STATE OF NORTH CAROLINA
COUNTY OF WAKE
REINSURANCE AGREEMENT
THE REINSURANCE AGREEMENT (the "Agreement"), made and entered
into as of the 1st day of August, 1994 (the "Effective Date"), by and
between TRIANGLE LIFE INSURANCE COMPANY, a North Carolina corporation
with its principal office in Raleigh, North Carolina ("Triangle"),
party of the first part; and YADKIN VALLEY LIFE INSURANCE COMPANY, an
Arizona corporation with its principal office in Phoenix, Arizona
("Yadkin");
W I T N E S S E T H :
WHEREAS, Triangle is licensed by the North Carolina Department
of Insurance to sell certain credit insurance policies and/or
certificates and/or plans (the "Policies"), which Policies are more
particularly described on Schedule A hereto;
WHEREAS, Triangle desires to reinsure the Policies with Yadkin,
subject to the terms of this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants between the parties made, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Triangle and Yadkin hereby agree as follows:
1. Automatic Reinsurance of Policies. On and after the Effective
Date, Triangle shall cede to Yadkin, and Yadkin shall accept from
Triangle, one hundred percent (100%) ("Yadkin's Share") of the rights,
obligations, liabilities, and risks (including underwriting risk and
timing risk) written and retained by Triangle on all applications for
the Policies signed on or after the Effective Date and considered by
Triangle to be paid; provided, however, that in the event the amount
of credit life insurance in force on any one life under one or more of
the Policies exceeds $25,000 at the time claims under said Policy or
Policies arise. Yadkin's Share of the liability to Triangle Life shall
be limited to $25,000. The liability of Yadkin on such reinsured
Policies (the "Reinsured Policies") shall commence and terminate at
the same time as that of Triangle.
2. Plan of Reinsurance. Reinsurance of the Reinsured Policies
shall be on a coinsurance basis according to Yadkin's Share, subject
to the terms and conditions of the original Policy form issued by
Triangle for the Reinsured Policies and to the North Carolina
Insurance Law. Reinsurance amounts shall be calculated in terms of
coverage on a "per policy" or "per certificate" basis.
No reduction or termination of a Reinsured Policy shall cause
Triangle to exceed its normal retention limits or affect the
reinsurance coverage of Triangle under arrangements other than this
Agreement. Any Reinsured Policy originally ceded under this Agreement
that is reduced, terminated, or lapsed and later is reinstated by
Triangle pursuant to Policy provisions shall be accepted by Yadkin up
to such amount as would be in force if such Reinsured Policy had not
been reduced, terminated, or lapsed. Yadkin shall share, according to
Yadkin's Share, in any adjustments to the amount of any Reinsured
Policy that result because of a misstatement of the age of the insured
thereunder.
Triangle shall hold a certificate of deposit in an amount no
less than any reserve established for Yadkin, as security for Yadkin's
performance of its obligations under this Agreement.
3. Notice of Verbal Inquiries. Upon receipt by Yadkin in any
manner of any and all telephone or verbal inquiries relating directly
or indirectly to the Reinsured Policies, Yadkin promptly shall notify
Triangle of same in accordance with the notice provisions of Paragraph
18 hereof.
4. Notice of Correspondence and Claims. Upon receipt by Triangle
of any and all correspondence or written communications relating
directly or indirectly to the Reinsured Policies, including
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but not limited to notice of legal action or any claim under any of
the Reinsured Policies, Triangle promptly shall remit same to Yadkin
in accordance with the notice provisions set forth in Paragraph 18
hereof.
5. Claim Files. All claim files pertaining to the Reinsured
Policies shall be the joint property of Triangle and Yadkin. Such
claim files shall be maintained by Triangle, subject to the following:
(i) Triangle shall forward a copy of the claim file for
a given claim to Yadkin upon Yadkin's request
therefor or as soon as it becomes known by Triangle
that the claim either has the potential to exceed
the amount of the Policy, may exceed Triangle's
claims settlement authority of up to the amount of
the Policy, has been open for more than six (6)
months, or has been closed by payment of an amount
set by Yadkin.
(ii) Upon an order of liquidation of Triangle, all claim
files shall become the sole property of and shall be
delivered to Yadkin or its estate; provided,
however, that Triangle shall have reasonable access
to and the right to copy such claim files on a
timely basis.
6. Reports and Remittance by Triangle. On or before the
thirtieth (30) day of each month, Triangle shall render an accounting
to Yadkin detailing all of the previous month's transactions with
respect to the Policies and any claims made under the Policies (the
"Monthly Accounting"). At the time of the Monthly Accounting, Triangle
shall pay to Yadkin a reinsurance premium (the "Reinsurance Premium"),
which shall be calculated as follows:
(a) Business written as Single Premium will be paid
monthly on a written gross basis. Premiums written
on a Monthly Outstanding Basis will be paid on a
monthly written premium basis which shall be the
earned premium.
(b) Claims shall be paid when settled.
7. Reinsurance Commission. Yadkin shall pay to Triangle a
reinsurance commission (the "Reinsurance Commission") equal to:
(a) Five percent (5%) of the gross premium received by
Triangle on the Reinsured Policies.
(b) All premium tax and Regulatory Charge which Triangle
is required to pay on the Reinsured Policies.
(c) All commissions or service fees paid to creditors or
agents, including any contingent compensation or
other compensation paid on the Reinsured Policies.
(d) All Guaranty Association (or similar association)
assessments or payments made by Triangle
attributable to the Reinsured Policies.
Such Reinsurance Commission shall be deducted by Triangle from the
reinsurance premium due Yadkin under Paragraph 4 hereof as and when
such Reinsurance Commission shall become due.
8. Quarterly Reports. Within thirty (30) calendar days of the
end of each calendar quarter, each party shall report to the other all
such information as reasonably may be requested by such other party
for purposes of filing statutory financial statements and other
reports. Each party shall provide to the other all such other reports
as reasonably may be requested by such other party in connection with
this Agreement in a format that is mutually acceptable to both
Triangle and Yadkin
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9. Policy Forms and Rates. Triangle shall file with Yadkin
copies of all applications, Policy forms, certificates, rates, and
marketing material used in connection with the Reinsured Policies. In
the event that new applications, Policy forms, certificates, rates, or
marketing material are published, or in the event that changes are
made in the items previously filed with Yadkin, Triangle promptly
shall file with Yadkin the new or revised copies of same.
10. Limitations and Authority. Notwithstanding other provisions
included in this Agreement, Triangle shall have no authority to:
a. Write insurance business on behalf of Yadkin;
b. Bind reinsurance or retrocession on behalf of
Yadkin, except as provided in this Agreement;
c. Commit Yadkin to participate in any insurance or
reinsurance syndicates;
d. Appoint any producer without assuring that such
producer is lawfully licensed to transact the type
of insurance for which the producer is appointed;
e. Pay or commit Yadkin to pay a claim over a specified
amount, net of reinsurance, which shall exceed the
amount of the Policy under which the claim is made,
without Yadkin's prior approval;
f. Collect any payment from a reinsurer or commit
Yadkin to pay any claim settlement with a reinsurer,
without Yadkin's prior approval.
11. Insolvency of Triangle.
a. Notice and Investigation of Claim. In the event of the
insolvency of Triangle, Triangle or its liquidator, receiver, or
statutory successor shall give written notice of any pending claim
against Triangle on any Reinsured Policy within fifteen (15) calendar
days after Triangle receives notice that such claim has been filed in
the insolvency proceedings. At its own expense, Yadkin shall be
entitled to investigate such claim while it is pending and to
interpose, in the proceedings where the claim is to be adjudicated,
any defenses that it may deem available to Triangle or its liquidator,
receiver, or statutory successor. Subject to court approval, the
expenses incurred by Yadkin in investigating and/or defending such
claims shall be charged against Triangle as an expense of liquidation,
to the extent of any proportionate share of the benefit accruing
Triangle as a result of such investigations and/or defenses by Yadkin.
b. Payment of Claims. All reinsurance under this Agreement
shall be paid by Yadkin directly to Triangle, or Triangle's
domiciliary receiver or statutory successor, as applicable, on the
basis of claims allowed against Triangle, without diminution because
of the insolvency of Triangle, unless Yadkin, with the consent of the
direct insured or insureds, shall have assumed the policy obligations
of Triangle as direct obligations of Yadkin to the payees under such
Reinsured Policies and in substitution for the obligations of Triangle
to such payees, prior to time such claims are allowed.
Any debits or credits, liquidated or unliquidated, which
are created as a result of the operation of this paragraph in favor of
or against either party on the date of entry of any receivership or
liquidation order shall be deemed mutual debits or credits, as the
case may be, and the balance only shall be allowed or paid.
Notwithstanding the fact that a claim on the part of either Yadkin or
Triangle against the other may be unliquidated or undetermined in
amount on the date of entry of a receivership or liquidation order,
such claim shall be deemed to be in existence as of such date, and any
existing credits or claims in favor of the other party may be offset
against such claim.
12. Records. Triangle and Yadkin shall maintain separate records
of all business written by Triangle and subject to this Agreement.
Both Triangle and Yadkin (and/or their duly authorized
representatives), during normal business hours, shall be permitted to
inspect and copy, in usable form, any and all books, records,
accounts, documents, or similar information of the other party
relating to or affecting the Reinsured Policies. The North Carolina
and Arizona Departments of Insurance also shall be permitted
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to inspect and copy, in usable form, such books, records, accounts,
documents, or similar information of Triangle and/or Yadkin as relate
to the services provided by Triangle pursuant to this Agreement.
13. Duration; Termination. This Agreement shall be effective as
of the Effective Date and shall continue in force unless terminated in
accordance with the following:
a. Without Cause. This Agreement may be terminated as to
all new reinsurance business, with or without cause:
(i) At any time by mutual consent of Triangle and
Yadkin; or,
(ii) By either Triangle or Yadkin as of the end of
any month by giving (30) days' notice to the
other party; provided, however, that Yadkin
shall continue to accept reinsurance during
the thirty (30) day notice period.
b. With Cause by Triangle. Triangle may terminate this
Agreement upon seven (7) days' written notice in the event that one or
more of the following occurs:
(i) Revocation of or failure by the North
Carolina Department of Insurance to renew
Triangle's license to sell the Policies;
(ii) Commission of a felony by Yadkin;
(iii) Commission of an unlawful business practice
by Yadkin;
(iv) Failure or refusal by Yadkin to perform any
obligation, duty, or responsibility imposed
under this Agreement;
(v) Any material change or transfer in the
ownership, management, or control of Yadkin,
or any transfer of any substantial part or
all of Yadkin's credit insurance business,
whether by sale of shares, sale of assets,
merger, reorganization, or otherwise, which
adversely impacts Yadkin's credit insurance
business and/or its ability to perform under
this Agreement;
(vi) Any conduct or proposed conduct by Yadkin not
authorized pursuant to this Agreement that
exposes or threatens to expose Triangle to
any liability or obligation, or to adverse
consequences under any provision of federal,
state or local law;
(vii) Appointment of a receiver for Yadkin or its
property;
(viii) Yadkin's becoming insolvent or unable to pay
its debts as they mature or ceasing to pay
its debts as they mature in the ordinary
course of business;
(ix) Yadkin making an assignment for the benefit
of its creditors;
(x) Commencement of any proceedings by or for
Yadkin under any bankruptcy, insolvency, or
debtor's relief law which are not vacated or
set aside within sixty (60) days from the
commencement thereof; or,
(xi) Liquidation of dissolution of Yadkin or
Yadkin's closing its doors or otherwise
ceasing to do business involving the
Reinsured Policies.
c. With Cause by Yadkin. Yadkin may terminate this Agreement
and/or Triangle's Settlement authority hereunder upon seven (7) days
written notice to Triangle in the event that one of the following
occurs:
(i) Triangle's Reinsurance Premium shall become
more than ninety (90) days in arrears;
(ii) Subject to the provisions of Paragraph 9
hereof, upon:
(a) Appointment of a receiver for Triangle
or its property;
(b) Triangle's becoming insolvent or unable
to pay its debts as they mature or
ceasing to pay its debts as they mature
in the ordinary course of business;
(c) Triangle's making of an assignment for
the benefit of its creditors;
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(d) Commencement of any proceedings by or
for Triangle under any bankruptcy,
insolvency, or debtor's relief law which
are not vacated or set aside within
sixty (60) days from the commencement
thereof; or,
(e) Liquidation or dissolution of Triangle
or Triangle's closing its doors or
otherwise ceasing to do business
involving the Reinsured Policies.
Yadkin may suspend the underwriting authority and/or settlement
authority of Triangle during the pendency of any dispute regarding the
cause of termination.
In the event of the termination of this Agreement by either
party as above herein provided, no further policies or certificates of
insurance shall be reinsured under the terms of this Agreement. With
respects to any Reinsured Policies existing as of the date of
termination of the Agreement: (1) Yadkin shall have no liability for
any claims or occurrences giving rise to claims which occur on or
after the effective date of such termination; (2) Yadkin shall not be
entitled to receive, and Triangle shall be entitled to retain all
premiums earned with respect to the period on and after such
termination; (3) Yadkin shall remain fully liable for all claims and
occurrences giving rise to claims which occur prior to the effective
date of such termination, including, but not limited to, all incurred
but unreported claims outstanding on such effective date. Yadkin also
shall remain fully liable for all Guaranty Association (or similar
association) assessments or payments made by Triangle attributable to
the Reinsured Policies incurred prior to the effective date of such
termination; and (4) No further Monthly Accountings and quarterly
reports and no further payments to Yadkin shall be required of
Triangle. Triangle shall advise Yadkin of any amounts due to Triangle
under the preceding item (3) and Yadkin shall promptly remit such
amount to Triangle.
14. Continued Reinsurance and Administration Upon Termination.
Notwithstanding the termination of this Agreement for any reason, the
reinsurance with Yadkin on all Reinsured Policies shall be maintained
in force as long as such reinstated Policies remain in force and the
reinsurance premiums therefor are paid when due, and Yadkin shall
remain liable thereon until the termination or expiration of the
Reinsured Policies in accordance with the terms of this Agreement. All
obligations of Yadkin and Triangle shall remain in force until the
termination or expiration of the Reinsured Policies.
15. Oversight; Clerical Errors. Notwithstanding anything to the
contrary herein, should Triangle fail to cede reinsurance that
otherwise would have been ceded pursuant to this Agreement, or should
Triangle or Yadkin fail to comply with any other terms of this
Agreement, and such failure is shown to have been unintentional and
the result of an inadvertent misunderstanding, oversight, or clerical
error on the part of either Triangle or Yadkin, such failure shall not
be deemed to be cause for termination of this Agreement; provided,
however, that both Triangle and Yadkin shall be restored promptly to
the same position that each would have occupied had the
miscommunication, oversight, or clerical error not occurred. Nothing
in this paragraph shall be construed to apply to errors which are not
inadvertent or to errors of judgment by either Triangle or Yadkin.
16. Indemnification. Triangle and Yadkin shall indemnify and
hold harmless each other and each other's directors, officers,
employees, representatives, agents, and attorneys from, against, and
in respect of any and all damages (including, without limitation,
amounts paid in settlement with the indemnifying party's consent,
which consent shall not be withheld unreasonably), losses,
obligations, liabilities, liens, deficiencies, costs, penalties,
fines, interest, monetary sanctions, and expenses, including, without
limitation, reasonable attorney's fees and costs incurred to comply
with injunctions and other court and agency orders, and other costs
and expenses incident to any lawsuit, action, investigation, claim, or
proceeding, or to establish such other party's or such other person's
right to indemnification under this Agreement, which has been
suffered, sustained, incurred, or required to be paid by any of them
by reason of any failure by the indemnifying party to observe or
perform its obligations as set forth in this Agreement.
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17. Arbitration. Triangle and Yadkin intend that any dispute
between them under or with respect to this Agreement be resolved
without resort to litigation. Accordingly, Triangle and Yadkin will
negotiate diligently and in good faith to agree on a mutually
satisfactory resolution of any such dispute; provided, however, that
if any such dispute cannot be so resolved within sixty (60) calendar
days (or such longer period as Triangle and Yadkin may agree) after
the commencement of such negotiations, either Triangle or Yadkin shall
be entitled to initiate arbitration proceedings by providing the other
party with written notice of its intention to arbitrate (the "Notice
of Arbitration"), which Notice of Arbitration shall contain a
statement setting forth the nature of the dispute, the amount
involved, if any, and the remedy sought. The party initiating
arbitration ("Claimant") shall file three (3) copies of the Notice of
Arbitration and three (3) copies of this Agreement with the
appropriate regional office of American Arbitration Association
("AAA"), together with the filing fee therefor.
The arbitration hearing shall be conducted in Raleigh, North
Carolina, before a panel of two (2) arbitrators and one (1)
chairperson (collectively, the "Arbitration Panel"), in the manner
specified in this Agreement, unless otherwise agreed in writing by
Triangle and Yadkin. All arbitration proceedings shall be conducted in
accordance with the rules of AAA.
The Arbitration Panel shall consist of active or retired,
disinterested officials of insurance or reinsurance companies. Each
party shall appoint one (1) arbitrator by written notification to the
other party and AAA within thirty (30) calendar days after receipt of
the Notice of Arbitration by the party to which it is sent
("Respondent"). The appointed arbitrators shall appoint a chairperson
before instituting the arbitration hearing. If Respondent fails to
appoint its arbitrator within four (4) calendar weeks after receipt of
the Notice of Arbitration, Claimant shall be entitled to appoint the
second arbitrator. If the two (2) arbitrators fail to agree on the
appointment of a chairperson within four (4) calendar weeks after the
second arbitrator is appointed, the chairperson shall be appointed by
the manager of AAA and shall meet the qualifications set forth herein
for the Arbitration Panel.
Claimant shall submit its initial brief, if any, to the
Arbitration Panel within twenty (20) days from the appointment of the
chairperson. Respondent shall submit its brief, if any, to the
Arbitration Panel within twenty (20) days after the date of filing of
Claimant's initial brief. Claimant may submit a reply brief to the
Arbitration Panel within ten (10) days after the date of filing of
Respondent's brief.
Decisions of the Arbitration Panel shall be made with regard to
the customary usage of the insurance and reinsurance business. Each
decision (including without limitation each award) of the Arbitration
Panel shall be final and binding upon all parties to the arbitration
proceeding and shall be nonappealable. At the request of either
Triangle or Yadkin, any word of the Arbitration Panel may be confirmed
by a judgment entered by any court of competent jurisdiction.
Each party shall be responsible for paying all fees and expenses
charged by its appointed arbitrator and its counsel, accountants,
actuaries, and other representatives in connection with the
arbitration proceedings and shall be responsible for paying one-half
(1/2) of the fees and expenses charged by the chairperson. In the
event that Claimant appoints a second arbitrator due to Respondent's
failure to appoint an arbitrator within the time period specified in
this paragraph, Respondent shall be responsible for paying all fees
and expenses charged by such second arbitrator.
The arbitration provisions contained in this paragraph shall
survive the termination of this Agreement.
18. Notices. All notices, requests, instructions, or other
documents required or permitted to be given pursuant to this Agreement
shall be in writing and shall be delivered personally, sent by
facsimile, delivered by overnight express, or sent by registered or
certified United States mail, postage prepaid and return receipt
requested, addressed as follows:
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If to Triangle:
Triangle Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary/Treasurer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Yadkin:
Yadkin Valley Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
or such other address as hereafter may be furnished to the other party
in writing pursuant to this paragraph. All notices so given shall be
deemed received upon actual receipt or upon receipt and refusal, if
delivered in person or by overnight express; upon electronic
confirmation of delivery, if delivered by facsimile; or upon actual
receipt and refusal, as evidenced by the return receipt therefor, if
delivered by registered or certified United States mail.
19. DAC Tax. Either Triangle or Yadkin may make election as
provided in Section 1.848-2(f)(7) of the proposed Income Tax
Regulations issued November 12, 1991, under Section 848 of the
Internal Revenue Code of 1986, as amended. If either Triangle or
Yadkin makes the election, the other automatically agrees to abide by
the election and agrees to the treatment of such election as set forth
on Schedule B attached hereto.
20. Miscellaneous.
a. Offset. Any amount required under this Agreement to be
paid by either Triangle or Yadkin to the other party may be paid out
of any amount which is due and unpaid by that party under this
Agreement. The application of this paragraph shall not be deemed to
constitute diminution in the event of insolvency of either Triangle or
Yadkin.
b. Entire Agreement. This Agreement and the Schedules
attached hereto constitute the entire agreement between Triangle and
Yadkin with respect to the subject matter herein and supersede all
prior discussions and written and oral agreements with respect
thereto.
c. Amendment. This Agreement may be amended from time to
time by Triangle and Yadkin, but only by written agreement duly
executed by or on behalf of Triangle and Yadkin.
d. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.
e. Jurisdiction. This Agreement shall be performed in the
State of North Carolina, and, notwithstanding the principles of
conflicts of law, the internal laws of the State of North Carolina
shall govern and control the validity, interpretation, performance,
and enforcement of this Agreement.
f. Survival. This Agreement is binding upon and shall
inure to the benefit of Triangle and Yadkin and their respective
successors and assigns.
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g. Assignment. Neither Triangle nor Yadkin shall be
permitted to assign, in whole or part, any of its respective rights or
obligations hereunder.
h. Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not constitute
binding terms of this Agreement.
i. Invalid Provisions. In the event that any provision of
this Agreement is held to be illegal, invalid, or unenforceable under
any present or future law, and provided that the rights or obligations
of Triangle and Yadkin under this Agreement shall not be materially
and adversely affected thereby, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had not compromised
a part hereof, and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by such
illegal, invalid, or unenforceable provision or by its severance
herefrom. In lieu of any such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this
Agreement a legal, valid, and enforceable provision as similar in
terms to such illegal, invalid, or unenforceable provision as is
possible.
IN WITNESS WHEREOF, Triangle and Yadkin have caused this
Agreement to be executed by their duly authorized officers and in such
form as to be binding, effective as of the Effective Date.
TRIANGLE LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Its President
-----------------------------------
YADKIN VALLEY LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. Holding
-----------------------------------
Its President
-----------------------------------
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SCHEDULE A
Group Credit Insurance Non-Participating Insurance Policies
Policy Numbers
▇▇ - ▇▇▇
▇▇ - ▇▇▇
▇▇ - ▇▇▇
▇▇▇ - 2
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SCHEDULE B
Triangle ("Reinsured") and Yadkin ("Reinsurer") hereby agree to the
following pursuant to 1.848-2(g)(8) of the IRS Regulation issued
December 1992:
1. The term "Party" will refer to either Reinsured or Reinsurer
as appropriate.
2. The terms used in this Schedule are defined by reference to
Regulation 1.848-2 in effect December 1992.
3. The party with 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 deduction limitation of 848(c)(1).
4. 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 IRS.
5. The exchange of information will follow the following
procedures:
a. By June 1 of each year, Reinsured will submit a
schedule to Reinsurer of its calculations of the net
consideration for the preceding calendar year. This
schedule of calculations will be accompanied by a
statement signed by an officer of Reinsured stating the
amount of net consideration Reinsured will report in its
tax return for the preceding calendar year.
b. Within 30 days of Reinsurer's receipt of Reinsured's
calculation, Reinsurer may contest such calculation by
providing an alternate calculation to Reinsured in
writing. If Reinsurer does not notify Reinsured, Reinsured
will report the net consideration as determined by
Reinsured in its tax return for the preceding year.
c. The Parties will act in good faith to reach an
agreement as to the correct amount within 30 days of the
date Reinsured receives any alternate calculation provided
by Reinsurer. If Reinsured and Reinsurer reach agreement
on the amount of net consideration, each party shall
report the applicable amount in their respective tax
returns for the preceding year.
6. For agreements administered by Reinsurer, the exchange of
information will follow the same procedures set forth in
paragraph 5, substituting Reinsured for Reinsurer and
substituting Reinsured for Reinsurer.
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