COINSURANCE,
(with respect to the Fixed Portion of certain Annuity Contracts)
MODIFIED COINSURANCE, and
(with respect to Variable Portion of certain Annuity Contracts)
ASSUMPTION REINSURANCE AGREEMENT
(with respect to the Fixed and Variable Portion of the Annuity Contracts)
BY AND BETWEEN
LONDON PACIFIC LIFE & ANNUITY COMPANY IN
RECEIVERSHIP
(referred to herein as London Pacific)
AND
FIDELITY SECURITY LIFE INSURANCE COMPANY
(referred to herein as FSL)
EFFECTIVE: September 30, 2003
TABLE OF CONTENTS
ARTICLE 1 Definitions.................................................................................4
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ARTICLE 2 Coinsurance of Fixed Portion of Contracts...................................................5
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ARTICLE 3 Modified Coinsurance of Variable Portion of Contracts.......................................6
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ARTICLE 4 Additional Provisions Relating to Indemnity Reinsurance.....................................7
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ARTICLE 5 Assumption Reinsurance .....................................................................9
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ARTICLE 6 Accounting and Transfer of Assets..........................................................10
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ARTICLE 7 Contract Administration....................................................................12
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ARTICLE 8 Representations and Warranties of London Pacific...........................................14
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ARTICLE 9 Representations and Warranties of FSL......................................................15
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ARTICLE 10 Termination................................................................................15
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ARTICLE 11 Indemnification............................................................................16
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ARTICLE 12 Miscellaneous..............................................................................17
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SCHEDULE A Regency Series Deferred Variable Annuity Contracts.........................................21
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SCHEDULE B Third-Party Reinsurance Agreements.........................................................23
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SCHEDULE C Mutual Funds which Underly LPLA Separate Account One.......................................24
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SCHEDULE D Effective Date Accounting..................................................................25
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COINSURANCE, MODIFIED COINSURANCE and
ASSUMPTION REINSURANCE AGREEMENT
This Agreement is made and entered into between London Pacific Life &
Annuity in Receivership, a North Carolina-domiciled life insurance company
("London Pacific") and Fidelity Security Life Insurance Company, a
Missouri-domiciled life insurance company ("FSL").
WITNESSETH:
WHEREAS, London Pacific has issued certain Individual Deferred Variable
Annuity Contracts with a Fixed Account under the marketing name Regency Series,
which are set forth in Schedule A, (herein after referred to as the
"Contracts"); and
WHEREAS, London Pacific intends to put in place a Plan of Reinsurance
that initially provides for indemnity reinsurance and which then becomes an
Assumption Reinsurance Agreement. The indemnity reinsurance is a combination of
coinsurance and modified coinsurance; and
WHEREAS, London Pacific desires to cede to FSL 100% of its liability
arising under the Fixed Portion of such Contracts pursuant to a coinsurance
arrangement, and FSL desires to accept the liability; and
WHEREAS, London Pacific desires to cede to FSL 100% of its liability
arising out of the Variable Portion of such Contracts, pursuant to a modified
coinsurance arrangement and FSL desires to accept such liability; and
WHEREAS, the reserves which underlie the Variable Portion of the
Contracts are held in a segregated asset account, LPLA Separate Account One; and
WHEREAS, after receiving the necessary regulatory approvals and having
complied with all applicable laws and regulations, FSL is willing to accept and
assume as its own direct obligation all rights and liabilities of London Pacific
with respect to such Contracts; and
WHEREAS, London Pacific, through its agents, will continue to provide
FSL with certain administrative and support services with respect to such
Contracts for a period following the Effective Date as further set forth herein,
and thereafter FSL will undertake and assume full responsibility for such
administrative and support services.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, London Pacific and FSL agree as
follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement, but not defined in this Article
1, shall have the meaning given them in other provisions of this Agreement. The
following capitalized terms shall have the meanings set forth below when used in
this Agreement.
1.1 Assumption Date. "Assumption Date" with respect to the Contracts
shall be the date that all regulatory and judicial approval is received for the
assumption of the Contracts and FSL accepts and assumes as its own direct
obligation the Contract Liabilities.
1.2 Contracts. "Contracts" shall mean the Individual Deferred Variable
Annuity Contracts with a Fixed Account issued under the marketing name of
Regency Series by London Pacific Life and Annuity Company, identified in
Schedule A, including all endorsements, riders, and supplemental agreements
issued pursuant to the Contracts, which are a part thereof, and which are set
forth in Schedule A.
1.3 Contract Liabilities. "Contract Liabilities" shall mean any and all
of London Pacific's gross risks, liabilities and obligations, based upon or
arising out of the express terms and conditions of the Contracts.
1.4 Effective Date. "Effective Date" shall mean 12:01 am Central time
September 30, 2003 being the date and time upon which the coinsurance of the
Fixed Portion of the Contracts shall occur and the date and time upon which the
modified coinsurance of the Variable Portion of the Contracts shall also occur.
1.5 Fixed Portion of the Contracts. The "Fixed Portion of the Contracts"
shall mean those benefits and contract rights that are guaranteed by the General
Account of London Pacific, including but not limited to death benefits,
surrender rights and annuity purchase guaranties.
1.6 LPLA Separate Account One. "LPLA Separate Account One" shall mean the
segregated asset account established by London Pacific pursuant to North
Carolina insurance law and registered with the Securities and Exchange
Commission as a Unit Investment Trust under the Investment Company Act of 1940.
1.7 Payment Date. "Payment Date" shall mean the fifth day after the Order
of the Receivership Court is issued approving the Plan of Reinsurance.
1.8 Receiver. "Receiver" shall mean the Commissioner of Insurance of the
State of North Carolina in his capacity as Rehabilitator of London Pacific or
any other person so designated by the Commissioner as a Deputy Receiver or
Deputy Rehabilitator.
1.9 Variable Portion of the Contracts. "Variable Portion of the
Contracts" shall mean those benefits and contract rights that are backed by the
assets held in LPLA Separate Account One.
ARTICLE 2
COINSURANCE OF FIXED PORTION OF CONTRACTS
2.1 Coinsurance. Subject to the terms and conditions of this Agreement,
as of the Effective Date London Pacific shall cede, and FSL shall assume on a
coinsurance basis, 100% of London Pacific's Contract Liabilities with respect to
the Fixed Portion of the Contracts. FSL hereby agrees to indemnify London
Pacific against all loss, cost and expense from risks assumed by FSL under this
Article 2, as more fully set forth in Section 2.2.
2.2 Risks Reinsured Under Coinsurance. As of the Effective Date and for
the duration of the Coinsurance, FSL does hereby reinsure and agrees to
reimburse London Pacific for the following Contract Liabilities with respect to
the Fixed Portion of the Contracts (including, but not limited to, death claims
and surrenders):
(a) 100% of all benefits incurred on or after the Effective
Date which are attributable to the Fixed Portion of the Contracts;
(b) 100% of any premium taxes that become due or assessed on or
after the Effective Date which are attributable to the Contracts;
(c) 100% of any assessments, whether involuntary or voluntary,
by an insurance guaranty or insolvency or similar fund established or
governed by any state or jurisdiction that relates to the Contracts that
becomes due or assessed after the Effective Date; and
(d) 100% of all other losses and expenses which are incurred on
or after the Effective Date and which are attributable to the Fixed
Portion of the Contracts.
On and after the Effective Date and prior to the Assumption Date,
Contract Liabilities shall not include:
(a) any liability for punitive, exemplary, special or any other
forms of extra-contractual obligation based on the acts or omissions of
London Pacific, Receiver or their agents prior to the Effective Date
("Extra-Contractual Obligations") except for any Extra-Contractual
Obligations equal to or less than the Contract benefits;
(b) commissions, fees, other payments due to, or claims made by,
any agent, general agent, manager, broker, producer, administrator or any
other person who marketed, produced, or administered the Contracts prior
to the Effective Date;
(c) any premium taxes or other assessments attributable to the
Contracts, the obligation of which arose before the Effective Date.
2.3 Duration of Coinsurance. The indemnity obligations under this Article
2 shall continue with respect to the Fixed Portion of the Contracts until all
liabilities and risks thereunder have been assumed by FSL, or the earlier of the
discharge of all liability of London Pacific under such Fixed Portion of the
Contracts or termination of the Coinsurance pursuant to Article 10.
2.4 Reserves. As of the date hereof and for the duration of the indemnity
obligations under this Article 2, with respect to the Fixed Portion of the
Contracts, FSL shall establish and maintain a liability on its statutory
financial statements in accordance with applicable statutory and regulatory
requirements.
ARTICLE 3
MODIFIED COINSURANCE OF VARIABLE PORTION OF CONTRACTS
3.1 Modified Coinsurance. Subject to the terms and conditions of this
Agreement, as of the Effective Date, London Pacific shall cede, and FSL shall
assume on a modified coinsurance basis, 100% of London Pacific's Contract
Liabilities with respect to the Variable Portion of the Contracts. FSL hereby
agrees to indemnify London Pacific against all loss, cost and expense from the
risks assumed by FSL under this Article 3 as more fully set forth in Section
3.2.
3.2 Risks Reinsured Under Modified Coinsurance. As of the Effective Date
and for the duration of the Modified Coinsurance, FSL does hereby reinsure and
agrees to reimburse London Pacific for the following Contract Liabilities with
respect to the Variable Portion of the Contracts:
(a) 100% of all benefits, including death claims and surrenders
incurred on or after the Effective Date which are attributable to the
Variable Portion of the Contracts, less any amounts held in LPLA Separate
Account One under the Contract pursuant to which any claim for benefits
has been made; and
(b) 100% of all other losses and expenses which are incurred on
or after the Effective Date which are attributable to the Variable
Portion of the Contracts.
On and after the Effective Date and prior to the Assumption Date,
Contract Liabilities shall not include Extra-Contractual Obligations as set
forth in Section 2.2.
3.3 Duration of Modified Coinsurance. The indemnity obligations under
this Article 3 shall continue with respect to the Variable Portion of the
Contracts until all liabilities and risks thereunder have been assumed by FSL or
the earlier of the discharge of all liabilities of London Pacific under such
Variable Portion of the Contract or termination of the Modified Coinsurance
pursuant to Article 10.
3.4 Reserves. As of the date hereof and for the duration of the indemnity
obligations under this Article 3 with respect to the Variable Portion of the
Contracts, FSL shall establish and maintain a liability on its statutory
financial statements in accordance with applicable statutory and regulatory
requirements, to the extent appropriate for its indemnity obligations hereunder.
3.5 Operation of LPLA Separate Account One. Until the Assumption Date,
London Pacific will continue to maintain and operate the LPLA Separate Account
One in accordance with all applicable laws and regulations and the Contracts.
ARTICLE 4
ADDITIONAL PROVISIONS RELATING TO INDEMNITY REINSURANCE
4.1 Third-Party Reinsurance. London Pacific represents to FSL that the
Third-Party Reinsurance Agreements set forth in Schedule B constitute all the
reinsurance treaties or agreements entered into by London Pacific with respect
to the Contracts. London Pacific further represents and warrants that the
Third-Party Reinsurance Agreements remain in full force and effect and that it
is not in default under any Third-Party Reinsurance Agreement. London Pacific
agrees to use its best efforts to obtain the consent of the Third-Party
Reinsurers to the assignment of London Pacific's rights and obligations under
the Third-Party Reinsurance Agreements with respect to the Contracts. FSL agrees
to assume London Pacific's rights and obligations under any Third-Party
Reinsurance Agreement relating to the Contracts that is assignable or for which
consent has been obtained. If London Pacific is unable to assign its rights and
obligations there-under, London-Pacific and FSL agree to use their respective
best efforts to replace such Third-Party Reinsurance Agreement with a new treaty
between FSL and a Third-Party Reinsurer on substantially similar terms.
4.2 Guaranty Fund Assessments. In the event London Pacific is required to
pay any assessment to any insurance guaranty or insolvency or similar fund
pursuant to Article 2 and if at a later date London Pacific is allowed to
recover any assessment (e.g. through a reduction of premium taxes) the portion
of any such recovery received or otherwise realized by London Pacific shall be
paid to FSL (based upon the total portion of such recovery attributable to such
Contracts reinsured by FSL).
4.3 Cooperation in Obtaining Approvals. London Pacific and FSL agree to
cooperate in good faith and use their respective best efforts to make all
necessary regulatory filings, to obtain any necessary regulatory or corporate or
other approvals required by the indemnity reinsurance and assumption reinsurance
provided for in this Agreement.
4.4 Participation Agreements. London Pacific and FSL will cooperate to
obtain the consent of the Mutual Funds set forth in Schedule C that underly LPLA
Separate Account One to the assignment of London Pacific's rights and
obligations under the Participation Agreements with respect to the Contracts.
FSL agrees to assume London Pacific's rights and obligations under the
Participation Agreements relating to the Contracts that are assignable or for
which consent has been obtained. If London Pacific is unable to assign its
rights and obligations thereunder, FSL agrees to use its best efforts to enter
into a new Participation Agreement on substantially similar terms.
4.5 Contractholder Relations. During the period when the indemnity
reinsurance provisions of this Agreement are in effect, London Pacific and FSL
shall cooperate in good faith with respect to Contractholder relations.
4.6 Consideration. In consideration for the reinsurance herein provided,
FSL agrees to pay London Pacific a Ceding Commission as provided for in Schedule
D.
4.7 Reinsurance Premium. With respect to Contracts issued and in force on
the Effective Date, London Pacific agrees to pay FSL a Reinsurance Premium as
follows:
(a) On or before the Payment Date, cash or other consideration
in an amount equal to the amount shown on Schedule D as the Effective
Date Estimated Settlement Amount; plus
(b) On the Assumption Date, the assets held in LPLA Separate
Account One, as of the Assumption Date; plus
(c) As of the Effective Date until the Assumption Date, the
following:
(1) any Contingent Deferred Sales Charges debited from
surrendered Contract values;
(2) any transfer fees assessed under the Contracts;
(3) all Mortality and Expense Risk Charges deducted from
LPLA Separate Account One;
(4) all Administration Charges deducted from LPLA Separate
Account One;
(5) all Distribution Charges deducted from LPLA Separate
Account One;
(6) any monies received from any of the Mutual Funds
listed in Schedule C, their advisors, distributors or any person
acting on behalf of such funds with respect to the Contracts or
LPLA Separate Account, such amounts referred to as revenue
sharing, service fees, 12b-1 Plan fees or otherwise; and
(7) any interest, or other income or earnings, that
becomes credited, due or payable after the Effective Date on
assets transferred to FSL pursuant to Section 4.8.
Any amount that becomes due and payable under this subsection
4.7(c) after the Effective Date but before the Payment Date
shall be payable along with the amount due under 4.7(a).
4.8 Transfer of Assets. By no later than 12:00 p.m., central time,
on the Payment Date, London Pacific shall transfer to FSL the net amount as set
forth in Schedule D, in accordance with Article 6.
4.9 Limitation Liability. As a prior condition to FSL providing reinsurance
pursuant to this Agreement, there shall be issued an Order of the Receivership
Court, absolving FSL for any claims, suits, actions, liabilities, losses,
damages, attorney's fees, interest, penalties, costs and any other losses of any
kind arising from London Pacific's activities occurring prior to the Effective
Date hereof. FSL shall further be absolved from all commissions, fees, and
payments due to, or claims made by, any agent, general agent, manager, broker,
producer, administrator, reinsurers or any other debt or obligation due to any
other person incurred prior to the Effective Date.
ARTICLE 5
ASSUMPTION REINSURANCE
5.1 Assumption Reinsurance. Upon a determination by FSL that all required
filings with regulatory authorities and consents from such regulatory
authorities have been made and obtained, and when all notices required by law or
under the terms of a Contract to be given to any Contractholder have been
provided and a registration statement with respect to the Contracts has been
declared effective by the Securities and Exchange Commission and when all the
Mutual Funds which underly LPLA Separate Account One have either consented to
the assignment of the existing Participation Agreement to FSL or have entered
into a New Participation Agreement with FSL, FSL shall notify London Pacific
that it intends to be bound by the assumption reinsurance provisions of this
agreement with respect to the Contracts. Upon the giving of such notice, FSL
will assume and reinsure the following with respect to the Contracts:
(a) all obligations and liabilities under the Contracts to the
same extent and with the same effect as if such Contracts had been issued
by FSL from their inception;
(b) all obligations and liabilities for or relating to lawsuits
and legal actions and proceedings that arose prior to the Assumption
Date; and
(c) all obligations under any reinsurance agreements applicable
to the Contracts.
Under no circumstances shall FSL be obligated hereunder for any claims, suits,
actions, liabilities, losses, damages, attorney's fees, interest, penalties,
costs and any other losses of any kind arising from London Pacific's activities
occurring prior to the Assumption Date. FSL shall further be absolved from all
commissions, fees, and payments due to, or claims made by, any agent, general
agent, manager, broker, producer, administrator, reinsurer or any other debt to
any other person, incurred prior to the Assumption Date. FSL shall at all times
be fully subrogated to all such defenses, set-offs and counter claims with
respect to any Contract Liabilities that FSL may have with respect to the
Contracts.
5.2 Direct Obligations. From and after the Assumption Date of the
Contract Liabilities, the Contracts shall be the direct obligation of FSL, and
London Pacific shall have no further obligations under the Contracts.
This transfer and novation has been deemed to be in the best interest of
the Contractholders by the North Carolina Commissioner of Insurance in his
discretion, and with the implied consent of the Contractholders pursuant to N.C.
Gen. Stat. ss.58-10-45. The effect of this transfer, as of the Assumption Date,
shall be a novation of the Contracts, with the result that London Pacific will
thereby be relieved of all insurance obligations and risks under the Contracts,
and FSL will be solely and directly liable to the Contractholders for such
insurance obligations and risks.
5.3 Delivery of Prospectuses. FSL will deliver to each
Contractholder a prospectus relating to the assumed Contract.
5.4 Assumption Certificate. FSL will prepare and issue
Assumption Certificates evidencing its assumption of the Contracts and deliver
same to each Contractholder. FSL will be responsible for obtaining all
necessary approvals of such Certificates.
5.5 Non-Consenting Contractholders. In the event any Contractholder of a
Contract, having the right to do so, objects to the assumption by FSL of London
Pacific's liabilities with respect to such Contract, indemnity reinsurance with
respect to such Contract shall be continued pursuant to this Agreement, to the
extent appropriate, and both parties shall use their respective best efforts to
resolve the matter.
5.6 Transfer of LPLA Separate Account One. On the Assumption Date, LPLA
Separate Account One will be transferred to FSL in accordance with Article 6.
ARTICLE 6
ACCOUNTING AND TRANSFER OF ASSETS
6.1 Effective Date Accounting. On or before the Payment Date,
London Pacific shall deliver to FSL the Effective Date Accounting which shall
set forth the following:
(a) An estimated balance sheet for LPLA Separate Account One as
of the Effective Date which is estimated on a Statutory basis;
(b) Contract Liabilities and related assets which are estimated
under statutory accounting principles, set forth in such detail and in
such format that FSL can complete its General Account Financial Statement
(Blue Book); and
(c) The Effective Date Estimated Settlement Amount which shall
set forth the amount of the cash payment and other consideration to be
made by London Pacific to FSL on or before the Payment Date which will be
net of the Ceding Commission.
6.2 Assumption Date Accounting. On the Assumption Date, London Pacific
will cause to have delivered to FSL a balance sheet for LPLA Separate Account
One, as of the Assumption Date and which is prepared on a Statutory basis.
6.3 Transfer of Assets. London Pacific will transfer assets to
FSL as follows:
(a) On or before the Payment Date, London Pacific will transfer
to FSL the Effective Date Settlement Amount as stated on Schedule D;
(b) On the Assumption Date, London Pacific will transfer to FSL
LPLA Separate Account One; and
(c) On and after the Payment Date until the Assumption Date, the
funds set forth in Section 4.7(c); except that London Pacific's
obligation with respect to items 4.7(c)(6) and (7) shall continue so long
as there remains any Contract Liabilities.
Unless otherwise agreed to, London Pacific will wire to FSL in Federal Funds, on
or before the Payment Date, the amount set forth in item (a) above. Wire
transfer instructions shall be provided to London Pacific by FSL prior to the
Payment Date. From the Payment Date until the Service Transfer Date (as defined
in Section 7.3) London Pacific will periodically, as may from time to time be
agreed to by the parties, wire to FSL the amounts set forth in item (c) above.
On and after the Service Transfer Date, FSL shall retain any proceeds from
operations and treat the same as additional Reinsurance Premium it is owed under
this Agreement.
On the Assumption Date, London Pacific and FSL will cooperate to assure
that the Mutual Funds that underly LPLA Separate Account One properly reflect
the transfer to FSL.
6.4 Verification and Settlement. Within ninety (90) days following the
Payment Date, FSL shall recalculate the required reserves and the consideration
transferred to FSL as of the Payment Date, and shall provide London Pacific with
a report of same.
In the event that the verification, or any subsequent accounting, reveals
that amounts are due any party, appropriate payments shall be made by the
applicable party within five (5) business days after the parties have mutually
agreed to the appropriate settlement.
If the results of the verification reveal a material deviation from the
Effective Date Estimated Settlement Amount, FSL may, in its sole discretion,
terminate this agreement and London Pacific shall recapture all business
reinsured hereunder pursuant to Article 10. The determination that the deviation
is material shall be submitted to arbitration pursuant to Section 12.6 before
any election to terminate this Agreement by FSL.
6.5 Delayed Payments. If either party fails to make any payment due under
this Agreement, or which may be found due after arbitration, interest will
accrue on such payment at the simple interest rate of one percent (1%) per
month. Such interest amount may be included in any arbitration award. For
purposes of this Section, a payment will be considered overdue, and interest
will begin to accrue, on the date which is thirty (30) days after the date such
payment is due or is found to have been due in an arbitration judgement.
6.6 Offset of Payments. To the extent allowed by the applicable law or
the appropriate regulatory official having jurisdiction and control over the
affairs of the parties, and in addition to any other remedies provided under
this Agreement, and subject to this Article 6, each party shall have, and may
exercise at any time and from time to time, the right to offset any balance or
balances, due from one party to the other party under this Agreement. However,
such right of offset shall be limited solely to amounts that may become due and
payable pursuant to this Agreement.
ARTICLE 7
CONTRACT ADMINISTRATION
7.1 Interim Servicing. For the period between the Effective Date and the
Service Transfer Date, London Pacific agrees to continue to service and
administer the Contracts in a manner consistent with its past practice, and to
supply to FSL, on a timely basis, copies of accounting and other records
pertaining to such contract service and administration when requested by FSL, or
as may be required under the terms of this Agreement.
7.2 Transfer of Servicing Obligations. On and after the Service Transfer
Date, FSL agrees to provide Contractholder service and administration for the
Contracts. Such service and administration functions shall include, but not be
limited to, the following:
(a) Preparing and mailing notices and other required documents,
if any, to Contractholders of Contracts at an appropriate time in advance
of applicable due dates, including any prospectus supplements, in
compliance with applicable law and regulations;
(b) Providing usual and customary services for Contractholders,
including, but not limited to, calculation of unit values for LPLA
Separate Account One, providing information concerning the Contracts,
processing surrenders and transfers of contract values, required tax
reporting, and processing Contractholder record changes;
(c) Handling all matters related to the payment of claims under
the Contracts, including, without limitation, handling, processing and
investigating claims, defending and timely paying death benefits,
surrenders and all other claims and other amounts owing under the
Contracts;
(d) Maintaining all files necessary or appropriate for the
administration of the Contracts and LPLA Separate Account One, including,
without limitation, files pertaining to systems, contract administration,
financial data, agents, commissions and claims, as the parties may from
time to time agree;
(e) Administering all Third-Party Reinsurance Agreements
including, without limitation, taking all steps necessary to maintain
such reinsurance coverage, paying all reinsurance premiums, collecting
all reinsurance recoverables due to FSL and enforcing all of London
Pacific's other rights under the Third-Party Reinsurance Agreements; and
(f) If the parties so decide and subject to the terms and
provisions of Section 7.6, handling all regulatory compliance matters in
connection with the Contracts.
7.3 Service Transfer Date. The Service Transfer Date is the date on which
FSL commences to administer the Contracts in accordance with the terms and
conditions of this Agreement. The Service Transfer Date shall be a date mutually
agreed upon by both parties, which shall be no later than ninety (90) days after
the Effective Date.
7.4 Level of Performance. The Contractholder services provided pursuant
to Section 7.2 shall comply with the level of performance reasonably required of
an administrator of variable annuity insurance policies of the type reinsured
hereunder; provided, however, that in no event shall FSL provide services
hereunder which do not meet the standards applicable to the administration of
its own policies.
7.5 Compliance with Law. On and after the Service Transfer Date, FSL
shall be responsible for assuring that the Contracts and LPLA Separate Account
One are at all times administered in compliance with all applicable laws and
regulations.
7.6 Regulatory Matters. If London Pacific or FSL receives notice of, or
otherwise become aware of any regulatory inquiry, investigation or proceeding
relating to the Contracts, London Pacific or FSL, as agreed to between the
parties, shall promptly notify the other party thereof, whereupon the parties
shall cooperate in good faith to resolve such matter in a mutually satisfactory
manner.
7.7 Transmittal of Files, Records and Related Information by London
Pacific. Prior to or on the Service Transfer Date, London Pacific, at its own
expense, shall deliver to FSL the original of all reports, records, claim files,
any information relating to the Contracts, unit value histories, performance
information and any other information relating to LPLA Separate Account One.
On and after the Service Transfer Date, London Pacific shall forward
within five (5) business days of receipt (a) all monies relating to the
Contracts received by it, and (b) all written notices and other written
communications received by it relating to the Contracts (including, without
limitation, all inquiries, correspondence, and notices), and shall promptly turn
over to FSL all records and related information which London Pacific may have in
its possession or under its control in connection with such Contracts.
7.8 Transmittal of Complaints by FSL. On and after the Service Transfer
Date, FSL shall promptly forward to London Pacific copies of (a) all written
inquiries or complaints regarding the Contracts received from state insurance
regulators, (b) all claims, suits and actions involving the Contracts for which
it receives service of process, and (c) information in FSL's possession or under
its control which London Pacific may request in connection with such inquiry,
complaint, service of process or suit as regard to Contract Liabilities as set
forth above.
7.9 Reports. On and after the Service Transfer Date and until the
Assumption Date, FSL will provide to London Pacific all reports or other
information that may be necessary to meet any state regulatory filing
requirements, including any that may be required as part of any reports relating
to the Receivership and maintenance of LPLA Separate Account One under the
Securities laws.
7.10 Inspection of Books and Records. For the duration of the indemnity
reinsurance, all books and records pertaining to the Contracts shall be made
available to London Pacific for inspection during regular business hours.
7.11 Audits. Upon fifteen (15) business days prior notice, either party
shall have the right, at its own expense, to audit the records and procedures
and parties relating to the Contracts, including to operation and performance of
all terms and conditions under this Agreement.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF LONDON PACIFIC
8.1 Authorization and Validity. The execution and delivery by London
Pacific of this Agreement and the consummation of the transaction and the
performance by London Pacific of its obligation hereunder, have been duly
authorized by all necessary regulatory and judicial action in accordance with
applicable law, and any material contracts entered into between London Pacific
and any third party.
8.2 Title to Assets. London Pacific will be, at the time of transfer, the
owner of any assets it will transfer to FSL pursuant to this Agreement and will
have good and marketable title thereto, free of any encumbrances.
8.3 Complete, Full and Accurate Disclosure. To the good faith best
knowledge of London Pacific, no representation or warranty by London Pacific in
this Agreement or in any statement or document furnished or to be furnished to
FSL in connection with the transaction contemplated hereunder contains or will
contain any untrue statement of a material fact, or omits or will omit a
material fact necessary to make the representation, warranty, statement or
document not misleading.
8.4 The Contracts. All contract forms, endorsements and riders used in
connection with the Contracts are, to the extent required under applicable law,
on forms approved or deemed approved or deemed approved by the applicable
insurance regulatory authorities. To the good faith best knowledge of London
Pacific, those forms which have been filed with and deemed approved by the
applicable insurance regulatory authorities are in compliance with applicable
insurance laws in all material respects.
The Contracts were sold pursuant to prospectuses filed with the
Securities and Exchange Commission. Such prospectuses contained no untrue
statement of a material fact or omitted a material fact necessary to make the
statement not misleading.
8.5 Agents Properly Licensed and Supported. To the extent required by
law, all of the Contracts were issued through agents licensed by the applicable
state insurance regulatory authorities and properly appointed.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF FSL
FSL represents and warrant that:
9.1 Organization and Standing. FSL is duly incorporated, validly existing
and maintains a current certificate of authority to conduct an insurance
business under the laws of the State of Missouri, and has the corporate power
and authority to carry on its business, including the activities contemplated by
this Agreement.
9.2 Authorization and Validity. FSL has all requisite corporate power and
authority necessary to enter into this Agreement and to perform all of its
obligations hereunder. The execution and delivery by FSL of this Agreement and
the consummation of the transaction and the performance by FSL of its obligation
hereunder, have been duly authorized.
ARTICLE 10
TERMINATION
10.1 Termination. This Agreement shall terminate in the following
events:
(a) automatically upon the discharge of all Contract Liabilities
under the Contracts; or
(b) automatically upon the assumption of Contract Liabilities by
FSL pursuant to the Assumption provisions hereof; or
(c) FSL elects to terminate this Agreement pursuant to Section
6.4; or
(d) the conditions set forth in Section 5.1 cannot be met due to
no fault of the parties and FSL elects not to continue to provide the
indemnity reinsurance; or
(e) a material breach of the provisions hereof; provided
however, that the determination that such breach is material shall be
submitted to arbitration pursuant to Section 12.6 before any termination
shall be effective.
10.2 Survival. The terms and conditions of the following shall
remain in full force and effect following termination:
Section 4.7
Article 8
Article 9
Section 10.3
Article 11
Sections 12.2 and 12.6.
10.3 Settlement Upon Termination. In the event this Agreement is
terminated pursuant to Sections 10.1(c), (d) or (e), FSL shall provide to London
Pacific Notice of Termination and set forth in such Notice the effective date of
termination ("Recapture Date"). Within thirty (30) days of having provided the
Notice of Termination, FSL shall provide London Pacific with a Terminal
Accounting setting forth an accounting of the indemnity reinsurance provided
hereunder by FSL. In the event London Pacific terminates this Agreement pursuant
to Section 10.1(e), it shall provide FSL with the Notice of Termination and
request an accounting. The Terminal Accounting shall set forth the information
and be based upon the calculation method as described in Schedule D, modified to
reflect the reversal of the reinsurance transaction.
On or before the Recapture Date, FSL will transfer cash or other assets
as may be agreed to by the parties equal to 100% of the Net Full CARVM statutory
reserves held by FSL with respect to the Fixed Portion of the Contract. FSL
shall provide to London Pacific all records, reports, and other documents and
information in its possession as such pertain to the administration of the
Contracts hereunder.
In the event that subsequent data or calculations require revision of the
Terminal Accounting, the required revisions and any appropriate payments shall
be made in cash by the appropriate party within thirty (30) days after the
parties mutually agree on the appropriate revision.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by London Pacific. From and after the Effective
Date, London Pacific shall reimburse FSL for, and shall indemnify and hold FSL
harmless and defend FSL from and against, all costs and expenses (including
interest, penalties, reasonable attorney, accounting and actuary fees, and any
other costs and expenses incident to any suit, action or proceeding), damages,
charges, losses, deficiencies, liabilities, obligations, claims and judgments
("Loss" or "Losses") sustained or incurred by, or asserted against, FSL which
arise out of: (a) London Pacific's material breach of any representation or
warranty under this Agreement; (b) any breach or nonfulfillment by London
Pacific of, or any failure by London Pacific to perform, any of the covenants,
terms or conditions of, or any of its duties or obligations under, this
Agreement; (c) London Pacific's marketing, issuance, delivery and administration
of the Contracts prior to the Service Transfer Date; and (d) any enforcement of
this indemnity.
11.2 Indemnification by FSL. From and after the Effective Date, FSL shall
reimburse London Pacific for, and shall indemnify and hold London Pacific
harmless and defend London Pacific from and against, all costs and expenses
(including interest, penalties, reasonable attorney, accounting and actuary
fees, and any other costs and expenses incident to any suit, action or
proceeding), damages, charges, losses, deficiencies, liabilities, obligations,
claims and judgments ("Loss" or "Losses") sustained or incurred by, or asserted
against, London Pacific which arise out of: (a) FSL's material breach of any
representation or warranty under this Agreement; (b) any breach or
nonfulfillment by FSL of, or any failure by FSL to perform, any of the
covenants, terms or conditions of, or any of its duties or obligations under,
this Agreement; (c) FSL's administration of the Contracts after the Service
Transfer Date; and (d) any enforcement of this indemnity.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. Any document, notice, consent or request to be given in
connection with any of the terms or provisions of this Agreement shall be in
writing and be given in person, by facsimile transmission, by courier delivery
service or by mail, and shall be effective: (a) on delivery if given in person;
(b) on the date of delivery if sent by facsimile or by courier delivery, with
receipt confirmed by telephone; or (c) four (4) business days after being
deposited in the U.S. mail, with proper postage prepaid for first-class
certified mail. Notices shall be addressed as follows:
If to London Pacific, to:
If to FSL, to:
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Fidelity Security Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Either party may change the names or addresses where notice is to be given by
providing notice to the other party of such change in accordance with this
Section 12.1.
12.2 Confidentiality. Each of the parties shall maintain the
confidentiality of all information related to the Contracts, including the names
and addresses of Contractholders of the Contracts, provided to it in connection
with this Agreement and shall not disclose such information to any third parties
without the prior written consent of the other party, except as may be required
by regulatory authorities, or pursuant to legal process; provided, however, that
FSL's affiliate, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Company, shall be entitled to use the list
of Contractholders provided to it by London Pacific for the sole purpose of
marketing to such Contractholders other life, annuity and health products of FSL
and/or its affiliates(s).
12.3 Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter of this
Agreement. This Agreement, including the Schedules attached hereto represent the
sole and entire agreement between the parties with respect to the subject
matter.
12.4 Waivers and Amendments. Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof. Such
waiver must be in writing and must be executed by an executive officer of such
party. A waiver on one occasion shall not be deemed to be a waiver of the same
or any other term or condition on a future occasion. This Agreement may be
modified or amended only in writing by a duly authorized officer of FSL and a
duly authorized person acting for and on behalf of London Pacific.
12.5 Course of Dealing. No course of dealing between the parties shall
operate as a waiver of any right of either party under this Agreement. No delay
or omission on the part of London Pacific or FSL in exercising its rights under
this Agreement shall operate as a waiver of such right or remedy on any future
occasion and no waiver or consent shall be binding unless it is in writing and
signed by an authorized representative of the party making such waiver.
12.6 Arbitration. Any dispute arising out of the interpretation,
performance or breach of this Agreement or the propriety of any action taken by
either party pursuant to this Agreement, including the formation or validity
hereof, shall be submitted for decision to a panel of two arbitrators and an
umpire. With respect to a dispute subject to this Section 12.6, compliance with
this Section shall be a condition precedent to any right of action in any court.
Notices requesting arbitration and the appointment of an arbitrator will be in
writing as provided in this Section 12.6.
The party to which the notice is sent shall respond thereto in writing
within thirty (30) calendar days of its receipt of such notice. In such
response, the party shall also assert any claim, defense and other dispute it
may have against the party initiating arbitration, and which arises out of or
relates in any way to this Agreement. One arbitrator shall be chosen by each
party and the two arbitrators shall, before instituting the hearing, choose an
impartial umpire who shall preside at the hearing. If either party fails to
appoint its arbitrator within thirty (30) calendar days after being requested in
writing to do so, the requesting party may appoint the second arbitrator if,
after ten (10) calendar days notice in writing to the other party of its
intention to do so, the other party fails to appoint an arbitrator.
If the two arbitrators are unable to agree upon the umpire within thirty
(30) calendar days of their appointment, the selection of the umpire shall be
made by the United States District Court for Raleigh, North Carolina or, if that
court lacks jurisdiction, the Circuit Court of Raleigh, North Carolina. The
judicial selection process shall commence with each arbitrator simultaneously
identifying three (3) candidates for umpire. The list of six (6) individuals,
three (3) names by each arbitrator, shall be submitted to the court accompanied
by a written statement of the reasons supporting the arbitrators' nominations
and his or her objections, if any, to the nominations by the other arbitrator.
The arbitrators and the umpire shall be disinterested active or former
executive officers of life insurance or reinsurance companies.
Within thirty (30) calendar days after notice of appointment of the
panel, they shall meet and determine discovery procedures and schedules for
briefs and hearings.
The panel shall be relieved of all judicial formality and shall not be
bound by the strict rules of procedure and evidence. The arbitration shall take
place in Kansas City, Missouri, unless the panel decides the venue must or
should be changed in whole or in part for good cause shown.
The panel shall interpret this Agreement as an honorable engagement
rather than as merely a legal obligation and shall make its decision considering
the custom and practice of the applicable insurance and reinsurance business as
promptly as possible following the termination of the hearings. Insofar as the
panel looks to substantive law, it shall consider the law of the State of North
Carolina. The decision of any two members of the panel, when rendered in
writing, shall be final and binding. The panel is empowered to grant interim
relief as it may deem appropriate. The arbitrators shall have the power to grant
equitable or injunctive relief, as well as money damages and interest. Judgment
upon the award may be entered in the United States District Court for Raleigh,
North Carolina or, if such court lacks jurisdiction, in the Circuit Court for
Raleigh, North Carolina.
Each party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other party the cost of the umpire. The remaining
costs of the arbitration shall be allocated by the panel. The panel may, at its
discretion, award such further costs and expenses as it considers appropriate,
including, but not limited to, attorneys' fees, to the extent permitted by law.
12.7 No Third Party Beneficiaries. This Agreement constitutes an
agreement solely between London Pacific and FSL, and is intended solely for the
benefit of the parties hereto and their permitted successors and assigns, and it
is not the intention of the parties to confer any rights as a third-party
beneficiary to this Agreement upon any other person.
12.8 Successors and Assigns. This Agreement shall not be assigned by
either of the parties hereto without the prior written approval of the other
party. The parties to this Agreement hereby agree and warrant that all terms,
conditions and obligations shall be binding upon any of London Pacific's and/or
FSL's successors in interest, assigns, affiliates, subsidiaries, parent
corporation or any other person or entity which assumes all or substantially all
of the assets and/or liabilities of London Pacific and/or FSL.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina, without regard to its
conflicts of law doctrine.
12.10 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
12.11 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law or if
determined by a court of competent jurisdiction to be unenforceable, and if the
rights or obligations of London Pacific or FSL under this Agreement will not be
materially and adversely affected thereby, such provision shall be fully
severable, and this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement,
and the remaining provisions of this Agreement shall remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance.
12.12 Oversights, Errors and Omissions. Inadvertent delays, errors or
omissions made in connection with this Agreement or any transaction hereunder
shall not relieve either party from any liability which would have attached, had
such delay, error or omission not occurred, provided always, however, that such
error or omission is rectified as soon as possible after discovery.
12.13 Schedules, Exhibits and Paragraph Headings. Schedules attached
hereto are made a part of this Agreement. Paragraph headings are provided for
reference purposes only and are not made a part of this Agreement.
12.14 Expenses. Except as explicitly provided to the contrary herein,
each party shall be solely responsible for all expenses it incurs in connection
with this Agreement or in consummating the transactions contemplated hereby or
performing the obligations imposed hereby, including, without limitation, the
cost of its attorneys, accountants and other professional advisors.
12.15 Use of Name. Neither London Pacific nor FSL shall be authorized to
use the other party's name, trademark, service ▇▇▇▇, logo or identification
without the prior written consent of the other party or its designated agent,
except FSL has the right to continue to utilize the ▇▇▇▇ "Regency Series" with
respect to the Contracts, or as may be otherwise mutually agreed to by the
parties. In no event shall either party's name, trademark, service ▇▇▇▇, logo or
identification be used for any purpose other than that of communicating with the
Contractholders and servicing the Contracts hereunder.
12.16 Insolvency. The reinsurance, if any, due from FSL to London Pacific under
this Agreement shall be payable by FSL on the basis of reported claims allowed
by the court overseeing the delinquency proceedings of London Pacific without
dimunition because of the insolvency of London Pacific, directly to London
Pacific or to its domiciliary receiver.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed this _ day of _____, 2003. Notwithstanding the foregoing date of
execution, this Agreement shall have an effective date of______________.
LONDON PACIFIC & ANNUITY COMPANY FIDELITY SECURITY LIFE INSURANCE COMPANY
IN RECEIVERSHIP
By: By:
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