Automatic Reinsurance Agreement
between
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
New York, New York
(hereinafter called the CEDING COMPANY)
and
[ ]
(hereinafter called the REINSURER)
Effective [ ]
CONTENTS
================================================================================
ARTICLES
I. Automatic Coverage ........................................... 1
II. Substandard Underwriting Program ............................. 2
III. Facultative Obligatory Coverage .............................. 3
IV. Yearly Renewable Term Premiums ............................... 4
V. Premium Administration ....................................... 5
VI. Increasing Amounts at Risk ................................... 7
VII. Errors and Omissions ......................................... 8
VIII. Expense of Original Policy ................................... 9
IX. Recapture Privileges ......................................... 10
X. Terminations and Reductions .................................. 11
XI. Reinstatement, Continuations, Extended Term
and Reduced Paid-Up Insurance ......................... 12
XII. Liability .................................................... 13
XIII. Claims ....................................................... 14
XIV. Negotiation .................................................. 16
XV. Arbitration .................................................. 17
XVI. Insolvency ................................................... 18
XVII. Right to Inspect ............................................. 19
XVIII. Duration of Agreement ........................................ 20
XIX. Miscellaneous ................................................ 21
XX. DAC Tax Article .............................................. 22
XXI. Execution of Agreement ....................................... 23
SCHEDULES
A. Plans of Insurance
B. Specifications
C. Benefits
EXHIBITS
I. Agreement Retention Limits
II. Reinsurance Premiums
III. Published Retention Limits
The CEDING COMPANY shall cede reinsurance to the REINSURER in accordance with
the terms of this Agreement.
ARTICLE I
AUTOMATIC COVERAGE
A. All Provisions of this Agreement are subject to the laws of the State of
New York.
B. Reinsurance hereunder will be ceded automatically by the CEDING COMPANY on
a quota-share basis. The REINSURER'S percentage of participation in each
risk ceded will be shown in Schedule B.
C. For each risk on which reinsurance is ceded under this agreement, the
CEDING COMPANY will retain [ ]% of the policy reinsured, up to its full
published retention as shown in Exhibit III at the time of issue, taking
into account both currently issued and previously issued policies.
D. The CEDING COMPANY will cede and the REINSURER will automatically accept
reinsurance, if all of the following conditions are met for each life:
1. The amount does not exceed the automatic binding limits shown in
Schedule B.
2. The sum of the amount of insurance already in force and applied for on
that life, in all companies, does not exceed the Jumbo Limit as shown
in Schedule B.
3. The issue age and mortality rating limit for each risk does not exceed
the limits as shown in Schedule B.
4. The CEDING COMPANY has not, within three years of the date of
application of the risk, made facultative application for reinsurance
of the risk to REINSURER or any other reinsurer, except in conjunction
with the Substandard Underwriting Program as described in Article II
of this treaty.
5. The risk is conventionally underwritten by the CEDING COMPANY
according to standard underwriting practices and guidelines, including
those related to HIV testing.
6. The plan is listed in Schedule A.
7. The individual risk must be a citizen or a permanent resident of the
United States, Canada or residents of countries as shown in Schedule
D.
8. The mortality rating on each individual risk must not exceed Table
[ ] or its equivalent on a flat extra premium basis for
single life policies.
9. The issuance and delivery of the policy is in compliance with the laws
of all applicable jurisdictions and the CEDING COMPANY's corporate
charter.
1
ARTICLE II
SUBSTANDARD UNDERWRITING PROGRAM
A. The CEDING COMPANY may submit substandard risks for facultative
underwriting to a lead insurer. For the [ ] policies, the
lead reinsurer will be the [ ]. For TERM III
and Last-to-Die policies, the lead reinsurer will be the
[ ].
B. Notification. The CEDING COMPANY will send to the appropriate lead
reinsurer all information it has about the risk, including
specifically but not limited to, copies of the application, medical
examiners' reports, attending physicians' statements, inspection
reports and other papers bearing on the insurability of the risk. Upon
receipt of all information, the lead reinsurer will analyze the risk
for facultative reinsurance and notify the CEDING COMPANY of its
classification of the risk. The CEDING COMPANY will issue the policy
at the CEDING COMPANY's substandard premium that is appropriate for
the classification determined by the lead reinsurer.
C. Sections A and B notwithstanding, the CEDING COMPANY retains the
right to submit a risk for facultative coverage outside of this
agreement. Any risk for which facultative reinsurance coverage is
sought outside of this agreement, shall be ineligible for reinsurance
coverage under this agreement.
D. The REINSURER will accept its share of the risk as shown in Schedule
B, at the rating by the CEDING COMPANY based on B above. The premiums
are described in Exhibit II.
E. Any facultative application accepted by the REINSURER for the plans
covered under this agreement, for the Substandard Underwriting
Program, will appear on the statement as described in Article V.
F. Adjustments. If any change is made in the policy that affects the
reinsurance, such as changes in face amount or form of policy, the
CEDING COMPANY will report such change to the REINSURER.
G. Reporting. The CEDING COMPANY will prepare monthly statements as
detailed in ARTICLE IV, Section A.
2
ARTICLE III
FACULTATIVE OBLIGATORY COVERAGE
A. The CEDING COMPANY may cede and the REINSURER will accept reinsurance
on a facultative obligatory basis the CEDING COMPANY's business as
defined in Schedule A, if all of the following conditions are met for
each life:
1. The risk is conventionally underwritten.
2. The plan is listed in Schedule A.
3. The policies are directly written by the CEDING COMPANY.
4. The sum of the amount of insurance inforce and applied for on
that life, in all companies does not exceed $[ ].
5. The issuance and delivery of the policy is in compliance with the
laws of all applicable jurisdictions and the CEDING COMPANY's
corporate charter.
6. Automatic reinsurance coverage under this agreement has not been
used on this policy.
7. The CEDING COMPANY has retained its full published retention as
shown in Exhibit III at the time of issue, taking into account
both currently issued and previously issued policies on the life.
B. Procedures to Effect Facultative Obligatory Reinsurance
1. The CEDING COMPANY will notify the REINSURER of the name of the
insured, date of birth and face amount requested.
2. The REINSURER will check their facilities and notify the CEDING
COMPANY no later that [ ] hours from the time of the CEDING
COMPANY's notification by facsimile transmission of the amount
the REINSURER is willing to accept. The CEDING COMPANY will
confirm by facsimile transmission within [ ] hours after the
capacity has been filled of the REINSURER's acceptance and the
amount, if applicable.
3. The REINSURER's offer on the risk will automatically terminate at
the later of the date the REINSURER receives notification that
the application has been withdrawn or [ ] days after the date the
offer is made by the REINSURER and no notification is received
from the CEDING COMPAMY.
3
ARTICLE IV
YEARLY RENEWABLE TERM PREMIUMS
A. Plans of insurance listed in Schedule A will be reinsured on the
yearly renewable term basis for the net amount at risk as described
in Schedule C, on that portion of the policy which is reinsured with
the REINSURER.
B. Yearly renewable term premiums for Life Reinsurance will be based on
the rates and allowances described in Exhibit II.
C. Yearly renewable term premiums will be increased by an flat extra
premium charged the insured on the face amount initially reinsured, as
described in Exhibit II.
D. The REINSURER shall not reimburse the CEDING COMPANY for state premium
taxes the latter may be required to pay on reinsurance ceded.
E. For technical reasons, the Life reinsurance rates cannot be
guaranteed for more than one year. However, the REINSURER anticipates
continuing to accept premiums on the basis of the rates as described
in Exhibit II for reinsurance ceded at these rates. If the REINSURER
deems it necessary to increase rates, such increased rates cannot be
higher than the valuation net premiums for yearly renewable term
insurance calculated using the minimum statutory mortality rates and
maximum statutory interest rate for each year of issue.
4
ARTICLE V
PREMIUM ADMINISTRATION
A. Premium Reporting
Within [ ] days following the end of each month, the CEDING
COMPANY will send the REINSURER a statement showing the premiums due for
all new cessions processed during the month just ended and for renewing
cessions with anniversaries in that month. The monthly statements shall
contain the following information:
1. Premium subtotals adequate for the REINSURER to use for its premium
accounting including first year and renewal year totals.
2. Totals for in-force, new business, changes and each type of
termination, as of the end of the month. "Totals" refer to the number
of policies reinsured and the net amount at risk reinsured.
In addition, the CEDING COMPANY will provide the REINSURER with an in-force
listing of reinsured business within [ ] days after the close of the
calendar year. This in-force listing will contain information adequate for
the REINSURER to audit in-force records.
Any premium adjustments due to terminations, reinstatements, reissues or
other changes will also be listed. The CEDING COMPANY will remit within
[ ] days the net amount shown as due the REINSURER. All premiums
not paid within [ ] days of the billing statement date shown on the
statement will be in default.
B. The REINSURER reserves the right to charge interest on a monthly basis at
[ ] rate as of [ ] when:
1. Renewal premiums are not paid within [ ] days of the due
date shown on the statement.
2. Premiums for new business are not paid within [ ] days of
the effective date of the policy.
C. The REINSURER will have the right to terminate this Agrement when premium
payments are in default by giving [ ] days written notice of
termination to the CEDING COMPANY. As of the close of the last day of this
[ ] days notice period, the REINSURER's liability for all
risks reinsured associated with the defaulted premiums, under this
agreement will terminate. The first day of the [ ] days notice of
termination will be the day the notice is received in the mail by the
CEDING COMPANY or if the mail is not used, the day it is delivered to the
CEDING COMPANY.
If all premiums in default are received with the [ ] day time period,
the Agreement will remain in effect.
5
ARTICLE V (CONTINUED)
D. Premiums will be payable annually in advance. If the reinsurance is
reduced, terminated or increased by reinstatement during the year, pro-rata
adjustment will be made by the CEDING COMPANY and the REINSURER on all
premium items.
E. Payments between the CEDING COMPANY and the REINSURER may be paid net of
any amount due and unpaid under this reinsurance agreement.
6
ARTICLE VI
INCREASING AMOUNTS AT RISK
Reinsurance accepted under this Agreement will include increases in amounts at
risk due to normal function of increases or expanding plans or riders. Such
increases will be split proportionately among the CEDING COMPANY and the
REINSURER based on the portion of the policy held by each company immediately
prior to the increase.
7
ARTICLE VII
ERRORS AND OMISSIONS
If either the CEDING COMPANY or the REINSURER fails to perform an obligation
that affects this Agrement and such failure results in an error on the part of
the CEDING COMPANY or the REINSURER, the error will be corrected by restoring
both the CEDING COMPANY and the REINSURER to the positions they would have
occupied had no such error occurred. An error is a clerical mistake made
inadvertently and excludes errors of judgment and all other forms of error.
8
ARTICLE VIII
EXPENSE OF ORIGINAL POLICY
The CEDING COMPANY will bear the expense of all medial examinations, inspection
fees and other charges incurred in connection with the original policy.
9
ARTICLE IX
RECAPTURE PRIVILEGES
[ ]
10
ARTICLE X
TERMINATIONS AND REDUCTIONS
A. Termination or reductions will take place in accordance with the following
rules, in order of priority:
1. Termination or reduction on a wholly reinsured policy will not affect
other reinsurance in force.
2. A termination or reduction on a wholly retained case will not cause an
equal reduction in existing automatic reinsurance.
3. When a reinsured policy is reduced, the reinsurance share will be
equal to the percentage share immediately prior to the reduction.
4. If a policy is reinsured with multiple reinsurers, the reinsurance
will be reduced by the ratio of the amount of reinsurance in each
company to the total outstanding reinsurance on the risk involved.
B. Whenever the total amount of reinsurance on a policy reduces to
$[ ] or less the reinsurance will be wholly recaptured, if such
policy has been inforce for at least three years.
11
ARTICLE XI
REINSTATEMENT, CONTINUATIONS, EXTENDED TERM
AND REDUCED PAID - UP INSURANCE
A. Any policy originally reinsured in accordance with the terms and conditions
of this Agreement by the CEDING COMPANY may be automatically reinstated
with the REINSURER so long as the policy is reinstated in accordance with
the terms and rules of the CEDING COMPANY. The CEDING COMPANY will pay the
REINSURER its share of reinsurance premiums corresponding to the amounts
collected or charged for the reinstatement of such policy.
B. A continuation is a new policy replacing a policy issued earlier by the
CEDING COMPANY or a change in an existing policy that is issued or made
either:
1. Under the terms of the original policy, or
2. Without the same new underwriting information the CEDING COMPANY
would obtain in the absence of the original policy, or
3. Without a suicide exclusion period or contestable period of equal
duration to those contained in new issues by the CEDING COMPANY, or
4. Without the payment of the same commissions in the first year that
the CEDING COMPANY would have paid in the absence of the original
policy.
C. Continuations will be reinsured under this Agreement only if the original
policy was reinsured with the REINSURER. Issue age and duration premium
calculations will apply. The amount of reinsurance under this Agreement
will not exceed the amount of the reinsurance of the original policy with
the REINSURER immediately prior to the continuation.
D. Changes as a result of extended terms or reduced paid-up insurance will be
handled like reductions.
12
ARTICLE XII
LIABILITY
A. This is an Agreement solely between the REINSURER and the CEDING COMPANY.
In no instance will anyone other than the REINSURER or the CEDING COMPANY
have any rights under this agreement, and the CEDING COMPANY will be and
remain solely liable to any insured, policy owner, or beneficiary under
policy reinsured hereunder.
B. The liability for automatic reinsurance ceded to the REINSURER under this
Agreement will commence simultaneously with that of the CEDING COMPANY. The
liability for facultative obligatory reinsurance shall not commence unless
and until the CEDING COMPANY has accepted the REINSURER's offer and
notified the REINSURER of its acceptance as set forth in Article III. The
liability for reinsurance ceded to the REINSURER under the Substandard
Underwriting Program, as described in Article II of the Agreement, will
commence once the CEDING COMPANY has been informed of the underwriting
action of the lead reinsurer.
C. The REINSURER will not be liable for proceeds paid under the CEDING
COMPANY's conditional receipt or temporary insurance agreement unless
conditions for automatic coverage under Article I of this Agreement are
met.
D. The liability of the REINSURER for all reinsurance under this Agreement
will cease simultaneously with the liability of the CEDING COMPANY and will
not exceed the CEDING COMPANY's contractual liability under the terms of
its policies.
13
ARTICLE XIII
CLAIMS
A. Prompt notice of a claim must be given to the REINSURER. In every case of
loss, copies of the proofs obtained by the CEDING COMPANY will be taken by
the REINSURER as sufficient. Copies thereof, together with proof of the
amount paid on such claim by the CEDING COMPANY will be furnished to the
REINSURER when requesting its share of the claim. The REINSURER shall pay
promptly its share of the claim after all copies of the proofs of death are
received.
B. The CEDING COMPANY will notify the REINSURER of its intention to contest,
compromise, or litigate a claim. Unless it declines to be a party to such
action, the REINSURER will pay its share of any settlement up to the
maximum that would have been payable under the specific policy had there
been no controversy plus its share of specific expenses, including legal or
arbitration costs, special investigations or similar expenses, but
excluding salaries of employees therein involved, routine investigative or
administrative expenses and expenses incurred in connection with a dispute
or contest arising out of conflicting or any other claims of entitlement to
policy proceeds or benefits.
In no event will the REINSURER participate in punitive or compensatory
damages which are awarded against the CEDING COMPANY as a result of an
act, omission or course of conduct committed solely by the CEDING COMPANY
in connection with the insurance reinsured under this Agreement. The
REINSURER shall, however, pay its share of statutory penalties awarded
against the CEDING COMPANY in connection with insurance reinsured under
this Agreement if the REINSURER elected to join in the contest of the
coverage in question.
The parties recognize that circumstances may arise in which equity would
require the REINSURER, to the extent permitted by law, to share
proportionately in certain assessed damages. Such circumstances are
difficult to define in advance, but generally would be those situations
in which the REINSURER was an active party and directed, consented to, or
ratified the act, omission or course of conduct of the CEDING COMPANY
which ultimately resulted in the assessment of the extra-contractual
damages, other than statutory damages. In such situations, the REINSURER
and the CEDING COMPANY shall share such damages so assessed, in equitable
proportions. For purposes of this provision, the following definitions
will apply:
"Punitive Damages" are those damages awarded as a penalty, the amount
of which is neither governed nor fixed by statute;
"Statutory Penalties" are those amounts awarded as a penalty, but
fixed in amount by statute;
"Compensatory Damages" are those amounts awarded to compensate for
the actual damages sustained and are not awarded as a penalty, nor
fixed in amount by statute.
14
ARTICLE XIII (CONTINUED)
If the REINSURER declines to be a party to the contest, compromise, or
litigation of a claim, it will pay its full share of the amount reinsured,
as if there had been no contest, compromise, or litigation, and its
proportionate share of covered expenses incurred to the date it notifies
the CEDING COMPANY it declines to be a party.
C. In no event will the REINSURER be liable for expenses incurred in
connection with a dispute or contest arising out of conflicting or any
other claims of entitlement to policy proceeds or benefits, providing the
REINSURER makes payment of the full amount of reinsurance to the CEDING
COMPANY when the REINSURER is first notified of the claim.
D. If the amount of insurance changes because of a misstatement of rate
classification, the REINSURER's share of reinsurance liability will change
proportionately.
15
ARTICLE XIV
NEGOTIATION
A. Within [ ] days after one of us has given the other the first written
notification of a specific dispute, each of us 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.
B. If the officers cannot resolve the dispute within [ ] days of their first
meeting, we agree that we will submit the dispute to formal arbitration.
However, we may agree in writing to extend the negotiation period for an
additional [ ] days.
16
ARTICLE XV
ARBITRATION
A. It is the intention of the CEDING COMPANY and the REINSURER that the
customs and practices of the insurance and reinsurance industry will be
given full effect in the operation and interpretation of this Agreement.
The parties agree to act in all things with the highest good faith. If,
after the negotiation required by Article XIV, the REINSURER or the CEDING
COMPANY cannot mutually resolve a dispute which arises out of or relates to
this Agreement, however, the dispute will be decided through arbitration.
The arbitrators will base their decision on the terms and conditions of
this Agreement plus, as necessary, on the customs and practices of the
insurance and reinsurance industry rather than solely on a strict
interpretation of the applicable law; there will be no appeal from their
decision, and any court having jurisdiction of the subject matter and the
parties may reduce that decision to judgment.
B. To initiate arbitration, either the REINSURER or the CEDING COMPANY will
notify the other party in writing of its desire to arbitrate, stating the
nature of its dispute and the remedy sought. The party to which the notice
is sent will respond to the notification in writing within [ ] days of its
receipt.
C. There will be three arbitrators who will be current or former officers of
life insurance companies other than the contracting companies or affiliates
thereof. Each of the contracting companies will appoint one of the
arbitrators and these two arbitrators will select the third. If either
party refuses or neglects to appoint an arbitrator within [ ] days, the
other party may appoint the second arbitrator. If the two arbitrators do
not agree on a third arbitrator within [ ] days of their appointment, then
the appointment of said third arbitrator will be left to the President of
the American Arbitrators Association. Once chosen, the arbitrators are
empowered to decide all substantive and procedural issues by a majority of
votes.
D. It is agreed that each of the three arbitrators should be impartial
regarding the dispute and should resolve the dispute on the basis described
in Section A of this Article.
E. The arbitration hearing will be held on the date fixed by the arbitrators
in New York City. In no event will this date be later than [ ] months after
the appointment of the third arbitrator. As soon as possible, the
arbitrators will establish pre-arbitration procedures as warranted by the
facts and issues of the particular case. At least [ ] days prior to the
arbitration hearing, each party will provide the other party and the
arbitrators with a detailed statement of facts and arguments it will
present at the arbitration hearing. The arbitrators may consider any
relevant evidence; they will give the evidence such weight as they deem it
entitled to after consideration of any objections raised concerning it.
Each party may examine any witnesses who testify at the arbitration
hearing.
F. The cost of arbitration will be divided between the parties, unless the
arbitrators decide otherwise.
17
ARTICLE XVI
INSOLVENCY
A. In the event of insolvency of the CEDING COMPANY, all reinsurance will be
payable on the basis of the liability of the CEDING COMPANY on the policies
reinsured, directly to the CEDING COMPANY or its liquidator, receiver or
statutory successor without diminution because of the insolvency of the
CEDING COMPANY.
B. In the event of insolvency of the CEDING COMPANY, the liquidator, receiver
or statutory successor will within a reasonable time after the claim is
filed in the insolvency proceeding, give written notice to the REINSURER of
all pending claims against the CEDING COMPANY on any policies reinsured.
While a claim is pending, the REINSURER may investigate and interpose, at
its own expense, in the proceedings where the claim is adjudicated, any
defense or defenses which it may deem available to the CEDING COMPANY or
its liquidator, receiver or statutory successor. The expenses incurred by
the REINSURER 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 REINSURER. Where two or
more reinsurers are participating in the same claim and a majority in
interest elect to interpose a defense or defenses to any such claim, the
expenses will be apportioned in accordance with the terms of the
reinsurance agreement as though such expenses had been incurred by the
CEDING COMPANY.
C. Any debts or credits, matured or unmatured, liquidated or unliquidated, in
favor of or against either the REINSURER or the CEDING COMPANY with respect
to this Agreement are deemed mutual debts or credits, as the case may be,
and will be offset, and only the balance will be allowed or paid. If either
the REINSURER or the CEDING COMPANY is under formal insolvency proceedings,
this right of offset shall be subject to the laws of the state exercising
primary jurisdiction over such proceedings.
18
ARTICLE XVII
RIGHT TO INSPECT
The REINSURER and the CEDING COMPANY, each may at all reasonable times inspect
original papers, records, books, files, etc., relating to the business under
this Agreement.
19
ARTICLE XVIII
DURATION OF AGREEMENT
A. This Agreement may be terminated as to new reinsurance at any time by
either party giving [ ] days' written notice of termination. The day the
notice is mailed to the other party's Home Office, or, if the mail is not
used, the day it is delivered to the other party's Home Office or to an
Officer of the other party, will be the first day of the [ ] day period.
B. During the [ ] day period, this Agreement will continue to operate in
accordance with its terms.
C. The REINSURER and the CEDING COMPANY will remain liable after termination,
in accordance with the terms and conditions of this Agreement, with respect
to all reinsurance effective prior to termination of this Agreement.
D. If at any time the REINSURER is no longer licensed or an accredited
reinsurer in the state of New York, it shall take all actions necessary or
appropriate to ensure that the CEDING COMPANY receives credit for all
reinsurance hereunder in its Annual Statement to the New York State
Insurance Department, including but not limited to providing a letter of
credit or reinsurance trust, costs to be borne by the REINSURER, and
compliance with New York Regulation 20.
20
ARTICLE XIX
MISCELLANEOUS
1. This Agreement shall constitute the entire agreement between the
parties with respect to business reinsured hereunder. There are no
understandings between the parties other than as expressed in this
Agreement and any change or modification of the Agreement shall be null
and void unless made by amendment to the Agreement and signed by both
parties.
2. Notices:
Any notice or communication given pursuant to this Reinsurance
Agreement must be in writing and (a) delivered personally, (b) sent by
facsimile or other similar transmission to a number specified in
writing by the recipient, (c) delivered by overnight express, or (d)
sent by registered or certified mail, postage prepaid, return receipt
requested, as follows:
a) If to CEDING COMPANY:
The Equitable Life Assurance Society of the United States
Reinsurance Department - 17th Floor
1290 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: [ ]
b) If to the REINSURER:
[ ]
All notices and other communications required or permitted under this
Reinsurance Agreement that are addressed as provided in this Section
will (a) if delivered personally or by overnight express, be deemed
given upon delivery; (b) if delivered by facsimile transmission or
other similar transmission, be deemed given when electronically
confirmed, and (c) if sent by registered or certified mail, be deemed
given when marked postage prepaid by the sender's terminal. Any party
from time to time may change its address, but no such notice of change
will be deemed to have been given until it is actually received by the
party sought to be charged with the contents thereof. The more specific
requirements of Articles II and III shall apply to notices thereunder.
3. This agreement shall be binding to the parties and their respective
successors and permitted assignees. This agreement may not be assigned
by either party without the written consent of the other. This
agreement may be modified or amended only by a writing duly executed
and delivered on behalf of each party by its respective duly authorized
officers.
21
ARTICLE XX
DAC TAX ARTICLE
TREASURY REGULATION SECTION 1.848-2(g)(8) ELECTION
The CEDING COMPANY and the REINSURER hereby agree to the following pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulations issued December 29, 1992,
under Section 848 of the Internal Revenue Code 1986, as amended. This election
shall be effective for [ ].
1. The term "party" will refer to either the CEDING COMPANY or the REINSURER
as appropriate.
2. The terms used in this Article are defined by reference to Treasury
Regulations Section 1.848-2 in effect as of December 29, 1992.
3. 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).
4. Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency. The
parties also agree to exchange information which may be otherwise required
by the IRS.
5. The CEDING COMPANY will submit a schedule to the REINSURER by [ ] of each
year of its calculation of the net consideration for the preceding calendar
year. This schedule will be accompanied by a statement signed by an officer
of the CEDING COMPANY stating that the CEDING COMPANY will report such net
consideration in its tax return for the preceding calendar year.
6. The REINSURER may contest such calculation by providing an alternate
calculation to the CEDING COMPANY in writing within [ ] days of the
REINSURERS's receipt of the CEDING COMPANY's calculation. If the REINSURER
does not so notify the CEDING COMPANY, the REINSURER will report the net
consideration as determined by the CEDING COMPANY in the REINSURER's tax
return for the previous calendar year.
7. If the REINSURER contests the CEDING COMPANY's calculation of the net
consideration, the parties will act in good faith to reach an agreement as
to the correct amount within [ ] days of the date the REINSURER submits its
alternate calculation. If the REINSURER and CEDING COMPANY reach agreement
on an amount of net consideration, each party shall report such amount in
their respective tax returns for the previous year.
22
ARTICLE XXI
EXECUTION OF AGREEMENT
IN WITNESS OF THE ABOVE,
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
New York, New York
and
[ ]
Executed in duplicate by Executed in duplicate by
THE EQUITABLE LIFE ASSURANCE [ ]
SOCIETY OF THE UNITED STATES
on [ ] on [ ]
By: [_________________] By: [_________________]
Title Title
By: [_________________] By: [_________________]
Title Title
23
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SCHEDULE A
PLANS OF INSURANCE
I. Term of Insurance
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[ ]
I. Variable Universal Life Insurance
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[ ]
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SCHEDULE B
SPECIFICATIONS
o TYPE OF BUSINESS Life insurance issued by the CEDING COMPANY.
o BASIS OF REINSURANCE Quota Share / Facultative Obligatory
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Percentage Share
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Plans Automatic* Substandard Facultative
Underwriting Obligatory
Program
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Variable Universal
Plan
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Term Plans
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Jumbo Limit
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o QUOTA SHARE BINDING LIMIT Single life $[ ]** Ages:[ ]
o FAC-OB MAXIMUM CAPACITY $[ ]
o MINIMUM AMOUNTS Initial - Automatic
Subsequent
* If the CEDING COMPANY is fully retained, the REINSURER's share will
increase accordingly.
** $[ ] for Aviation, Avocation.
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SCHEDULE C
BENEFITS
The following benefits are reinsured under this Agreement:
Life reinsurance will be on the yearly renewable term basis for the net amount
at risk as described below:
A. Term Plans - The net amount at risk will be the reinsurance face
amount.
B. Variable Universal & Last to Die life plans - The net amount at risk
will be the REINSURER's share of the insurance death benefit less the
cash value.
C. The methods of calculating the net amount at risk described above may
not be appropriate because of special options, structure of tables of
amounts, rate of accumulation of cash surrender values and provisions
guaranteeing an increase in the face amount under a given plan of
insurance. Then the net amount at risk will be calculated by a method
mutually agreeable to both parties.
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SCHEDULE D
BINDING LIMITS
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EXHIBIT I
CEDING COMPANY'S RETENTION LIMITS
1. LIFE:
[ ]% of the first $[ ] of each risk, but not to exceed the CEDING
COMPANY's published retention as shown in Exhibit III.
1975-80 M ANB, WITH OLDER-AGE EXTENSION
1975-80 F ANB, WITH OLDER-AGE EXTENSION
1975-80 F ANB, WITH OLDER-AGE EXTENSION
1975-80 F ANB, WITH OLDER-AGE EXTENSION
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EXHIBIT III
PUBLISHED RETENTION LIMITS
FAMILY RETENTION LIMITS of The Equitable Life Assurance Society of The United
States, the CEDING COMPANY: (including The Equitable of Colorado, Inc.)
Individual Life Insurance
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Issue Ages Retention Limits
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Last to Die Life Insurance
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Issue Ages Retention Limits
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* [ ] for aviation and avocation cases.