EXHIBIT 99.A4
Exhibit 27(g)
Reinsurance Agreements
Reinsurance Treaty dated September 30, 2000 and Amendments Thereto
And
Reinsurance Treaty dated July 1, 2002 and Amendments Thereto
AUTOMATIC POOL REINSURANCE AGREEMENT
referred to in this Document as the "Agreement"
EFFECTIVE SEPTEMBER 30, 2000
among
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
TRANSAMERICA LIFE INSURANCE COMPANY
referred to in this Agreement as the "Ceding Company"
and
EMPLOYERS REASSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
collectively referred to in this Agreement as the "Pool Reinsurers"
TABLE OF CONTENTS
Article I Scope of the Agreement Page 1
Parties to the Agreement
Effective Date of the Agreement
Scope of the Agreement
Duration of the Agreement
Definitions
Article II Reinsurance Coverage Page 2
Automatic Reinsurance
Facultative Reinsurance
Facultative Reinsurance Outside This Agreement
Basis of Reinsurance
Article III Procedures Page 4
Article IV Liability Page 6
Article V Reinsurance Rates and Payments Page 7
Tax Reimbursement
Experience Refund
Article VI Changes to the Reinsurance Page 9
Errors and Oversights
Misstatement of Age or Sex
Changes to the Underlying Policy
Reductions, Terminations and Reinstatements
Article VII Recapture Page 11
Article VIII Claims Page 13
Article IX Arbitration Page 16
Article X Insolvency Page 18
Article XI Inspection of Records Page 19
Article XII Offset Page 19
Article XIII Execution of the Agreement Page 20
EXHIBITS
Exhibit A Reinsurance Coverage
Underwriting Guidelines
Retention Limits
Automatic Acceptance Limits
Exclusions to Automatic Reinsurance Coverage,
including Jumbo Limits
Exhibit B Administration and Reporting Forms
Exhibit C Rates and Allowances
Net Amount at Risk Calculation
Exhibit D Conditional Receipt
Exhibit E Illustration of Reinsurance Ceded
Exhibit F Total Policy Liability Statement
ARTICLE I - SCOPE OF THE AGREEMENT
1. PARTIES TO THE AGREEMENT
The Ceding Company and the Pool Reinsurers mutually agree to transact
reinsurance business according to the terms of this Agreement. This
Agreement is for indemnity reinsurance and the Ceding Company and the
Pool Reinsurers are the only parties to the Agreement. There will be no
right or legal relationship whatsoever between the Pool Reinsurers and
any other person having an interest of any kind in policies reinsured
under this Agreement.
2. EFFECTIVE DATE OF THE AGREEMENT
This Agreement will go into effect at 12:01 A.M., September 30, 2000
and will cover policies shown in Exhibit A issued and after that date.
3. SCOPE OF THE AGREEMENT
The text of this Agreement and all Exhibits, Schedules and Amendments
are considered to be the entire agreement. There are no other
understandings or agreements regarding the policies reinsured other
than as expressed in this Agreement. Either the Ceding Company or any
of the Pool Reinsurers may make changes or additions to this Agreement,
but they will not be considered to be in effect unless they are made by
means of a written amendment which has been signed by all parties.
The Retention Limits and Binding Limits of the Ceding Company as shown
in Exhibit A are based only on the amounts of insurance administered by
the administrative office of Aegon USA in St Petersburg, Florida and/or
by any third party administrator administering insurance on behalf of
this administrative office.
4. DURATION OF THE AGREEMENT
The duration of this Agreement will be unlimited. However, any of the
Pool Reinsurers may terminate their participation in the Agreement for
new reinsurance at any time by giving the Ceding Company ninety (90)
days prior written notice. The Ceding Company may terminate the entire
Pool or the participation of any Pool Reinsurer by giving ninety (90)
days prior written notice. Reinsurance will continue to be placed
during the ninety-day period. The Ceding Company has the right, upon
termination of any Pool Reinsurer under this Agreement, to re-allocate
the quota share percentages among the remaining Pool Reinsurers upon
Pool Reinsurers consent, or to name a new Pool Reinsurer to the
Agreement.
Existing reinsurance will not be affected by the termination of this
Agreement or by the termination of the participation of any of the Pool
Reinsurers for new reinsurance. Existing reinsurance will remain in
force until the termination or expiry of the underlying policy on which
reinsurance is based, as long as the Ceding Company complies with this
Agreement and continues to pay reinsurance premiums as shown in Article
V (Reinsurance Rates and Payment). The Pool Reinsurers will accept
liability for any claims or premium refunds which are not reported to
them within ninety (90) days following the termination or expiry of the
last cession reinsured under this Agreement, provided that the Ceding
Company has taken prompt and reasonable action to identify those
claims.
5. DEFINITIONS
ULTIMATE NET AMOUNT AT RISK: Largest value in column (S), Actual
Reinsurance, of Exhibit E.
INITIAL SPECIFIED AMOUNT: Amount shown on the Policy Schedule page of
the life insurance contract.
QUOTA SHARE PERCENTAGE: Reinsurer's percentage of risk on Automatic
Reinsurance and Special Pool Facultative Reinsurance.
PARTICIPATION PERCENTAGE: Percentage that the facultative reinsurer
agrees to reinsure on Regular Facultative Reinsurance.
ARTICLE II - REINSURANCE COVERAGE
1. AUTOMATIC REINSURANCE
The Pool Reinsurers will automatically accept reinsurance of life
benefits for individually underwritten ordinary life policies on the
lives of permanent residents of the United States or United States
Territories in accordance with the provisions and limitations shown in
Exhibit A.
The Pool Reinsurers will also automatically accept reinsurance of
riders and supplementary benefits written with the covered life
benefits, but only to the extent that the riders and supplementary
benefits are specifically shown in Exhibit A, Part I.
The Ceding Company has the right to modify its retention limits shown
in Exhibit A, Part II at any time. If the retention limits are reduced,
the Ceding Company will notify the Pool Reinsurers in writing before
reinsurance can be ceded on the basis of the reduced retention limits.
The Pool Reinsurers have the right to amend the Automatic Acceptance
Limits shown in Exhibit A, Part III if the Ceding Company modifies its
retention limits. The Pool Reinsurers also have the right to modify the
Automatic Acceptance Limits if the Ceding Company elects to participate
in another arrangement or arrangements to secure additional automatic
binding capacity. However, the Pool Reinsurers must exercise their
option to amend the Automatic Acceptance Limits within ninety (90) days
of notification of the change in retention limits or the placement of
additional automatic binding capacity.
2. FACULTATIVE REINSURANCE
Applications for reinsurance of amounts in excess of the Automatic
Acceptance Limits, and any risks which the Ceding Company does not care
to cede automatically or may not be so ceded under the terms of this
Agreement, may be submitted to the Lead Facultative Reinsurer specified
in Exhibit A for facultative consideration either as the Lead
Facultative Reinsurer for the Pool Reinsurers or as an independent
reinsurer, as described in Article III. Procedures below.
If the Ceding Company determines to replace the Lead Facultative
Reinsurer, it will be necessary to appoint a replacement Lead
Facultative Reinsurer and such replacement will be appointed by the
Ceding Company. The Ceding Company will notify all Pool Reinsurers
thirty (30) days prior to the assignment of the new Lead Facultative
Reinsurer.
3. FACULTATIVE REINSURANCE OUTSIDE THIS AGREEMENT
The Ceding Company retains the right to reinsure facultatively with any
reinsurer who is not a Pool Reinsurer. In such case, the risk shall not
be covered under this Agreement. The Ceding Company will attempt to
place business facultatively outside this Agreement only after having
failed to obtain desired facultative reinsurance from among the Pool
Reinsurers.
4. BASIS OF REINSURANCE
Life reinsurance under this Agreement will be on the Monthly Renewable
Term plan for the net amount at risk on the portion of the original
policy that is reinsured into the Pool. The net amount at risk for any
policy period will be calculated according to Exhibit C (Reinsurance
Rates and Allowances), Part I.
Riders or supplementary benefits ceded with life benefits will be
reinsured as shown in Exhibit C. Any differences in the net amount at
risk calculation for these benefits will be shown in Exhibit C.
5. UNDERWRITING GUIDELINES
The Pool Reinsurers intend to approve the policy's Ultimate Net Amount
at Risk based on the agreed upon percentages of the insured's net worth
as described in Exhibit A. The Pool Reinsurers reserve the right to use
these percentages as a guideline only and are not bound to the
percentages under any circumstance.
ARTICLE III - PROCEDURES
1. AUTOMATIC REINSURANCE
Individual notification for the placement of automatic reinsurance will
not be necessary. Subject to Article V (Reinsurance Rates and Payment)
and Exhibit B (Reinsurance Reporting Forms and Reinsurance
Administration), new business or changes to existing reinsurance will
be shown on the Ceding Company's periodic billing report.
2. FACULTATIVE REINSURANCE INSIDE THIS AGREEMENT
SPECIAL POOL FACULTATIVE REINSURANCE. If a case is submitted to the
Lead Facultative Reinsurer for the Pool Reinsurers for facultative
consideration, the Lead Facultative Reinsurer can authorize the Ceding
Company to cede to the Pool Reinsurers the excess, if any, over the
Ceding Company's regular retention for the risk amounts described in
Exhibit A,V. The Lead Facultative Reinsurer can authorize the Ceding
Company to cede to the Pool Reinsurers their respective Quota Share
Percentage shown in Exhibit A. Submissions cannot be made to the Lead
Facultative Reinsurer on cases submitted facultatively to other
reinsurers, including other Pool Reinsurers, nor when the amount
applied for and in force with all companies exceeds the Jumbo Coverage
Limit as identified in Exhibit A,VI.2. When submitting a case to the
Lead Facultative Reinsurer, the Ceding Company will indicate whether it
is asking the Lead Facultative Reinsurer to act as Lead Facultative
Reinsurer for the Pool Reinsurers or as an independent reinsurer. The
Ceding Company will submit to the Lead Facultative Reinsurer copies of
the original application, the complete underwriting file and all other
information the Ceding Company may have pertaining to the insurability
of the risk. The Lead Facultative Reinsurer shall promptly communicate
an offer of reinsurance on the risk to the Ceding Company. The Lead
Facultative Reinsurer's evaluation of the case will be used to issue
the case and to bind all Pool Reinsurers.
When a policy is placed in force on which reinsurance is to be ceded to
the Pool Reinsurers, the Ceding Company will notify the Pool Reinsurers
that the reinsurance has been effected by including an entry on the
Ceding Company's next periodic billing report.
REGULAR FACULTATIVE REINSURANCE. If the amount of reinsurance required
is in excess of the Ceding Company's regular retention or if the case
is being or has been submitted to other reinsurers for facultative
consideration, the Special Pool Facultative Reinsurance coverage does
not apply. Such cases may be submitted to the Lead Facultative
Reinsurer for its own account independent of the Pool Reinsurers. On
such cases, if the Lead Facultative Reinsurer makes an
offer to reinsure the risk, the Ceding Company must accept the offer
during the lifetime of the proposed insured, but not later than one
hundred twenty days after the offer is made, to effect the reinsurance.
The Company's acceptance of the Lead Facultative Reinsurer's offer will
be documented by a dated notation in the Ceding Company's underwriting
file and subsequent formal notice to the Lead Facultative Reinsurer.
3. REFERENCE MATERIALS
Upon request and subject to availability, the Ceding Company will use
its best efforts to obtain reference materials which may be required by
the Pool Reinsurers for proper administration of reinsurance under this
Agreement.
ARTICLE IV - LIABILITY
1. AUTOMATIC REINSURANCE
Subject to the provisions of Article VI, Section 4 and Article VII, the
liability of the Pool Reinsurers for reinsurance placed automatically
under this Agreement will begin and end simultaneously with that of the
Ceding Company for the underlying policy on which reinsurance is based.
2. FACULTATIVE REINSURANCE
The liability of the Pool Reinsurers (when the Lead Facultative
Reinsurer is acting on behalf of the Pool Reinsurers) shall commence
simultaneously with that of the Ceding Company provided the Ceding
Company has accepted, during the lifetime of the insured and within one
hundred twenty (120) days of the offer, a facultative offer made by the
Lead Facultative Reinsurer on that life.
The liability of a Pool Reinsurer acting as an independent reinsurer
shall commence simultaneously with that of the Ceding Company provided
the Ceding Company has accepted, during the lifetime of the insured and
within one hundred twenty (120) days of the offer, a facultative offer
made by the Pool Reinsurer on that life.
3. CONDITIONAL RECEIPT LIABILITY
The Pool Reinsurers will be liable for losses under the terms of a
Conditional Receipt or Temporary Insurance Receipt to the extent that
the Ceding Company is liable.
4. CONTINUATION OF LIABILITY
Continuation of the Pool Reinsurers' liability is conditioned on the
Ceding Company's payment of reinsurance premiums as shown in Article V
(Reinsurance Rates and Payment) and is subject to Article VI (Changes
to the Reinsurance) and Article VII (Recapture).
5. ADJUSTABLE TERM INSURANCE RIDER (ATIR) LIABILITY
The maximum liability for the Adjustable Term Insurance Rider on
policies that have the ATIR attached to them is the Target Death
Benefit Schedule provided to the Pool Reinsurers and is limited to
their quota share percentage of the maximum Target Death Benefit.
An illustration similar to that shown in Exhibit E will be provided to
the Pool Reinsurers to illustrate the maximum ceded amount.
All Pool Reinsurers will execute a Total Policy Liability Statement. At
the time this Agreement is executed by the Pool Reinsurers, a copy of
each Pool Reinsurers' Total Liability Statement will be attached to and
made a part of this Agreement and labeled Exhibit F.
ARTICLE V - REINSURANCE RATES AND PAYMENTS
1. REINSURANCE RATES
The rates that the Ceding Company will pay to the Pool Reinsurers for
reinsurance covered under this Agreement are shown in Exhibit C. The
reinsurance rate payable for any cession for any accounting period will
be calculated on the basis of the net amount at risk reinsured as of
that period.
For reasons relating to deficiency reserve requirements by the various
state insurance departments, the rates shown in Exhibit C cannot be
guaranteed for more than one year. While all parties anticipate that
reinsurance rates shown in Exhibit C will continue to be charged, it
may become necessary to charge a guaranteed rate that is the greater of
the rate from Exhibit C or the corresponding statutory net premium rate
based on the required statutory valuation mortality table at 4.5%
interest for the applicable mortality rating.
If the original policy is issued with interim insurance, the Ceding
Company will pay the Pool Reinsurers a reinsurance rate for the interim
period that is the same percentage of the first year premium that the
interim period bears to twelve (12) months. The rate that the Ceding
Company pays the Pool Reinsurers for the first policy year after the
interim period will be calculated on the basis of the full annual
reinsurance rate.
The age basis for all products is Age Nearest Birthday except for the
Private Placement VUL which is Age Last Birthday. Procedures and
details of reinsurance rate calculation for any benefits or riders
ceded under this Agreement are shown in Exhibit C.
All financial transactions under this Agreement will be in United
States dollars, unless the parties mutually agree to use other
currencies. Specifications of the currencies and details of currency
conversion procedures will be shown in Exhibit C, if necessary.
2. PAYMENTS
The Ceding Company will be responsible for administration of the
periodic reporting of its statements of account and payment of balances
due to the Pool Reinsurers as shown in Exhibit B.
Within thirty (30) days after the close of each reporting period, the
Ceding Company will send each Pool Reinsurer a statement of account for
that period along with payment of the full balance due. If the
statement of account shows a balance due the Ceding Company, each Pool
Reinsurer will remit the appropriate amount within thirty (30) days of
receipt of the statement of account.
In order to eliminate reporting of trivial amounts, the Ceding Company
will send statements of account to the Pool Reinsurers monthly, but
will only send payment when the total balance due equals or exceeds
$100.00.
The Ceding Company's timely payment of reinsurance premiums is a
condition precedent to the continued liability of the Pool Reinsurers.
If the Ceding
Company has not paid the balance due to the Pool Reinsurers by the
thirty-first (31st) day following the close of the reporting period,
the Pool Reinsurers have the right to give thirty (30) days' written
notice of their intention to terminate the reinsurance on which the
balance is due and unpaid. At the end of this thirty (30) day period,
the liability of the Pool Reinsurers will automatically terminate for
all reinsurance on which balances remain due and unpaid, including
reinsurance on which balances became due and unpaid during and after
the thirty-day notice period. Even though reinsurance has been
terminated, the Ceding Company will continue to be liable for the
payment of unpaid balances along with interest charges equivalent to
the 30 Day Treasury ▇▇▇▇ rate as published in the Money Rate Section or
any successor section of The Wall Street Journal on the first business
day following the date the premiums are deemed delinquent.
Reinsurance terminated for non-payment of balances due may be
reinstated at any time within sixty (60) days of the date of
termination, by the Ceding Company's payment of all balances due and
interest charged in full to the Pool Reinsurers. However, the Pool
Reinsurers will have no liability for claims incurred between the
termination date and the reinstatement date.
3. TAX REIMBURSEMENTS
Details of any reimbursement of premium taxes that the Ceding Company
pays on behalf of reinsurance payments to the Pool Reinsurers are shown
in Exhibit C, Section VIII. (Premium Taxes).
The parties mutually agree to the following pursuant to Section 1.848-2
(g) (8) of the Income Tax Regulation issued December 29, 1992 under
Section 848 of the Internal Revenue Code of 1986, as amended. This
election will be effective for all taxable years for which this
Agreement remains in effect.
The terms used in this Section are defined in Regulation Section
1.848-2 in effect as of December 29, 1992. The term "net consideration"
will refer to either net consideration as defined in Section 1.848-2
(f) or "gross premium and other consideration" as defined in Section
1.848-3 (b), as appropriate.
a) The party with the net positive consideration for this
Agreement for each taxable year will capitalize specified
policy acquisition expenses with respect to this Agreement
without regard to the General Deductions Limitation of IRC
Section 848(c)(1).
b) The parties mutually agree to exchange information pertaining
to the amount of net consideration under this Agreement by May
1 of each year to ensure consistency. The parties also
mutually agree to exchange information otherwise required by
the Internal Revenue Service. Any disputes regarding the
information provided by the parties will be resolved no later
than June 1 of each year.
4. EXPERIENCE REFUND
Details of any Experience Refund payable to the Ceding Company will be
shown in Exhibit C. Section XI. (Experience Refund).
ARTICLE VI - CHANGES TO THE REINSURANCE
1. ERRORS AND OVERSIGHTS
Unintentional clerical errors, omissions or misunderstandings in the
administration of the Agreement by the Ceding Company or any Pool
Reinsurer shall not invalidate the reinsurance hereunder provided the
error, omission or misunderstanding is corrected promptly after
discovery.
All parties shall be restored, to the extent possible, to the position
they would have occupied had the error, omission or misunderstanding
not occurred, but the liability of any Pool Reinsurer under this
Agreement shall in no event exceed the limits specified herein.
2. MISSTATEMENT OF AGE OR SEX
If the misstatement of the age or sex of a reinsured life causes an
increase or reduction in the amount of insurance in the underlying
policy, all parties will share in the change in proportion to their
original liabilities at the time the policy was issued.
3. CHANGES TO THE UNDERLYING POLICY
a) All changes. If any change is made to the underlying policy,
the reinsurance will change accordingly. The Ceding Company
will notify the Pool Reinsurers of the change and the
appropriate premium adjustment on its periodic statement of
account.
b) Increases resulting from contractual provisions and policies,
including policies in corridor, with increasing net amounts at
risk will not be considered new business and will continue to
be reinsured under this Agreement, subject to five (5) times
the initial specified amount. Such increases will be reinsured
on a point in scale basis utilizing the attained age
reinsurance premiums.
c) Increases in the death benefit of policies that are not
currently reinsured, but on which we have kept our full
retention, will also be reinsured on a point in scale basis
utilizing the attained age reinsurance premiums, and will also
be subject to five (5) times the Initial Specified Amount.
d) All other increases are subject to approval of the Pool
Reinsurers. Ceding Company will provide all Pool Reinsurers
copies of all documents relating to the change in coverage.
4. REDUCTIONS, TERMINATIONS AND REINSTATEMENTS
If any part of the underlying policy on a life reinsured under this
Agreement is reduced or terminated, the amount reinsured will also be
reduced or terminated to the extent that the Ceding Company will
continue to maintain its appropriate retention limit as shown in
Exhibit A for the issue age and table rating of the insured. The Ceding
Company will not be required to assume amounts in excess of the
retention limit that was in force when the affected policy was issued.
Reductions or terminations to any one policy will neither affect nor
change the Ceding Company's retention on existing policies covering the
same insured life.
The amount of the reduction will be applied on a proportional basis to
each Pool Reinsurer's net amount at risk at the same proportion that
the Pool Reinsurer's initial amount of reinsurance bore to the total
initial amount reinsured.
If a policy reinsured under this Agreement is lapsed or terminated, the
reinsurance coverage will also terminate.
If a policy reinsured automatically lapses and is reinstated in
accordance with the Ceding Company's standard rules and procedures,
reinsurance for the amount at risk effective at the time of the lapse
will be reinstated automatically at the date of reinstatement of the
policy. Otherwise, the Pool Reinsurer that bound the reinsurance
initially must approve the reinstatement for facultative consideration.
If the Pool Reinsurer assumes the risk, then the Ceding Company will
reinstate the policy. The Ceding Company will provide the Pool
Reinsurers with copies of
reinstatement papers only upon request. The Ceding Company will notify
the Pool Reinsurers of the reinstatement on its periodic statement of
account, and it will pay all reinsurance payments due from the date of
reinstatement to the date of the current statement of account,
including a proportionate share of any interest collected. Thereafter,
reinsurance payments will be in accordance with Article V. (Reinsurance
Rates and Payments).
ARTICLE VII - RECAPTURE
1. BASIS OF RECAPTURE
If the Ceding Company increases its retention limits shown in Exhibit
A, III. it may make a corresponding reduction in eligible reinsurance
cessions. Policies are eligible for recapture if:
a) the Ceding Company has maintained the maximum retention limit
for the age and mortality rating of the insured when the
underlying policy was issued. Policies on which the Ceding
Company retained a reduced retention or no retention will not
be eligible for recapture; and
b) the policy has been in force under this Agreement for the
Recapture Period shown in Exhibit C, Section IX. The recapture
period will always be measured from the original policy issue
date.
2. METHOD OF RECAPTURE
The Ceding Company will give the Pool Reinsurers written notice of its
intention to recapture within ninety (90) days of the effective date of
the retention increase. If the Ceding Company elects to recapture at a
later date, it will give the Pool Reinsurers additional written notice
before beginning the recapture.
When the Ceding Company has given the Pool Reinsurers written notice of
intent to recapture, and the date that the recapture will begin:
a) All eligible policies will be recaptured;
b) Reinsurance will be reduced on the next anniversary date of
each eligible policy;
c) Reinsurance on each eligible policy will be reduced by an
amount that will increase the Ceding Company's retention to
the then current limit set forth in Exhibit A, as amended.
d) If there is reinsurance in force in other reinsurers on any
one insured life, the reduction of the reinsurance in force
under this Agreement will be in the same proportion that the
amount reinsured with the Pool Reinsurers bears to the total
reinsurance coverage on the life, if the other reinsurance is
eligible for recapture at the same time;
e) If at the time of recapture the insured is disabled and
premiums are being waived under any type of Disability Benefit
Rider, only the life benefit will be recaptured. The reinsured
portion of the Disability Benefit Rider will remain in force
until the policy is returned to premium-paying status, at
which time it will be eligible for recapture.
If the Ceding Company omits or overlooks the recapture of any eligible
policy or policies, the acceptance of reinsurance payments by the Pool
Reinsurers after the date the recapture would have taken place will not
cause the Pool Reinsurers to be liable for the amount of the risk that
would have been recaptured. The Pool Reinsurers will be liable only for
a refund of reinsurance payments received, without interest.
If the Ceding Company's retention increase is due to its purchase by or
purchase of another company, or its merger, assumption or any other
affiliation with another company, no immediate recapture will be
allowed. However, the Ceding Company may recapture eligible policies
once the Recapture Period set out in Exhibit C, Section IX. has
expired.
ARTICLE VIII - CLAIMS
1. NOTICE OF CLAIM
Subject to the provisions of Section 2 of this Article, the Ceding
Company will notify the Pool Reinsurers promptly when it receives
notice that a claim has been incurred on a policy reinsured under this
Agreement, and it will also forward copies of the death certificate and
the claimant's statement as each document becomes available. The Ceding
Company will send copies of additional information on the claim,
including copies of the application and underwriting papers, upon the
request of any of the Pool Reinsurers.
2. SETTLEMENT OF CLAIMS
For non-contestable claims on policies with face amounts of $1,500,000
or less, including compromises, the Pool Reinsurers will accept the
good faith decision of the Ceding Company. The Ceding Company will
consult with the Pool Reinsurers whenever the claim is incurred during
the contestable period of the policy. However, the consultation will
not impair the Ceding Company's freedom to determine the proper action
on the claim and the settlement made by the Ceding Company will still
be binding upon the Pool Reinsurers.
For claims on policies with face amounts in excess of $1,500,000, the
Lead Claim Reinsurer specified in Exhibit A will review the claim
papers on behalf of the other Pool Reinsurers. The Ceding Company will
consult with the Lead Claim Reinsurer before the Ceding Company makes
any admission or acknowledgment of the validity of the claim. The
action taken by the Lead Claim Reinsurer will be binding on the other
Pool Reinsurers.
Once the Pool Reinsurers have received the proofs cited in Section 1 of
this Article, and upon evidence of the Ceding Company's settlement with
the claimant, they will discharge their net reinsurance liability by
paying one lump sum to the Ceding Company. The Pool Reinsurers will
also reimburse the Ceding Company for any unearned premiums.
The Ceding Company will consult with the Pool Reinsurers before
conceding any liability or making any settlement with the claimant
whenever the claim is incurred during the contestable period of the
policy. However, the consultation will not impair the Ceding Company's
freedom to determine the proper action on the claim and the settlement
made by the Ceding Company will still be binding upon the Pool
Reinsurers.
Claim settlements will be administered in good faith, according to the
standard procedures the Ceding Company applies to all claims, whether
reinsured or not.
3. CONTESTED CLAIMS
The Ceding Company will immediately notify the Pool Reinsurers if it
intends to contest, compromise or litigate a claim involving
reinsurance and will give each Pool Reinsurer an opportunity to review
the claim papers. If any Pool Reinsurer prefers not to participate in
the contest, compromise or claim litigation, that Pool Reinsurer will
notify the Ceding Company of its decision within fifteen (15) days of
its receipt of the claim papers, and that Pool Reinsurer will
immediately pay the full amount of reinsurance due to the Ceding
Company. Once the Pool
Reinsurer has paid its reinsurance liability, it will not be liable for
legal and/or investigative expenses, it will have no further liability
for expenses associated with the contest, compromise or litigation and
it will not share in any subsequent increase or reduction of the policy
face amount.
When the Pool Reinsurers agree to participate in a contest, compromise
or claim litigation involving reinsurance, the Ceding Company will give
each participating Pool Reinsurer prompt notice of the beginning of any
legal proceedings involving the contested policy. The Ceding Company
will promptly furnish the participating Pool Reinsurers with copies of
all documents pertaining to a lawsuit or notice of intent to file a
lawsuit by any of the claimants or parties to the policy.
The participating Pool Reinsurers will share in the payment of legal or
investigative expenses relating to a contested claim in the same
proportion as their Net Amount at Risk bears to the Ceding Company's
Net Amount at Risk. The participating Pool Reinsurers will not
reimburse expenses associated with non-reinsured policies.
If the contest, compromise or litigation results in a reduction in the
liability of the contested policy, the participating Pool Reinsurers
will share in the reduction in the same proportion that the amount
reinsured with each Pool Reinsurer bore to the amount payable under the
terms of the policy on the date of death of the insured.
If the contest, compromise or litigation results in a dismissal of the
claim and a return of the premium to the claimant and/or to the
beneficiary(ies), the participating Pool Reinsurers will refund all
premiums that the Ceding Company has paid to them.
4. CLAIM EXPENSES
The Pool Reinsurers that have elected to participate in a contest,
compromise or claim litigation will pay their proportionate share of
the following expenses arising out of the settlement or litigation of a
claim, providing that the expenses are reasonable:
a) investigative expenses;
b) outside legal counsel fees;
c) penalties and interest imposed automatically by statute and
rising solely out of a judgment rendered against the issuing
company in a suit for policy benefits, so long as such
penalties and interests do not compensate the Ceding Company
for new elements of extra-contractual damages.
d) interest paid to the claimant on death benefit proceeds
according to the practices of the Ceding Company and either at
the same rate as used by the Ceding Company, or at the rate
prescribed by state law.
The Pool Reinsurers' share of claim expenses will be in the same
proportion that their liability bears to the liability of the Ceding
Company.
The Ceding Company will be responsible for payment of the following
claim expenses, which are not considered items of "net reinsurance
liability" as referenced in Section 2. of this Article:
a) routine administrative expenses for the home office or
elsewhere, including the salaries of the Ceding Company's
employees;
b) expenses incurred in connection with any dispute or contest
arising out of a conflict in claims of entitlement to policy
proceeds or benefits which the Ceding Company admits are
payable.
5. EXTRA CONTRACTUAL DAMAGES
The Pool Reinsurers will not be held liable for nor will they pay any
extra contractual damages, including but not limited to consequential,
compensatory, exemplary or punitive damages which are awarded against
the Ceding Company or which may be paid voluntarily, in settlement of a
dispute or claim where damages were awarded as the result of any direct
or indirect act, omission or course of conduct undertaken by the Ceding
Company, its agents or representatives, in connection with any aspect
of the policies reinsured under this Agreement.
Special circumstances may arise in which the Pool Reinsurers should
participate to the extent permitted by law in certain assessed damages.
These circumstances are difficult to describe or define in advance but
could include those situations in which the Pool Reinsurers were an
active party in the act, omission or course of conduct which ultimately
resulted in the assessment of the damages. The extent of the
participation of any of the Pool Reinsurers is dependent upon a
good-faith assessment of the relative culpability in each case; but all
factors being equal, the division of any such assessment would
generally be in the same proportion of the net liability accepted by
each party.
ARTICLE IX - ARBITRATION
1. BASIS FOR ARBITRATION
The parties to this Agreement mutually understand and agree that its
wording and interpretation is based on the usual customs and practices
of the insurance and reinsurance industry. While all parties mutually
agree to act in good faith in dealings with each other, it is
understood and recognized that situations may arise in which an
agreement cannot be reached.
In the event that any dispute cannot be resolved to the mutual
satisfaction of the parties involved, the dispute will first be subject
to good-faith negotiation as described below in an attempt to resolve
the dispute without the need to institute formal arbitration
proceedings.
2. NEGOTIATION
Within ten (10) days after one of the parties to this Agreement has
given the other the first written notification of the specific dispute,
each party will appoint a designated officer to attempt to resolve the
dispute. The officers will meet at a mutually agreeable location as
early as possible and as often as necessary, in order to gather and
furnish the other with all appropriate and relevant information
concerning the dispute. The officers will discuss the problem and will
negotiate in good faith without the necessity of any formal arbitration
proceedings. During the negotiation process, all reasonable requests
made by one officer to the other for information will be honored. The
specific format for such discussions will be decided by the designated
officers.
If the officers cannot resolve the dispute within thirty (30) days of
their first meeting, the parties agree that they will submit the
dispute to formal arbitration. However, the parties may agree in
writing to extend the negotiation period for an additional thirty (30)
days.
3. ARBITRATION PROCEEDINGS
No later than fifteen (15) days after the final negotiation meeting,
the officers taking part in the negotiation will give the concerned
parties written confirmation that they are unable to resolve the
dispute and that they recommend establishment of formal arbitration.
An arbitration panel consisting of three (3) past or present officers
of life insurance or life reinsurance companies not affiliated with any
of the parties to this Agreement in any way will settle the dispute.
Each party will appoint one (1) arbitrator and the two (2) will select
a third. If the two (2) arbitrators cannot agree on the choice of a
third, the choice will be made by the Chairman of the American
Arbitration Association.
The arbitration proceedings will be conducted according to the
Commercial Arbitration Rules of the American Arbitration Association
which are in effect at the time the arbitration begins.
The arbitration will take place at a site decided upon by the
arbitrators unless the involved parties mutually agree otherwise.
Within sixty (60) days after the arbitration proceedings have been
concluded, the arbitrators will issue a written decision on the dispute
and a statement of any award to be paid as a result. The decision will
be based on the terms and conditions of this Agreement as well as the
usual customs and practices of the insurance and reinsurance industry,
rather than on strict interpretation of the law. The decision will be
final and binding on the parties involved and there will be no further
appeal, except that either party may petition any court having
jurisdiction regarding the award rendered by the arbitrators.
The parties involved in the arbitration may agree to extend any of the
negotiation or arbitration periods shown in this Article.
Unless otherwise decided by the arbitrators, the parties involved in
the arbitration will share equally in all expenses resulting from the
arbitration, including the fees and expenses of the arbitrators, except
that each party will be responsible for its own attorneys' fees.
ARTICLE X - INSOLVENCY
1. If the Ceding Company is judged insolvent, the Pool Reinsurers will pay
all reinsurance under this Agreement directly to the Ceding Company,
its liquidator, receiver or statutory successor on the basis of the
Ceding Company's liability under the policy or policies reinsured
without decrease because of the insolvency of the Ceding Company. It is
understood, however, that in the event of the insolvency of the Ceding
Company, its liquidator, receiver or statutory successor will give the
Pool Reinsurers written notice of a pending claim on a policy reinsured
within a reasonable time after the claim is filed in the insolvency
proceedings. While the claim is pending, the Pool Reinsurers may
investigate and interpose at their own expense in the proceedings where
the claim is to be adjudicated, any defense which they may deem
available to the Ceding Company, its liquidator, receiver or statutory
successor. It is further understood that the expense incurred by the
Pool Reinsurers will be chargeable, subject to court approval, against
the Ceding Company as part of the expense of liquidation to the extent
of a proportionate share of the benefit which may accrue to the Ceding
Company solely as a result of the defense undertaken by the Ceding
Company. Where two (2) or more Pool Reinsurers are involved in the same
claim and a majority in interest elect to interpose defense to the
claim, the expenses will be apportioned in accordance with the terms of
the Agreement as though the Ceding Company had incurred the expense.
2. If any of the Pool Reinsurers are judged insolvent, they will be
considered in default under this Agreement. Amounts due to the
insolvent Pool Reinsurer(s) will be paid directly to their liquidator,
receiver or statutory successor without diminution because of
insolvency of the Pool Reinsurer(s).
3. For the purpose of this Agreement, the Ceding Company or any of the
Pool Reinsurers will be deemed insolvent under the following
circumstances:
a) When a cease and desist order or injunction has been issued by
the commissioner or a court in that party's state or
jurisdiction or domicile, ordering the party to cease and
desist from transacting, soliciting or writing any new
business of any kind and is reasonably expected to result in
conservatorship, rehabilitation, receivership or liquidation;
or
b) When a court order is issued voluntarily or involuntarily
placing a party into conservatorship, rehabilitation,
receivership or liquidation, or appointing a conservator,
rehabilitator, receiver or liquidator to take over the
business of the party; or
c) When a party files or consents to the filing of a petition in
bankruptcy, seeks reorganization or an arrangement with
creditors or takes advantage of any bankruptcy, dissolution,
liquidation or similar law or statute.
ARTICLE XI - INSPECTION OF RECORDS
1. INSPECTION OF RECORDS
Any party to this Agreement will have the right at any reasonable time
to inspect the papers, records, books, files or other documents
relating directly or indirectly to the reinsurance coverage under this
Agreement.
ARTICLE XII - OFFSET
1. The Ceding Company and any of the Pool Reinsurers will have, and may
exercise at any time, the right to offset mutually agreed-to balances
due one party from the other against mutually agreed-to balances due
the other party. The right of offset is limited to balances due under
this Agreement. Subject to state regulations, the right of offset will
not be affected nor diminished because of the insolvency of the parties
to this Agreement.
ARTICLE XIII - EXECUTION OF THE AGREEMENT
In witness whereof, the parties hereto have caused this Agreement to be executed
in duplicate at the dates and places shown below, by their respective officers
duly authorized to do so.
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
TRANSAMERICA LIFE INSURANCE COMPANY
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
EMPLOYERS REASSURANCE CORPORATION
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
AMENDMENT NO. 1
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
TRANSAMERICA LIFE INSURANCE COMPANY
AND
EMPLOYERS REASSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
THE LINCOLN NATIONAL LIFE INSURANCE
Except as hereinafter specified, all terms and conditions of the Automatic and
Facultative Reinsurance Agreement effective the 30th day of September, 2000,
amendments and addenda attached thereto, shall apply, and this Amendment is to
be attached to and made a part of the aforesaid Agreement.
It is mutually agreed that:
Effective July 1, 2001, EXHIBIT A, Retention Schedule of Western
Reserve Life, is revised as attached.
IN WITNESS WHEREOF, the Company and the Reinsurer have caused their names to be
subscribed and duly attested hereunder by their respective Authorized Officers:
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
TRANSAMERICA LIFE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
EMPLOYERS REASSURANCE CORPORATION
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
THE LINCOLN NATIONAL LIFE INSURANCE
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
AMENDMENT NO. 2
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
TRANSAMERICA LIFE INSURANCE COMPANY
AND
EMPLOYERS REASSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
THE LINCOLN NATIONAL LIFE INSURANCE
Except as hereinafter specified, all terms and conditions of the Automatic and
Facultative Reinsurance Agreement effective the 30th day of September, 2000,
amendments and addenda attached thereto, shall apply, and this Amendment is to
be attached to and made a part of the aforesaid Agreement.
It is mutually agreed that:
Effective July 1, 2001, EXHIBIT A, AUTOMATIC ACCEPTANCE LIMITS and
EXCLUSION TO AUTOMATIC REINSURANCE COVERAGE, "Jumbo Coverage Limits"
are revised as attached.
IN WITNESS WHEREOF, the Ceding Company and the Pool Reinsurer have caused their
names to be subscribed and duly attested hereunder by their respective
Authorized Officers:
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
TRANSAMERICA LIFE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
EMPLOYERS REASSURANCE CORPORATION
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
THE LINCOLN NATIONAL LIFE INSURANCE
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
AMENDMENT NO. 3
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
TRANSAMERICA LIFE INSURANCE COMPANY
AND
EMPLOYERS REASSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
THE LINCOLN NATIONAL LIFE INSURANCE
SCOR LIFE U.S. REINSURANCE COMPANY
Except as hereinafter specified, all terms and conditions of the Automatic and
Facultative Reinsurance Agreement effective the 30th day of September, 2000,
amendments and addenda attached thereto, shall apply, and this Amendment is to
be attached to and made a part of the aforesaid Agreement.
It is mutually agreed that:
Effective August 1, 2001, EXHIBIT A, I. REINSURANCE COVERAGE is revised
as attached.
IN WITNESS WHEREOF, the Company and the Reinsurer have caused their names to be
subscribed and duly attested hereunder by their respective Authorized Officers:
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
TRANSAMERICA LIFE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
EMPLOYERS REASSURANCE CORPORATION
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
THE LINCOLN NATIONAL LIFE INSURANCE
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SCOR RE LIFE U.S. REINSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
AMENDMENT NO. 4
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
AND
ERC LIFE REINSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
SWISS RE LIFE & HEALTH AMERICA, INC.
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
SCOR LIFE U.S. RE INSURANCE COMPANY
Effective January 1, 2003, provisions of this Agreement are extended to cover
reinsurance on the WRL Freedom Elite Advisor and WRL Freedom Elite Builder
Associates and their riders sold through Western Reserve Life Assurance Co. of
Ohio
All other provisions of the Agreement not in conflict with the provisions of
this Amendment will continue unchanged.
IN WITNESS THEREOF, the parties hereto have caused their names to be subscribed
and duly attested hereunder by their respective Authorized Officers:
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BY: _________________________________ ATTEST: _________________________
TITLE: VP & MANAGING ACTUARY TITLE: VP & MANAGING ACTUARY
DATE: DATE:
ERC LIFE REINSURANCE CORPORATION
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SWISS RE LIFE & HEALTH AMERICA, INC.
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SCOR LIFE U.S. RE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
AMENDMENT NO. 5
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
AND
ERC LIFE REINSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
THE LINCOLN NATIONAL LIFE INSURANCE
SCOR LIFE U.S. REINSURANCE COMPANY
Except as hereinafter specified, all terms and conditions of the Automatic and
Facultative Reinsurance Agreement effective the 30th day of September, 2000,
amendments and addenda attached thereto, shall apply, and this Amendment is to
be attached to and made a part of the aforesaid Agreement.
It is mutually agreed that:
Effective July 1, 2002, EXHIBIT A, UNDERWRITING GUIDELINES, are revised
as attached.
Article I, Section 5, "Definitions", is revised as attached.
Article III, Section 2, "Regular Facultative Reinsurance" subsection,
is revised as attached.
Article IV, Section 5, "Adjustable Term Insurance Rider (ATIR)
Liability, is revised as attached.
Article VIII - Claims, 2. Settlement of Claims, is also revised as
attached.
IN WITNESS WHEREOF, the Ceding Company and the Pool Reinsurer have caused their
names to be subscribed and duly attested hereunder by their respective
Authorized Officers:
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BY: _________________________________ ATTEST: __________________________
TITLE: VP & MANAGING ACTUARY TITLE: VP & MANAGING ACTUARY
DATE: SEPTEMBER 11, 2002 DATE: SEPTEMBER 11, 2002
EMPLOYERS REASSURANCE CORPORATION
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
THE LINCOLN NATIONAL LIFE INSURANCE
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SCOR RE LIFE U.S. REINSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
AUTOMATIC POOL REINSURANCE AGREEMENT
referred to in this Document as the "Agreement"
EFFECTIVE JULY 1, 2001
among
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
referred to in this Agreement as the "Ceding Company"
and
EMPLOYERS REASSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
SWISS RE LIFE & HEALTH AMERICA, INC.
collectively referred to in this Agreement as the "Pool Reinsurers"
TABLE OF CONTENTS
Article I Scope of the Agreement Page 1
Parties to the Agreement
Effective Date of the Agreement
Scope of the Agreement
Duration of the Agreement
Article II Reinsurance Coverage Page 2
Automatic Reinsurance
Facultative Reinsurance
Basis of Reinsurance
Article III Procedures Page 4
Article IV Liability Page 6
Article V Reinsurance Rates and Payments Page 6
Tax Reimbursement
Experience Refund
Article VI Changes to the Reinsurance Page 9
Errors and Oversights
Misstatement of Age or Sex
Changes to the Underlying Policy
Reductions, Terminations and Reinstatements
Article VII Recapture Page 11
Article VIII Claims Page 12
Article IX Arbitration Page 16
Article X Insolvency Page 18
Article XI Inspection of Records Page 19
Article XII Offset Page 19
Article XIII Execution of the Agreement Page 20
EXHIBITS
Exhibit A Reinsurance Coverage
Retention Limits
Automatic Acceptance Limits
Exclusions to Automatic Reinsurance Coverage,
including Jumbo Limits
Exhibit B Administration and Reporting Forms
Exhibit C Rates and Allowances
Net Amount at Risk Calculation
Exhibit D Conditional Receipt
ARTICLE I - SCOPE OF THE AGREEMENT
1. PARTIES TO THE AGREEMENT
The Ceding Company and the Pool Reinsurers mutually agree to transact
reinsurance business according to the terms of this Agreement. This
Agreement is for indemnity reinsurance and the Ceding Company and the
Pool Reinsurers are the only parties to the Agreement. There will be no
right or legal relationship whatsoever between the Pool Reinsurers and
any other person having an interest of any kind in policies reinsured
under this Agreement.
2. FORM OF REINSURANCE
The form of reinsurance shall be First Dollar Quota Share.
3. EFFECTIVE DATE OF THE AGREEMENT
This Agreement will go into effect at 12:01 A.M., July 1, 2001 and will
cover policies shown in Exhibit A with an issue date of July 1, 2001
and thereafter.
4. SCOPE OF THE AGREEMENT
The text of this Agreement and all Exhibits, Schedules and Amendments
are considered to be the entire agreement. There are no other
understandings or agreements regarding the policies reinsured other
than as expressed in this Agreement. Either the Ceding Company or any
of the Pool Reinsurers may make changes or additions to this Agreement,
but they will not be considered to be in effect unless they are made by
means of a written amendment which has been signed by all parties.
The Retention Limits and Binding Limits of the Ceding Company as shown
in Exhibit A are based only on the amounts of insurance administered by
the administrative office of Aegon USA in St Petersburg, Florida and/or
by any third party administrator administering insurance on behalf of
this administrative office.
5. DURATION OF THE AGREEMENT
The duration of this Agreement will be unlimited. However, any of the
Pool Reinsurers may terminate their participation in the Agreement for
new reinsurance at any time by giving the Ceding Company ninety (90)
days prior written notice. The Ceding Company may terminate the entire
Pool or the participation of any Pool Reinsurer by giving ninety (90)
days prior written notice. Reinsurance will continue to be placed
during the ninety-day period. The Ceding Company has the right, upon
termination of any Pool Reinsurer under this Agreement, to re-allocate
the Pool Reinsurer Percentages among the remaining Pool Reinsurers upon
Pool Reinsurers consent, or to name a new Pool Reinsurer to the
Agreement. Existing reinsurance will not be affected by the termination
of this Agreement or by the termination of the participation of any of
the Pool Reinsurers for new reinsurance. Existing reinsurance will
remain in force until the termination or expiry of the underlying
policy on which reinsurance is based, as long as the Ceding Company
complies with this Agreement and continues to pay reinsurance premiums
as shown in Article V (Reinsurance Rates and Payment). The Pool
Reinsurers will accept liability for any claims or premium refunds
which are not reported to them within ninety (90) days following the
termination or expiry of the last cession reinsured under this
Agreement, provided that the Ceding Company has taken prompt and
reasonable action to identify those claims.
6. DEFINITIONS
INITIAL SPECIFIED AMOUNT: AMOUNT shown on the Policy Schedule page of
the life insurance contract.
POOL REINSURER PERCENTAGE: Reinsurer's percentage of risk on Automatic
Reinsurance and Special Pool Facultative Reinsurance.
PARTICIPATION PERCENTAGE: PERCENTAGE that the facultative reinsurer
agrees to reinsure on Regular Facultative Reinsurance.
ARTICLE II - REINSURANCE COVERAGE
1. AUTOMATIC REINSURANCE
The Pool Reinsurers will automatically accept reinsurance of life
benefits for individually underwritten ordinary life policies on the
lives of permanent residents of the United States or United States
Territories in accordance with the provisions and limitations shown in
Exhibit A.
The Pool Reinsurers will also automatically accept reinsurance of
riders and supplementary benefits written with the covered life
benefits, but only to the extent that the riders and supplementary
benefits are specifically shown in Exhibit A, Part I.
The Ceding Company has the right to modify its retention limits shown
in Exhibit A, Part II at any time. If the retention limits are reduced,
the Ceding Company will notify the Pool Reinsurers in writing before
reinsurance can be ceded on the basis of the reduced retention limits.
The Pool Reinsurers have the right to amend the Automatic Acceptance
Limits shown in Exhibit A, Part III if the Ceding Company modifies its
retention limits. The Pool Reinsurers also have the right to modify the
Automatic Acceptance Limits if the Ceding Company elects to participate
in another arrangement or arrangements to secure additional automatic
binding capacity. However, the Pool Reinsurers must exercise their
option to amend the Automatic Acceptance Limits within ninety (90) days
of notification of the change in retention limits or the placement of
additional automatic binding capacity.
2. FACULTATIVE REINSURANCE
Applications for reinsurance of amounts in excess of the Automatic
Acceptance Limits, and any risks which the Ceding Company does not care
to cede automatically or may not be so ceded under the terms of this
Agreement, may be submitted to the Lead Facultative Reinsurer specified
in Exhibit A for facultative consideration either as the Lead
Facultative Reinsurer for the Pool Reinsurers or as an independent
reinsurer, as described in Article III. Procedures below.
If the Ceding Company determines to replace the Lead Facultative
Reinsurer, it will be necessary to appoint a replacement Lead
Facultative Reinsurer and such replacement will be appointed by the
Ceding Company. The Ceding Company will notify all Pool Reinsurers
thirty (30) days prior to the assignment of the new Lead Facultative
Reinsurer.
3. FACULTATIVE REINSURANCE OUTSIDE THIS AGREEMENT
The Ceding Company retains the right to reinsure facultatively with any
reinsurer who is not a Pool Reinsurer. In such case, the risk shall not
be covered under this Agreement. The Ceding Company will attempt to
place business facultatively outside this Agreement only after having
failed to obtain desired facultative reinsurance from among the Pool
Reinsurers.
4. BASIS OF REINSURANCE
Life reinsurance under this Agreement will be on the Monthly Renewable
Term plan for the net amount at risk on the portion of the original
policy that is reinsured into the Pool. The net amount
at risk for any policy period will be calculated according to Exhibit C
(Reinsurance Rates and Allowances), Part I.
Riders or supplementary benefits ceded with life benefits will be
reinsured as shown in Exhibit C. Any differences in the net amount at
risk calculation for these benefits will be shown in Exhibit C.
ARTICLE III - PROCEDURES
1. AUTOMATIC REINSURANCE
Individual notification for the placement of automatic reinsurance will
not be necessary. Subject to Article V (Reinsurance Rates and Payment)
and Exhibit B (Reinsurance Reporting Forms and Reinsurance
Administration), new business or changes to existing reinsurance will
be shown on the Ceding Company's periodic billing report.
2. FACULTATIVE REINSURANCE INSIDE THIS AGREEMENT
SPECIAL POOL FACULTATIVE REINSURANCE. If a case is submitted to the
Lead Facultative Reinsurer for the Pool Reinsurers for facultative
consideration, the Lead Facultative Reinsurer can authorize the Ceding
Company to cede to the Pool Reinsurers the excess, if any, over the
Ceding Company's regular retention for the risk amounts described in
Exhibit A, IV. The Lead Facultative Reinsurer can authorize the Ceding
Company to cede to the Pool Reinsurers their respective Pool Reinsurer
Percentage shown in Exhibit A. Submissions cannot be made to the Lead
Facultative Reinsurer on cases submitted facultatively to other
reinsurers, including other Pool Reinsurers, nor when the amount
applied for and in force with all companies exceeds the Jumbo Coverage
Limit as identified in Exhibit A, V.2. When submitting a case to the
Lead Facultative Reinsurer, the Ceding Company will indicate whether it
is asking the Lead Facultative Reinsurer to act as Lead Facultative
Reinsurer for the Pool Reinsurers or as an independent reinsurer. The
Ceding Company will submit to the Lead Facultative Reinsurer copies of
the original application, the complete underwriting file and all other
information the Ceding Company may have pertaining to the insurability
of the risk. The Lead Facultative Reinsurer shall promptly communicate
an offer of reinsurance on the risk to the Ceding Company. The Lead
Facultative Reinsurer's evaluation of the case will be used to issue
the case and to bind all Pool Reinsurers.
When a policy is placed in force on which reinsurance is to be ceded to
the Pool Reinsurers, the Ceding Company will notify the Pool Reinsurers
that the reinsurance has been effected by including an entry on the
Ceding Company's next periodic billing report.
REGULAR FACULTATIVE REINSURANCE. If the amount of reinsurance required
is in excess of the Ceding Company's regular retention or if the case
is being or has been submitted to other reinsurers for facultative
consideration, the Special Pool Facultative Reinsurance coverage does
not apply. Such cases may be submitted to the Lead Facultative
Reinsurer for its own account independent of the Pool Reinsurers. On
such cases, if the Lead Facultative Reinsurer makes an offer to
reinsure the risk, the Ceding Company must accept the offer during the
lifetime of the proposed insured, but not later than one hundred twenty
days after the offer is made, to effect the reinsurance.
The Company's acceptance of the Lead Facultative Reinsurer's offer will
be documented by a dated notation in the Ceding Company's underwriting
file and subsequent formal notice to the Lead Facultative Reinsurer.
3. REFERENCE MATERIALS
Upon request and subject to availability, the Ceding Company will use
its best efforts to obtain reference materials which may be required by
the Pool Reinsurers for proper administration of reinsurance under this
Agreement.
ARTICLE IV - LIABILITY
1. AUTOMATIC REINSURANCE
Subject to the provisions of Article VI, Section 4 and Article VII, the
liability of the Pool Reinsurers for reinsurance placed automatically
under this Agreement will begin and end simultaneously with that of the
Ceding Company for the underlying policy on which reinsurance is based.
2. FACULTATIVE REINSURANCE
The liability of the Pool Reinsurers (when the Lead Facultative
Reinsurer is acting on behalf of the Pool Reinsurers) shall commence
simultaneously with that of the Ceding Company provided the Ceding
Company has accepted, during the lifetime of the insured and within one
hundred twenty (120) days of the offer, a facultative offer made by the
Lead Facultative Reinsurer on that life.
The liability of a Pool Reinsurer acting as an independent reinsurer
shall commence simultaneously with that of the Ceding Company provided
the Ceding Company has accepted, during the lifetime of the insured and
within one hundred twenty (120) days of the offer, a facultative offer
made by the Pool Reinsurer on that life.
3. CONDITIONAL RECEIPT LIABILITY
The Pool Reinsurers will be liable for losses under the terms of a
Conditional Receipt or Temporary Insurance Receipt to the extent that
the Ceding Company is liable.
4. CONTINUATION OF LIABILITY
Continuation of the Pool Reinsurers' liability is conditioned on the
Ceding Company's payment of reinsurance premiums as shown in Article V
(Reinsurance Rates and Payment) and is subject to Article VI (Changes
to the Reinsurance) and Article VII (Recapture).
ARTICLE V - REINSURANCE RATES AND PAYMENTS
1. REINSURANCE RATES
The rates that the Ceding Company will pay to the Pool Reinsurers for
reinsurance covered under this Agreement are shown in Exhibit C. The
reinsurance rate payable for any cession for any accounting period will
be calculated on the basis of the net amount at risk reinsured as of
that period.
For reasons relating to deficiency reserve requirements by the various
state insurance departments, the rates shown in Exhibit C cannot be
guaranteed for more than one year. While all parties anticipate that
reinsurance rates shown in Exhibit C will continue to be charged, it
may become necessary to charge a guaranteed rate that is the greater of
the rate from Exhibit C or the corresponding statutory net premium rate
based on the required statutory valuation mortality table at 4.5%
interest for the applicable mortality rating.
If the original policy is issued with interim insurance, the Ceding
Company will pay the Pool Reinsurers a reinsurance rate for the interim
period that is the same percentage of the first year premium that the
interim period bears to twelve (12) months. The rate that the Ceding
Company pays the Pool Reinsurers for the first policy year after the
interim period will be calculated on the basis of the full annual
reinsurance rate.
All financial transactions under this Agreement will be in United
States dollars, unless the parties mutually agree to use other
currencies. Specifications of the currencies and details of currency
conversion procedures will be shown in Exhibit C, if necessary.
2. PAYMENTS
The Ceding Company will be responsible for administration of the
periodic reporting of its statements of account and payment of balances
due to the Pool Reinsurers as shown in Exhibit B.
Within thirty (30) days after the close of each reporting period, the
Ceding Company will send each Pool Reinsurer a statement of account for
that period along with payment of the full balance due. If the
statement of account shows a balance due the Ceding Company, each Pool
Reinsurer will remit the appropriate amount within thirty (30) days of
receipt of the statement of account.
In order to eliminate reporting of trivial amounts, the Ceding Company
will send statements of account to the Pool Reinsurers monthly, but
will only send payment when the total balance due equals or exceeds
$100.00.
The Ceding Company's timely payment of reinsurance premiums is a
condition precedent to the continued liability of the Pool Reinsurers.
If the Ceding Company has not paid the balance due to the Pool
Reinsurers by the thirty-first (31st) day following the close of the
reporting period, the Pool Reinsurers have the right to give thirty
(30) days' written notice of their intention to terminate the
reinsurance on which the balance is due and unpaid. At the end of this
thirty (30) day period, the liability of the Pool Reinsurers will
automatically terminate for all reinsurance on which balances remain
due and unpaid, including reinsurance on which balances became due and
unpaid during and after the thirty-day notice period. Even though
reinsurance has been terminated, the Ceding Company will continue to be
liable for the payment of unpaid balances along with interest charges
equivalent to the 30 Day Treasury ▇▇▇▇ rate as published in the Money
Rate Section or any successor section of The Wall Street Journal on the
first business day following the date the premiums are deemed
delinquent.
Reinsurance terminated for non-payment of balances due may be
reinstated at any time within sixty (60) days of the date of
termination, by the Ceding Company's payment of all balances due and
interest charged in full to the Pool Reinsurers. However, the Pool
Reinsurers will have no liability for claims incurred between the
termination date and the reinstatement date.
3. TAX REIMBURSEMENTS
Details of any reimbursement of premium taxes that the Ceding Company
pays on behalf of reinsurance payments to the Pool Reinsurers are shown
in Exhibit C, Section VIII. (Premium Taxes).
The parties mutually agree to the following pursuant to Section 1.848-2
(g) (8) of the Income Tax Regulation issued December 29, 1992 under
Section 848 of the Internal Revenue Code of 1986, as amended. This
election will be effective for all taxable years for which this
Agreement remains in effect.
The terms used in this Section are defined in Regulation Section
1.848-2 in effect as of December 29, 1992. The term "net consideration"
will refer to either net consideration as defined in Section 1.848-2
(f) or "gross premium and other consideration" as defined in Section
1.848-3 (b), as appropriate.
a) The party with the net positive consideration for this
Agreement for each taxable year will capitalize specified
policy acquisition expenses with respect to this Agreement
without regard to the General Deductions Limitation of IRC
Section 848 (c) (1).
b) The parties mutually agree to exchange information pertaining
to the amount of net consideration under this Agreement by May
1 of each year to ensure consistency. The parties also
mutually agree to exchange information otherwise required by
the Internal Revenue Service. Any disputes regarding the
information provided by the parties will be resolved no later
than June 1 of each year.
4. EXPERIENCE REFUND
Details of any Experience Refund payable to the Ceding Company will be
shown in Exhibit C. Section XI. (Experience Refund).
ARTICLE VI - CHANGES TO THE REINSURANCE
1. ERRORS AND OVERSIGHTS
Unintentional clerical errors, omissions or misunderstandings in the
administration of the Agreement by the Ceding Company or any Pool
Reinsurer shall not invalidate the reinsurance hereunder provided the
error, omission or misunderstanding is corrected promptly after
discovery. All parties shall be restored, to the extent possible, to
the position they would have occupied had the error, omission or
misunderstanding not occurred, but the liability of any Pool Reinsurer
under this Agreement shall in no event exceed the limits specified
herein.
2. MISSTATEMENT OF AGE OR SEX
If the misstatement of the age or sex of a reinsured life causes an
increase or reduction in the amount of insurance in the underlying
policy, all parties will share in the change in proportion to their
original liabilities at the time the policy was issued.
3. CHANGES TO THE UNDERLYING POLICY
a) All changes. If any change is made to the underlying policy,
the reinsurance will change accordingly. The Ceding Company
will notify the Pool Reinsurers of the change and the
appropriate premium adjustment on its periodic statement of
account.
b) Increases resulting from contractual provisions and policies,
including policies in corridor, with increasing net amounts at
risk will not be considered new business and will continue to
be reinsured under this Agreement. Such increases will be
reinsured on a point in scale basis utilizing the attained age
reinsurance premiums.
c) Increases in the death benefit of policies that are not
currently reinsured, but on which we have kept our full
retention, will also be reinsured on a point in scale basis
utilizing the attained age reinsurance premiums.
d) All other increases up to the Automatic Binding Limit do not
require the Pool Reinsurers' approval. Increases that would
result in the total Net Amount of Risk exceeding the Automatic
Binding Limits at the attained age of the insured are subject
to the approval of any Pool Reinsurer prior to such Pool
Reinsurer being bound. The Ceding Company will provide the
Pool Reinsurer copies of all documents relating to the change
in coverage.
4. REDUCTIONS, TERMINATIONS AND REINSTATEMENTS
If any part of the underlying policy on a life reinsured under this
Agreement is reduced or terminated, the amount reinsured will also be
reduced or terminated to the extent that the Ceding Company will
continue to maintain its appropriate retention limit as shown in
Exhibit A for the issue age and table rating of the insured. The Ceding
Company will not be required to assume amounts in excess of the
retention limit that was in force when the affected policy was issued.
Reductions or terminations to any one policy will neither affect nor
change the Ceding Company's retention on existing policies covering the
same insured life.
The amount of the reduction will be applied on a proportional basis to
each Pool Reinsurer's net amount at risk at the same proportion that
the Pool Reinsurer's initial amount of reinsurance bore to the total
initial amount reinsured.
If a policy reinsured under this Agreement is lapsed or terminated, the
reinsurance coverage will also terminate.
If a policy reinsured automatically lapses and is reinstated in
accordance with the Ceding Company's standard rules and procedures,
reinsurance for the amount at risk effective at the time of the lapse
will be reinstated automatically at the date of reinstatement of the
policy. Otherwise, the Pool Reinsurer that bound the reinsurance
initially must approve the reinstatement for facultative consideration.
If the Pool Reinsurer assumes the risk, then the Ceding Company will
reinstate the policy. The Ceding Company will provide the Pool
Reinsurers with copies of reinstatement papers only upon request. The
Ceding Company will notify the Pool Reinsurers of the reinstatement on
its periodic statement of account, and it will pay all reinsurance
payments due from the date of reinstatement to the date of the current
statement of account, including a proportionate share of any interest
collected. Thereafter, reinsurance payments will be in accordance with
Article V. (Reinsurance Rates and Payments).
ARTICLE VII - RECAPTURE
1. BASIS OF RECAPTURE
If the Ceding Company increases its retention limits shown in Exhibit
A, II. it may make a corresponding reduction in eligible reinsurance
cessions. Policies are eligible for recapture if:
a) the Ceding Company has maintained the maximum retention limit
for the age and mortality rating of the insured when the
underlying policy was issued. Policies on which the Ceding
Company retained a reduced retention or no retention will not
be eligible for recapture; and
b) the policy has been in force under this Agreement for the
Recapture Period shown in Exhibit C, Section IX. The recapture
period will always be measured from the original policy issue
date.
2. METHOD OF RECAPTURE
The Ceding Company will give the Pool Reinsurers written notice of its
intention to recapture within ninety (90) days of the effective date of
the retention increase. If the Ceding Company elects to recapture at a
later date, it will give the Pool Reinsurers additional written notice
before beginning the recapture.
When the Ceding Company has given the Pool Reinsurers written notice of
intent to recapture, and the date that the recapture will begin:
a) All eligible policies will be recaptured;
b) Reinsurance will be reduced on the next anniversary date of
each eligible policy;
c) Reinsurance on each eligible policy will be reduced by an
amount that will increase the Ceding Company's retention to
the then current limit set forth in Exhibit A, as amended.
d) If there is reinsurance in force in other reinsurers on any
one insured life, the reduction of the reinsurance in force
under this Agreement will be in the same proportion that the
amount reinsured with the Pool Reinsurers bears to the total
reinsurance coverage on the life, if the other reinsurance is
eligible for recapture at the same time;
e) If at the time of recapture the insured is disabled and
premiums are being waived under any type of Disability Benefit
Rider, only the life benefit will be recaptured. The reinsured
portion of the Disability Benefit Rider will remain in force
until the policy is returned to premium-paying status, at
which time it will be eligible for recapture.
If the Ceding Company omits or overlooks the recapture of any eligible
policy or policies, the acceptance of reinsurance payments by the Pool
Reinsurers after the date the recapture would have taken place will not
cause the Pool Reinsurers to be liable for the amount of the risk that
would have been recaptured. The Pool Reinsurers will be liable only for
a refund of reinsurance payments received, without interest.
If the Ceding Company's retention increase is due to its purchase by or
purchase of another company, or its merger, assumption or any other
affiliation with another company, no immediate recapture will be
allowed. However, the Ceding Company may recapture eligible policies
once the Recapture Period set out in Exhibit C, Section IX. has
expired.
ARTICLE VIII - CLAIMS
1. NOTICE OF CLAIM
Subject to the provisions of Section 2 of this Article, the Ceding
Company will report the claims on a bulk basis for policies with face
amounts less than $1,750,000. The Ceding Company will notify the Pool
Reinsurers promptly when it receives notice that a claim with a face
amount of $1,750,000 or greater has been incurred on a policy reinsured
under this Agreement, and it will also forward copies of the death
certificate and the claimant's statement as each document becomes
available. The Ceding Company will send copies of additional
information on the claim, including copies of the application and
underwriting papers, upon the request of any of the Pool Reinsurers.
2. SETTLEMENT OF CLAIMS
For non-contestable claims on policies with face amounts of $1,750,000
or less, including compromises, the Pool Reinsurers will accept the
good faith decision of the Ceding Company. The Ceding Company will
consult with the Pool Reinsurers whenever the claim is incurred during
the contestable period of the policy. However, the consultation will
not impair the Ceding Company's freedom to determine the proper action
on the claim and the settlement made by the Ceding Company will still
be binding upon the Pool Reinsurers.
For claims on policies with face amounts in excess of $1,750,000, the
Lead Claim Reinsurer specified in Exhibit A will review the claim
papers on behalf of the other Pool Reinsurers. The Ceding Company will
consult with the Lead Claim Reinsurer before the Ceding Company makes
any admission or acknowledgment of the validity of the claim. The
action taken by the Lead Claim Reinsurer will be binding on the other
Pool Reinsurers.
Once the Pool Reinsurers have received the proofs cited in Section 1 of
this Article, and upon evidence of the Ceding Company's settlement with
the claimant, they will discharge their net reinsurance liability by
paying one lump sum to the Ceding Company. The Pool Reinsurers will
also reimburse the Ceding Company for any unearned premiums.
The Ceding Company will consult with the Pool Reinsurers before
conceding any liability or making any settlement with the claimant
whenever the claim is incurred during the contestable
period of the policy. However, the consultation will not impair the
Ceding Company's freedom to determine the proper action on the claim
and the settlement made by the Ceding Company will still be binding
upon the Pool Reinsurers.
Claim settlements will be administered in good faith, according to the
standard procedures the Ceding Company applies to all claims, whether
reinsured or not.
3. CONTESTED CLAIMS
The Ceding Company will immediately notify the Pool Reinsurers if it
intends to contest, compromise or litigate a claim involving
reinsurance and will give each Pool Reinsurer an opportunity to review
the claim papers. If any Pool Reinsurer prefers not to participate in
the contest, compromise or claim litigation, that Pool Reinsurer will
notify the Ceding Company of its decision within fifteen (15) days of
its receipt of the claim papers, and that Pool Reinsurer will
immediately pay the full amount of reinsurance due to the Ceding
Company. Once the Pool Reinsurer has paid its reinsurance liability, it
will not be liable for legal and/or investigative expenses, it will
have no further liability for expenses associated with the contest,
compromise or litigation and it will not share in any subsequent
increase or reduction of the policy face amount.
When the Pool Reinsurers agree to participate in a contest, compromise
or claim litigation involving reinsurance, the Ceding Company will give
each participating Pool Reinsurer prompt notice of the beginning of any
legal proceedings involving the contested policy. The Ceding Company
will promptly furnish the participating Pool Reinsurers with copies of
all documents pertaining to a lawsuit or notice of intent to file a
lawsuit by any of the claimants or parties to the policy.
The participating Pool Reinsurers will share in the payment of legal or
investigative expenses relating to a contested claim in the same
proportion as their Net Amount at Risk bears to the Ceding Company's
Net Amount at Risk. The participating Pool Reinsurers will not
reimburse expenses associated with non-reinsured policies.
If the contest, compromise or litigation results in a reduction in the
liability of the contested policy, the participating Pool Reinsurers
will share in the reduction in the same proportion that the amount
reinsured with each Pool Reinsurer bore to the amount payable under the
terms of the policy on the date of death of the insured.
If the contest, compromise or litigation results in a dismissal of the
claim and a return of the premium to the claimant and/or to the
beneficiary(ies), the participating Pool Reinsurers will refund all
premiums that the Ceding Company has paid to them.
4. CLAIM EXPENSES
The Pool Reinsurers that have elected to participate in a contest,
compromise or claim litigation will pay their proportionate share of
the following expenses arising out of the settlement or litigation of a
claim, providing that the expenses are reasonable:
a) investigative expenses;
b) outside legal counsel fees;
c) penalties and interest imposed automatically by statute and
rising solely out of a judgment rendered against the issuing
company in a suit for policy benefits, so long as such
penalties and interests do not compensate the Ceding Company
for new elements of extra-contractual damages.
d) interest paid to the claimant on death benefit proceeds
according to the practices of the Ceding Company and either at
the same rate as used by the Ceding Company, or at the rate
prescribed by state law.
The Pool Reinsurers' share of claim expenses will be in the same
proportion that their liability bears to the liability of the Ceding
Company.
The Ceding Company will be responsible for payment of the following
claim expenses, which are not considered items of "net reinsurance
liability" as referenced in Section 2. of this Article:
a) routine administrative expenses for the home office or
elsewhere, including the salaries of the Ceding Company's
employees;
b) expenses incurred in connection with any dispute or contest
arising out of a conflict in claims of entitlement to policy
proceeds or benefits which the Ceding Company admits are
payable.
5. EXTRA CONTRACTUAL DAMAGES
The Pool Reinsurers will not be held liable for nor will they pay any
extra contractual damages, including but not limited to consequential,
compensatory, exemplary or punitive damages which are awarded against
the Ceding Company or which may be paid voluntarily, in settlement of a
dispute or claim where damages were awarded as the result of any direct
or indirect act, omission or course of conduct undertaken by the Ceding
Company, its agents or representatives, in connection with any aspect
of the policies reinsured under this Agreement.
Special circumstances may arise in which the Pool Reinsurers should
participate to the extent permitted by law in certain assessed damages.
These circumstances are difficult to describe or define in advance but
could include those situations in which the Pool Reinsurers were an
active party in the act, omission or course of conduct which ultimately
resulted in the assessment of the damages. The extent of the
participation of any of the Pool Reinsurers is dependent upon a
good-faith assessment of the relative culpability in each case; but all
factors being equal, the division of any such assessment would
generally be in the same proportion of the net liability accepted by
each party.
ARTICLE IX - ARBITRATION
1. BASIS FOR ARBITRATION
The parties to this Agreement mutually understand and agree that its
wording and interpretation is based on the usual customs and practices
of the insurance and reinsurance industry. While all parties mutually
agree to act in good faith in dealings with each other, it is
understood and recognized that situations may arise in which an
agreement cannot be reached.
In the event that any dispute cannot be resolved to the mutual
satisfaction of the parties involved, the dispute will first be subject
to good-faith negotiation as described below in an attempt to resolve
the dispute without the need to institute formal arbitration
proceedings.
2. NEGOTIATION
Within ten (10) days after one of the parties to this Agreement has
given the other the first written notification of the specific dispute,
each party will appoint a designated officer to attempt to resolve the
dispute. The officers will meet at a mutually agreeable location as
early as possible and as often as necessary, in order to gather and
furnish the other with all appropriate and relevant information
concerning the dispute. The officers will discuss the problem and will
negotiate in good faith without the necessity of any formal arbitration
proceedings. During the negotiation
process, all reasonable requests made by one officer to the other for
information will be honored. The specific format for such discussions
will be decided by the designated officers.
If the officers cannot resolve the dispute within thirty (30) days of
their first meeting, the parties agree that they will submit the
dispute to formal arbitration. However, the parties may agree in
writing to extend the negotiation period for an additional thirty (30)
days.
3. ARBITRATION PROCEEDINGS
No later than fifteen (15) days after the final negotiation meeting,
the officers taking part in the negotiation will give the concerned
parties written confirmation that they are unable to resolve the
dispute and that they recommend establishment of formal arbitration.
An arbitration panel consisting of three (3) past or present officers
of life insurance or life reinsurance companies not affiliated with any
of the parties to this Agreement in any way will settle the dispute.
Each party will appoint one (1) arbitrator and the two (2) will select
a third. If the two (2) arbitrators cannot agree on the choice of a
third, the choice will be made by the Chairman of the American
Arbitration Association.
The arbitration proceedings will be conducted according to the
Commercial Arbitration Rules of the American Arbitration Association
which are in effect at the time the arbitration begins.
The arbitration will take place at a site decided upon by the
arbitrators unless the involved parties mutually agree otherwise.
Within sixty (60) days after the arbitration proceedings have been
concluded, the arbitrators will issue a written decision on the dispute
and a statement of any award to be paid as a result. The decision will
be based on the terms and conditions of this Agreement as well as the
usual customs and practices of the insurance and reinsurance industry,
rather than on strict interpretation of the law. The decision will be
final and binding on the parties involved and there will be no further
appeal, except that either party may petition any court having
jurisdiction regarding the award rendered by the arbitrators.
The parties involved in the arbitration may agree to extend any of the
negotiation or arbitration periods shown in this Article.
Unless otherwise decided by the arbitrators, the parties involved in
the arbitration will share equally in all expenses resulting from the
arbitration, including the fees and expenses of the arbitrators, except
that each party will be responsible for its own attorneys' fees.
ARTICLE X - INSOLVENCY
1. If the Ceding Company is judged insolvent, the Pool Reinsurers will pay
all reinsurance under this Agreement directly to the Ceding Company,
its liquidator, receiver or statutory successor on the basis of the
Ceding Company's liability under the policy or policies reinsured
without decrease because of the insolvency of the Ceding Company. It is
understood, however, that in the event of the insolvency of the Ceding
Company, its liquidator, receiver or statutory successor will give the
Pool Reinsurers written notice of a pending claim on a policy reinsured
within a reasonable time after the claim is filed in the insolvency
proceedings. While the claim is pending, the Pool Reinsurers may
investigate and interpose at their own expense in the proceedings where
the claim is to be adjudicated, any defense which they may deem
available to the Ceding Company, its liquidator, receiver or statutory
successor. It is further understood that the expense incurred by the
Pool Reinsurers will be chargeable, subject to court approval, against
the Ceding Company as part of the expense of liquidation to the extent
of a proportionate share of the benefit which may accrue to the Ceding
Company solely as a result of the defense undertaken by the Ceding
Company. Where two (2) or more Pool Reinsurers are involved in the same
claim and a majority in interest
elect to interpose defense to the claim, the expenses will be
apportioned in accordance with the terms of the Agreement as though the
Ceding Company had incurred the expense.
2. If any of the Pool Reinsurers are judged insolvent, they will be
considered in default under this Agreement. Amounts due to the
insolvent Pool Reinsurer(s) will be paid directly to their liquidator,
receiver or statutory successor without diminution because of
insolvency of the Pool Reinsurer(s).
3. For the purpose of this Agreement, the Ceding Company or any of the
Pool Reinsurers will be deemed insolvent under the following
circumstances:
a) When a cease and desist order or injunction has been issued by
the commissioner or a court in that party's state or
jurisdiction or domicile, ordering the party to cease and
desist from transacting, soliciting or writing any new
business of any kind and is reasonably expected to result in
conservatorship, rehabilitation, receivership or liquidation;
or
b) When a court order is issued voluntarily or involuntarily
placing a party into conservatorship, rehabilitation,
receivership or liquidation, or appointing a conservator,
rehabilitator, receiver or liquidator to take over the
business of the party; or
c) When a party files or consents to the filing of a petition in
bankruptcy, seeks reorganization or an arrangement with
creditors or takes advantage of any bankruptcy, dissolution,
liquidation or similar law or statute.
ARTICLE XI - INSPECTION OF RECORDS
1. INSPECTION OF RECORDS
Any party to this Agreement will have the right at any reasonable time
to inspect the papers, records, books, files or other documents
relating directly or indirectly to the reinsurance coverage under this
Agreement.
ARTICLE XII - OFFSET
1. The Ceding Company and any of the Pool Reinsurers will have, and may
exercise at any time, the right to offset mutually agreed-to balances
due one party from the other against mutually agreed-to balances due
the other party. The right of offset is limited to balances due under
this Agreement. Subject to state regulations, the right of offset will
not be affected nor diminished because of the insolvency of the parties
to this Agreement.
ARTICLE XIII - EXECUTION OF THE AGREEMENT
In witness whereof, the parties hereto have caused this Agreement to be executed
in duplicate at the dates and places shown below, by their respective officers
duly authorized to do so.
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
EMPLOYERS REASSURANCE CORPORATION
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
SWISS RE LIFE & HEALTH AMERICA, INC.
By: _________________________________ Attest: __________________________
Title: ______________________________ Title: ___________________________
Date: _______________________________ Date: ____________________________
AMENDMENT NO. 1
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
AND
EMPLOYERS REASSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
SWISS RE LIFE & HEALTH AMERICA, INC.
Except as hereinafter specified, all terms and conditions of the Automatic Pool
Reinsurance Agreement ("Agreement") effective the 1st day of July, 2001 shall
apply, and this Amendment is to be attached to and made part of the Agreement.
In accordance with the provisions of Article I, Duration of Agreement, The
Lincoln National Life Insurance Co. is hereby cancelled for and as to the
submission of new business effective April 1, 2002. By mutual consent, both
Western Reserve Life Assurance Co. of Ohio and The Lincoln National Life
Insurance Co. waive the ninety-day notice clause.
Reinsurance in force and active on April 1, 2002 with The Lincoln National Life
Insurance Co. shall continue to be covered under the provisions of the Agreement
until termination or natural expiry of the underlying policies, subject to the
payment of reinsurance premiums as set forth in Article V.
All terms and conditions of the Agreement not in conflict with the terms and
conditions of this Amendment will continue unchanged.
This Amendment is signed in duplicate at the dates and places indicated with an
effective date of April 1, 2002.
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BY: ________________________________ ATTEST: _________________________
TITLE: VP & MANAGING ACTUARY TITLE: VP & MANAGING ACTUARY
DATE: APRIL 15, 2002 DATE: APRIL 15, 2002
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
AMENDMENT NO. 2
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
AND
EMPLOYERS REASSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
SWISS RE LIFE & HEALTH AMERICA, INC.
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
SCOR LIFE U.S. RE INSURANCE COMPANY
Except as hereinafter specified, all terms and conditions of the Automatic Pool
Reinsurance Agreement ("Agreement") effective the 1st day of July, 2001 shall
apply, and this Amendment is to be attached to and made part of the Agreement.
Exhibit A and Exhibit C are hereby amended as attached. All terms and conditions
of this Agreement not in conflict with the terms and conditions of this
Amendment will continue unchanged.
This Amendment is signed in duplicate at the dates and places indicated with an
effective date of April 1, 2002.
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BY: _________________________________ ATTEST: __________________________
TITLE: VP & MANAGING ACTUARY TITLE: VP & MANAGING ACTUARY
DATE: APRIL 15, 2002 DATE: APRIL 15, 2002
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SCOR LIFE U.S. RE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
AMENDMENT NO. 3
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
AND
ERC LIFE REINSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
SWISS RE LIFE & HEALTH AMERICA, INC.
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
SCOR LIFE U.S. RE INSURANCE COMPANY
Except as hereinafter specified, all terms and conditions of the Automatic Pool
Reinsurance Agreement ("Agreement") effective the 1st day of July, 2001 shall
apply, and this Amendment is to be attached to and made part of the Agreement.
Effective July 1, 2002, it is agreed that the following sentence is added to
Exhibit C, Section II, Rates for Life Reinsurance:
On Joint Life business, the Single Life rates will be combined according
to the ▇▇▇▇▇▇▇ method.
All other provisions of the Reinsurance Agreement will continue unchanged.
This Amendment is signed in duplicate at the dates and places indicated with an
effective date of July 1, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇ ▇▇▇▇
BY: _________________________________ ATTEST: __________________________
TITLE: VP & MANAGING ACTUARY TITLE: VP & MANAGING ACTUARY
DATE: SEPTEMBER 13, 2002 DATE: SEPTEMBER 13, 2002
ERC LIFE REINSURANCE CORPORATION
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SWISS RE LIFE & HEALTH AMERICA, INC.
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SCOR LIFE U.S. RE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
AMENDMENT NO. 4
AUTOMATIC POOL REINSURANCE AGREEMENT
BETWEEN
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
AND
ERC LIFE REINSURANCE CORPORATION
GENERAL & COLOGNE LIFE RE OF AMERICA
SWISS RE LIFE & HEALTH AMERICA, INC.
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
SCOR LIFE U.S. RE INSURANCE COMPANY
Effective January 1, 2003, provisions of this Agreement are extended to cover
reinsurance on the WRL Freedom Elite Advisor and WRL Freedom Elite Builder
Associates and their riders sold through Western Reserve Life Assurance Co. of
Ohio
All other provisions of the Agreement not in conflict with the provisions of
this Amendment will continue unchanged.
IN WITNESS THEREOF, the parties hereto have caused their names to be subscribed
and duly attested hereunder by their respective Authorized Officers:
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
BY: _________________________________ ATTEST: __________________________
TITLE: VP & MANAGING ACTUARY TITLE: VP & MANAGING ACTUARY
DATE: DATE:
ERC LIFE REINSURANCE CORPORATION
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
GENERAL & COLOGNE LIFE RE OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SWISS RE LIFE & HEALTH AMERICA, INC.
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________
SCOR LIFE U.S. RE INSURANCE COMPANY
BY: _________________________________ ATTEST: __________________________
TITLE: ______________________________ TITLE: ___________________________
DATE: _______________________________ DATE: ____________________________