Payments Page 5
Article VI Changes to the Reinsurance Page 7
Article VII Recapture Page 9
Article VIII Claims Page 11
Article IX Arbitration Page 13
Article X Insolvency Page 15
Article XI Offset Page 15
Article XII Inspection of Records Page 16
Article XIII Letter of Credit Page 16
Article XIV Confidentiality Page 17
Article XV Miscellaneous Page 18
Article XVI Execution of the Agreement Page 20
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 ____________. (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 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.
We agree that we will not make you a party to any litigation between any
such third party and us. Neither party will disclose the other's name to
these third parties with regard to the agreements or transactions that are
between our companies, unless prior written approval is obtained from the
other party.
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
appended hereto 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 calendar days prior written notice. You will continue to accept new
reinsurance during the ninety-day period.
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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 Payments), unless otherwise terminated in
accordance with the terms of this Agreement. 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 remaining reinsured under this Agreement.
6. Compliance
This Agreement applies only to the issuance of insurance by us in a
jurisdiction in which we are properly licensed.
The parties represent that, to the best of their knowledge, they are in
compliance with all state and federal laws and regulations applicable to the
business reinsured under this Agreement. In the event that either party is
found to be in non-compliance with any such law or regulation, the Agreement
will remain in effect and the parties will seek to remedy the non-compliance
and will indemnify each other for any direct loss suffered as a result of
the non-compliance.
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.
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.
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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.
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. Your offer will expire at the end of
one hundred twenty (120) days, unless otherwise specified by you.
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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. All
information will be subject to the confidentiality and privacy requirements
set forth in Article XIV (Confidentiality).
ARTICLE IV - COMMENCEMENT OF REINSURANCE
1. Automatic Reinsurance
Your liability for cessions ceded automatically under this Agreement will
begin and end simultaneously with our contractual liability for the policy
on which reinsurance is based, unless otherwise terminated in accordance
with this agreement, subject to the Agreement effective date shown in
Article I (Scope of the Agreement), Section 2.
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), and Article I (Scope of the Agreement).
5. Temporary Insurance Receipt Liability
You will not be liable for losses under the terms of a Temporary Insurance
Receipt.
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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 premium 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 you anticipate that the reinsurance rates shown in
Exhibit C will continue to be charged, it may become necessary for you to
charge a rate that is the greater of the rate from Exhibit C or the
corresponding statutory net premium rate based on _________________. If you
choose to increase the rates in Exhibit c, we reserve the right to terminate
reinsurance and recapture all business reinsured under this Agreement as of
the date the rates were increased. The recapture will be without penalty.
Procedures and details of the 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.
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
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balances through the termination date, along with interest charges
calculated from the due date shown above to the date of payment. We agree
that we will not force termination under the provisions of this paragraph to
avoid the recapture requirements, or to transfer the block of business
reinsured to another reinsurer.
If we overpay a reinsurance premium and you accept the overpayment, your
acceptance will not constitute nor create a reinsurance liability nor result
in any additional reinsurance. Instead, you will be liable to us for a
credit in the amount of the overpayment, without interest.
If we fail to make a full premium payment for a policy or policies reinsured
hereunder, due to an error or omission as defined in Article VI, the amount
of reinsurance coverage provided by you shall not be reduced. However, once
the underpayment is discovered, we will be required to pay you the
difference between the full premium amount and the amount actually paid,
without interest. If payment of 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 above.
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.
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 in
full. However, you will have no liability for claims incurred between the
termination date and the reinstatement date, subject to requirements of
Article VI.
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 VIII (Premium
Taxes).
B. DAC Tax
The following will be effective where applicable:
1. 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.
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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 in the
administration of this Agreement, the underlying 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.
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 if it affects the
reinsurance of this policy and the appropriate premium adjustment, on
our periodic statement of account.
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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 based on issue age and table rating of insured as shown in
Exhibit A. 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.
Reductions and terminations are permitted only when the underlying
policyholder directs such a reduction or termination of the issuing company
policy that is in force at the time that the reductions and terminations
take place, or by operation of the policy's terms.
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 will be reinstated automatically at the date of reinstatement of the
policy. We will send you copies of our reinstatement papers only upon
request.
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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 maintained our maximum available retention as shown in
Exhibit A, at the time reinsurance was required.
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 (Reinsurance
Premium Rates and Payments).
5. Risk Classification Changes
If the policyholder requests a substandard table rating reduction or removal
of a flat extra, such change will be underwritten by us in accordance with
our standard underwriting guidelines, practices, and procedures for risk
selection, a communicated to you at the time of pricing, as well as any
subsequent material changes to these guidelines, practices, and procedures
that have been consented to in writing by you.
6. Policy Loans
You do not participate in policy loans nor other forms of indebtedness on
policies reinsured under this Agreement; therefore, policy loans do not
affect the Reinsurance Death Benefit.
ARTICLE VII - RECAPTURE
1. Basis of Recapture
Recapture will be allowed under this Agreement only as specifically stated
under Articles I and X, or under the following circumstances:
a) You elect to increase the premium rates shown in Exhibit C, on in force
business: or
b) We increase the retention limits shown in Exhibit A.
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Policies will be eligible for recapture under paragraph b) above when the
policy has been in force under this Agreement for the Recapture Period shown
in Exhibit C, Section IX (Recapture Period). The recapture period will
always be measured from the original policy issue date. Policies will be
eligible for recapture under paragraph a) above as of the effective date of
the rate increase, regardless of issue date. The recapture will be without
penalty.
2. Method of Recapture
If we elect to recapture because you have increased reinsurance rates, the
recapture will be effective as of the effective date of the rate increase,
regardless of issue date.
If we elect to recapture due to an increase in our retention limits, we will
give you written notice of our intention to recapture within ninety days of
the effective date of our retention increase.
When we have given you written notice of our intent to recapture, and the
date that we will begin the process of recapture, the following procedures
as applicable to the Basis of Recapture undertaken will apply:
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) Recapture will not be made on a basis that may result in any
anti-selection against the Reinsurer.
If we increase our retention limits shown in Exhibit A, the percentage of
the risk reinsured will reduce proportionately. If reinsurance was placed
with more than one reinsurer, each reinsurer's percentage will be reduced 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.
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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. Notification of rescission of policies where the insured is still
alive will be provided in writing.
2. Settlement of Claims
Claim payments will be applied against premium payments. If the amount of
claims payment due us 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. You will accept our good faith decision in settling
any claim except as specified in this Article.
We will provide you with claim documentation of Death Certificate,
Beneficiary Statement, Statement of Benefits, and upon request, a copy of
the entire claim file, for all contestable claims. Your consultation
privileges 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, Section 4, 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. These expenses include,
but are not limited to, investigative expenses, attorney's fees, penalties
and interest imposed automatically by statute and risking solely out of a
judgement rendered against us in a suit for policy benefits.
We will be responsible for and shall not hold you responsible for payment of
the following claim expenses:
a) routine administrative expenses for the home office or elsewhere,
including our employees' salaries;
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b) expenses incurred in connection with any dispute or contest arising our
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 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 lawsuit by any of the claimants or
parties to the policy.
c) You will share in the payment of reasonable investigative and attorneys'
fees in the same proportion as your original liability bears to our
original liability prior to the contest of the claim. In addition you
will share in payment of any penalties and interest imposed
automatically against us by statute and arising solely out of a
judgement rendered against us in a suit or a settlement 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.
d) 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
The Reinsurer will not participate in punitive or compensatory damages that
are awarded against the Ceding Company as a result of an act, omission or
course of conduct committed solely by the Ceding Company, its agent, or
representatives in connection with claims covered under this Agreement. The
Reinsurer will, however, pay its share of statutory penalties awarded
against the Ceding Company in connection with claims covered under this
Agreement if the Reinsurer has joined in the contest of the coverage in
question.
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The parties recognize that circumstances may arise in which equity would
require the Reinsurer to the extent permitted by law, to share
proportionately in punitive and compensatory damages. Such circumstances are
difficult to define in advance, but would generally be those situations in
which the Reinsurer was an active party, and in writing, recommended,
consented to, or ratified the act or course of conduct of the Ceding Company
that ultimately resulted in the assessment of the extra-contractual damages.
In such situations, the Reinsurer and the Ceding Company will share such
damages so assessed, in equitable proportions.
For the purposes of this Article, the following definitions will apply:
"Punitive Damages" are those damages awarded as a penalty, the amount of
which is neither governed nor fixed by statute.
"Compensatory Damages" are those amounts to compensate for the actual
damages sustained, and are not awarded as a penalty, nor fixed in amount by
statute.
"Statutory Penalties" are those amounts awarded as a penalty, but are fixed
in amount of statute.
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.
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.
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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 within 30 days of their appointment, each arbitrator shall
nominate three candidates within 10 days thereafter, two of whom the other
shall decline, and the decision shall be made by drawing lots.
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.
The parties to this Agreement may agree to extend any of the negotiation or
arbitration periods.
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.
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Each party will pay the fees of its own attorneys, the arbitrator appointed
by the 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 and may limit the use of depositions and discovery.
ARTICLE X - INSOLVENCY
1. If we are judged insolvent, you will pay all reinsurance 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, determined in proportion to each reinsurer's share of the risk,
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 deemed insolvent by the Insurance Commissioner of your state of
domicile, you will be bound by any legal directions imposed by your
liquidator, receiver or statutory successor. However, if not in conflict
with such legal directions, 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.
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.
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ARTICLE XII - INSPECTION OF RECORDS
Either party to this Agreement 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 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, any 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 disposition of funds withdrawn,
except to see that withdrawals are made only upon the order of our properly
authorized representatives.
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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), and any other information considered nonpublic personal
information as defined under statute or state law, 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.
b) Information acquired from non-parties who have no confidential
commitment to either party to this Agreement.
c) Information which was independently developed without violating any
known confidentiality obligations and without the use of any
Confidential Information.
You will take all necessary and appropriate measures to ensure that your
employees and agents abide by the terms of this Article
2. Confidential information as defined above may be shared or used by you
within your organization and with a third party only if required to
administer or perform services under this agreement. If required by law, you
agree that you will enter into a written agreement with such third parties
not to disclose our confidential information, before you share confidential
information with such third parties. You will take all necessary and
appropriate measures to ensure that your employees and representatives abide
by the terms of this agreement.
3. Upon termination of service for the Phoenix, all confidential information
must be disposed of in a responsible manner. You agree to return all records
and copies of confidential information, in whatever form then existing, to
the appropriate officers of the Company or to destroy such records in a
responsible manner once the need for their retention expires. Upon request
you will provide in writing, written certification that destruction of such
records has occurred. In the event you are requested or required by law,
regulation, or order, subpoena or civil process to disclose any confidential
information, you agree that you provide Phoenix with an opportunity to take
appropriate action.
4. 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 you may make available any necessary data or information to your
auditors, retrocessionaires, affiliates, or any governmental or
administrative agencies in the
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course of their examination of your records, systems and procedures provided
that they are (1) made aware by you that this is Confidential Information;
and (2) agree to abide by the restrictions of this Agreement on further
dissemination of said Confidential Information.
ARTICLE XV - FINANCIAL SOLVENCY
This Agreement is entered into in reliance on the utmost good faith of the
parties including, for example, their representations and disclosures. It
requires the continuing utmost good faith of the parties; their
representatives, successors, and assigns. This includes a duty of full and
fair disclosure of all information respecting the formation and continuation
of this contract, the business reinsured, the underwriting and policy issues
(rules, practices, and staff), the financial condition of the parties,
studies and reports on the business reinsured, and the solvency of the
parties.
You or your representatives have the right at any reasonable time to inspect
our 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. You have entered into
this Agreement in reliance upon our representatives and warranties. We
affirm that we have disclosed and will continue to disclose to you all
matters material to this Agreement.
ARTICLE XVI - 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
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.
ARTICLE XV - MISCELLANEOUS
1. Assignment
Rights and obligations of this Agreement cannot be assigned by either party
unless mutually agreed to by all parties. The terms of this Agreement are
binding upon the parties, their representatives, successors, and assigns.
The parties to this
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Agreement are bound by ongoing and continuing obligations and liabilities
until the later of: this Agreement terminates; or the underlying policies
are no longer in force. This Agreement shall not be bifurcated, partially
assigned, or partially assumed.
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 Ceding Company:
Phoenix Life Insurance Company
PHL Variable Insurance Company
Phoenix Life and Annuity Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to Reinsurer:
----------------------------
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.
-19-
ARTICLE XVI - EXECUTION OF THE AGREEMENT
In witness whereof, we have caused this Agreement to be executed in duplicate
at the dates 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
SCOR GLOBAL LIFE RE INSURANCE COMPANY OF TEXAS
------------------------------------------ -----------------------------------
Signature Signature
------------------------------------------ -----------------------------------
Title Title
------------------------------------------ -----------------------------------
Date of Signature Date of Signature
-20-
EXHIBIT A
(Effective ____________)
REINSURANCE COVERAGE
I. REINSURANCE COVERAGE
This Agreement will cover a ____ percent quota share of Death Benefits and
Other Supplementary Benefits or Riders issued with Death Benefits, universal
life, indexed universal life, variable universal life, and whole life
(including single life, joint life and COLI products) that we issue directly
and which is fully underwritten and in excess of the sum of our retention
limit shown in this Exhibit. This includes increasing face amount or
increasing term riders.
Reinsurance will be placed automatically under this Agreement provided that:
. The policies are placed on the Effective Date of Coverage of this
Agreement or later
. Each risk is classified using our individual underwriting standards that
were in effect at the time the policy and/or benefit(s) is underwritten.
. Each insured life is a permanent resident of the United States or Canada.
. We have maintained our maximum available retention on the life of the
insured as shown below, at the time reinsurance is required.
. The initial face amount or ultimate face amount (if Death Benefit Option
C or Increasing Term Riders are used) is greater than Phoenix's maximum
available retention at issue.
Benefits and Riders that are covered under this Agreement:
Individual Term, Increasing Term, Child Term, Family Term, Estate Term,
Credit of Specified Amount upon Death of Covered Insured, Four Year
Survivorship Term, Four Year Term, Flexible insurance Term, Death Benefit
Option C.
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 < Flat Extra >=
$10 per 1,000 $10 per 1,000
Ages Standard or _____ or ____
---- -------- ------------- -------------
0 - 14
15 - 70
71 - 80
81 - 85
86 - 90
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 < Flat Extra >=
$10 per 1,000 $10 per 1,000
Ages Standard or ______% or ________%
---- -------- ------------- -------------
0 - 14
15 - 70
71 - 80
81 - 85
86 - 90
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 term insurance riders.
3) When the initial amount of reinsurance required on a policy is $________
or less, we will retain that amount in addition to our regular retention
limits.
4) When the net amount at risk on all reinsurance cessions combined on an
individual life falls below $________ all cessions on that life will
terminate as of the first anniversary date that the total net amount at
risk falls below $________.
III. AUTOMATIC ACCEPTANCE LIMITS FOR THE POOL
A. Single Life and First-to-Die Policies:
Flat Extra < Flat Extra >=
$10 per 1,000 $10 per 1,000
Ages Standard or _______% or _______%
---- -------- ------------- -------------
0 - 14
15 - 70
71 - 80
81 - 85
86 - 90
B. Second-to-Die Policies:
Flat Extra < Flat Extra >=
$10 per 1,000 $10 per 1,000
Ages Standard or _______% or ________%
---- -------- ------------- -------------
0 - 14
15 - 70
71 - 80
81 - 85
86 - 90
. Automatic acceptance limits for joint life second-to-die plans will be
based on the largest of the individual automatic acceptance limits.
. 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.
. 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.
. Aviation risks for ages over 75 or less than 15, or rated greater than
Table 6 must have an Aviation Exclusion Rider. Automatic Acceptance
Limit for Aviation Risks is $________.
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 within the
last three (3) years.
B. The risk is categorized as a Jumbo Risk.
C. The policy has an ultimate face amount greater than $________.
D. We have retained an amount less than our usual retention limits for the
age and table rating of the insured.
E. The substandard mortality assessment exceeds ____% or its equivalent
with flat extra premium.
F. Professional athletes that are a member of a team that is part of Major
League Baseball, the National Football League, the National Basketball
Association, or the National Hockey League will not be reinsured on an
automatic basis.
G. Military applicants serving in hazardous areas, alerted for or on orders
to, or volunteering for service in hazardous areas.
H. The aggregate amount of automatic reinsurance on one life in all Pools
is greater than the Automatic Acceptance Limits shown in this Exhibit.
V. JUMBO LIMIT:
For the purposes of this Agreement, the Jumbo Risk is defined as a policy
for which our underwriting papers indicate that the total life insurance
inforce and the ultimate face amount 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 ultimate face amount applied for on
either life exceeds $________ the current application will be considered a
jumbo risk.
Phoenix must notify the Reinsurer whenever the total amount in force and the
ultimate applied for exceeds $________.
Exceptions for amounts to be replaced may only be made where:
1. An existing permanent product is to be replaced, with or without a 1035
exchange, and the new issuing company has been provided with and filed
an acceptable absolute assignment form, (where permitted), and/or
2. An existing term product is to be replaced and the new issuing company
has been provided with and filed an acceptable absolute assignment form
(where permitted) and/or
3. An internal replacement situation where the new issuing company is
replacing a like amount of its in force coverage.
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
electronic media, containing information in general compliance with the
following:
. 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.
. 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 electronic media, an in force
listing containing information in general compliance with the following:
. 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. Your
share of the net amount at risk of each eligible policy will be the "Policy
Percentage" times the total net amount at risk of the policy with total net
amount at risk equal to face amount minus account value. "Policy Percentage"
is defined as: (your percentage of 25%) x (Ultimate Face Amount - Retention
Limit) / (Ultimate Face Amount).
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:
Frasierized
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. Your
share of the net amount at risk of each eligible policy will be the "Policy
Percentage" times the total net amount at risk of the policy with total net
amount at risk equal to face amount minus account value. "Policy Percentage"
is defined as: (your percentage of 25%) x (Ultimate Face Amount - Retention
Limit) / (Ultimate Face Amount).
II. RATES AND ALLOWANCES FOR LIFE REINSURANCE
A. Single Life
The single life YRT Rates shown in this Exhibit are a percentage of the 2001
Valuation Basic Table (VBT), NS/SM, ANB or ALB, depending on plan. 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:
Phoenix
Accumulator UL UL/VUL Express VUL
-------------- ------ -----------
Risk Class
Male Preferred Plus
Male Preferred
Male Nonsmoker
Male Smoker
Female Preferred Plus
Female Preferred
Female Nonsmoker
Female 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:
UL/VUL
------
Risk Class
Male Preferred Plus
Male Preferred
Male Nonsmoker
Male Smoker
Female Preferred Plus
Female Preferred
Female Nonsmoker
Female Smoker
C. Joint Second-To-Die Frasierized Products
The joint second to die frasierized premium will be calculated as follows:
The monthly 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 $______.
q/L/\\x+t-1:y+t-1\\ /12 = monthly survivorship rate
q/L/\\x+t-1:y+t-1\\ = 1 - (\\t\\p/L/\\xy\\ / \\t-1\\p/L/\\xy\\) where
q/L/\\x+t-1:y+t-1\\ = the annual survivorship mortality rate for both
insureds.
\\t\\p/L/\\xy\\ = \\t\\p\\x\\ + \\t\\p\\y\\ - \\t\\p\\x\\ * \\t\\p\\y\\
\\t\\p\\x\\ = II p\\x+r\\ for r = 0, 1, ...t-1
p\\x+r\\ = 1- q\\x+r\\ where q is the single life rate.
The rate charged will be the calculated rate or, if larger, $____/1000 of
NAR per year.
UL/VUL
------
Risk Class
Male Preferred Plus
Male Preferred
Male Nonsmoker
Male Smoker
Female Preferred Plus
Female Preferred
Female Nonsmoker
Female 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 twenty years after the issue date of the
covered policy.
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' subsidiaries.
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 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:
. 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.
. Single life to Joint Second to Die - Phoenix Life Insurance Company will
fully retain the converted policy.
. 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 ___%
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.