Exhibit 10(v)
PROCUREMENT AND DISBURSEMENT AND BILLING AND COLLECTION
SERVICES AGREEMENT
THIS PROCUREMENT AND DISBURSEMENT AND BILLING AND COLLECTION SERVICES
AGREEMENT (this "Agreement") replaces all previous Procurement and Disbursement
Services Agreements, AND Billing and Collection Services Agreements, both
agreements as amended and restated, between CUNA Mutual Insurance Society ("CUNA
Mutual") and its affiliates and subsidiaries, and is made the 20th day of
December, 2007 (the "Effective Date"), by and between CUNA Mutual and those of
its affiliates and subsidiaries identified on Exhibit A, attached hereto and
incorporated herein, as the same may be amended from time to time to reflect the
addition or deletion of such affiliates and subsidiaries (collectively,
"Company"), subsequent to the execution of this Agreement.
The parties acknowledge that this Agreement is based on the following:
A. CUNA Mutual is an Iowa mutual life insurance corporation that provides
life and health products to credit unions and their members.
▇. ▇▇▇▇ Mutual and Company have agreed that CUNA Mutual will perform certain
services as set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, including the
mutual covenants contained in this Agreement, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bound, agree
as follows:
1. SERVICES. On the terms specified in this Agreement, CUNA Mutual may
provide from time to time, some or all of the following services (the
"Services") to Company:
(A) PROCUREMENT. CUNA Mutual will provide procurement services as
more fully described on Exhibit B.
(B) DISBURSEMENT. CUNA Mutual will provide disbursement services as
more fully described on Exhibit C.
(C) BILLING AND COLLECTION. CUNA Mutual will provide billing and
collection services as more fully described on Exhibit D.
2. TERM; TERMINATION. This Agreement shall commence on the Effective
Date and shall continue for an indefinite period until terminated by either
party upon 30 days notice. Upon termination of any service, CUNA Mutual agrees
to assist Company as necessary in transferring the responsibility for the
service to Company or such other party designated by Company.
3. SERVICING FEE. Company will pay CUNA Mutual fifteen days after the
end of the quarter, during the term of this Agreement, a servicing fee equal to
the cost of providing the Services rendered. The servicing fee will be based
upon a mutually agreed upon allocation method taking into account any
appropriate time allocations, item allocations, number of employees, special
studies and any other basis. Company shall authorize CUNA Mutual to make
automatic payment from an account of Company to an account of CUNA Mutual.
Notwithstanding the foregoing, should any party cease to he a party to this
Agreement for any reason, all amounts due to CUNA Mutual shall be immediately
due and payable.
4. SERVICE STANDARD. In performing the Services, CUNA Mutual shall
exercise due care and shall provide the services, as described in Exhibits B, C
and D, in an efficient and timely manner and in accordance with all applicable
federal, state and other laws and regulations. More specifically, as to the
disbursement services, CUNA Mutual shall process requests for disbursements and
make payments on behalf of Company in accordance with payees' requests and
scheduled payment terms. Within two business days after receipt of notice that a
disbursement payment has cleared Company's financial institution, CUNA Mutual
will electronically transfer a like disbursement amount from the account of
Company to an account of CUNA Mutual to reimburse CUNA Mutual for such
disbursement. On a quarterly basis, CUNA Mutual will compute and reimburse CUNA
Mutual any interest earned in Company's account related to the aforementioned
two business day transfer. More specifically, as to the billing and collection
services, CUNA Mutual shall electronically transfer the funds received to
Company's specified account on a daily basis. An automated process is used for
intercompany settlement wherein cash posting on day one is identified on day
two, at which time electronic funds transfers are initiated for next-day
settlement on day three.
5. INDEMNIFICATION. Each party (the "Indemnitor") will indemnify the
other party (the "Indemnitee") and the Indemnitee's directors, shareholders,
officers, agents and employees and hold each of them harmless from and against
any losses, damages, judgments and other costs, fees and expenses, including
reasonable attorneys' fees, resulting from any breach by the Indemnitor of this
Agreement or from the gross negligence, fraud or willful misconduct of employees
and permissible contractors and agents of the Indemnitor.
6. OWNERSHIP OF RECORDS; ACCESS TO RECORDS.
(A) OWNERSHIP OF RECORDS. All business records and reports,
studies, documents and other information generated pursuant to or relating to
this Agreement or the Services performed hereunder (the "Records") are and shall
remain the property of Company.
(B) ACCESS TO RECORDS. CUNA Mutual will make available to Company,
its agents, attorneys and accountants, at all times during normal business
hours, all Records owened by Company under subsection (a). CUNA Mutal shall
promptly respond to any questions from Company with respect to such Records
and shall confer with Company at all reasonable times, upon request, concerning
this Agreement and the operation of Company.
7. CONFIDENTIALITY. The parties each agree that all confidential or
proprietary information, whether or not marked as such, of a party communicated
to and by each other relating to this Agreement shall be deemed to be
confidential business information and shall be maintained in strict confidence
to be used only during the term of this Agreement and only for the purposes
contemplated by this Agreement.
8. ASSIGNMENT. Neither party may assign this Agreement or assign any
rights or delegate any duties hereunder without the express written consent of
the other party, which consent shall not be unreasonably withheld, except that
CUNA Mutual may, without prior approvel, assign this Agreement to any
wholly-owned subsidiary. The assignment of this Agreement shall not release the
assignor from any of its duties or obligations under this Agreement.
9. DELAYS AND WAIVERS. The failure of any party to insist in any one
or more instances upon the performance of any of the terms, covenants or
conditions of this Agreement shall not be construed as a waiver or
relinquishment of the future performance of any other term, covenant or
condition, but the defaulting party's obligation with respect to future
performance of any other terms shall continue in full force and effect. The
failure of any party to take any action permitted by this Agreement
2
to be taken by it shall not be construed as a waiver or relinquishment of its
right thereafter to take such action.
10. NOTICES. Any notice required or permitted under this Agreement
shall be in writing and shall be given by personal delivery or certified mail,
return receipt requested, addressed as follows:
If to CUNA Mutual: CUNA Mutual Insurance Society
Attn: ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇▇▇
If to Company: (Company Name)
Attn: President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇▇▇
Except as may be specifically provided otherwise, all notices shall be
effective, in the case of personal delivery, upon receipt and, in the case of
mailing, upon deposit in the United States mail.
11. PARTIES BOUND. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns.
12. ENTIRE UNDERSTANDING. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous representations, understandings or
agreements between the parties with respect to such subject matter.
13. GOVERNING LAW. This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal law of the State of Wisconsin.
14. HEADINGS; REFERENCES. The headings used in this Agreement are for
convenience only and shall not constitute a part of this Agreement. Unless the
context clearly requires otherwise, all references to "Sections11" and other
subdivisions are to the sections and subdivisions of this Agreement.
15. SEVERABILITY. If any provision of this Agreement shall under any
circumstances be deemed invalid or inoperative, this Agreement shall be
construed with the invalid or inoperative provision deleted and the rights and
obligations construed and enforced accordingly.
16. REMEDIES. Except as otherwise stated, the rights and remedies
specified in this Agreement are cumulative and not exclusive of any other rights
or remedies that either party may have and may be exercised concurrently
therewith.
17. NO ASSUMPTION OF LIABILITIES; NO AUTHORITY TO BIND. Neither party
shall, by reason of entering into and performing this Agreement, assume or
become liable for any of the existing or future liabilities or debts of the
other party. Nothing in this Agreement shall be construed to constitute either
party as a partner of the other party.
Except as may be expressly permitted in writing by the other, no party
shall have any right, power or authority to bind the other party, transact any
business in the name of the other party or on its behalf, or make any promises
or representations on behalf of the other party.
3
18. EXECUTION IN COUNTERPART AND AMENDMENT. The parties acknowledge
that this Agreement may be executed in counterpart and that present or future
affiliates or subsidiaries of CUNA Mutual not a party to this Agreement may
become parties by executing a counterpart signature page acknowledging such
entity's(ies') agreement to all terms and conditions of this Agreement. Further,
by signing this Agreement, the parties agree to become party to any amendments
to this Agreement limited solely to incorporating changes made to the names of
the parties to this Agreement or removing any party that is no longer an
affiliate of CUNA Mutual. Notwithstanding the foregoing, the terms of this
Agreement may not be amended, modified, released or discharged, in whole or in
part, except by a written instrument signed by the parties hereto, or their
respective successors or assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first written above.
CUNA MUTUAL INSURANCE SOCIETY
CUMIS INSURANCE SOCIETY, INC.
MEMBERS LIFE INSURANCE COMPANY
CUNA MUTUAL INSURANCE AGENCY, INC.
CUNA MUTUAL INVESTMENT CORPORATION
CMIA WISCONSIN, INC.
LEAGUE INSURANCE AGENCY, INC.
MEMBER PROTECTION INSURANCE PLANS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Treasurer
CUMIS SPECIALTY INSURANCE COMPANY, INC.
CUNA MUTUAL BUSINESS SERVICES, INC.
CUNA MUTUAL CASUALTY INSURANCE AGENCY OF MISSISSIPPI, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director and Treasurer
CUNA MUTUAL GROUP FOUNDATION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
CMG MORTGAGE INSURANCE COMPANY
CMG MORTGAGE ASSURANCE COMPANY
CMG MORTGAGE REINSURANCE COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant Secretary
4
CUNA BROKERAGE SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
CUNA MUTUAL GENERAL AGENCY OF TEXAS, INC.
▇▇▇▇▇▇▇ ASSOCIATES INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Secretary
CUNA MUTUAL INSURANCE SOCIETY POLITICAL ACTION COMMITTEE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Assistant Treasurer
FILENE RESEARCH INSTITUTE, INC.
LENDING CALL CENTER SERVICES, LLC
CM CUSO LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇, Assistant Treasurer
INTERNATIONAL COMMONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
-----------------------
▇▇▇▇▇ ▇. ▇▇▇, Treasurer
LENDERS PROTECTION, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
MEMBERS CAPITAL ADVISORS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Director and Treasurer
5
MEMBERS DEVELOPMENT COMPANY, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
MEMBERS FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Licensing Officer
CMG STUDENT LENDING SERVICES, LLC
(Executed on its behalf by its parent company,
CUNA Mutual Investment Corporation)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, Vice President,
CUNA Mutul Investment Corporation
6
EXHIBIT A
AFFILIATES AND SUBSIDIARIES OF
CUNA MUTUAL INSURANCE SOCIETY
CUMIS Insurance Society, Inc.
MEMBERS Life Insurance Company
CUNA Mutual Insurance Agency, Inc.
CMG Mortgage Insurance Company
CMG Mortgage Assurance Company
CMG Mortgage Reinsurance Company
CUNA Mutual Investment Corporation
CM CUSO Limited Partnership
CMIA Wisconsin, Inc.
CUMIS Specialty Insurance Company, Inc.
CUNA Brokerage Services, Inc.
CUNA Mutual Business Services, Inc.
CUNA Mutual General Agency of Texas, Inc.
CUNA Mutual Group Foundation, Inc.
CUNA Mutual Insurance Society Political Action
Committee
International Commons, Inc.
League Insurance Agency, Inc.
Lenders Protection, LLC
Lending Call Center Services, LLC
Member Protection Insurance Plans, Inc.
MEMBERS Capital Advisors, Inc.
MEMBERS Development Company, LLC
MEMBERS Financial Services, Inc.
▇▇▇▇▇▇▇ Associates Incorporated
CMG Student Lending Services, LLC
7
EXHIBIT B
PROCUREMENT SERVICES
The procurement services shall include the following:
o Origination and maintenance of Company-wide procurement policy and
procedure.
o Input and direction for set-up and continued upgrades of software for
procurement and receiving.
o Training in use of procurement system and interpretation of policy and
procedure.
o Central processing of all requests for purchase and conversion to
purchase orders.
o Coordinate efforts to standardize purchased items to the extent
possible and combine purchases to provide maximum value for Company.
o Negotiate purchase agreements and pricing on behalf of Company and
obtain the most advantageous total cost available.
o Conduct lease/purchase analysis and determine most economical means to
finance acquisition of assets for Company.
o Direction and control of receiving process,
o Coordinate maintenance of Master Item File and Master Catalogs for all
items purchased by Company. This includes part numbers, sales tax
applicability, vendor/item relationships, pricing, unit measure,
catalog category, etc.
o Coordinate maintenance of Master Vendor File to include correct name,
address, remit address, payment terms, 1099 reporting status, etc.
o Provide for record of all purchase requests and completed purchase
orders to meet legal requirements for retention.
o Maintain procurement disaster recovery program for Company.
8
EXHIBIT C
DISBURSEMENT SERVICES
The disbursement services shall include the following:
o Processing and validation of all disbursement requests for general
operating expenditures, including business travel expense requests and
non-payroll payments to employees. Security and audit validation of all
disbursements.
o Receive and process various disbursement requests produced in an
electronic medium or paper request from Company's various
administrative systems.- Company's administrative systems and service
areas have completed their standard processes of reviewing and
authorizing the payment to be made to their customers/policyholders
prior to the transmission to the Disbursement area to process the
payment.
o Provide a Company specific check stock including Company's name,
address and logo. Incorporate security features in check stock to
prevent fraud. Print process will secure all check stock, signature and
account information. Printing, mailing and distribution of disbursement
checks based on Company's specifications to: insert and mail, or return
the check and documentation to an appropriate unit/individual/
representative of Company, Print all supporting documentation provided
by Company's various Administrative Systems provided electronically to
be sent out with the paper check payment.
o Provide the ability to combine disbursements into a single payment
based on Company's specification. Also, provide the ability to age and
utilize various payment discounts prior to issuance of the payment.
o Maintain a disbursement service disaster recovery program for Company.
o Provide for Emergency Policy Servicing Operations for Company to
establish an emergency customer service to issue immediate policyholder
payments to remote sites (i,e., earthquake, tornado, Oklahoma Disaster),
o Provide the ability to process disbursements through Electronic Funds
Transfer (EFT) in the form of a wire transfer, ACH (Automated Clearing
House) or U.S. Central Corporate Credit Union transfer. Provide paper
advice for EFT payments if requested by Company. Electronic funds
transfer payment processing for tax payments. Provide the ability to
process international drafts and cables as requested by authorized
Company representatives. Also, provide the ability to process and
initiate disbursement requests for certified or cashier checks.
o Maintain vendor payment and voucher disbursement record archived
history information for up to seven years. Provide an on-line payment
and voucher inquiry capability to Company's various client service
areas. Provide cleared check images upon request for items up to seven
years old.
o Provide detailed accrual and cash journal entries for Company's General
Ledger Monthly Accounting of all expenses processed.
9
o Electronically transfer funds from a Company specified account to cover
the disbursements presented for payment that were issued by Company. If
a disbursement is not presented for payment within 365 days of the date
of the disbursement, funds will be electronically transferred from
Company specified account to the CUNA Mutual common paymaster account.
o Daily account reconciliation will validate that only authorized
disbursements receive payment. Daily and. monthly reconciliation of the
disbursement accounts and outstanding payable listing.
o Provide an 800 telephone number for financial institutions to confirm
and validate paper disbursement checks.
o For disbursements processed through the CUNA Mutual common paymaster
account, in compliance with the unclaimed, property laws of each state:
provide notices from CUNA Mutual Group to persons who are owed the
property; file a combined unclaimed property report with each state;
and transfer the combined property to the appropriate state.
o Issue void, stop payment and reissue of disbursement requests.
A Common Paymaster Process Overview further details the disbursement services
processes and is attached hereto as Schedule 1 to Exhibit C and incorporated
herein, as the same may be amended from time to time to reflect updated
processes.
10
EXHIBIT D
BILLING AND COLLECTION SERVICES
The billing and collection services shall include the following:
o Processing of all billing notices in electronic, tape, diskette,
cartridge and paper mediums.
o Provide the ability to combine Company's ▇▇▇▇▇▇▇▇ for multiple products
into a single ▇▇▇▇ based on the Company's specifications.
o Examine and provide, if feasible, the ability to combine the ▇▇▇▇▇▇▇▇
of various participating companies into a single ▇▇▇▇.
o Printing, mailing and distribution of billing notices based on the
Company's specifications to: print, insert and mail the billing notices
and any inserts to an appropriate customer or company representative.
o Provide an 800 telephone number for customers to confirm and validate
billing and payment status.
o Maintain customer billing and payment history information.
o Warehouse billing and collection files to query for status requests and
reporting.
o Processing and validation of payments received in electronic and paper
mediums.
o Provide the ability to process payments through the Electronic Funds
Transfer (EFT) in the form of a Wire Transfer, ACH (Automated Clearing
House) or U.S, Central Corporate Credit Union Transfer.
o Provide paper advice of the billing notice for EFT payments if
requested by the customer.
o Resolution of unvalidated payments within 24 hours.
o Daily electronic transfer of funds received to Company's designated
account.
o Electronically transfer funds between products or companies if received
in the wrong deposit.
o Automated feed to the General Ledger of all due and received premiums.
o Daily and monthly reconciliation of the deposit accounts and
outstanding bills.
o Maintain a billing and collection service disaster recovery program for
the Company.
o Provide mainframe and software capabilities that are year 2000
compliant.
11
SCHEDULE 1
TO
EXHIBIT C - DISBURSEMENT SERVICES
COMMON PAYMASTER PROCESS OVERVIEW
I. A disbursement request is received for payment.
Samples of disbursement requests are:
o Company has acquired a good or service from a supplier. The
supplier sends an invoice to Company for payment: electric,
telephone, equipment, postage, etc.
o Company receives notification of a claim to be paid for a current
policy. The claim is processed through the claim administrative
process, and the payment amount is determined.
o Company has received an overpayment of premium or cancellation of
a policy. The amount for payment is determined to be reimbursed to
the policyholder.
o Company needs to submit a payment to renew a license, pay for a
conference registration, payment of taxes, etc., and a manual
disbursement request is created.
II. The disbursement request is submitted to the Disbursement Services Team
for processing. The documents can be mailed, faxed, e-mailed or batch fed
from a Policyholder Administrative System.
III. The source documents (disbursement requests) are imaged into a work list.
The Disbursement Services Team will enter the disbursement request
information into a voucher on the Accounts Payable System (AP System).
A Policyholder Administrative System's batch feed is an automated method
of receiving voucher information for payments into the AP System without
manual intervention.
IV. The following basic information is entered into a "voucher": Payee,
amount, invoice number, invoice date and description. Additional
information such as claim number, agreement number, purchase order and
receipt number are entered as required. Entry includes the requester and
accounting for the disbursement.
The accounting will include; Company number, department, and general
ledger account number. The disbursement can be coded to the appropriate
Company incurring the expense. When the accounting is not provided on the
source document, the AP System will route the voucher to the requester to
enter the accounting information.
The voucher is saved and a unique voucher number is assigned to each
transaction. The source document image is linked to the voucher.
The AP System will edit for required fields, accounting data elements and
duplicate payments in the voucher save process.
12
V. The AP System also has a disbursement authorization workflow program.
This program will match the voucher amount with the requester's
authorization level. If the amount is over the requester's authorization
level, the transaction will be saved as a "Pending Authorization"
transaction. The AP System will route the voucher to the appropriate
individual for approval. Once the approval is met, the voucher will be
saved as an "Approved Transaction."
VI. When the voucher is 'approved* the nightly processing cycle will generate
the accounting accrual transactions. This accounting will create the
inter unit payable and receivable accounting, expense accounting and
accounts payable accrual for each Company.
VII. Based on the scheduled payment terms of the voucher, the voucher will be
picked up in the appropriate "pay cycle" to produce the payment.
When the payment is issued the AP System will generate the appropriate
accounting to credit the cash or bank account and debit the accounts
payable accrual account.
The payment is sent to the payee, either as a paper check or an
electronic funds transfer.
The AP System generates a "positive pay file" for each check issued that
is transmitted to the financial institution the check is issued against.
VIII. The payment is presented for payment and clears the appropriate financial
institution.
On the payment clearing date the financial institutions or the electronic
settlement system sends to CUNA Mutual Group a cleared payment file.
The file(s) are loaded into the AP System and reconciled or matched
against the payments issued. The payment is marked as 'cleared' with
the cleared date associated to the payment. These payments are no longer
considered outstanding.
The AP System generates a cleared payment report by each Company. Company
was identified when the voucher was originated.
IX. CUNA Mutual Group Corporate Treasury Department will initiate the funds
transfer from the various Companies to the Common Paymaster Accounts. The
transfer is based on the AP System payment clearing report for each
Company.
This transfer will occur on the next business day after the payment
cleared.
This funds transfer will also generate accounting entries to clear the
inter unit payable and receivable accounting entries and to reflect the
withdrawal and deposit of funds to the appropriate cash or bank account.
X. On a monthly basis the inter unit payable, inter unit receivable, and
accounts payable accrual accounts are reconciled. The reconciliation
validates that the general ledger for all Companies are in balance with
the AP system.
XI. On a quarterly basis, an AP System Report will be generated to determine
the daily clearings to calculate the interest income payment due to
Common Paymaster for the one day delay in reimbursement for payments
clearing.
13
The report will calculate the amount of disbursements by Company for each
day. The report will also take into account all non-business days
(weekends, holidays) for the calculation of the reimbursement of interest.
The interest rate will be determined based on the average for the quarter
of the daily interest rate of a short term investment, e.g, a money
market account, which will be an account generally used by all Companies
in a short-term investment portfolio. This information will be received
from the CUNA Mutual Group Investment Accounting Department on a monthly
basis.
The interest calculation is as follows:
Short Term Investment
Total Disbursements Cleared X Interest Rate % = Interest Due
--------------------------- ---------------
# of days in Quarter 365 days
Note: The payments cleared on Friday, would also be counted as cleared
for Saturday and Sunday. The payments cleared the day prior to a holiday
would bo counted for the holiday.
The interest payment will be made during the month following each
calendar quarter. Every year end (December 31st), the interest payment
accrual will be booked to the general ledger for each Company.
Example; in 2005 $981,150,000 disbursements cleared the Common Paymaster
which would have generated an $82,040 interest payment, based on a 3%
interest rate.
XII. When a payment is outstanding 365 days (1 year), the payment is
transferred to the Unclaimed Property System. The AP System marks the
check payment as being sent to tho Unclaimed Property System.
These items transfer ownership to the Common Paymaster Company. Funds
transfers are paid from the issuing companies to the Common Paymaster.
This funds transfer will also generate accounting entries to clear the
inter unit payable and receivable accounting entries and reflect the
withdrawal and deposit of funds to the appropriate cash or bank account.
The unclaimed property liability is recorded on the Common Paymaster
Company's General Ledger. In accordance with state regulatory
requirements, the funds will be forwarded to the appropriate state
unclaimed property office.
14