COINSURANCE AGREEMENT by and between INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA Austin, Texas and FAMILY LIFE INSURANCE COMPANY Houston, Texas
EXHIBIT
10. 63
COINSURANCE
AGREEMENT
by
and
between
INVESTORS
LIFE INSURANCE COMPANY OF NORTH AMERICA
Austin,
Texas
and
FAMILY
LIFE
INSURANCE COMPANY
Houston,
Texas
COINSURANCE
AGREEMENT
THIS
COINSURANCE AGREEMENT
(the
“Agreement”) is made and entered into by and between INVESTORS
LIFE INSURANCE COMPANY OF NORTH AMERICA (“Company”),
a Texas
stock
life insurance company,
and
FAMILY
LIFE
INSURANCE COMPANY
(“Reinsurer”), a Texas
stock life
insurance company.
WHEREAS,
Financial Industries Corporation, the parent of both Company and Reinsurer,
has
agreed to sell Reinsurer to The Manhattan Life Insurance Company pursuant
to a
Stock Purchase Agreement that includes among its terms the reinsurance of
the
Policies;
WHEREAS,
Company
is the issuer of insurance Policies (as defined herein) consisting of mortgage
protection life insurance policies;
WHEREAS,
Company
desires
to cede a
portion
of its
risks
under the Policies to Reinsurer
subject
to this Agreement;
WHEREAS,
effective as of the Effective Date, Company will cede or retrocede its risks
under the Policies to Reinsurer, and Reinsurer will
provide
indemnity reinsurance of such risks,
in each
case on the terms and subject to the conditions set forth below;
and
NOW,
THEREFORE,
in
consideration of the mutual promises and covenants set forth herein, and
in
reliance upon the representations, warranties, conditions, and covenants
contained herein, and intending to be legally bound hereby, Company and
Reinsurer hereby agree as follows:
ARTICLE
I
DEFINITION
OF TERMS
Capitalized
terms used shall have the meaning given below.
1.1. Closing
Date.
The
date of closing of the sale of Reinsurer to The Manhattan Life Insurance
Company.
1.2. Effective
Date.
The
date upon which the coinsurance of the Policies by Reinsurer under the terms
of
this Agreement shall be effective, which shall be 12:01 a.m. Central time,
on the day following the effective date of termination of the Optimum Re
Agreement.
1.3. Expense
Allowance Percentage.
The
percentage of net written premium (written premium less cancellations and
refunds) specified in Schedule 1.3.
1.4. Extracontractual
Liabilities.
Any
claim or liability under, in connection with or with respect to the Policies
for
“bad faith”, punitive, exemplary or other extra-contractual damages that are
based upon, relate to or arise out of any act, error or omission of Company,
or
any of its officers, directors, agents or employees, whether intentional
or
otherwise.
1.5. Optimum
Re Agreement.
The
Automatic Reinsurance Agreement between Company and Optimum Re Insurance
Company
dated January 19, 2005.
1.6. Policies.
All
of
those mortgage protection life insurance policy contracts and riders (but
not
universal life plans) issued or to be issued by the Family Sales Division
of
Company including those either identified by policy form number or Plan Code
on
Schedule 1.3.
1.7. Policy.
Each
Policy reinsured by Reinsurer under this Agreement.
1.8. Policyholder.
Any
individual or entity which is the owner of a Policy or which has the right
to
terminate or lapse the Policy, effect changes of beneficiary, coverage limits,
add or terminate persons covered under such Policy or direct any other policy
changes in such Policy.
1.9. Reinsurance
Percentage.
The
percentage of contractual liability of Company reinsured by Reinsurer as
specified in Schedule 1.9.
ARTICLE
II
BASIS
OF REINSURANCE
2.1. Reinsurance.
Subject
to the terms and conditions of this Agreement,
effective as of the Effective Date, Company hereby cedes to Reinsurer, and
Reinsurer hereby accepts and reinsures from Company the Reinsurance Percentage
of the Policies that are issued by the Company on and after the Effective
Date.
2.2. Liability
of Reinsurer.
The
liability of Reinsurer shall begin and terminate simultaneously with that
of
Company, and the extent of Reinsurer’s liability shall be governed by the
general and special policy conditions of the Policies.
2.3. Underwriting.
All
Policies shall be underwritten in accordance with current underwriting
guidelines in use as of the Effective Date unless modified in accordance
with
Section 2.4.
2.4. Modification.
Any
modifications or changes to the Policies must be mutually agreed upon by
Company
and Reinsurer.
2.5. Premium
Required.
The
receipt by Reinsurer of reinsurance premiums when and as required by this
Agreement shall be a condition precedent to Reinsurer’s liability for each
policy to be reinsured.
2.6. Reinstatements.
If a
Policy that was reduced, terminated, or lapsed is reinstated, the reinsurance
for such Policy under this Agreement will be reinstated automatically to
the
amount that would have been in force if the Policy had not been reduced,
terminated, or lapsed.
2.7. Authority
and Territory.
In no
event shall the reinsurance be in force and binding unless the Policy issued
directly by Company is in force and unless the issuance and delivery of the
Policy constitutes the doing of business in a state of the United States
of
America or a country in which Company is properly licensed.
2.8. Non-Forfeiture
Benefits.
The
liability of Reinsurer shall include a pro rata share of any non-forfeiture
benefits under the Policies in accordance with the Reinsurance
Percentage.
2.9. Recapture.
The
business reinsured is not subject to recapture except by agreement of the
parties.
ARTICLE
III
TERMINATION
3.1. Term.
This
Agreement shall commence on the Effective Date and continue in effect according
to its terms, unless terminated pursuant to Section 3.2,
until
12:01 a.m. CST on the fifth anniversary of the Effective Date. This
Agreement cannot be terminated with respect to the Policies except by mutual
agreement of Company and Reinsurer.
3.2. Termination
of New Sales.
Reinsurer may terminate this Agreement with respect to new sales by Company
of
Policies as of the end of any calendar year or any renewal term by giving
at
least one hundred eighty (180) days notice in writing to Company prior to
the
end of such calendar year.
ARTICLE
IV
PREMIUMS
AND EXPENSE ALLOWANCE
4.1. Reinsurance
Premium.
Company
agrees to pay Reinsurer reinsurance premiums equal to the Reinsurance Percentage
multiplied by the collected premiums less the returns and
cancellations.
4.2. Expense
Allowance.
Reinsurer will pay Company an Expense Allowance equal to the Expense Allowance
Percentage, multiplied by the reinsurance premiums, as calculated in
Section 4.1
above,
and the
applicable fee, as specified in Schedule 1.3.
4.3. Reinsurer
Liability.
Reinsurer shall not be directly liable for any commissions, taxes, or expenses
incurred by Company except as specifically set forth in this
Agreement.
ARTICLE
V
ADMINISTRATION
5.1. Quarterly
Report.
Company
shall submit to Reinsurer a statement listing reinsurance premiums, new policies
issued, paid claims and non-forfeiture benefits, expense allowances, premium
taxes, assessments, reserves, and other pertinent data mutually agreed upon
by
both parties relating to the Policies by the fifteenth (15th) of the month
following the end of each calendar quarter that this Agreement is in effect.
Any
balance due Reinsurer by Company shall be paid with the report. Any balance
due
Company from Reinsurer shall be paid within fifteen (15) days of receipt
of such
report.
5.2. Access
to Books and Records.
Company
and Reinsurer shall, have at all times, full and free access during regular
business hours, at the home office of the other party, to inspect all books,
record and files relating to the Policies in accordance with the terms of
this
Agreement.
5.3. Error
or Omission.
It is
expressly understood and agreed that if non-payment of reinsurance premium
within the time specified or failure to comply with other terms of this
Agreement is shown to be the result of a misunderstanding, oversight or clerical
error, both Company and Reinsurer shall be restored to the positions they
would
have occupied had no such misunderstanding, oversight or clerical error
occurred. Upon discovery of the oversight, clerical error or misunderstanding,
the party that committed the oversight or clerical error or acted incorrectly
as
a result of a misunderstanding shall promptly notify the other party in
writing.
5.4. Lapses.
If a
Policy lapses for nonpayment of premium and is subsequently reinstated in
accordance with the terms of the Policy and rules of Company, the reinsurance
hereunder with respect to such Policy shall be reinstated automatically.
Reinsurance premiums shall be payable hereunder with respect to any such
Policy
in full, as if such Policy had continued uninterrupted in force.
5.5. Cooperation.
Each
party hereto shall cooperate fully with the other in all reasonable respects
in
order to accomplish the objectives of this Agreement.
5.6. Premium
Taxes.
Company
shall be liable for the payment of all Premium Taxes on premiums received
under
the Policies. Reinsurer shall allow Company a provision for Premium Taxes
incurred in connection with premiums received under the Policies in proportion
to the percentage under Schedule 1.3.
The
provision for Premium Taxes shall be two percent (2%) of premiums collected,
as
calculated on a calendar quarter basis, minus: (a) the sum of any Premium
Taxes withheld by Company from amounts transferred to Reinsurer during such
calendar quarter; and (b) the amount of any Premium Tax offset directly or
indirectly available for use by Company during such calendar quarter as a
consequence of any assessment or payment for which Company has been reimbursed
by Reinsurer pursuant to Section 5.7
hereof,
and shall be paid by Reinsurer to Company within thirty (30) days of the
end of
each calendar quarter.
5.7. Guaranty
Fund Assessments. In
the
event that Company is required to pay to any guaranty fund, insolvency fund,
or
similar plan, pool, association or organization maintained by any jurisdiction
an assessment in respect of the Policies, the portion of such payment that
relates to the Policies for such period shall be reimbursed to Company by
Reinsurer in
proportion to the Reinsurance Percentage. Company shall credit Reinsurer
with
any Premium Tax offset for such assessments relating to Policies in the
proportion of the Reinsurance Percentage.
5.8. Reserves.
Reinsurer shall establish and maintain reserves in proportion to the Reinsurance
Percentage in accordance with applicable statutory accounting
standards.
5.9. Other
Reinsurance.
The
Company shall provide notice of termination with respect to the Optimum Re
Agreement prior to the Closing and shall retain its pro rata share of liability
without other reinsurance of any type.
ARTICLE
VI
CLAIMS
6.1. Notice
and Settlement.
Company
shall give Reinsurer prompt notice of any and all claims. The settlement
of any
claim paid by Company shall be binding on Reinsurer. Reinsurer shall pay
its
Reinsurance Percentage to Company pursuant to Section 5.1
6.2. Reduced
Settlement and Expense.
Should
any claim be settled for a reduced sum, Company and Reinsurer shall participate
in such reduction in proportion to their respective liabilities. Likewise,
Reinsurer and Company shall share, in the same proportion as the Reinsurance
Percentage, any special expenses for investigative or legal fees (excluding
salaries, retainers, or ordinary administrative and overhead expenses). Claim
expenses in connection with settlements such as external legal counsel fees,
costs of investigative agency reports and case management fees from outside
agencies shall be considered special expenses.
6.3. Extracontractual
Liabilities.
Reinsurer shall not be liable for any extracontractual liabilities or any
expense relating thereto.
ARTICLE
VII
INDEMNIFICATION
7.1. Indemnification.
From
and after the Effective Date, (a) Company shall indemnify, defend and hold
harmless Reinsurer
and its
officers, directors, employees, agents and affiliates (collectively, the
“Reinsurer Indemnified Parties”) from
and
against any costs and expenses (including interest, fines, penalties, statutory,
punitive or extracontractual damages, refunds, reasonable attorneys’,
accountants’, and actuaries fees and disbursements, and any other costs and
expenses incident to any suit, action, investigation, or proceeding), damages,
losses, charges, deficiencies, liabilities, obligations, claims, settlements,
judgments, or diminution in value (“Loss” or “Losses”) sustained or incurred by,
or asserted against Reinsurer which arises out of: (i) any breach or
non-fulfillment by Company of, or any failure by Company to perform, any
of the
covenants, terms or conditions of or any of its duties or obligations under
this
Agreement, and (ii) any enforcement of this indemnity,
and
(b) Reinsurer shall indemnify, defend and hold harmless Company, and its
officers, directors, employees, agents and affiliates (collectively, the
“Company Indemnified Parties”) from and against any Loss sustained or incurred
by, or asserted against, Company Indemnified Parties which arises out of
(i) any breach or non-fulfillment by Reinsurer of, or any failure by
Reinsurer to perform, any of the covenants, terms or conditions of or any
of its
duties or obligations under this Agreement, and (ii) any enforcement of
this indemnity.
ARTICLE
VIII
INSOLVENCY
8.1. Payment
of Benefits under Insolvency.
The
obligations of Reinsurer under this Agreement shall be payable by Reinsurer
while in force on the basis of the contractual liability of Company under
the
Policies without diminution or in any way affected or diminished because
of the
insolvency of Company. In the event of the insolvency of Company and the
appointment of a conservator, liquidator, receiver, or statutory successor
of
Company while coinsurance under this Agreement is in effect as to any Policy,
all coinsurance made, ceded, renewed or otherwise becoming effective shall
be
payable directly to such conservator, liquidator, receiver, or statutory
successor immediately upon demand, with reasonable provision for verification,
on the basis of claims allowed against Company by any court of competent
jurisdiction or by any conservator, liquidator, receiver, or statutory successor
of Company having authority to allow such claims, without diminution because
of
such insolvency or because such conservator, liquidator, receiver, or statutory
successor has failed to pay all or a portion of any claims.
8.2. Required
Notice of and Defense against Claims.
In the
event of the insolvency of Company while reinsurance as to any Policy is
in
effect under this Agreement, the conservator, liquidator, receiver, or statutory
successor of Company shall give Reinsurer written notice of the pendency
of a
claim against Company on a Policy within a reasonable time after such claim
is
filed in the insolvency proceeding. Such notice shall indicate the Policy
reinsured and whether the claim could involve a possible liability on the
part
of Reinsurer. During the pendency of any such claim, Reinsurer may, at its
own
expense, investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated, any defense or defenses
that
Reinsurer may deem available to Company or its conservator, liquidator,
receiver, or statutory successor. The expense thus incurred by Reinsurer
shall
be payable, subject to court approval, out of the estate of Company as a
part of
the expense of conservation or liquidation to the extent of a proportionate
share of the benefit which may accrue to Company in conservation or liquidation
solely as a result of the defense undertaken by Reinsurer,
all in
accordance with Sections 10-3-118(3)(b) and (8), Texas Revised
Statutes.
ARTICLE
IX
ARBITRATION
9.1. Agreement
to Arbitrate.
The
parties hereto acknowledge and agree that (a) it is the intention of the
parties
that customs and usages of the business of insurance shall be given full
effect
in the interpretation of this Agreement; and (b) the parties shall act in
all
things with the highest good faith. All disputes between Reinsurer and Company
arising under this Agreement on which an amicable understanding cannot be
reached will be decided by arbitration between the parties at a location
to be
mutually agreed upon between the parties or as designated by the arbitrators
if
agreement as to a location cannot be reached by the parties. Notwithstanding
any
other provision of this ARTICLE
IX,
if
either Reinsurer or Company seeks, consents to, or acquiesces in the appointment
of or otherwise becomes subject to any trustee, receiver, liquidator or
conservator (including any state insurance regulatory agency or authority
acting
in such a capacity), the other party shall not be obligated to resolve any
claim, dispute or cause of action under this Agreement by arbitration.
Notwithstanding any other provision of this ARTICLE
IX,
nothing
contained in this Agreement shall require arbitration of any issue for which
equitable or injunctive relief, including specific performance, is
sought.
9.2. Method.
The
parties intend this Article VIII to be enforceable in accordance with the
Federal Arbitration Act (9 U.S.C. Section 1, et seq.), including any
amendments to that Act which are subsequently adopted, notwithstanding any
other
choice of law provision set forth in this Agreement. In the event that either
party refuses to submit to arbitration as required herein, the other party
may
request a United States Federal District Court to compel arbitration in
accordance with the Federal Arbitration Act. Both parties consent to the
jurisdiction of such court to enforce this Article and to confirm and
enforce the performance of any award of the arbitrators. To initiate
arbitration, either party shall notify the other in writing in the manner
set
forth in this Agreement for sending notices to the parties of its desire
to
arbitrate, stating the nature of the dispute and the remedy sought, and
designating an arbitrator. The party to which the notice is sent shall respond
thereto in writing within thirty (30) 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 and designate its arbitrator. If the
second
party fails to respond within the time set forth in this Section 8.2, or
fails to designate its arbitrator in its response, the party initiating
arbitration shall appoint a second arbitrator. The two arbitrators shall
select
a third arbitrator within thirty (30) days of the designation of the second
arbitrator. If they are unable to agree upon the selection of the third
arbitrator, they shall, within such period, each name three (3) individuals
of
whom the other shall decline two (2), and the decision of the third arbitrator
shall be determined by drawing lots from the two remaining designees. All
arbitrators shall be active or retired officers of life or health insurance
companies and be unaffiliated in any way with the parties and disinterested
in
the outcome of the arbitration. The arbitrators shall have the power to
determine all procedural rules for the conduct of the arbitration, including
but
not limited to the production and inspection of documents, the examination
of
witnesses, and any other matter relating to the conduct of the arbitration.
The
arbitrators shall interpret this Agreement in accordance with the standards
identified in Section 8.1. The arbitrators shall have no authority to award
punitive damages against or in favor of either party (except to reimburse
a
party for extra-contractual or punitive damages that either Company or Reinsurer
has paid or is legally obligated to pay to third parties). The costs of the
arbitration (except legal fees of the parties) shall be split equally between
the parties, unless the arbitrators shall otherwise require in their award.
Each
party shall pay its own legal fees in connection with the arbitration, unless
the arbitrators award legal fees and expenses of the prevailing party as
part of
any award. Except as otherwise specifically provided herein, the arbitration
shall be conducted in accordance with rules established by the American
Arbitration Association. The decision, in writing, of the arbitrators shall
be
final and binding upon both of the parties. Judgment may be entered upon
the
final decision of the arbitrators in any court having jurisdiction.
ARTICLE
X
GENERAL
PROVISIONS
10.1. Notices.
Any and
all notices and other communications required or permitted under this Agreement
shall be in writing and shall be deemed to have been duly given when (i)
received by the receiving party if mailed by United States registered or
certified mail, return receipt requested, (ii) received by the receiving
party
if mailed by United States overnight express mail, (iii) sent by facsimile
or
telecopy machine, followed by confirmation mailed by United States first-class
mail or overnight express mail, or (iv) delivered in person to the parties
at
the addresses set forth below:
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If
to Company:
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INVESTORS
LIFE INSURANCE COMPANY OF NORTH AMERICA
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▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇
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▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
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Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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FAX
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With
a concurrent copy
to:
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▇▇▇▇▇▇▇
▇▇▇▇▇▇
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▇▇▇▇,
Gotshal & ▇▇▇▇▇▇ LLP
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▇▇▇
▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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FAX
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If
to Reinsurer, to:
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FAMILY
LIFE INSURANCE COMPANY
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▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
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FAX
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With
a concurrent copy to:
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Burnie
Burner
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Long,
Burner, Parks & ▇▇▇▇▇▇▇, P.C.
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▇▇▇
▇. ▇▇▇ ▇▇., ▇▇▇ ▇▇▇
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▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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FAX
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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10.2. Confidentiality.
Each of
the parties shall maintain the confidentiality of all information related
to the
Policies and all other information denominated as confidential by the other
party provided to it in connection with this Agreement and shall not disclose
such information to any third parties without prior written consent of the
other
party, except as may be required by regulatory authorities or by law, or
pursuant to legal process.
10.3. Misunderstandings
and Oversights.
If any
failure to pay amounts due or to perform any other act required of either
party
under this Agreement is shown to be unintentional and caused by
misunderstanding, oversight or clerical error, then this Agreement shall
not be
deemed in breach thereby, but such error shall be corrected by restoring
both
parties to the positions they would have occupied had the error not
occurred.
10.4. Entire
Agreement.
This
Agreement supersedes all prior discussions and agreements between the parties
with respect to the subject matter of this Agreement, and this Agreement
contains the sole and entire agreement between the parties with respect to
the
reinsurance of the Policies hereunder and the obligations of the parties
are
determined solely by the terms of this Agreement.
10.5. 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
will
not be deemed a waiver of the same or any other term or condition on a future
occasion. This Agreement may be modified or amended only by a writing duly
executed by an executive officer of Company and Reinsurer,
respectively.
10.6. Offsets.
Any
debts or credits, regardless of when they arose or were incurred, in favor
of or
against either Company or Reinsurer with respect to this Agreement are deemed
mutual debts or credits, as the case may be, and shall be set off, and only
the
balance shall be allowed or paid.
10.7. No
Third Party Beneficiaries.
This
Agreement constitutes an indemnity reinsurance agreement solely between Company
and Reinsurer, 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.
10.8. Assignment.
This
Agreement shall not be assigned by either of the parties hereto without the
prior written approval of the other party.
10.9. Governing
Law.
Notwithstanding anything herein to the contrary, all provisions, including
Arbitration, of this Agreement will be governed by and construed in accordance
with the laws of the State of Texas,
without regard to its conflicts of law doctrine.
10.10. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed
an
original, but all of which shall constitute one and the same
instrument.
10.11. 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 Company
or
Reinsurer 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 here
from.
10.12. Schedules
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.
10.13. Tax
Provisions.
With
respect to the transaction contemplated by this Agreement, the parties hereby
agree to make an election in accordance with Internal Revenue Regulation
Section 1.848-2(g)(8) (the “Regulation”) under Section 848 of the
Internal Revenue Code of 1986 (the “Code”), as amended, and to comply with all
of the requirements of such Regulation regarding such election, including,
without limitation, the election statement and Tax return reporting requirements
of Regulation Sections 1.848-2(g)(8)(ii) and 1.848-2(g)(8)(iii), and further
agree:
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(a)
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To
exchange information pertaining to the amount of “net consideration” under
this Agreement as defined in the
Regulation;
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(b)
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That
Company shall submit its calculation of the “net consideration” for
purposes of that Regulation to Reinsurer not later than May 1st
for each
and every taxable year for which this Agreement is in
effect;
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(c)
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That
Reinsurer may challenge such calculation within ten (10) business
days of
its receipt of Company’s
calculation;
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(d)
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That
should Reinsurer challenge Company’s calculation of the “net
consideration” and the parties be unable to agree as to the appropriate
methodology to determine the “net consideration” for purposes of the
Regulation, they shall refer such dispute to an outside Tax consultant
unrelated to either of the parties, in lieu of the arbitration
provisions
of this Agreement, and the parties agree to be bound by the decision
of
that consultant;
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(e)
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That,
pursuant to such election, the party with net positive consideration
with
respect to 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 Section 848(c)(1) of the
Code; and
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(f)
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That
the first taxable year for which such election shall be effective
is
taxable year 2006.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the date first written below.
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INVESTORS
LIFE INSURANCE COMPANY OF NORTH AMERICA
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By:
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/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 12/29/06
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| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President | |||
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FAMILY
LIFE INSURANCE COMPANY
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By:
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer | |||
Coinsurance
Agreement
-10-
Schedule 1.3
EXPENSE
ALLOWANCE PERCENTAGE
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Plans
Reinsured:
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Plan
Codes:
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Univestor
Term
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HA3015E,
HA3030E, HA2010E, HA2020E, HA1515E, HA3015K, HA3030K, HA2010K,
HA2020K,
HA1515K
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Univestor
MCI
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UT15EF1,
UT15EM1, UT15FM1, UT15FF1, UT15GM1, UT15GF1, UT20EF1, UT20EM1,
UT20FF1,
UT20FM1, UT20GM1, UT20GF1, UT30EN1, UT30FN1, UT30GN1, UT30ET1,
UT30FT1,
UT30GT1
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Any
other mortgage protection life insurance
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Allowances:
Family
Sales Division.
All
mortgage cancellation policies, including Univestor Term and Univestor
MCI:
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1.
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123%
first year plus $25 underwriting/issue allowance per new policy
issued,
plus 2% premium tax, plus pro rata portion of $42/policy/year
administration fee according to the Reinsurance Percentage.
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2.
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Renewal
year allowance is at the rate which covers writing agent renewal
commissions and any associated non-affiliated overrides, plus 2%
premium
tax, plus pro rata portion of $42/policy/year administration fee
according
to the Reinsurance Percentage.
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Coinsurance
Agreement
-11-
Schedule 1.9
REINSURANCE
PERCENTAGE
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Percentage
of Company contractual liability reinsured by
line:
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·
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35%
until Company retention reaches maximum of $250,000 per life,
and
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·
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100%
thereafter to the Maximum Per Life
Amount.
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·
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Maximum
Per Life Amount is $700,000.
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Coinsurance
Agreement