REINSURANCE AGREEMENT EFFECTIVE
APRIL 1, 2000 BETWEEN
CONTINENTAL ASSURANCE COMPANY AND AMERICAN NATIONAL LIFE INSURANCE COMPANY
GUARANTEED MINIMUM DEATH BENEFIT
REINSURANCE AGREEMENT
CEDING COMPANY: AMERICAN NATIONAL LIFE INSURANCE COMPANY
(hereinafter referred to as the "Ceding Company")
REINSURER: CONTINENTAL ASSURANCE COMPANY OF CHICAGO, ILLINOIS
(hereinafter referred to as "Continental")
EFFECTIVE DATE: April 1, 2000
Commencing on the effective date, the Ceding Company will submit and Continental
agrees to accept, the Ceding Company's Guaranteed Minimum Death Benefit (GMDB)
risks as defined in Schedule B, the Accepted Coverage Schedule, subject to the
provisions of this agreement.
TABLE OF CONTENTS
ARTICLES TITLE PAGE
I Automatic reinsurance 3
II Reinsurance premiums and reporting 3
III Errors and omissions 5
IV Forms 5
V Claims 5
VI Recapture 7
VII Inspection of records 7
VIII Confidentiality 8
IX Insolvency 8
X Termination charge 9
XI Parties to the agreement 10
XII Duration of agreement 10
XIII Arbitration 10
XIV Currency 11
XV Choice of law and forum 11
XVI Dac tax 11
XVII Premium tax 12
XVIII Entire contract 12
SCHEDULES
A Automatic Acceptance Limits 15
B Accepted Coverage 17
C Premium Rates 18
D Reporting Format 20
E Sub-Accounts 21
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ARTICLE I
AUTOMATIC REINSURANCE
1. Beginning with the effective date of this agreement, the Ceding Company will
cede and Continental will accept, subject to the limits and conditions set forth
in this Agreement and the Schedules attached thereto, reinsurance of the GMDB
attached to the Variable Annuity Contracts listed in Schedule B. The GMDB
reinsurance benefit is as described in the rider shown in Schedule A.
2. This agreement covers only the Ceding Company's liability on claims under
Variable Annuity Contracts that Continental has reviewed prior to issuance.
Approved GMDB forms, Variable Annuity Contracts and Annuity Contract Forms are
listed in Schedule B.
3. If the Ceding Company intends to cede to Continental liability with respect
to a new annuity contract, or a revised version of an annuity contract where
such revision effects the GMDB, it must provide Continental written notice of
such intention together with a copy of the proposed annuity contract, or
revision. Continental must approve all such additions/revisions in writing.
Continental will respond to the Ceding Company within thirty (30) days after
receipt of the additions/revisions.
4. The Ceding Company will not change its existing published limits and rules
relating to GMDB as stated in its prospectus in effect as of April 1, 2000.
Continental shall have no liability pursuant to revised limits and rules unless
the Ceding Company provides written notice to Continental of such changes and
Continental provides written notice to the Ceding Company that such revised
limits and rules are acceptable. Continental will respond to the Ceding Company
within thirty (30) days after receipt of the changes.
ARTICLE II
REINSURANCE PREMIUMS AND REPORTING
1. REINSURANCE PREMIUMS
A. Reinsurance premiums will be paid monthly in arrears. Such premiums will be
determined by the application of the rates set forth in Schedule C to the amount
of contract value provided for each annuity insured by the Ceding Company as
calculated based on the criteria defined in Schedule C.
B. Continental's share of the maximum purchase amount issued on the life of each
annuitant shall not exceed $3,000,000 without prior notification and acceptance.
The maximum purchase amount is the sum of all premium contributions less
withdrawals in the Contract. For purchase amounts in excess of the maximum,
where Continental has not agreed to accept the entire amount, Continental's
death benefit liability will be reduced by the ratio of purchase amounts in
excess of the maximum to the total purchase amounts.
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2. REINSURANCE REPORTING
A. Within 30 days from the close of the calendar month, the Ceding Company will
forward to Continental a statement or electronic medium reflecting the premiums
due including any adjustments from the prior month. The Ceding Company will also
remit a check for the balance due or will submit a request for payment of any
net amount due from Continental. No interest is payable on amounts paid within
30 days from the date the statement is prepared.
B. If the amounts described in this Article cannot be determined by said due
dates on an exact basis, such payments will be made with a generally agreed upon
formula which will approximate the actual payments. Adjustments will then be
made to reflect actual amounts when they become available.
3. UNPAID PREMIUMS
A. If any reinsurance premium is not paid within the allotted time, Continental
may terminate the reinsurance on unpaid policies by giving the Ceding Company
written notice. The Ceding Company will be liable for the payment of reinsurance
premiums to the effective date of termination. Failure by Continental to
exercise its right under this paragraph in any specific situation will not be a
waiver of Continental's right to do so at a later date.
B. Continental will reinstate the reinsurance at any time within sixty (60) days
following such termination if the Ceding Company makes payment, with interest,
of all reinsurance premiums due and payable up to the date of reinstatement and
provides full disclosure of all claims for which it has received notice between
dates of termination and reinstatement. Continental will refund, with interest,
any termination charge that was assessed against the due and unpaid policies at
the time of reinstatement. Interest amounts will be calculated using the 7 year
Constant Maturity Treasury rate reported for the last working day of that
calendar month as reported in the Federal Reserve H15 Report. Continental will
be liable for reinsurance on only those claims incurred by the Ceding Company
between the dates of termination and reinstatement if the Ceding Company
disclosed at the time it requested reinstatement of such policies all claims for
which it has received notice. All such claims will be subject to the claims
provisions specified in Article V.
C. Balances remaining unpaid by either party for more than 30 days from the date
due will incur interest retroactive from the due date of the balance to the date
of actual payment. Interest amounts will be calculated using the 7 year Constant
Maturity Treasury rate reported for the last working day of that calendar month
as reported in the Federal Reserve H15 Report.
4. OFFSET
Continental and the Ceding Company may exercise at any time the right to offset
any undisputed debits or credits, liquidated or unliquidated, whether on account
of premiums or on account of losses or otherwise, due from either party to the
other under this agreement.
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5. QUARTERLY RESERVE AND VALUATION INFORMATION
The reserve held by Continental for reinsurance of the variable annuity death
benefit will be determined in accordance with the NAIC Actuarial Guideline
XXXIV, but in no event less than the required statutory reserve in the state of
domicile of the Ceding Company or such other state in which it conducts
business. If Continental is not an admitted reinsurer in all jurisdictions where
the Ceding Company conducts business, Continental will purchase, at
Continental's expense, a Letter of Credit to enable the Ceding Company to take
reinsurance credit appropriately for all liabilities under this Agreement.
6. SELF ADMINISTERED REPORTING REQUIREMENTS
The Ceding Company will not change its existing self administered reporting
practices in effect on or after the effective date, unless the Ceding Company
notifies Continental in writing and Continental approves of such changes. If the
reporting practices of the Ceding Company deteriorate to the point that
Continental cannot properly administer the risks reinsured under this agreement,
has been notified of such deterioration in writing by Continental and has not
remedied such deterioration within 30 days of receipt of notice, then
Continental reserves the right to terminate this agreement within 15 business
days of receiving the notice of non-remedy.
ARTICLE III
ERRORS AND OMISSIONS
This Agreement will not be abrogated by the failure of either the Ceding Company
or Continental to comply with any of the terms of this Agreement if it is shown
that said failure was unintentional and the result of a misunderstanding,
oversight or clerical error on the part of either the Ceding Company or
Continental. Both parties will be returned to the position they would have
occupied had no such oversight, misunderstanding or clerical error occurred.
This provision will cease five years after the termination of the last contract
known to be reinsured under this agreement.
ARTICLE IV
FORMS
The Ceding Company will furnish Continental with any specimen copies of its
applications, forms, and any tables of rates and values which may be required
for the proper administration of the business reinsured under this agreement,
and will keep Continental informed with proper documentation as to any
modifications or new forms which would be required for the proper administration
of reinsurance under this agreement.
ARTICLE V
CLAIMS
1. The Ceding Company is solely responsible for payment of its claims under the
underlying Annuity Contracts identified in Schedule B.
2. The Ceding Company will determine the Guaranteed Minimum Death Benefit for
each deceased annuitant and/or owner.
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3. Claims are self administered.
4. The amount payable or paid on such claim, will be furnished to Continental
when the claim payment is reported to Continental.
5. Continental will be liable to the Ceding Company for the benefits reinsured
hereunder to the same extent as the Ceding Company is liable to the
contractowner for such benefits, and all reinsurance will be subject to the
terms and conditions of the contract under which the Ceding Company will be
liable.
6. Continental will pay its share in a lump sum to the Ceding Company without
regard to the form of claim settlement of the Ceding Company.
7. Continental agrees to pay to the Ceding Company a proportionate share of any
interest paid out to the claimant by the Ceding Company. Continental's liability
to pay interest will be discharged on the date that Continental issues payment
to the Ceding Company.
8. Continental reserves the right to offset any claim payments in accordance
with Article II - 4.
9. Claims remaining unpaid by Continental for more than 30 days after the
receipt of final papers will incur interest calculated from that date using the
7 year Constant Maturity Treasury Rate as reported for the last working date of
that month in the Federal Reserve H 15 Report.
10. The Ceding Company will promptly notify Continental of its intention to
contest benefits reinsured under this agreement or to assert defenses to a claim
for such benefits. If Continental agrees to participate in the contest or
assertion of defenses and the Ceding Company's contest of such benefits results
in the reduction of its liability, Continental will share in such reduction in
proportion to Continental's liability. If Continental declines to participate in
the contest or assertion of defenses, Continental will discharge all of its
liability by payment of the full amount of the reinsurance to the Ceding
Company.
11. Continental will pay its share of the unusual expenses of the contest in
addition to its share of the claim itself. Routine expenses incurred in the
normal settlement of uncontested claims, including interpleader cases, and the
salary of an officer or employee of the Ceding Company, are excluded from this
provision.
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12. If Continental participates in the contest, in no event will Continental
participate in punitive or compensatory damages which are awarded against the
Ceding Company as a result of an act, omission or course of conduct committed
solely by the Ceding Company in connection with the benefits reinsured under
this Agreement. Continental will, however, pay its share of statutory penalties
awarded against the Ceding Company in connection with benefits reinsured under
this Agreement if Continental elected to join in the contest of the coverage in
question. The parties recognize that circumstances may arise in which equity
would require Continental, to the extent permitted by law, to share
proportionately in certain assessed damages. Such circumstances are difficult to
define in advance, but generally would be those situations in which Continental
was an active party and directed, consented to, or ratified the act, omission,
or course of conduct of the Ceding Company which ultimately results in the
assessment of punitive and/or compensatory damages. In such situations, the
Ceding Company and Continental would share such damages so assessed in equitable
proportions. Routine expenses incurred in the normal settlement of uncontested
claims, in the submission of interpleaders and the salary of an officer or
employee of the Ceding Company are excluded from this provision.
13. For purposes of this provision, the following definitions will apply:
14. "Punitive Damages" are those damages awarded as a penalty, the amount of
which is not governed nor fixed by statute;
15. "Statutory Penalties" are those amounts which are awarded as a penalty, but
fixed in amount by statute;
16. "Compensatory Damages" are those amounts awarded to compensate for the
actual damages sustained, and are not awarded as penalty, nor fixed in amount by
statute.
ARTICLE VI
RECAPTURE PRIVILEGE
Recapture is not available.
ARTICLE VII
INSPECTION OF RECORDS
Continental will have the right, at any reasonable time, to inspect, at the
office of the Ceding Company, all books, records and documents relating to the
reinsurance under this Agreement.
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ARTICLE VIII
CONFIDENTIALITY
Continental and the Ceding Company may come into the possession or knowledge of
Confidential Information of either party in fulfilling their obligations under
this agreement. Continental and the Ceding Company agree to hold such
information in confidence and to take all reasonable steps to ensure that such
Confidential Information is not disclosed in any form by any means by its
employees or third parties of any kind, except by advance written authorization
by an officer of Continental or the Ceding Company; provided however, that
Continental and the Ceding Company will be deemed to have satisfied their
obligations as to the Confidential Information by protecting its confidentiality
in the same manner that they would protect their own proprietary or confidential
information of like kind which will be at least a reasonable manner or, if it is
determined that such disclosure is necessary in order to avoid a violation or
potential violation of legal obligations in accordance with the following:
1. If Continental or the Ceding Company, their employees, directors or advisers
are requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose Confidential Information, it will promptly notify the other
party in writing. The party notified will promptly determine whether to contest
such attempted discovery by legal means or to waive compliance by the notifying
party with the terms of this Agreement. If, in the opinion of its counsel,
Continental or the Ceding Company is subject to contempt, sanction or other
penalty for failure to disclose the requested Confidential Information, it may,
without violating the terms of this Agreement, disclose only that portion of the
Confidential Information that counsel advises is legally required to be
disclosed, provided that it exercises all reasonable efforts to preserve the
confidentiality of such information, including, without limitation, by
cooperating with Continental or the Ceding Company in obtaining a protective
order or other reliable assurance that the Confidential Information will be
protected from redisclosure, provided, however, that all expenses of such
efforts (other than allocated costs of home office employees at such location)
shall be borne by the party whose confidential information is sought to be
disclosed.
2. Confidential Information means any and all information acquired by
Continental or the Ceding Company prior or subsequent to the execution of this
Agreement with the exception of the following:
o Information readily available in the public domain; or
o Information acquired from sources other than the other party.
ARTICLE IX
INSOLVENCY
1. In the event of insolvency of either the Ceding Company or Continental, any
debits or credits due the other party, whether matured or unmatured, under this
agreement or any other agreement, which exists on the date of the entry of a
receivership or liquidation order, shall be deemed mutual debits or credits as
the case may be and shall be offset and only the balance shall be allowed or
paid.
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2. In the event of insolvency of the Ceding Company, Continental's liability for
claims will continue to be in accordance with the terms of the agreement.
Payment of reinsurance claims less any reinsurance premiums due Continental will
be made directly to the liquidator, receiver or statutory successor of the
Ceding Company without diminution because of the insolvency of the Ceding
Company.
3. In the event of insolvency of the Ceding Company, the liquidator, receiver or
statutory successor will give Continental written notice of any pending claim
and Continental may, at its own expense, investigate the claim and interpose any
defense which it deems appropriate to the Ceding Company or its liquidator,
receiver or statutory successor. If the Ceding Company benefits from the defense
by Continental, an equitable share of the expenses incurred by the Continental
will be chargeable to the Ceding Company as part of the expense of liquidation.
4. The Continental's liability will not increase as a result of the insolvency
of the Ceding Company.
5. In the event of the insolvency of Continental as determined by the Illinois
Department of Insurance, the liability of Continental shall not terminate but
shall continue with respect to the reinsurance ceded to Continental by the
ceding company prior to the date of such insolvency, and the Ceding Company
shall have a security interest in any and all sums held by or under deposit in
the name of Continental.
6. If the event in paragraph 5 above occurs, Continental shall have the right
within sixty (60) days of the date of notification to the Ceding Company that
the Illinois Department of Insurance determined the insolvency of Continental to
transfer all new and existing reinsurance ceded and all rights and obligations
under this Agreement to another reinsurer, subject to approval of the reinsurer
by the Ceding Company, and upon terms and conditions acceptable to the Ceding
Company. The Ceding Company shall not withhold its approval unreasonably and it
is understood that the terms and conditions of this Agreement shall be
acceptable to the Ceding Company for purposes of such transfer. In the event
that Continental is unable to effect such transfer, upon expiration of the
applicable notice period all new and existing reinsurance ceded under this
Agreement may terminate and be recaptured, as elected by the Ceding Company.
ARTICLE X
TERMINATION CHARGE
If Continental exercises its rights to terminate all new and existing inforce
reinsurance on unpaid policies as stipulated in Article 11-3 an appropriate
charge will be determined by, and paid to, Continental. Such termination charge
will be equal to one prior year's premium on the unpaid policies measured from
the date of termination.
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ARTICLE XI
PARTIES TO THE AGREEMENT
This is an Agreement for indemnity reinsurance solely between the Ceding Company
and Continental.
The acceptance of reinsurance hereunder will not create any right or legal
relation whatsoever between
Continental and any annuitant, contractowner or any beneficiary under any
contracts of the Ceding
Company which may be reinsured hereunder.
ARTICLE XII
DURATION OF AGREEMENT
1. This Agreement will be effective on and after the Effective Date stated on
the cover page. Other than for nonpayment of reinsurance premiums and/or failure
to comply with reporting requirements, the Agreement is unlimited in duration
but may be amended by mutual consent of the Ceding Company and Continental.
2. This Agreement may be terminated as to new reinsurance by either party giving
ninety (90) days written notice to the other, effective two years after date of
this agreement.
ARTICLE XIII
ARBITRATION
1. It is the intention of Continental and the Ceding Company that the customs
and practices of the insurance and reinsurance industry will 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. If Continental or the Ceding
Company cannot mutually resolve a dispute which arises out of or relates to this
Agreement, however, the dispute will be decided through arbitration.
2. Disagreements between Continental and the Ceding Company will be submitted to
three arbitrators who must be current or former officers of other life insurance
companies. Within sixty (60) days of the date of notice of the intent to submit
the dispute to arbitration, Continental and the Ceding Company will each appoint
one arbitrator and the third will be selected by these two arbitrators. If
agreement cannot be reached on the selection of the third arbitrator, each
arbitrator will nominate three (3) candidates within ten (10) days thereafter,
two of whom the other will decline, and the decision will be made by drawing
lots.
3. The arbitrators will base their decision on the terms and conditions of this
Agreement plus, as necessary, on the customs and practices of the insurance and
reinsurance industry rather than solely on a strict interpretation of the
applicable law. There will be no appeal from their decision, and any court
having jurisdiction of the subject matter and the parties may reduce that
decision to judgment.
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4. The arbitration hearing will be held on the date fixed by the arbitrators. In
no event will this date be later than six (6) months after the appointment of
the third arbitrator. As soon as possible, the arbitrators will establish
prearbitration procedures as warranted by the facts and issues of the particular
case. At least ten (10) days prior to the arbitration hearings, each party will
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 will give the evidence such weight as
they deem it entitled to after consideration of any objections raised concerning
it. The party initiating the arbitration will 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) days after the end of
the arbitration hearing, the arbitrators will issue a written decision. In their
decision, the arbitrators will apportion the costs of arbitration, which will
include but not be limited to their own fees and expenses, as they deem
appropriate.
ARTICLE XIV
CURRENCY
All currency will be payable in United States dollars.
ARTICLE XV
CHOICE OF LAW AND FORUM
Illinois law will govern the terms and conditions of the Agreement. In the case
of an arbitration, the arbitration hearing will take place in Chicago, Illinois,
and the Uniform Arbitration Act will control except as provided in Article XIII.
ARTICLE XVI
DAC TAX ELECTION STATEMENT
1. The Ceding Company and Continental hereby agree to the following pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulation issued December 1992, under
Section 848 of the Internal Revenue Code of 1986, as amended. This election will
be effective June 1, 1999 and all subsequent taxable years for which this
agreement remains in effect.
2. The term party" will refer to either the Ceding Company or Continental as
appropriate.
3. The terms used in this article are defined by reference to Regulation 1.848-2
in effect December 1992.
4. The party with net positive consideration for this agreement for each taxable
year will capitalize specified IRS contract acquisition expenses with respect to
this agreement without regard to the general deductions limitation of Section
848(c)(1).
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5. Both parties agree to exchange information pertaining to the amount of net
consideration under this agreement each year to ensure consistency or as
otherwise required by the Internal Revenue Service.
6. Continental will submit a schedule to the Ceding Company by February 1 of
each year of its calculation of the net consideration for the preceding calendar
year. This schedule will be accompanied by a statement stating that Continental
will report such net consideration in its tax return for the preceding calendar
year.
7. The Ceding Company may contest such calculation by providing an alternative
calculation to Continental within 30 days of the Ceding Company s receipt of
Continental's calculation. If the Ceding Company does not so notify Continental,
Continental will report the net consideration as determined by Continental in
Continental's tax return for the previous calendar year.
8. If the Ceding Company contests Continental's calculation of the net
consideration, the parties will act in good faith to reach an agreement as to
the correct amount within 30 days of the date the Ceding Company submits its
alternative calculation. If the Ceding Company and Continental reach agreement
on an amount of the net consideration, each party will report such amount in
their respective tax returns for the previous calendar year.
ARTICLE XVII
PREMIUM TAX
Continental will not be responsible for any taxes incurred now or in the future,
directly or indirectly, by the Ceding Company or its affiliated companies.
ARTICLE XVIII
ENTIRE CONTRACT
1. This agreement will constitute the entire agreement between the parties with
respect to the business being reinsured thereunder and that there are no
understandings between the parties other than in the agreement.
2. Any changes or modifications to the agreement will be null and void unless
made by amendment to the agreement and signed by both parties.
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Signed for Continental: Continental Assurance Company of Chicago, Illinois
By: /s/_________________________ Attest: /s/_____________________________
---------------------------- --------------------------------
President & COO Assistant Secretary
Life Reinsurance
Date of Signatures: March 9, 2000
-----------------------
Signed for the Ceding Company: American National Life Insurance Company
By:___________________________ Attest: _______________________________
Title: Title:
Date of Signatures: __________________________
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SCHEDULES
SCHEDULE A AUTOMATIC ACCEPTANCE LIMITS
SCHEDULE B ACCEPTED COVERAGES
SCHEDULE C PREMIUM RATES
SCHEDULE D REPORTING FORMAT
SCHEDULE E SUB-ACCOUNTS
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SCHEDULE A
AUTOMATIC ACCEPTANCE LIMITS
GUARANTEED MINIMUM DEATH BENEFITS (GMDB)
The GMDB reinsured hereunder is the amount is excess of the Accumulation Value
provided on all new Wealthquest III deferred variable annuity contracts. The
GMDB reinsured under the terms of this Agreement is described in the attached
copies of the GMDB Rider forms. Such forms are listed in Schedule B of this
agreement. Continental will reinsure all new deferred variable annuity contracts
until the exhaustion of the capacity.
6-Year Ratchet Benefit:
The guaranteed minimum death benefit (GMDB) during the accumulation period prior
to death will be the greatest of:
During the first six Contract Years the (GMDB) will be:
1) The purchase payments paid, reduced proportionately for any partial
withdrawals, systematic withdrawals and any incurred taxes;
At the start of each subsequent six Contract Year Ratchet periods, the (GMDB)
will be the greatest of:
1) The Accumulation Value at the start of such six Contract Year period;
2) The guaranteed minimum death benefit (GMDB) at the start of the immediately
preceding six Contract Year period prior to the Contract owner's 85 birthday
plus any subsequent purchase payments reduced proportionately for partial
surrenders and systematic withdrawals, made since such immediately preceding six
Contract Year period.
For all other dates, the GMDB will equal the GMDB at the start of such six
Contract Year period, plus any purchase payments and less a reduction to reflect
partial surrenders and systematic withdrawals made during such period.
3% Rollup Benefit:
The guaranteed minimum death benefit (GMDB) during the accumulation period will
be the greatest of:
1) The contract value determined as of the date that the company receives proof
of death and;
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2) The net of purchase payments and amounts surrendered, accumulated at 3%
effective interest from the date of each payment or surrender to the earlier of
the date the company receives proof of death or the Contract owner's 85th
birthday, plus subsequent purchase payments, less an adjustment for amounts
subsequently surrendered. Such total accumulated amount shall not exceed 200% of
the net of purchase payments and amounts surrendered.
5% Rollup Benefit:
The guaranteed minimum death benefit (GMDB) during the accumulation period will
be the greatest of:
1) The contract value determined as of the date that the company receives proof
of death and;
2) The net of purchase payments and amounts surrendered, accumulated at 5%
effective interest from the date of each payment or surrender to the earlier of
the date the company receives proof of death or the Contract owner's 85th
birthday, plus subsequent purchase payments, less an adjustment for amounts
subsequently surrendered. Such total accumulated amount shall not exceed 200% of
the net of purchase payments and amounts surrendered.
In the event of lapse or other policy termination, prior to a death benefit
becoming payable under the Contract, no benefit will be payable under this
coverage.
If GMDB rider forms differ from the above description because of state or
jurisdiction variations, the rider forms will be taken as the correct definition
of the GMDB.
CAPACITY
1) $150 million of total deposits per contract year of new policies, regardless
of the split of the business among the benefits outlined above. The Ceding
Company will use this capacity by ceding to Continental 100% of the covered
contracts until the exhaustion of the capacity.
2) If prior to April 1, 2001 the volume of new business reinsured with
Continental is in jeopardy of exceeding the contract year capacity, the Ceding
Company will notify Continental in writing, requesting a change in the quota
share percentage. This requested change in quota share percentage would enable
all new policies to be uniformly reinsured.
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SCHEDULE B
ACCEPTED COVERAGES
Annuity accounts allocated to the variable annuity contract forms shown below as
governed by the prospectus in effect on April 1, 2000.
The following flexible premium variable annuity rider forms are included in this
agreement:
individual:
Contract - WQIII-NQ Contract - WQIII-PQ Rider Form - GMDB Rider Form - GMDB3
Rider Form - GMDB5
Group:
Contract - PWQIIINQ Certificate Form - CWQIIINQ Certificate Form - CWQIIIPQ
Rider Form - CGMDB Rider Form - CGMDB3 Rider Form - CGMDB5
And such other state specific versions as may be required by the states in which
the company conducts business.
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SCHEDULE C
PREMIUM RATE SCHEDULE
The Adjusted Aggregate Accumulation Value is the sum of the Accumulation Values
in all of the Ceding Company's variable annuities contracts subject to this
Agreement minus Contract Values attributable to amounts in excess of the maximum
purchase amounts as described in Article II-1.
The premium is a flat basis point charge applied to Adjusted Aggregate
Accumulation Value.
6-Year Ratchet Benefit:
Issue Ages 0 -- 85
Cost of Reinsurance 12.0 basis points of the Adjusted Aggregate Contract Value
payable monthly at the rate of 1.000 basis points times the Average Monthly
Aggregate Accumulation Value.
3% Rollup Benefit:
Issue Ages 0-- 85
Cost of Reinsurance 25.0 basis points of the Adjusted Aggregate Contract Value
payable monthly at the rate of 2.08333 basis points times the Average Monthly
Aggregate Accumulation Value.
5% Rollup Benefit:
Issue Ages 0-- 85
Cost of Reinsurance 42.0 basis points of the Adjusted Aggregate Contract Value
payable monthly at the rate of 3.5000 basis points times the Average Monthly
Aggregate Accumulation Value.
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The Average Monthly Aggregate Accumulation Value is defined as beginning of
month Adjusted Aggregate Accumulation Value plus end of month Adjusted Aggregate
Accumulation Value, divided by two.
The premium rate is guaranteed for the life of the contract, with the following
caveat. If the benefits or charges to the contractholder are changed (including
contract charges, M&E charges, and administrative fees), Continental reserves
the right to adjust the premium rates by an amount which reflects the change(s)
made to the contract. Fund management fees are allowed to fluctuate.
Subject to ninety days (90) written notice, Continental reserves the right to
adjust premium rates for contracts with an effective date of April 1, 2002 and
later.
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SCHEDULE D
REPORTING FORMAT
Within 30 days after the end of each calendar month, the Ceding Company will
furnish Continental an electronic and summarized paper report for the
reinsurance account, valued as of the last day of that month. The electronic
report will be submitted in a format that is acceptable to both Continental and
the Ceding Company. The reports should indicate for all inforce annuitants in
either the electronic report (policy level detail) or the paper report
(summarization, Field #14 -- 18) the following information:
Field # Field Name Description
1 Report Date Report date is the last day
of the reporting month (mm/dd/yyyy)
2 Direct Writing Company Name of your company
3 Policy Number Policy or contract number
4 Policyholder Name of the policyholder
(last name MI first name)
5 Issue Age Age of the policyholder
as of the report date
6 Issue Date Date of the policy issued
(mm/dd/yyyy)
7 Sex Gender of the policyholder
(M or F)
8 Plan Code Zxxxx-- 6 Ratchet
Zxxxx-- 3% Rollup
Zxxxx-- 5% Rollup
9 Date of Last Ratchet N/A
10 Current Ratchet Value N/A
11 Current Guaranteed
Minimum Death Benefit GMDB as of the report date
($xx.xx)
12 Current Total Account
Value Total account value as of
the report date ($xx.xx)
13 Current Account Value
by Fund Account value by individual
fund as of the report date.
The sum of Field 13
should equal Field 12. ($xx.xx)
14 Total Death Benefits Paid Total death benefits paid
for this reporting month ($xx.xx)
15 Death Benefits Paid by
CNA Death benefits paid by CNA
for this reporting month ($xx.xx)
16 Total Death Benefits
Due and Unpaid Total death benefits due and
unpaid for this
reporting month ($xx.xx)
17 Death Benefits Due and
Unpaid by CAN Death benefits due and
unpaid by CNA for this
reporting month ($xx.xx)
18 Current Premium N/A
19 ITD Premium Premium paid since
inception ($xx.xx)
20 Current Withdrawal Amount N/A
21 ITD Withdrawal Amount Total withdrawal amount
since inception ($xx.xx)
20
SCHEDULE E ELIGIBLE PORTFOLIOS FOR CONTRACT VALUES
1. Separate Account Sub-Accounts
American National Funds:
Growth Portfolio
Balanced Portfolio
Equity Income Portfolio
High Yield Bond Portfolio
International Stock Portfolio
Small-Cap/Mid Cap Portfolio
Government Bond Portfolio
Money Market Portfolio
Fidelity Funds:
Asset Manager Portfolio
Index 500 Portfolio
Contrafund Portfolio
Asset Manager Growth Portfolio
Growth Opportunities Portfolio
T ▇▇▇▇ Price Funds:
Equity Income Portfolio
Mid-Cap Growth Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
MFS Funds:
Capital Opportunities Portfolio
Emerging Growth Portfolio
Research Portfolio
Growth With Income Portfolio
21
Federated Funds:
Utility Fund II Portfolio
Growth Strategies Portfolio
U.S. Government Bond Portfolio
High Income Bond Portfolio
Equity Income Fund II Portfolio
▇▇▇▇▇ American Fund:
Small Capitalization Portfolio
Growth Portfolio
MidCap Growth Portfolio
Leverage AllCap Portfolio
Income & Growth Portfolio
Balanced Portfolio
2. General Account
Fixed Account
22