MUNICH AMERICAN REASSURANCE COMPANY
Automatic Reinsurance Agreement
effective April 1, 2000
between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
WORCESTER, MASSACHUSETTS
(hereinafter called the Ceding Company)
and
MUNICH AMERICAN REASSURANCE COMPANY
ATLANTA, GEORGIA
(hereinafter called MARC)
Treaty ID: 1689
TABLE OF CONTENTS
Article I Basis of Reinsurance 1
Article II Mode of Notification and Cession 2
Article III Liability of MARC 2
Article IV Plan of Reinsurance 2
Article V Reinsurance Premiums 4
Article VI Tax Procedures 4
Article VII Claims 5
Article VIII Policy Changes 6
Article IX Accounting 7
Article X Expenses of Original Policy 8
Article XI Errors and Omissions 8
Article XII Retention Limit Changes (Recapture) 8
Article XIII Inspection of Records 10
Article XIV Insolvency 10
Article XV Arbitration 10
Article XVI Parties to Agreement; Entire Agreement 11
Article XVII Duration of Agreement; Termination 11
Article XVIII Effective Date; Execution 13
Exhibit I Reinsurance Submission Form
Exhibit II Limits and Special Conditions
Exhibit III Retention Limits of the Ceding Company
Exhibit IV Life Reinsurance Premiums
Exhibit V Accidental Death Reinsurance Premiums
Exhibit VI List of Risks Reinsured
Exhibit VII List of Amendments
Exhibit VIII In-Force Summary Form
Exhibit IX Underwriting Guidelines
ARTICLE I BASIS OF REINSURANCE
1. On and after the effective date of this agreement, the
Ceding Company will automatically cede to MARC its
quota share as defined in Exhibit II. MARC will
automatically accept such quota share within the limits
shown in Exhibit II, provided the Ceding Company keeps
its retention share and applies its simplified issue
underwriting standards in Exhibit IX. The Ceding
Company's regular retention limits are shown in Exhibit
III. Normal underwriting standards are explained in
paragraph 7 of this article.
2. If the Ceding Company is already on the risk for its
regular retention under previously issued policies,
MARC will automatically accept reinsurance up to the
limits shown in Exhibit II, provided the Ceding Company
has applied the same underwriting rules it would have
applied if the new policy had fallen completely within
its regular retention.
3. If the Ceding Company retains less than its regular
retention on a risk, MARC will automatically accept an
amount not exceeding the amount retained by the Ceding
Company on the current application.
Facultative Submissions
4. The Ceding Company may submit any risk that is eligible
for automatic reinsurance to MARC for its underwriting
opinion. If such risk is acceptable, it will be
reinsured automatically under this agreement.
5. In addition, the Ceding Company may apply to MARC for
facultative reinsurance of any individual life risk. An
application may include waiver of premium disability or
accidental death benefits with life. The Ceding Company
may apply for reinsurance of accidental death benefits
without life.
6. The Ceding Company will make such facultative
submissions by sending MARC copies of all papers
relating to the insurability of the risk, together with
a Reinsurance Submission Form (Exhibit I). MARC will
examine the papers and notify the Ceding Company of its
underwriting action promptly. Any offer made by MARC
will expire as indicated in the offer unless the Ceding
Company withdraws its application earlier. If no
expiration date is shown in the offer, the offer will
expire after 120 days from the date of the offer. The
Ceding Company must notify MARC of its acceptance of an
offer before the expiration of the offer and during the
lifetime of the insured.
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Underwriting Standards
7. The Underwriting Guidelines in Exhibit IX will be used
to determine underwriting risk classifications, unless
the Ceding Company and MARC agree to use an alternative
method. The Ceding Company should discuss any proposed
changes in underwriting standards, requirements, or
other criteria with MARC before implementation.
ARTICLE II MODE OF NOTIFICATION AND CESSION
1. There will be no individual cessions for risks
reinsured hereunder. Instead, each month the Ceding
Company will supply MARC with three lists containing
the information shown in Exhibit VI, "List of Risks
Reinsured," Exhibit VII, "List of Amendments," and
Exhibit VIII, "In-Force Summary." The Ceding Company
will submit all monthly lists to MARC no later than the
tenth day of the following month. In addition, the
Ceding Company will submit quarterly reserve reports.
These are described in Article IX, "Accounting."
2. If the Ceding Company chooses to report its reinsurance
transactions via electronic media, it will consult with
MARC to determine the appropriate format. The Ceding
Company will notify MARC before making any changes in
the data format or code structure of any such reports.
ARTICLE III LIABILITY OF MARC
For automatic reinsurances, MARC's liability will begin
at the same time as the Ceding Company's liability. For
facultative submissions, MARC's liability will begin at
the same time as the Ceding Company's liability if all
the requirements of Articles I and II have been met.
ARTICLE IV PLAN OF REINSURANCE
1. Life reinsurance will be ceded on the risk premium
basis for the net amount at risk under the policy. The
Net Amount at Risk Reinsured will be rounded to the
nearest dollar. It will be calculated monthly for
interest sensitive and universal life policies, and
annually for all other policies.
Interest Sensitive and Universal Life
a. The Net Amount at Risk Reinsured will equal the
Proportion of the Policy Reinsured multiplied by
the difference between the death benefit and the
cash value included in the death benefit. The
Proportion of the Policy Reinsured will be as
stated in Exhibit II. Any increase or decrease in
the death benefit will be shared proportionately
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by the Ceding Company and MARC until the Ceding
Company has reached its retention limit.
Additional increases will be assumed by MARC
subject to the provisions for increased amounts
specified in Article VIII and Exhibit II.
Traditional Permanent Plans
b. The Net Amount at Risk Reinsured will be the Total
Net Amount at Risk for the policy year multiplied
by the proportion the total initial amount
reinsured with MARC bears to the total amount of
insurance under the original policy. The Total Net
Amount at Risk will be the difference between the
total amount insured under the policy and the
terminal reserve at the end of the policy year.
Such terminal reserve will be based on the Ceding
Company's reserve standard, unless the Ceding
Company and MARC have agreed on an alternative
method.
Level Term for Twenty Years or Less
c. The Net Amount at Risk Reinsured during all years
will be the initial amount reinsured. Terminal
reserves will be disregarded.
Annually Reducing Term
d. The Net Amount at Risk Reinsured will be the total
death benefit for the policy year multiplied by
the proportion the total initial amount reinsured
with MARC bears to the total amount of insurance
under the original policy.
Monthly Reducing Term
e. For premium calculation, the Net Amount at Risk
Reinsured will be the mean of the total death
benefits for the first month of the respective
policy year and the first month of the next
following policy year multiplied by the proportion
the total initial amount reinsured with MARC bears
to the total amount of insurance under the
original policy.
2. Reinsurance of waiver of premium disability and
accidental death benefits will agree with the Ceding
Company's original policy forms. The Ceding Company
must ▇▇▇▇▇▇▇ ▇▇▇▇ with copies of its waiver of premium
disability and accidental death riders and keep MARC
informed of any changes.
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ARTICLE V REINSURANCE PREMIUMS
1. The reinsurance premium rates for life insurance are in
Exhibit IV. The reinsurance premium rates for
accidental death benefits are in Exhibit V.
2. The reinsurance premiums for waiver of premium
disability benefits will be the following percentages
of the premium that the Ceding Company charges the
insured on the initial amount of reinsurance:
FIRST YEAR RENEWAL YEARS
---------- -------------
0% 90%
3. The Ceding Company will pay the reinsurance premiums
for traditional policies annually in advance. These
premiums will be payable as long as the reinsurance
remains in force. If any reinsurance is reduced or
terminated, MARC will refund any unearned portion of
reinsurance premium except the policy fee.
4. MARC cannot guarantee the life reinsurance premium
rates for more than one year; however, MARC expects to
continue accepting premiums on these rates
indefinitely. If MARC increases the reinsurance
premiums, then the Ceding Company shall have the right
to immediately recapture any business affected by this
change as of the date of the increase. The Ceding
Company must notify MARC of their intent to recapture
within 90 days of the rate increase.
ARTICLE VI TAX PROCEDURES
1. MARC will not reimburse the Ceding Company for a share
of the state premium taxes the Ceding Company has to
pay.
2. Both companies hereby enter into an election under
Treasury Regulations Section 1.848-2(g)(8) whereby:
a. For each taxable year under this agreement, the
party with net positive consideration, as defined
in Treasury Code Section 848, will capitalize
specified policy acquisition expenses with respect
to this reinsurance agreement without regard to
the general deductions limitation of
Section 848(c)(1).
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b. Both companies agree to exchange information about
the amount of net consideration for all
reinsurance agreements in force between them to
ensure consistency for purposes of computing
specified policy acquisition expenses.
c. This election will be effective as of the
beginning of the taxable year that includes the
effective date of this agreement. This election
will remain in effect for all future taxable years
for which this agreement remains in effect.
ARTICLE VII CLAIMS
1. If the Ceding Company pays a claim in full, MARC will
pay the Ceding Company the full Net Amount at Risk
Reinsured for the policy year of death. For monthly
decreasing term plans, MARC's share will be the total
death benefit under the policy for the month of death
multiplied by the proportion the initial amount
reinsured with MARC bears to the total amount of
insurance under the original policy. If the Ceding
Company pays less than the full amount of a claim, MARC
and the Ceding Company will share proportionately in
the reduction.
2. If any special expenses are involved in the settlement
of a claim, MARC and the Ceding Company will share the
expenses proportionately. Such special expenses
include, but are not limited to, court and arbitration
costs, special investigations, etc. The following will
not be considered special expenses:
a. Salaries of the Ceding Company's and MARC's
employees
b. Expenses incurred in connection with a dispute or
contest arising out of conflicting claims of
entitlement to policy proceeds or benefits that
the Ceding Company admits are payable
c. Expenses, fees, settlements, or judgements arising
out of or in connection with claims made against
the Ceding Company for extra-contractual damages,
such as punitive damages, bad faith damages, or
compensatory damages that may arise from acts or
omissions of the Ceding Company in its conduct
with its own insured, policy owner, beneficiary or
assignee of the policy, or others; provided,
however, that MARC will pay its proportionate part
of any such expenses, fees, settlements, and
judgements to the extent that such expenses, fees,
settlements, and judgements result directly from
acts or omissions of MARC, or acts or omissions of
the Ceding Company to which MARC affirmatively
consented or that were directed, ratified, or
agreed to by MARC.
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3. Both companies will share proportionately in any
increase or reduction resulting from an insured's
misstatement of age or sex.
4. In every case of loss, any proofs acceptable to the
Ceding Company will be sufficient for MARC. However,
the Ceding Company must ▇▇▇▇▇▇▇ ▇▇▇▇ with copies of the
proofs.
Contestable Claims
5. The Ceding Company must give MARC advance notice of any
contestable claim if the claim amount exceeds $125,000
of the life or waiver of premium disability risk is
reinsured by MARC. Contestable claim amounts up to and
including $125,000 will be handled by the Ceding
Company without giving MARC advance notice. The Ceding
Company must also give MARC advance notice of any
contestable accidental death claim if the accidental
death benefit is reinsured hereunder. On request, the
Ceding Company will submit all papers relating to any
such claim to MARC for its opinion before making any
commitment or payment to the claimant.
ARTICLE VIII POLICY CHANGES
1. The Ceding Company will include any changes in the List
of Amendments described in Exhibit VII.
2. If the face amount or death benefit is increased
according to procedures in the policy, the Net Amount
at Risk Reinsured and the Proportion of the Policy
Reinsured will be recalculated. Such increases are
subject to the submission of satisfactory evidence of
insurability and will therefore be treated as new
issues, subject to the provisions of Article I and the
limitations shown in Exhibit II. Reinsurance premiums
for such increased amounts will be calculated as for
other new issues.
3. If any portion of the total insurance retained by the
Ceding Company on any life is reduced or terminated,
the amount of reinsurance carried by the Ceding Company
on that life will be reduced in the same proportion as
that between the new and the original sums insured.
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4. If an original policy is changed to reduced paid-up
insurance, MARC will share in the total amount of
reduced paid-up insurance in the same proportion as it
shared in the original amount insured before such
change to reduced paid-up insurance.
5. If an original policy is changed to extended term
insurance, MARC's proportion of the Total Net Amount at
Risk under the policy will remain unchanged.
6. If a policy is reinstated in accordance with its terms
and the Ceding Company's reinstatement rules, the
reinsurance will be restored with the same net amount
at risk and other benefits as if no change had
occurred. The premium will be appropriately adjusted.
ARTICLE IX ACCOUNTING
1. Within the first ten days of each calendar month, the
Ceding Company will send MARC the List of Risks
Reinsured, the List of Amendments, and the In-Force
Summary, including all the information required by
Exhibits VI, VII, and VIII.
2. If the Ceding Company owes MARC, it will remit the
amount owed with the statement. MARC will remit any
amount it owes the Ceding Company within twenty working
days after receiving the statement.
3. Within the first ten days of each calendar quarter the
Ceding Company will submit to MARC a listing of the
reserves for all in-force risks reinsured under this
agreement as of the end of the preceding quarter. This
list will include the following:
a. Life insurance amount reinsured
b. Life insurance reserve reinsured
c. Substandard reserve reinsured
d. WPD-active life reserve (if disability is
reinsured)
e. ADB reserve and amount (if ADB is reinsured)
f. Reserve basis for:
(i) Life insurance
(ii) WPD and ADB
4. Claim payments will be settled individually when they
are due.
5. Any debts or credits, in favor of or against either
MARC or the Ceding Company with respect to this
agreement or any other reinsurance agreement between
the Ceding Company and MARC, are deemed mutual debts or
credits and will be offset and only the balance will be
allowed or paid. The right of
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offset will not be affected or diminished because of
the insolvency of either party.
ARTICLE X EXPENSES OF ORIGINAL POLICY
The Ceding Company will pay for all medical
examinations, inspection fees, and other charges
incurred in issuing policies.
ARTICLE XI ERRORS AND OMISSIONS
1. Errors and omissions on any statement or reinsurance
record will not affect MARC's liability for any
reinsurance under this agreement. Any error affecting
reinsurance premiums will be rectified as soon as
possible after discovery.
2. If the failure of either party to comply with any
provision of this agreement is unintentional or the
result of a misunderstanding or oversight, both parties
will be restored as closely as possible to the
positions they would have occupied if no error or
oversight had occurred.
3. This article will not apply to any facultative
submission until the Ceding Company has notified MARC
of its acceptance of MARC's offer in accordance with
Article I.
ARTICLE XII RETENTION LIMIT CHANGES (RECAPTURE)
1. The reinsurance under this agreement will remain in
force without reduction as long as the original policy
remains in force without reduction, except as provided
below.
2. If the Ceding Company increases its regular retention
limits, it may choose to recapture. Such recapture will
increase the total amount the Ceding Company carries on
each case up to its then maximum retention. If the
Ceding Company chooses to recapture, it must send MARC
a written request.
3. Recaptures will take effect on the later of the
following dates:
a. The first policy anniversary date after the Ceding
Company notifies MARC of its retention limit
increase
b. When the policy has been in force for the number
of years stated in Exhibit IV
8
If any reinsurance on any policy reinsured hereunder is
recaptured, all other eligible policies must be
similarly recaptured, subject to the restrictions
herein.
4. If the reinsurance to be reduced is shared by two or
more reinsurers, the reduction will be prorated among
all the reinsurers.
5. Reductions or cancellations that were overlooked will
be made when discovered. MARC's acceptance of
reinsurance premiums after the effective dates of any
overlooked reductions or cancellations will not
constitute or determine a liability of MARC. MARC will
be liable only for a refund of the premium so received.
6. No recapture will be made if the Ceding Company
retained less than its regular retention or no part of
the risk. If there are multiple issues and the Ceding
Company is unable to fully retain on a subsequent issue
due to previous in force, the Ceding Company is still
entitled to recapture as long as the recaptures take
place in chronological order, beginning with the oldest
policy first. In the case of a first dollar quota share
arrangement, the Ceding Company may recapture as long
as the original quota share percentage retained by the
Ceding Company is continued after the recapture.
7. If a waiver of premium disability claim is in effect
when recapture takes place, the Ceding Company will
recapture the life risk and all other eligible benefits
as if there were no waiver of premium disability claim.
MARC's liability for these benefits will then cease.
The waiver of premium disability reinsurance will
remain in effect until the policy is returned to a
premium paying status. When that happens, the Ceding
Company will recapture the waiver of premium disability
benefits.
8. If a recaptured waiver of premium claim is resumed
because of an extension of the initial disability under
the terms of the Ceding Company's policy, MARC will pay
its share of the waiver of premium benefit if the
Ceding Company pays MARC the reinsurance premium for
the period following recapture.
9
ARTICLE XIII INSPECTION OF RECORDS
Both MARC and the Ceding Company will have the right to
inspect all books, records, and documents relating to
the reinsurance under this agreement. Both parties will
have the right to make such inspections at any
reasonable time at the office of the other party.
ARTICLE XIV INSOLVENCY
1. If the Ceding Company becomes insolvent, MARC will pay
all reinsurance directly to the liquidator, receiver or
statutory successor without reduction because of the
insolvency. The liquidator, receiver, or statutory
successor will give MARC written notice of any pending
claims on policies reinsured hereunder. Such notice
will be given within a reasonable time after a claim is
filed in the insolvency proceeding.
2. While any such claim is pending, MARC may investigate
the claim and interpose in the name of the Ceding
Company (its liquidator, receiver, or statutory
successor) at its own expense in the proceeding where
such claim is to be adjudicated. Any expense thus
incurred by MARC will be chargeable, subject to court
approval, against the Ceding Company as part of the
expense of liquidation. Where two or more reinsurers
are participating in the same claim and a majority in
interest elects to interpose a defense or defenses to
any such claim, the expense will be apportioned in
accordance with the terms of the reinsurance agreements
as though the Ceding Company had incurred such expense.
ARTICLE XV ARBITRATION
1. Any controversy or claim arising out of or relating to
this Agreement will be settled by arbitration.
2. There must be three arbitrators who must be impartial
and must be present or former officers of life
insurance or life reinsurance companies other than the
parties or their affiliates. Each of the parties will
appoint one of the arbitrators and these two
arbitrators will select the third (the "Umpire"). In
the event that either party should fail to choose an
arbitrator within thirty (30) days following a written
request by the other party to do so, the requesting
party may choose two arbitrators who will in turn
choose an Umpire before entering upon arbitration. If
the two arbitrators fail to agree upon the selection of
an Umpire within thirty (30) days following their
appointment, either party may ask ▇▇▇▇▇ US to appoint
the Umpire. However, if ▇▇▇▇▇ US is unable to appoint
an Umpire who is impartial and who is or was an officer
of a life insurance or life reinsurance company other
than the parties or their affiliates,
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then either party may ask a court to appoint the Umpire
pursuant to the Uniform Arbitration Act or any similar
statute empowering the court to appoint an arbitrator,
in which case the requirement that the Umpire be a
present or former officer of a life insurance or life
reinsurance company shall be waived. In the event that
more than one reinsurer is involved in the same
dispute, you will cooperate with any reasonable request
we make to consolidate the arbitration proceedings.
3. The arbitrators will decide all matters by majority
vote. They will establish the procedural rules for the
arbitration and allocate among the parties the expenses
of the arbitration. They shall interpret this Agreement
as an honorable engagement and are not bound by the
strict formalities of law. They are not empowered to
assess punitive damages.
4. The award agreed by the arbitrators will be final, and
judgment may be entered upon it in any court having
jurisdiction.
ARTICLE XVI PARTIES TO AGREEMENT; ENTIRE AGREEMENT
1. This is an agreement solely between the Ceding Company
and MARC. MARC's acceptance of reinsurance hereunder
will not create any right or legal relationship
whatsoever between MARC and the insured or beneficiary
under any policy that may be reinsured hereunder.
2. This agreement represents the entire agreement between
MARC and the Ceding Company concerning the business
reinsured hereunder. There are no understandings
between MARC and the Ceding Company other than as
expressed in this agreement.
3. Any change or modification of this agreement will be
null and void unless made by an amendment to the
agreement and signed by both MARC and the Ceding
Company.
ARTICLE XVII DURATION OF AGREEMENT; TERMINATION
1. The duration of this agreement will be unlimited.
However, either party to this agreement may terminate
it at any time, for new business only, by giving thirty
days' notice in writing to the other party. MARC will
continue to accept reinsurance during the thirty-day
period and will remain liable on all reinsurance
already placed in force under the terms of this
agreement until such contracts are terminated between
the original insured and the Ceding Company.
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2. The payment of reinsurance premiums is a condition
precedent to the liability of MARC for reinsurance
under this agreement. In the event reinsurance premiums
are not paid when due, MARC will have the right to
terminate all reinsurance coverage of all policies on
which reinsurance premiums are in arrears. If MARC
elects to exercise this right of termination, it will
give the Ceding Company thirty days' written notice of
its intention to terminate said reinsurance. Such
notice will be sent by certified mail, return receipt
requested. The Ceding Company will have until the end
of the thirty-day period to pay any premiums that are
in arrears. If all the reinsurance premiums that are in
arrears are not paid by the end of the thirty-day
period, including any that came to be in arrears during
the thirty-day period, MARC will be relieved of all
liability under those policies as of the last date for
which premiums have been paid for each policy. The
reinsurance of policies on which reinsurance premiums
subsequently become due will automatically terminate as
of the last date for which premiums have been paid for
each policy, unless the reinsurance premiums on those
policies are paid when due. Terminated reinsurance may
be reinstated, subject to MARC's approval, within
thirty days of the date of termination, upon payment of
all reinsurance premiums in arrears. MARC will have no
liability for any claims incurred between the date of
termination and the date of reinstatement of the
reinsurance. The right to terminate reinsurance will
not prejudice MARC's right to collect premiums for the
period during which reinsurance was in force.
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ARTICLE XVIII EFFECTIVE DATE; EXECUTION
The said First Allmerica Financial Life Insurance
Company, Worcester, Massachusetts, and the said Munich
American Reassurance Company, Atlanta, Georgia, declare
that this agreement and all its terms will be effective
as of April 1, 2000, and will apply to all eligible
policies applied for on and after such date, even
though such policies may have been backdated for up to
six months to save age. In witness whereof they have by
their officers executed and delivered this agreement in
duplicate.
FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY
By /s/
----------------------------------
Title Vice President and Actuary
Attest (illegible) Date 5/8/2001
-------------------------- --------------------------------
MUNICH AMERICAN REASSURANCE COMPANY
By /s/
----------------------------------
Title Vice President
Attest (illegible) Date 10/5/00
-------------------------- --------------------------------
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EXHIBIT I
REINSURANCE SUBMISSION FORM
Omitted 1 Page
EXHIBIT II
LIMITS AND SPECIAL CONDITIONS
The quota share of the Ceding Company to be automatically covered under this
agreement, including previous reinsurances ceded to MARC by the Ceding Company
on the same life, is defined as follows:
1. POLICY FORMS
All amounts of new, bank issues of individual life insurance above the Ceding
Company's retention share as shown in Exhibit III.
2. JUMBO LIMITS
Automatic coverage of any risk will be granted only if, according to the Ceding
Company's papers, the total amount in force and applied for on the same life
with all insurance companies does not exceed the applicable amounts shown below:
a. Life (with or without waiver of premium): $10,000,000
3. BINDING LIMITS
a. Flexible Premium Variable Life sold through banks, Form No. 1036-99
(i) Maximum Issue Age: 80
(ii) Standard risks written by the Ceding Company in the United
States.
(iii) 90% of the risk, but not more than $225,000 on any one life.
Automatic reinsurance is provided for increases resulting from changes
in existing insurance coverage as provided in the policy, as long as
such coverage qualifies as life insurance according to U.S. federal
income tax laws and regulations, subject however to the automatic
coverage limits defined herein. Increases above the automatic coverage
limits will be ceded facultatively.
b. Waiver of Premium Disability Benefits
Waiver of Premium Disability Benefits will not be reinsured hereunder
unless the Ceding Company and MARC agree to include such benefits.
c. Accidental Death Benefits
Accidental death benefits will not be reinsured hereunder unless the
Ceding Company and MARC agree to include such benefits hereunder.
4. SUPPLEMENTARY BENEFIT FORMS
Supplementary benefits to be covered automatically under this agreement will be
those provided by the following policy forms:
EXHIBIT III
RETENTION LIMITS OF THE CEDING COMPANY
FOR THIS AGREEMENT
LIFE INSURANCE
ISSUE
AGES STANDARD
---- --------
All Ages 10% of the risk up to a maximum of $25,000
Retention Schedule of the Ceding Company
STANDARD THROUGH SPECIAL CLASSES
TABLE H AND TABLES J, L & P
FLAT EXTRAS OF $20.00 FLAT EXTRAS OF $20.01
AGES OR LESS AND OVER
---- --------------------- ---------------------
0 $ 500,000 $ 250,000
1 - 60 2,000,000 1,000,000
61 - 70 1,000,000 500,000
71 - 80 500,000 250,000
Aviation: $500,000
WAIVER OF PREMIUM DISABILITY BENEFITS
Not Reinsured Hereunder
ACCIDENTAL DEATH BENEFITS
Not Reinsured Hereunder
EXHIBIT IV
LIFE REINSURANCE PREMIUMS
1. Life reinsurance premiums for business ceded hereunder will be the
following percentages of the 1975-80 Basic Select and Ultimate Mortality
Tables Age Nearest Birthday including the older age extension attached
hereto:
ALL YEARS
---------
Nonsmoker 63%
Smoker 128%
2. Life reinsurance premiums will be calculated as follows:
a. For standard risks, by multiplying the Net Amount at Risk Reinsured by
the appropriate premium rates from the attached schedules.
b. Life reinsurance premiums for substandard risks subject to a flat
extra premium will be the sum of:
(i) The applicable standard reinsurance premiums, calculated from
paragraph a., and
(ii) The following percentages of the policy annual flat extra
premiums applicable to the initial amount of reinsurance
hereunder on such risks:
TERM OF FLAT
EXTRA PREMIUM FIRST YEAR RENEWAL YEARS
------------- ---------- -------------
More than five years 25% 90%
Five years or less 90% 90%
3. Periodic listings to be forwarded to MARC by the Ceding Company in
accordance with Article II, "Mode of Notification and Cession," will
identify smoker and nonsmoker risks.
4. Reinsurances ceded on these rate schedules will be eligible for recapture
in accordance with Article XII after they have been in force for at least
ten years.
TABLE 1 - TABLE C - TABLE 2 - TABLE D
Omitted 8 Pages
EXHIBIT V
ACCIDENTAL DEATH REINSURANCE PREMIUMS
Not Reinsured Hereunder
EXHIBIT VI
LIST OF RISKS REINSURED
The "List of Risks Reinsured," showing all renewing policies, should be
prepared and submitted monthly, quarterly, or annually according to the terms
of the agreement. At least once a year at the end of each year, a list must be
submitted by the Ceding Company to MARC including ALL risks reinsured under
this agreement. Premiums due should be included only for the period being
reported. The information required to be shown on such lists is set out below.
A. Policy number
B. Name of insured (MINIMUM is surname and first initial; prefer to have first
name and middle initial as well.)
C. Sex
D. Date of birth (month, day, year)
E. Issue age
*F. Attained age
G. Policy date (month, day, year) or date of increase/decrease in specified
amount
H. Transaction code (in force)
1. First year, newly reported (i.e., new business)
2. First year, previously reported (i.e., renewal business in first
policy year)
3. Renewal
I. Substandard rating (table, mortality percentage, flat extra amount and
duration. Show multiple of standard for ADB or WPD.)
J. Plan or plan code (IF more than one plan is covered by the agreement)
K. Underwriting class (smoker, nonsmoker, preferred, etc.)
L. Specified amount issued (life, ADB, WPD)
M. Death benefit option (i.e., cash value INCLUDED IN or IN ADDITION TO the
specified amount)
*N. Current death benefit (under original policy)
O. Proportion reinsured this policy (where applicable)
P. Amount reinsured
Q. Current Reinsurance amount at risk
R. Reinsurance premium (life, ADB, WPD)
*S. Net cash amount due MARC (life, ADB, WPD)
*T. Automatic or facultative
*U. Currency code if not U.S. currency
*Desirable but not required
There should be separate subtotals for all items listed below. Each subtotal
should include:
Policy count (life-separately for new business, renewals, and
combined)
Reinsurance amount at risk (separately for new business, renewals and
combined)
Reinsurance premium (separately for new business, renewals and
combined)
Reinsurance commission (separately for new business, renewals and
combined)
Net amount due MARC (separately for new business, renewals and
combined)
The various policy details including reinsurance amount at risk and proportion
reinsured shown on the "List of Risks Reinsured" should correspond to the in
force AFTER any changes reported concurrently on the "List of Amendments." We
need a grand total each reporting period for policy count in force and
reinsurance amount at risk in force (separately for new business, renewals, and
combined). A separate total of ADB in force is needed. This need not be
separated into new business and renewals.
A grand total of reinsurance premium and net amount due MARC, including all in
force and amendments, should be shown (separately for first year, renewals, and
combined categories). Separate totals should be provided for life, ADB, and
WPD. This may be shown on the "List of Risks Reinsured" or may be included in a
separate summary.
Where premiums for more than one period are being reported on a single list,
the basic identification (policy number, name of insured, sex, date of birth,
age, and policy date) need be shown only one time on the first line for the
policy. Subsequent lines should each relate to a different period and the
period involved should be indicated.
Although an increase or decrease in the specified amount will not, as a rule,
result in the issuance of a new policy, the amount of such increase or decrease
should be reported separately from the base specified amount so that
differences in premium rates can be reflected. For example, the amount of
increase in specified amount might involve a substandard rating that differs
from the rating for the base specified amount. In any such case, it might be a
good idea to assign a separate policy number suffix.
Any significant deviations from these reporting guidelines must be agreed to by
MARC.
EXHIBIT VII
LIST OF AMENDMENTS
Each "List of Amendments" (monthly, quarterly, or annual) should show details
for each policy for which any transaction (see codes 4-12 below) occurred which
has an effect on either the reinsurance amount at risk or reinsurance premium.
The basic policy details to be shown include the following:
a. Policy number
b. Name of insured
*▇. ▇▇▇▇ of birth
d. Transaction code (changes to in force)
4. Termination without value
5. Policy not placed (NTO)
6. Surrender (full or partial)
7. Reinstatement
8. Increase in specified amount
9. Decrease in specified amount
10. Conversion or change of plan (e.g., Option A to Option B)
11. Death
12. Other (Please describe)
Under item 12, we would like you to describe any other amendments
such as partial recapture, full recapture, table rating reduction,
etc.
e. Effective date of transaction
f. Net increase or decrease in reinsurance amount at risk from the reinsurance
amount at risk last reported to MARC before the change
g. Reinsurance premium adjustment (separately for first year/renewal)
h. Net adjustment due MARC (separately for fist year/renewal)
i. Currency code if not U.S. currency
Subtotals of policy count and reinsurance amount at risk should be provided for
each transaction code where the transaction is such that the life policy count
in force is altered by the transaction. For items g and h only grand totals are
required (separately for first year/renewal/combined).
The premium adjustments should include adjustments UP TO the current reporting
period (e.g., month, quarter). Premiums for the current reporting period should
appear on the "List of Risks Reinsured."
It is not necessary to adhere strictly to the set of transaction codes shown
above as long as the amendments are clearly identified and appropriate
subtotals and totals can be provided.
*Desirable but not required
EXHIBIT VIII
IN-FORCE SUMMARY FORM
Omitted 1 Page
EXHIBIT IX
UNDERWRITING GUIDELINES
Omitted 5 Pages