EXHIBIT (g)
SAMPLE SUBSTANDARD POOL REINSURANCE AGREEMENT
Effective
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Between
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
Milwaukee, Wisconsin
and
REINSURANCE COMPANY
City, State
This Agreement of yearly renewable term reinsurance is effective
__________________ by and between The Northwestern Mutual Life Insurance
Company, Milwaukee, Wisconsin ("NML") and Reinsurance Company ("Pool
Reinsurer"). As between NML and Pool Reinsurer, this Agreement is referred to as
the "Agreement."
This Agreement is a pooling reinsurance arrangement whereby NML cedes
risk to various reinsurers, including the Pool Reinsurer. The distribution of
the pooling is set forth in Exhibit B. The term "Pool Reinsurers" refers to all
of the reinsurers participating in the pool, including the Pool Reinsurer.
NML and Pool Reinsurer agree as follows:
1. Automatic Yearly Renewable Term Reinsurance
1.1 NML shall retain no mortality risk on policies in the
pool. NML agrees to cede and Pool Reinsurers agree to accept (as set forth in
Exhibit B), on the terms and conditions set forth in this Agreement, equal
shares of the risk specified in Exhibit A on qualifying policies evaluated
within the classification range specified in Exhibit A, as subject to this
Agreement.
1.2 NML policies qualify for automatic yearly renewable term
reinsurance under this Agreement only if:
1.2.1 The proposed insured applies for single-life
fixed or single-life variable insurance while this Agreement is in force and
submits evidence of insurability appropriate for personal applications at
his/her age and amount according to NML's usual underwriting requirements;
1.2.2 The proposed insured's insurance age is within
the range specified in Exhibit A;
1.2.3 NML has not sought to improve its
classification on the life of the proposed insured through facultative
reinsurance at any time in the last five years;
1.2.4 The face amount of the application satisfies
the Minimum Risk Amount requirements provided in Exhibit A;
1.2.5 The current application will not cause the
aggregate amount of insurance in force in the pool to exceed the Maximum Risk
Amount specified in Exhibit A;
1.2.6 The proposed insured is not a jumbo risk as
defined in Exhibit A;
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1.2.7 Applying NML's usual underwriting rules and
standards, the classification of the proposed insured as of the application
signed date satisfies the range specified in Exhibit A; and
1.2.8 The proposed insured resides in a locale
acceptable to NML under its regular underwriting standards applicable to
residents.
2. Inforce Substandard Policies on Qualifying Lives
2.1 Inforce single-life policies on the life of any insured
newly qualifying for reinsurance under this Agreement that meet all of the
qualifications of Section 1, are not otherwise reinsured, and would obtain a
more favorable retail classification from the change will also be reinsured
under this Agreement, effective as of their next monthly anniversary dates. The
reinsurance premiums for such policies will be based upon the original policy
date and issue age of the insured life.
2.2 NML shall have the authority to reinsure previously
retained substandard policies under this Agreement upon their reinstatement if
the life meets all of the qualifications of Section 1 of this Agreement.
3. Liability of Pool Reinsurer
3.1 The liability of each Pool Reinsurer shall begin and end
simultaneously with that of NML except as otherwise expressly stated in this
Agreement.
3.2 Each Pool Reinsurer shall establish and hold statutory
reserves, including required deficiency reserves, at the level established by
NML for its share of the risks reinsured. Any Pool Reinsurer not authorized to
write reinsurance in all jurisdictions where NML operates will establish and
maintain a letter of credit or other security acceptable to NML to allow NML to
reflect its full statutory reserve credit in its statutory statements.
3.3 The reinsurance provided under this Agreement is indemnity
reinsurance. No right or legal relation whatsoever exists between Pool Reinsurer
and the insured, owner, or beneficiary of any insurance policy or contract of
NML. Further, the participation of each Pool Reinsurer in this Agreement shall
be separate and apart from the participation of all other Pool Reinsurers and
shall not be joint with other Pool Reinsurers.
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3.4 Whenever NML becomes liable for a death benefit under the
provisions of a Conditional Life Insurance Agreement, as shown in Exhibit D,
Pool Reinsurer will assume liability for its proportionate share of cumulative
benefits up to $2 million, provided the insured qualifies for automatic
reinsurance under this Agreement.
3.5 NML will provide Pool Reinsurer with notice of any change
in NML's Conditional Life Insurance Agreement and the practices and procedures
respecting the same.
3.6 Pool Reinsurer does not reinsure the Accidental Death or
Waiver of Premium benefits and does not participate in policy loans, dividends,
or surrender values.
4. Risk Amounts
4.1 NML shall retain no mortality risk on policies in the
pool. Pool Reinsurers shall share equally in the net amount at risk so long as
the policy is in force including by reinstatement and operation of a
nonforfeiture option, except as otherwise expressly provided in Section 5,
Section 6, Exhibit G, and as follows:
4.1.1 Contractual Increases. Pool Reinsurers shall
assume increases in risk of reinsured policies arising through contractual
provisions, including but not limited to, additional premium deposits, scheduled
increases in coverage, and corridor risk amounts on variable insurance
contracts.
4.1.2 Noncontractual Increases. NML shall have the
authority to approve noncontractual increases in coverage to policies reinsured
in the pool, subject to all of the provisions of Section 1 of this Agreement.
4.1.3 Reductions. If the face amount of a policy
reinsured under this Agreement is reduced, the amount reinsured in the pool
shall be reduced proportionately. Neither reduction nor termination of an NML
policy other than a policy reinsured under this Agreement will affect the amount
of reinsurance on a policy reinsured under this Agreement.
4.1.4 Conversions. Policies arising from conversions
of term policies reinsured under this Agreement shall also be reinsured under
this Agreement. The reinsurance pricing for such policies will be based upon the
original policy date and issue age of the insured life.
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4.1.5 Reinstatements. NML shall have sole authority
to reinstate policies reinsured under this Agreement according to its usual
reinstatement practices and procedures. When a policy reinsured under this
Agreement is reinstated, reinsurance under this Agreement is reinstated
concurrently. NML will pay all reinsurance premiums in arrears for that period
for which NML receives premiums in arrears under the reinsured policy.
4.1.6 Reconsiderations. NML shall have the right to
improve the classification of insureds under this Agreement only with respect to
smoking habits. For this purpose, NML shall apply its normal smoker
reconsideration rules.
4.1.7 Plan Changes. If a policy reinsured under this
Agreement is changed to another single-life plan of insurance, the reinsurance
shall continue from the original policy date.
5. Changes in Retention Limits
5.1 In the event NML changes its limits of retention, it will
provide prompt written notice of the new retention limits and the effective date
of the change.
6. Recapture
6.1 In the event NML increases its limits of retention for
business eligible for this Agreement, it may recapture reinsurance under this
Agreement as follows:
6.1.1 NML may reduce the reinsurance on all policies
reinsured under this Agreement so long as its remaining proportionate retention
is no more than its proportionate retention on otherwise similar new issues.
6.1.2 If NML elects to recapture reinsurance under
Section 6, it must do so such that its total retention on the policy reinsured
under this Agreement equals its new retention as indicated in Exhibit C after
the increase in its limits of retention. Further, in the event of any such
recapture, Pool Reinsurer shall continue to reinsure automatically the excess
over NML's new retention following recapture, each Pool Reinsurer bearing risk
in the same proportion to total reinsurance on the policy as it did immediately
before recapture.
6.1.3 If NML elects to recapture reinsurance under
Section 6, it must exercise its option by giving written notice of its election
to all affected Pool Reinsurers within ninety (90) days of the effective date of
any increase in its limits of retention. Such recapture will
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become effective only on the later of the following: the anniversary date of
the affected policy immediately following the notice of election, or the tenth
anniversary of the policy.
7. Reinsurance Premiums
7.1 Reinsurance premiums for business reinsured under this
Agreement shall be at the classification specified in Exhibit A, using the
appropriate premium schedule shown in Exhibit E.
7.2 Flat extra premiums assessed on policies reinsured under
this Agreement shall be coinsured. Pool Reinsurer will pay NML allowances.
7.3 With the exception of certain plans as determined by NML,
reinsurance premiums for fixed dollar coverages shall be paid on an annual basis
for all reinsured policies newly issued or experiencing anniversary processing
dates within a calendar month. In the case of new issues, such premiums are due
by the fifteenth (15) day of the month following the first month in which the
policy is both issued and paid for. In the case of renewals, such premiums are
due by the fifteenth (15) day of the month following the anniversary processing
date of the policy.
7.4 For variable coverages and certain fixed-dollar plans (as
determined by NML) reinsured under this Agreement, NML shall calculate and pay
reinsurance premiums each month for each reinsured policy based on the net
amount at risk as of the last working day of the month. Such premiums are due by
the fifteenth (15) day of the following month. To offset Pool Reinsurer's loss
of interest because reinsurance premiums are not paid annually in advance, the
monthly premium shall be 8.63 percent of the otherwise applicable annual
premium.
7.5 NML and Pool Reinsurer anticipate that the premium rates
specified in Exhibits A and E for individual reinsured policies will remain in
effect so long as those policies are reinsured under this Agreement. Pool
Reinsurer guarantees to provide the coverage at rates no higher than the yearly
renewable term net premium on the valuation mortality basis of the underlying
policies. If Pool Reinsurer does increase the reinsurance premium rates, NML has
the right to recapture the coverage immediately at no cost or penalty.
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7.6 The payment of net reinsurance premiums due is a condition
precedent to the continuing liability of the Pool Reinsurer under this
Agreement. If any reinsurance premium is not paid when due, the Pool Reinsurer
or Pool Reinsurers to which it is owed may terminate the corresponding
reinsurance upon sixty (60) days prior written notice to NML. If all overdue
premiums are paid within the notice period, the reinsurance will not terminate.
7.7 There shall be no experience refunds paid with respect to
reinsurance effected under this Agreement.
8. Currency
8.1 All amounts reinsured under this Agreement and all
payments by NML and Pool Reinsurer shall be in United States dollars.
9. Administration and Expenses
9.1 NML will self-administer all reinsurance provided under
this Agreement by providing: (a) a monthly accounting statement indicating the
net amount of reinsurance premium due; (b) a monthly policy exhibit indicating
the amounts of reinsurance in force at the beginning and end of the month and
the interim changes; (c) periodic electronic records of reinsured policies in
force, as well as new issues, terminations, and other changes; and (d) periodic
summaries and electronic records of statutory reserves on reinsured policies.
9.2 NML will furnish Pool Reinsurer with specimen copies of
its application, policy and rider forms, and such tables of rates and values as
are reasonably required for proper administration of the business reinsured
under this Agreement.
9.3 NML shall bear the expense of all medical examinations,
inspection fees, commissions, and other charges incurred in connection with the
issuance and maintenance of its policies reinsured under this Agreement.
10. Claims
10.1 NML shall give Pool Reinsurer prompt notice of each claim
submitted on a policy reinsured under this Agreement. Claim proofs accepted by
NML will be deemed accepted by and binding upon Pool Reinsurer. In administering
claims on policies reinsured under this Agreement, NML shall employ its
customary practices and procedures. Pool Reinsurer will
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abide by all claim payments and settlements of NML. Upon request, NML will give
affected Pool Reinsurer copies of proofs and other documents bearing on a claim.
10.2 Each Pool Reinsurer shall pay its respective share of
each claim (including interest, if any) in one lump sum, regardless of the
method of settlement employed by NML under its reinsured policy. Pool
Reinsurers' shares shall be due within twenty (20) days of receipt by the Pool
Reinsurer of notification by NML that the claim has been settled.
10.3 Each Pool Reinsurer shall pay its respective share of
such interest as is credited or paid by NML on the principal amount of a claim.
10.4 In the event of adjustment by NML in the amount of any
claim due to misstatement of age or sex of the insured, reinsurance under this
Agreement will be reinstituted as of the original policy date based upon the
correct age and sex, and reinsurance premiums shall be adjusted retroactively to
reflect the correct age and sex. Pool Reinsurers will then participate in the
adjusted claim amount, each in the same share as it held before discovery of the
misstatement.
10.5 In the event of misstatement of smoking habits, NML shall
have sole authority to rescind the policy or to adjust the policy premium
accordingly. In the event the policy premium is adjusted, reinsurance premiums
shall be retroactively adjusted accordingly; and each Pool Reinsurer shall pay
its respective share of the net settlement made by NML. In the event of
rescission, NML shall recover from Pool Reinsurer all net reinsurance premiums
on the policy rescinded.
10.6 NML and Pool Reinsurers shall bear, each Pool Reinsurer
according to its share of the risk on the affected policy, related claims
expenses incurred in connection with settling claims, including, by way of
description only and not limited to, fees and expenses of third parties utilized
by NML in connection with claims investigation and litigation (including
litigation concerning policy rescission), but not including overhead expenses
and compensation of NML's salaried officers and employees allocated to regular
claim procedures, and not including expenses resulting from disputes over the
entitlement of beneficiaries to proceeds NML admits are payable. NML may request
each Pool Reinsurer to pay its share of expenses on a periodic basis before a
case is finally resolved.
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10.7 NML shall not be required to notify Pool Reinsurer of its
intention to contest a claim or assert defenses to a claim under a policy
reinsured under this Agreement. Pool Reinsurers shall pay their respective
shares of the costs of any such contest or defense, including their shares of
any costs of a rescission action, but Pool Reinsurers shall not be liable for
any extra-contractual damages, exemplary, compensatory or punitive, awarded
under statute or otherwise as a result of NML's actions.
11. Error and Oversight
11.1 If, through unintentional error, oversight, omission, or
misunderstanding (collectively referred to as "errors"), Pool Reinsurer or NML
fails to comply with the terms of this Agreement and if, upon discovery of the
error by either party, the other is promptly notified, each will be restored to
the position it would have occupied if the error had not occurred, including the
effect of the time value of money, using the 13-week U.S. Treasury ▇▇▇▇ rate or
such other rate to which the parties may agree.
11.2 If it is not possible to restore each party to the
position it would have occupied but for the error, the parties will endeavor in
good faith to fashion a prompt resolution to the situation created by the error
that is fair and reasonable and most closely approximates the intent of the
parties as evidenced by this Agreement. However, Pool Reinsurer will not provide
reinsurance for policies that do not satisfy the parameters of this Agreement.
If either party discovers that NML has failed to cede reinsurance as provided in
this Agreement, or failed to comply with its reporting requirements, Pool
Reinsurer may require NML to audit its records for similar errors and to take
the actions necessary to avoid similar errors in the future.
12. Offset
12.1 Any amount which either NML or any Pool Reinsurer is
obligated to pay the other under this Agreement may be paid net of any amount
then due and unpaid by the other under this or any other reinsurance agreement
between them.
13. Inspection of Records
13.1 At any reasonable time during normal business hours and
upon prior reasonable written notice, Pool Reinsurers, or any of them, may
inspect, at their own expense, at
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the Home Office of NML, all existing records of applications for policies
reinsured under this Agreement and any and all records pertaining to reinsurance
under this Agreement.
13.2 At any reasonable time during normal business hours and
upon prior reasonable written notice, NML may inspect, at its own expense, at
the Home Office of any one or more Pool Reinsurers, any and all records
pertaining to reinsurance under this Agreement.
14. Insolvency of NML
14.1 In the event of the insolvency of NML, the reinsurance
under this Agreement will be payable by Pool Reinsurer directly to NML or its
liquidator, receiver or statutory successor, on the basis of the liability of
NML under the policy or policies reinsured, without diminution because of the
insolvency of NML. It is agreed, however, that the liquidator, receiver or
statutory successor of the insolvent NML shall give written notice to each Pool
Reinsurer of the pendency of a claim against the insolvent NML on a policy
reinsured under this Agreement within a reasonable time after such claim is
filed in the insolvency proceedings and that during the pendency of such claim
Pool Reinsurers, or any of them, may investigate such claim and interpose, in
the proceeding where such claim is to be adjudicated, any defense which they or
it may deem available to NML or its liquidator, receiver or statutory successor.
The expense thus incurred by Pool Reinsurer or any of them shall be chargeable,
subject to court approval, against the insolvent NML as part of the expense of
liquidation or receivership to the extent that any benefit accrues to the
insolvent NML as a result of the defense undertaken by the Pool Reinsurers or
any of them.
15. Arbitration
15.1 It is the intention of NML and each Pool Reinsurer that
the customs and practices of the insurance and reinsurance industry shall be
given full effect in the operation and interpretation of this Agreement. The
parties agree to act in all things with the highest good faith; however, if NML
and Pool Reinsurers, or any of them, cannot mutually resolve a dispute which
arises out of, or relates to this Agreement, the dispute shall be decided
through arbitration in accordance with the Arbitration Rules attached as Exhibit
F. The parties agree that the threshold questions of whether an issue is
arbitrable shall be decided by the arbitrators, not a court, and said question
shall also be subject to the final and binding arbitration provisions set
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forth in this Agreement. The arbitrators shall base their decision on the terms
and conditions of this Agreement, and on applicable law, but may also refer, as
necessary to decide the matter, to the course of dealings between the parties
and the customs and practices of the insurance and reinsurance industries.
15.2 The decision of the arbitrators shall be final and
binding on NML and the Pool Reinsurer(s) involved in the arbitration process.
There shall be no appeal from the arbitrators' decision, except that any party
to the arbitration may petition a court having jurisdiction over the parties and
the subject matter to reduce the arbitrators' decision to judgment.
15.3 The parties intend this article to be enforceable in
accordance with the Federal Arbitration Act (9 U.S.C. Sections 1 et seq.),
including amendments and successors to that Act. In the event that any party to
a dispute refuses to submit to arbitration as required by Section 15.1, the
other party to the dispute may request the United States District Court for the
Eastern District of Wisconsin to compel arbitration in accordance with the
Federal Arbitration Act. NML and Pool Reinsurer hereby consent to the
jurisdiction of such court to enforce Section 15 and to confirm and enforce the
performance of any arbitration award obtained hereunder.
15.4 Notwithstanding anything in this Agreement to the
contrary, however, Pool Reinsurer may not require arbitration of a dispute under
this Agreement if NML has been made the subject of delinquency proceedings under
Chapter 645 of the Wisconsin Statutes.
16. Premium Taxes
16.1 Each Pool Reinsurer will reimburse NML for state premium
taxes NML is required to pay on gross reinsurance premiums paid to the Pool
Reinsurer. Premium tax reimbursement will be at NML's average premium tax rate
and may be deducted from its periodic reinsurance premium payments or reimbursed
on an annual basis. In the latter case, it is NML's responsibility to notify
each Pool Reinsurer of the amount of its liability for premium taxes paid by NML
and to request reimbursement within six months of the close of the calendar year
to which the taxes apply.
17. Changes in Circumstances of Pool Reinsurer
17.1 In view of the importance of financially sound reinsurers
to the financial security of NML's policyholders, NML and Pool Reinsurer agree
to the information, security,
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transfer of risk, and other provisions set forth in attached Exhibit G, Changes
in Circumstances of Pool Reinsurer.
18. Choice of Law
18.1 This Agreement shall be construed in accordance with and
shall be governed by the laws of the State of Wisconsin, without giving effect
to the choice-of-law principles of such state.
19. Assignment and Transfer
19.1 This Agreement may not be assigned or transferred by NML
without the prior written consent of Pool Reinsurer; and this Agreement, any
rights or duties under this Agreement, or any reinsurance under this Agreement
may not be sold, assigned, or transferred in any manner by any Pool Reinsurer
without the prior written consent of NML. Included among the transfers
prohibited by this provision are bulk transfers of the reinsurance under this
Agreement without NML's prior consent, but this provision shall not be
interpreted to prohibit retrocessions made in the ordinary course of business by
Pool Reinsurer.
20. Publication Prohibited
20.1 Pool Reinsurers shall not publish (whether orally or in
writing) or otherwise use their reinsurance relationships with NML in connection
with their direct insurance operations, if any; provided, however, that Pool
Reinsurers may disclose their reinsurance relationships with NML, and facts
pertinent thereto, to regulatory authorities and in material filed with
regulatory authorities as required by law.
21. Severability
21.1 If any provision of this Agreement is found by a court of
competent jurisdiction to violate any applicable law, statute, or regulation,
such provision shall be deemed void and unenforceable. However, the parties
shall abide by the remainder of this Agreement in accordance with its terms.
21.2 If the operation of any provision of Exhibit G of this
Agreement is determined, by any regulatory authority having jurisdiction, to
foreclose NML from taking credit on its annual statement for reinsurance ceded
under this Agreement, NML may at its election
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declare such provision to be null and void as to one or more Pool Reinsurers,
whereupon it shall be so, the parties to abide by the remainder of this
Agreement in accordance with its terms.
22. Execution, Duration, and Termination of Agreement
22.1 This Reinsurance Pool Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same instrument.
22.2 This Agreement shall be of unlimited duration. It may be
amended at any time as to all parties upon written agreement of all parties; it
may be amended at any time as to NML and any Pool Reinsurer upon written
agreement, signed by NML and the Pool Reinsurer. In addition to termination
afforded by Exhibit G, this Agreement may be terminated as to any one or more
Pool Reinsurers, for purposes of new business only, upon one hundred twenty
(120) days prior written notice to NML, by each terminating Pool Reinsurer; and
it may be terminated by NML as to any one or more Pool Reinsurers, upon ninety
(90) days prior written notice to the affected Pool Reinsurer(s). In any case of
termination under this Section 22.2, however, the terminating or terminated Pool
Reinsurer shall continue to accept reinsurance during the notice period, and
shall remain liable on all existing reinsurance effected under this Agreement,
in accordance with this Agreement, until such existing reinsurance under this
Agreement ceases.
23. DAC Tax.
23.1 NML and Pool Reinsurer each represents and warrants that
it is subject to taxation under subchapter L or subpart F of part III of
subchapter N of Chapter 1 of the Internal Revenue Code of 1986, as amended (the
"Code").
23.2 NML and Pool Reinsurer (for purposes of this section
each, singularly, a "party" and collectively, the "parties") agree and elect as
follows pursuant to Section 1.848-2 (g)(8) of the Income Tax Regulations issued
December 29, 1992 under Section 848 of the Code ("Regulations"):
23.2.1 The party with a positive net consideration
for the Agreement for each taxable year will capitalize specified policy
acquisition expenses with respect to the Agreement without regard to the general
deductions limitation of Section 848 (c)(1) of the Code.
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23.2.2 For purposes of this section, "consideration"
shall be determined in accordance with Section 1.848-2(f) of the Regulations.
23.2.3 The parties agree to exchange information
pertaining to the amount of net consideration under the Agreement to effect this
election and to ensure consistency in the computation of net consideration.
23.2.4 NML will submit a Schedule to Pool Reinsurer
by April 1 of each year of its calculation of the net consideration under the
Agreement for the preceding calendar year. Pool Reinsurer may contest the
calculation of net consideration by submitting an alternative to NML in writing
within sixty (60) days of receipt of the Schedule. If Pool Reinsurer does not do
so, the amounts shown on the Schedule shall be presumed, conclusively, to be
correct. If Pool Reinsurer does contest the calculation of net consideration,
the parties will act in good faith to reach an agreement as to the correct
amount within thirty (30) days of submission by Pool Reinsurer, of this
alternative calculation. Each party shall then report the amount agreed upon on
its respective tax return for the preceding calendar year.
23.2.5 This election shall be effective for all
taxable years for which the Agreement remains in effect.
24. Entire Agreement
24.1 This Agreement, including the Exhibits, constitutes the
entire agreement between NML and Pool Reinsurer with respect to the business
that is the subject of this Agreement, and there are no understandings between
the parties with respect to the business reinsured under this Agreement, other
than as expressed in this Agreement.
24.2 The parties have negotiated this Agreement and agree that
it should not be construed against either party as the drafter of this
Agreement.
This Agreement is executed in duplicate by NML and Pool
Reinsurer by their respective officers duly authorized to do so on the date
below.
THE NORTHWESTERN MUTUAL REINSURANCE COMPANY
LIFE INSURANCE COMPANY
By: By:
------------------------ -------------------------
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Title: Title:
------------------------ -------------------------
Attest: Attest:
By: By:
------------------------ -------------------------
Title: Title:
------------------------ -------------------------
Date Signed: Date Signed:
--------------- ---------------
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EXHIBIT A
QUALIFICATIONS FOR THE POOL
[This Exhibit sets forth the parameters for the policies reinsured by
this pool.]
EXHIBIT B
ALLOCATION OF REINSURANCE
[This Exhibit defines the portion of each risk that is ceded to each
reinsurer.]
EXHIBIT C
NORTHWESTERN MUTUAL RETENTION LIMITS
[This Exhibit sets forth NML's retention limits.]
EXHIBIT D
CONDITIONAL LIFE INSURANCE AGREEMENT
[Exhibit D consists of a sample of Northwestern Mutual's current
Conditional Life Insurance Agreement.]
EXHIBIT E
REINSURANCE PREMIUM RATES
[This Exhibit sets forth the reinsurance premium rates.]
EXHIBIT F
ARBITRATION RULES
To initiate arbitration, either NML or a Pool Reinsurer engaged in the
dispute shall notify the other in writing of its desire to arbitrate, stating
the nature of the dispute and the remedy sought. The party to whom the notice is
sent shall respond to the notification in writing within ten (10) business days
of its receipt.
The arbitration hearing shall be before a panel of three arbitrators,
each of whom must be a current or former officer of a life insurance or life
reinsurance company domiciled in North America. NML, as one party, and the Pool
Reinsurer or Pool Reinsurers engaged in dispute, collectively, as the other
party, shall each name three (3) candidates to serve as arbitrator. No candidate
so named may be a present officer, attorney, or consultant of NML or any Pool
Reinsurer, or any of their affiliates, and if any candidate so named is a former
officer, attorney, or consultant of NML or any Pool Reinsurer, or any of their
affiliates, that fact and the dates of service and titles held in such capacity
shall be disclosed and, upon the objection of the other party, such candidate
shall be removed from the list of the party naming such candidate and replaced
with another candidate within two business days. After formulation of the lists
in this fashion, the two parties shall each choose one candidate from the
other's list and these two candidates shall serve as the first two arbitrators.
If one or more candidates so chosen shall decline to serve as an arbitrator, the
party who named such candidate shall add an additional candidate to its list,
subject to the limitations stated above, and the other party shall again choose
one candidate from the list. This process shall continue until two arbitrators
have been chosen and have accepted. The parties shall each present their initial
lists of three (3) candidates by written notification to the other within
twenty-five (25) business days of the date of the mailing of the notification
initiating the arbitration. Any subsequent additions to the list which are
required (except for replacements upon objection to a former officer, attorney
or consultant which shall be made within two (2) business days as indicated
above) shall be presented within ten (10) business days of the date the naming
party receives notice that a chosen candidate has declined to serve. If either
party refuses or neglects to present its initial list of arbitrators within the
twenty-five (25) business days allotted, or to make any subsequent additions to
the list within the time allotted, the other party may appoint both arbitrators.
The two arbitrators shall then select the third arbitrator from the four (4)
candidates remaining on the lists of the parties within fourteen (14) days of
the acceptance of their positions as arbitrators. If the two arbitrators cannot
agree on the choice of the third, then this choice shall be referred back to the
parties. The parties shall take turns striking the name of one of the remaining
candidates from the initial six (6) candidates until only one candidate remains.
If the candidate so chosen shall decline to serve as the third arbitrator, the
candidate whose name was stricken last shall be nominated as the third
arbitrator. This process shall continue until a candidate has been chosen and
has accepted. This candidate shall serve as the third arbitrator.
The first turn at striking the name of a candidate shall belong to the party
that is initiating the arbitration. Once chosen, the arbitrators are empowered
to decide all substantive and procedural issues by a majority of votes.
It is agreed that each of the three arbitrators should be impartial
regarding the dispute and should resolve the dispute on the basis set forth in
the Agreement. Therefore, at no time will NML or any Pool Reinsurer contact or
otherwise communicate with any person who has been designated as a candidate to
serve as an arbitrator concerning the dispute. Likewise, any written or oral
arguments provided to the arbitrators concerning the dispute shall be provided
simultaneously to the other party or shall take place in the presence of the
other party.
The arbitration hearing shall be held in Milwaukee, Wisconsin, or such
other place as is agreed to by the parties, on the date fixed by the
arbitrators. In no event shall this date be later than six (6) months after the
appointment of the third arbitrator. As soon as possible, the arbitrators shall
establish pre-arbitration procedures as warranted by the facts and issues of the
particular case. At least ten (10) business days prior to the arbitration
hearing, each party shall provide the other party and the arbitrators with a
detailed statement of the facts and arguments it will present at the arbitration
hearing. The arbitrators may consider any relevant evidence; they shall give the
evidence such weight as they deem it entitled to after consideration of any
objections raised concerning it. The party initiating the arbitration shall have
the burden of proving its case by a preponderance of the evidence. Each party
may examine any witnesses who testify at the arbitration hearing. Within twenty
(20) business days after the end of the arbitration hearing, the arbitrators
shall issue a written decision. In their decision the arbitrators shall
apportion the costs of arbitration, which shall include, but not be limited to,
their own fees and expenses, as they deem appropriate.
EXHIBIT G
CHANGES IN CIRCUMSTANCES OF POOL REINSURERS
[This Exhibit sets forth detailed financial parameters for NML's
reinsurers.]