[Lineage 2nd-to-die]
REINSURANCE AGREEMENT
No. abc
between
XYZ Company
(hereinafter referred to as the Reinsurer, You, Your)
of City, State
and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(hereinafter referred to as the Reinsured, We, Us, Our)
of Los Angeles, California
Effective Month Day, Year
TABLE OF CONTENTS
ARTICLES PAGE
I Basis of Reinsurance 1
II Liability 3
III Notification of Reinsurance 3
IV Plans of Reinsurance 4
V Reinsurance Premiums 4
VI Premium Accounting 4
VII Confidential Information 6
VIII Oversights 6
IX Reductions, Terminations and Changes 7
X Increase In Retention 8
XI Reinstatement 9
XII Expenses 10
XIII Claims 10
XIV Extra-Contractual Damages 12
XV Inspection of Records 13
XVI Insolvency 13
XVII Arbitration 14
XVIII Special Termination 15
XIX Deferred Acquisition Cost Tax 15
XX Severability Clause 17
XXI Parties to Agreement 17
XXII Duration of Agreement 17
XXIII Entire Agreement 18
SCHEDULES
A Specifications 20
B Benefits 21
C Definitions 22
EXHIBITS
I Simplified-Issue Guidelines 24
II Reinsurance Premiums 25
III Retention, Binding and Issue Limits 27
3
ALL SCHEDULES AND EXHIBITS ATTACHED
WILL BE CONSIDERED PART OF THIS AGREEMENT
ARTICLE I
BASIS OF REINSURANCE
Reinsurance under this Agreement must be individual insurance as stated in
Schedule A. On our behalf, the insurance will be underwritten and administered
by [Name Redacted] Insurance Company. You must automatically reinsure the life
insurance for the plans as stated in Schedule A and any additional benefits
listed in Schedule B or, at our option, we may apply to you facultatively.
1. REQUIREMENTS FOR AUTOMATIC REINSURANCE
A. The individual risk must be in a jurisdiction in which we are duly
licensed and/or authorized to do business.
B. Each fully underwritten risk must be underwritten according to
our standard underwriting practices and guidelines. Each
simplified-issue risk must be underwritten according to our
simplified underwriting guidelines of Exhibit I.
C. Any risk offered on a facultative basis by us to you or any other
company will not qualify for automatic reinsurance under this
Agreement on the same life unless:
(i) Reinsurance on the life was previously ceded on a
facultative basis because of binding or jumbo limit violations
and these limits have since been increased,
or,
(ii) The risk which required facultative submission has
changed significantly or has been eliminated altogether, so that
the individual insured qualifies for automatic reinsurance based
on our current underwriting guidelines; and the original
facultative cession has been in force for at least two years.
D. The maximum issue age on any risk will be age 89.
E. The mortality rating on each fully underwritten risk must not
exceed Table 8, Table H, or 300%, or its equivalent, as shown in
our retention schedule, on a flat extra premium basis.
F. The maximum amount of insurance issued and applied for in all
companies on each risk must not exceed the jumbo limits as stated
in Schedule A.
G. On each individual life, we must retain the amounts of insurance
according to our published retention limits.
H. The maximum amount of insurance to be reinsured on a life must
not exceed the automatic binding limits as stated in Schedule A.
2. REQUIREMENTS FOR FACULTATIVE REINSURANCE
A. If the requirements for automatic reinsurance are met, but we
prefer to apply for facultative reinsurance with you, then we
must submit to you all the papers relating to the insurability of
the individual risk for facultative reinsurance.
B. If requirements for automatic reinsurance are not met and we
apply for facultative reinsurance with you, then we must submit
to you all the papers relating to the insurability of the
individual risk for facultative reinsurance.
3. APPLICATION FOR FACULTATIVE REINSURANCE
A. An application for facultative reinsurance will include life
insurance without disability waiver of premium.
B. Copies of all the papers relating to the insurability of the
individual risk must be sent to you for facultative reinsurance.
After you have examined the papers sent, you will promptly notify
us of your underwriting offer subject to additional requirements,
or your final underwriting offer. Your final underwriting offer
on the individual risk will automatically terminate the earlier
of the withdrawal of our application or one hundred and twenty
(120) days from the date of your final offer.
4. The initial minimum amount of life reinsurance on the individual risk must be
the amount stated in Schedule A.
5. If the subsequent amount of life reinsurance net amount at risk falls
below the amount stated in Schedule A on the individual risk, as of that
date, all of the life reinsurance on the risk must terminate.
6. In no event will you be liable for reinsurance unless the insurance
issued directly by us constituted the transacting of business in a
jurisdiction in which we are properly licensed or otherwise authorized
to do business.
ARTICLE II
LIABILITY
1. Your liability for automatic reinsurance will begin simultaneously with
our liability except for those risks which qualify for automatic
reinsurance, but we submit on a facultative basis.
2. Your liability for facultative reinsurance on the individual risk will
begin simultaneously with our liability provided all conditions of
facultative reinsurance have been met, including your accepting the risk
in writing.
3. Your liability for reinsurance on the individual risk will terminate
when our liability terminates.
ARTICLE III
NOTIFICATION OF REINSURANCE
For automatic and facultative reinsurance, we will notify you on the monthly
statement as described in Article VI.
ARTICLE IV
PLANS OF REINSURANCE
1. Life reinsurance will be on the basis as stated in Schedule B.
2. When requested, we must furnish you with a copy of each policy, rider,
rate book and cash value table which applies to the life insurance
reinsured.
ARTICLE V
REINSURANCE PREMIUMS
The life insurance premium on the net amount at risk will be determined from
Exhibit II. For reinsurance on a yearly renewable term basis, we anticipate that
the premium rates in Exhibit II will be continued indefinitely. However, if any
one or more of such premium rates for any policy year or years after the first
will be less than the net premium rate or rates based on the 1980 CSO Table (or
related smoker and non-smoker tables) at the interest rate specified in the
Standard Valuation Law for the applicable mortality rating, then, in that event,
only the latter rate or rates will be guaranteed.
ARTICLE VI
PREMIUM ACCOUNTING
l. Payment of Reinsurance Premiums.
A. The reinsurance premiums will be paid to you on the basis stated in
Exhibit II, and will be paid on an annual basis.
B. Each month, we will send you a statement of first year and
renewal reinsurance premiums which are due during the month, and
a listing of new business, changes and terminations.
C. If a net reinsurance premium balance is payable to you, we will
include with the statement the amount of the net balance.
D. If a net reinsurance premium balance is payable to us, you must
pay this balance within twenty five (25) days after
we submit the statement to you.
2. Termination Because of Non-Payment of Premium.
When reinsurance premiums are delinquent, you have the right to
terminate the reinsurance risks on the statement by giving us ninety
(90) days written notice. As of the close of this ninety (90) day
period, all of your liability will terminate for the risks described in
the preceding sentence.
Regardless of these terminations, we will continue to be liable to you
for all unpaid reinsurance premiums earned by you.
3. Reinstatement of a Delinquent Statement.
We may reinstate the terminated risks within sixty (60) days after the
effective date of termination by paying the unpaid reinsurance premiums
for the risks in force prior to the termination. The effective date of
reinstatement will be the date the required back premiums are received.
4. Currency.
The reinsurance premiums and benefits payable under this Agreement will
be payable in the lawful money of the United States.
5. We will send you a detailed listing of all reinsurance in force as of
the close of the calendar year involved for automatic reinsurance.
ARTICLE VII
CONFIDENTIAL INFORMATION
You will hold in trust for us and will not disclose or cause to be disclosed to
any non-party to this Agreement, any of our confidential information.
Confidential information is information which relates to our policyowner data,
experience information, including but not limited to mortality and/or lapse
information, risk selection guidelines, any and all information contained in our
current and future underwriting manuals, trade secrets, research, products and
business affairs, but does not include:
1) Information which is generally known or easily ascertainable by
non-parties of ordinary skill; and
2) Information acquired from non-parties who have no confidential
commitment to either you or us.
You will take all necessary and appropriate measures to ensure that your
employees and agents abide by the terms of this Article.
Notwithstanding the foregoing, we acknowledge that you may aggregate our data
with that of other companies reinsured by you on the condition that our data not
be identified by our corporate name, logo or any other means. We also
acknowledge that, upon request, you may make available any necessary data or
information to your auditors, or any governmental or administrative agencies in
the course of their examination of you.
ARTICLE VIII
OVERSIGHTS
If there is an unintentional oversight or misunderstanding in the administration
of this Agreement by either company, it can be corrected provided the correction
takes place promptly after the time the oversight or misunderstanding is first
discovered. Both companies will be restored to the position they would have
occupied had the oversight or misunderstanding not occurred.
ARTICLE IX
REDUCTIONS, TERMINATIONS AND CHANGES
1. If there is a contractual or non-contractual replacement or change of
the insurance reinsured under this Agreement where full underwriting
evidence according to our regular underwriting rules is not required,
the insurance will continue to be reinsured with you provided it meets
the initial minimum amount stated in Schedule A.
2. If the insurance reinsured under this Agreement increases and;
A. The increase is subject to new underwriting evidence, the provisions of
Article I will apply to the increase in reinsurance.
B. The increase is not subject to new underwriting evidence, as with
the Guaranteed Insurability Rider, you will accept automatically
the increase in reinsurance, but not to exceed our automatic
binding limit, as long as the increase resulted in accordance
with our established underwriting rules.
3. If the insurance reinsured under this Agreement is increased or reduced,
the reinsurance for the individual risk involved will be increased or
reduced proportionally by taking into account Article I, Sections 1.G. &
1.H., on the effective date of increase or reduction.
4. If any portion of the total insurance retained by us on an individual
life reduces or terminates, any reinsurance under this Agreement based
on the same life will also be reduced or terminated. We will reduce our
reinsurance by applying the retention limits which were in effect at the
time the policy was issued. We will not be required to retain an amount
in excess of our regular retention limit for the age, mortality rating
and risk classification at the time of issue for any policy on which
reinsurance is being reduced.
We must first reduce the reinsurance of the insurance which has the same
mortality rating as the terminated insurance. If further reduction is
required, the reinsurance to be terminated or reduced will be effected
in the inverse order in which the reinsurance was first reinsured.
5. If the insurance for a risk is shared by more than one pool of
reinsurers, the reduced reinsurance will be effected proportionally
within each pool, but in the inverse order by pool in which the
insurance was first reinsured.
6. If insurance reinsured under this Agreement is terminated, the
reinsurance for the individual risk involved will be terminated on the
effective date of termination.
7. On facultative reinsurance, if we wish to reduce the mortality rating,
this reduction will be subject to and reinsured under the facultative
provisions of this Agreement.
8. You will refund to us all unearned reinsurance premiums arising from
reductions, terminations and changes as described in this Article.
ARTICLE X
INCREASE IN RETENTION
1. If we should increase our retention limits, prompt written notice of the
increase must be given to you.
2. We will have the option of recapturing the reinsurance under this
Agreement when our retention limit increases. We may exercise our option
to recapture by giving written notice to you within ninety (90) days
after the effective date of the increase.
3. If we exercise our option to recapture, then;
A. We must reduce the reinsurance on each individual life on which
we retained our maximum retention limit for the age and mortality
rating that was in effect at the time the reinsurance was ceded
to you.
B. No recapture will be made to reinsurance on an individual life if
(a) we retained a special retention limit less than our maximum
retention limit for the age and mortality rating in effect at the
time the reinsurance was ceded to you, or if (b) we did not
retain insurance on the life.
C. We must increase our total amount of insurance on the individual
life up to our new retention limit by reducing the reinsurance.
If an individual life is shared by more than one reinsurer, your
percentage of the reduced reinsurance will be the same percentage
as your initial reinsurance on the individual risk.
D. The reduction of reinsurance will become effective on the later
of the following dates:
(1) The policy anniversary date immediately following the
effective date of our increase in retention limits.
(2) The number of years stated in Schedule A starting with
the 'policy date' for the risk involved.
ARTICLE XI
REINSTATEMENT
If an insurance policy lapses for nonpayment of premium and is reinstated under
our terms and rules, the reinsurance will be reinstated by you as follows:
Automatic Cases:
We must pay you all back reinsurance premiums in the same manner as we
received insurance premiums under our policy. When reinstated by us, the
policy will automatically be reinstated by you.
Facultative Cases:
Reinstatement evidence will be submitted to you for your approval.
Reinstatement approval is required before we reinstate the policy with
you. Upon your approval, we must pay you all back reinsurance premiums
in the same manner as we received insurance premiums under our policy.
ARTICLE XII
EXPENSES
We must pay the expense of all medical examinations, inspection fees and other
charges in connection with the issuance of the insurance.
ARTICLE XIII
CLAIMS
1. We will give you prompt notice of any claim and send a copy of the proof
of death and the amount paid on that claim when requesting payment. You
will be liable to us for the benefits reinsured under this Agreement to
the same extent that we are liable to the claimant for such benefits,
and all reinsurance coverage under this Agreement will be subject to the
terms and conditions of the original policy for the underlying
reinsurance cession under which we are liable. Payment of death claims
by you, however, will be in one lump sum regardless of the mode of
settlement under the original policy.
2. Upon request, we will forward copies of all claim papers. Any settlement
made by us will be binding on you. When a death occurs within the
contestable period and the amount of reinsurance ceded to you is 50% or
more of the total amount reinsured by us, or if we retained none of or
less than our usual retention on the basic plan or supplementary
benefits and riders, then you will make a recommendation before we admit
liability or make settlement with the claimant, provided you review all
claim papers and make recommendation within five (5) working days after
receipt of all necessary papers. We are not bound to accept your
recommendation.
3. For all claims where we decide to deny liability, we will immediately
notify you of our intention to contest the insurance reinsured under
this Agreement or to assert defenses to a claim for such insurance. We
will then submit for review copies of all papers connected with the
claim. If any claim is settled on a compromise basis, you will
participate in such compromise in proportion to your respective
liability under the policy or policies reinsured. You will pay your
share of the usual expenses of the contest in addition to your share
of the claim itself. In the event that you do not wish to follow our
action to contest the claim, you will notify us within five (5)
working days after receipt of all necessary papers. You will then
discharge all your liability by paying the full amount of the
reinsurance coverage to us and not sharing in any subsequent reduction
of liability. You will not be liable for any special expenses incurred
by us in contesting the claim.
4. If the amount of insurance provided by the policy or policies reinsured
under this Agreement is increased or reduced because of a misstatement
of age or sex established after the death of the insured, you will share
with us in this increase or reduction. Your share of this increase or
reduction will be the percentage that your net liability relates to our
total net liability and that of other reinsurers immediately prior to
this increase or reduction. In the case of reinsurance on the yearly
renewable term basis, your reinsurance will be calculated from the
inception date of the policy on the adjusted amounts using the premiums
and reserves applicable to the correct age or sex. Any adjustment in
reinsurance premiums will be made without interest.
5. We must pay the routine expenses incurred in connection with settling
claims. These expenses may include compensation of agents and employees
and the cost of routine investigations.
6. You will share with us all expenses that are not routine. Expenses that
are not routine are those directly incurred in connection with the
contest or the possibility of a contest of insurance or the assertion of
defenses. These expenses will be shared in proportion to the net amount
at risk for both of us. However, if you have released your liability
under Section 3. of this Article, you will not share in any expenses
incurred after your date of release.
ARTICLE XIV
EXTRA-CONTRACTUAL DAMAGES
1. Except as provided below, you will not have any liability for any
extra-contractual damages which are awarded against us as a result of
acts, omissions or course of conduct committed by us in connection with
the insurance reinsured under this Agreement.
2. You will pay extra-contractual damages assessed against us for any
policy reinsured under this Agreement if each of the following
conditions is met:
(a) A primary basis for the award of extra-contractual or punitive
damages was our denial of a claim or delay in paying a claim
under the policy;
(b) Before any action by us indicating to the claimant that the claim
is being denied or contested, you must have had the opportunity
to review the claim file; and
(c) Within five (5) working days from your receipt of the claim file,
you did not recommend payment of the claim.
You will also reimburse us for your share of reasonable legal fees
incurred in defense of extra-contractual or punitive damages.
3. You do recognize that other circumstances may arise under which you, in
equity, should share, to the extent permitted by law, in paying certain
assessed damages. Such circumstances are difficult to define in advance,
but involve those situations in which you were an active party in the
act, omission or course of conduct which ultimately results in the
assessment of such damages. The extent of such sharing is dependent on
good faith assessment of culpability in each case, but all factors being
equal, the division of any such assessment would be in the proportion of
total risk accepted by each party for the plan of insurance involved.
ARTICLE XV
INSPECTION OF RECORDS
You will have the right, at any reasonable time, to inspect our books and
documents which relate to reinsurance under this Agreement.
ARTICLE XVI
INSOLVENCY
1. If we become insolvent, all of the reinsurance due us will be paid in
full directly to our liquidator, receiver, or statutory successor
immediately upon demand without decrease.
2. If we become insolvent, the liquidator will give you written notice of a
pending claim against us for insurance reinsured under this Agreement
within a reasonable time after the claim is filed in the insolvency
proceeding. During the insolvency proceedings where the claim is to be
settled, you may investigate this pending claim and mediate in our or
our liquidator's name, but at your own expense, with any defense or
defenses which you may believe available to us or our liquidator.
3. The expenses incurred by you will be chargeable, subject to court
approval, against us as part of the expense of liquidation. The benefit
which we may accumulate solely as a result of the defense undertaken by
you will be shared proportionately. Where two or more reinsurers are
involved in the same claim, and a majority in interest elect to mediate
a defense or defenses to this claim, the expense will be shared as
though such expense had been incurred by us.
ARTICLE XVII
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 will be officers of life insurance
or life reinsurance companies other than the contracting companies or
their affiliates. Each of the contracting companies will appoint one of
the arbitrators and these two arbitrators will select the third. 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, each Arbitrator will nominate
three candidates within ten days thereafter, two of whom the other will
decline, and the decision will be made by drawing lots.
3. With regard to Section 2. of this Article, arbitration must be conducted
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association which will be in effect on the date of delivery
of demand for arbitration.
4. Each contracting company must pay part of the arbitration expenses as
allocated by the arbitrators.
5. The award agreed by the arbitrators will be final, and judgment may be
entered upon it in any court having jurisdiction.
ARTICLE XVIII
SPECIAL TERMINATION
[Text Redacted]
ARTICLE XIX
DEFERRED ACQUISITION COST TAX
Both companies agree that, with respect to Section 1.848-2(g)(8) of the Income
Tax Regulations issued December 29, 1992 under Section 848 of the Internal
Revenue Code of 1986, as amended:
1. The term "party" will refer to either you or us, as appropriate;
2. The term "net consideration" will refer to either net consideration as
defined in Regulation Section 1.848-2(f) or gross amount of premiums and
other consideration as defined in Regulation Section 1.848-3(b), as
appropriate;
3. Both companies will attach a schedule to their federal income tax return
which identifies the relevant reinsurance agreements for which the joint
election under the Regulation has been made. The joint election will be
effective for the year that this Agreement was entered into, and for all
subsequent years that this Agreement remains in effect.
4. The company with positive net consideration for this Agreement for each
taxable year will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1);
5. Both companies agree to exchange information pertaining to the amount of
net consideration under this Agreement each year to ensure consistency,
or as may otherwise be required by the Internal Revenue Service;
6. By June 1 of each tax year, the company that administers the business
under this Agreement (the "submitting company") will submit to the other
company its calculation of the net consideration for the preceding
calendar year. This calculation will be accompanied by a statement
signed by an officer of the submitting company declaring that the
company will report such net consideration in its tax return for the
previous calendar year;
7. Within thirty (30) days of receipt of the submitting company's
calculation, the other company may contest that calculation by providing
the submitting company with a written alternative calculation. If the
other company does not provide the submitting company with a written
alternative calculation, then the other company will report in its tax
return for the previous year the net consideration as determined by the
submitting company.
8. If the other company contests the calculation provided by the submitting
company, both companies will act in good faith to reach an agreement on
the correct net consideration within thirty (30) days of the date that
the other company provides its alternative calculation. If both
companies reach an agreement on a net consideration amount, each company
will report such amount in their respective tax returns for the previous
calendar year.
ARTICLE XX
SEVERABILITY CLAUSE
If any provision of this Agreement is declared or found to be illegal,
unenforceable or void by any administrative agency, regulatory body, or court of
competent jurisdiction, such finding shall not affect the remaining provisions
of this Agreement, and all other provisions hereof shall remain in full force
and effect.
ARTICLE XXI
PARTIES TO AGREEMENT
This is an Agreement solely between you and us. There will be no legal
relationship between you and any person having an interest of any kind in any of
our insurance.
ARTICLE XXII
DURATION OF AGREEMENT
1. Except as provided under Article XVIII, this Agreement may be terminated
by either company giving thirty (30) days written notice of termination.
The day the notice is deposited in the mail addressed to the Home
Office, or to an Officer of either company will be the first day of the
thirty (30) day period.
2. During the thirty (30) day period, this Agreement will continue to be in
force.
3. After termination, we are both liable for all automatic reinsurance
which becomes effective prior to termination of this Agreement and also
for all facultative reinsurance approved by you based upon applications
you receive prior to termination of this Agreement.
ARTICLE XXIII
ENTIRE AGREEMENT
This Agreement, including any amendments and addenda, forms our entire agreement
with you in connection with the reinsurance provided under this Agreement, and
there are no understandings between the companies other than as expressed in
this Agreement.
Any change or modification to this Agreement will be null and void unless made
by amendment to this Agreement and signed by both companies.
EXECUTION
Executed in duplicate by Executed in duplicate by
XYZ COMPANY TRANSAMERICA OCCIDENTAL
LIFE INSURANCE COMPANY
at City, State at Los Angeles, California
on ________________________, Year. on ________________________, Year.
By _____________________________ By _____________________________
Title: Vice President
By _____________________________ By _____________________________
Title: Vice President
[Lineage - Single Life]
REINSURANCE AGREEMENT
No. abc
between
XYZ COMPANY
(hereinafter referred to as the Reinsurer, You, Your)
of City, State
and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(hereinafter referred to as the Reinsured, We, Us, Our)
of Los Angeles, California
Effective Month Day, Year
TABLE OF CONTENTS
ARTICLES PAGE
I Basis of Reinsurance 1
II Liability 3
III Notification of Reinsurance 3
IV Plans of Reinsurance 4
V Reinsurance Premiums 4
VI Premium Accounting 4
VII Confidential Information 6
VIII Oversights 6
IX Reductions, Terminations and Changes 7
X Increase In Retention 8
XI Reinstatement 9
XII Expenses 10
XIII Claims 10
XIV Extra-Contractual Damages 11
XV Inspection of Records 12
XVI Insolvency 12
XVII Arbitration 13
XVIII Special Termination 14
XIX Deferred Acquisition Cost Tax 14
XX Severability Clause 16
XXI Parties to Agreement 16
XXII Duration of Agreement 16
XXIII Entire Agreement 17
SCHEDULES
A Specifications 19
B Benefits 21
C Definitions 22
EXHIBITS
I Simplified-Issue Guidelines 24
II Reinsurance Premiums 25
III Retention, Binding and Issue Limits 27
17
ALL SCHEDULES AND EXHIBITS ATTACHED
WILL BE CONSIDERED PART OF THIS AGREEMENT
ARTICLE I
BASIS OF REINSURANCE
Reinsurance under this Agreement must be individual insurance as stated in
Schedule A. On our behalf, the insurance will be underwritten and administered
by [Name redacted] Insurance Company. You must automatically reinsure the life
insurance for the plans as stated in Schedule A and any additional benefits
listed in Schedule B or, at our option, we may apply to you facultatively.
1. REQUIREMENTS FOR AUTOMATIC REINSURANCE
A. The individual risk must be in a jurisdiction in which we are
duly licensed and/or authorized to do business.
B. Each fully underwritten risk must be underwritten according to
our standard underwriting practices and guidelines. Each
simplified-issue risk must be underwritten according to our
simplified underwriting guidelines of Exhibit I.
C. Any risk offered on a facultative basis by us to you or any other
company will not qualify for automatic reinsurance under this
Agreement on the same life unless:
(i) Reinsurance on the life was previously ceded on a
facultative basis because of binding or jumbo limit violations
and these limits have since been increased,
or,
(ii) The risk which required facultative submission has
changed significantly or has been eliminated altogether, so
that the individual insured qualifies for automatic
reinsurance based on our current underwriting guidelines; and
the original facultative cession has been in force for at
least two years.
D. The maximum issue age on any risk will be age 89.
E. The mortality rating on each fully underwritten risk must not
exceed Table 8, Table H, or 300%, or its equivalent, as shown in
our retention schedule, on a flat extra premium basis.
F. The maximum amount of insurance issued and applied for in all
companies on each risk must not exceed the jumbo limits as stated
in Schedule A.
G. On each individual life, we must retain the amounts of insurance
according to our published retention limits.
H. The maximum amount of insurance to be reinsured on a life must
not exceed the automatic binding limits as stated in Schedule A.
2. REQUIREMENTS FOR FACULTATIVE REINSURANCE
A. If the requirements for automatic reinsurance are met, but we
prefer to apply for facultative reinsurance with you, then we
must submit to you all the papers relating to the insurability of
the individual risk for facultative reinsurance.
B. If requirements for automatic reinsurance are not met and we
apply for facultative reinsurance with you, then we must submit
to you all the papers relating to the insurability of the
individual risk for facultative reinsurance.
3. APPLICATION FOR FACULTATIVE REINSURANCE
A. An application for facultative reinsurance will include life
insurance without disability waiver of premium.
B. Copies of all the papers relating to the insurability of the
individual risk must be sent to you for facultative reinsurance.
After you have examined the papers sent, you will promptly notify
us of your underwriting offer subject to additional requirements,
or your final underwriting offer. Your final underwriting offer
on the individual risk will automatically terminate the earlier
of the withdrawal of our application or one hundred and twenty
(120) days from the date of your final offer.
4. The initial minimum amount of life reinsurance on the individual risk must be
the amount stated in Schedule A.
5. If the subsequent amount of life reinsurance net amount at risk falls
below the amount stated in Schedule A on the individual risk, as of that
date, all of the life reinsurance on the risk must terminate.
6. In no event will you be liable for reinsurance unless the insurance
issued directly by us constituted the transacting of business in a
jurisdiction in which we are properly licensed or otherwise authorized
to do business.
ARTICLE II
LIABILITY
1. Your liability for automatic reinsurance will begin simultaneously with
our liability except for those risks which qualify for automatic
reinsurance, but we submit on a facultative basis.
2. Your liability for facultative reinsurance on the individual risk will
begin simultaneously with our liability provided all conditions of
facultative reinsurance have been met, including your accepting the risk
in writing.
3. Your liability for reinsurance on the individual risk will terminate
when our liability terminates.
ARTICLE III
NOTIFICATION OF REINSURANCE
For automatic and facultative reinsurance, we will notify you on the monthly
statement as described in Article VI.
ARTICLE IV
PLANS OF REINSURANCE
1. Life reinsurance will be on the basis as stated in Schedule B.
2. When requested, we must furnish you with a copy of each policy, rider,
rate book and cash value table which applies to the life insurance
reinsured.
ARTICLE V
REINSURANCE PREMIUMS
The life insurance premium on the net amount at risk will be determined from
Exhibit II. For reinsurance on a yearly renewable term basis, we anticipate that
the premium rates in Exhibit II will be continued indefinitely. However, if any
one or more of such premium rates for any policy year or years after the first
will be less than the net premium rate or rates based on the 1980 CSO Table (or
related smoker and non-smoker tables) at the interest rate specified in the
Standard Valuation Law for the applicable mortality rating, then, in that event,
only the latter rate or rates will be guaranteed.
ARTICLE VI
PREMIUM ACCOUNTING
l. Payment of Reinsurance Premiums.
A. The reinsurance premiums will be paid to you on the basis stated
in Exhibit II, and will be paid on an annual basis.
B. Each month, we will send you a statement of first year and
renewal reinsurance premiums which are due during the month, and
a listing of new business, changes and terminations.
C. If a net reinsurance premium balance is payable to you, we will
include with the statement the amount of the net balance.
D. If a net reinsurance premium balance is payable to us, you must
pay this balance within twenty five (25) days after we submit the
statement to you.
2. Termination Because of Non-Payment of Premium.
When reinsurance premiums are delinquent, you have the right to
terminate the reinsurance risks on the statement by giving us ninety
(90) days written notice. As of the close of this ninety (90) day
period, all of your liability will terminate for the risks described in
the preceding sentence.
Regardless of these terminations, we will continue to be liable to you
for all unpaid reinsurance premiums earned by you.
3. Reinstatement of a Delinquent Statement.
We may reinstate the terminated risks within sixty (60) days after the
effective date of termination by paying the unpaid reinsurance premiums
for the risks in force prior to the termination. The effective date of
reinstatement will be the date the required back premiums are received.
4. Currency.
The reinsurance premiums and benefits payable under this Agreement will
be payable in the lawful money of the United States.
5. We will send you a detailed listing of all reinsurance in force as of
the close of the calendar year involved for automatic reinsurance.
ARTICLE VII
CONFIDENTIAL INFORMATION
You will hold in trust for us and will not disclose or cause to be disclosed to
any non-party to this Agreement, any of our confidential information.
Confidential information is information which relates to our policyowner data,
experience information, including but not limited to mortality and/or lapse
information, risk selection guidelines, any and all information contained in our
current and future underwriting manuals, trade secrets, research, products and
business affairs, but does not include:
1) Information which is generally known or easily ascertainable by
non-parties of ordinary skill; and
2) Information acquired from non-parties who have no confidential
commitment to either you or us.
You will take all necessary and appropriate measures to ensure that your
employees and agents abide by the terms of this Article.
Notwithstanding the foregoing, we acknowledge that you may aggregate our data
with that of other companies reinsured by you on the condition that our data not
be identified by our corporate name, logo or any other means. We also
acknowledge that, upon request, you may make available any necessary data or
information to your auditors, or any governmental or administrative agencies in
the course of their examination of you.
ARTICLE VIII
OVERSIGHTS
If there is an unintentional oversight or misunderstanding in the administration
of this Agreement by either company, it can be corrected provided the correction
takes place promptly after the time the oversight or misunderstanding is first
discovered. Both companies will be restored to the position they would have
occupied had the oversight or misunderstanding not occurred.
ARTICLE IX
REDUCTIONS, TERMINATIONS AND CHANGES
1. If there is a contractual or non-contractual replacement or
change of the insurance reinsured under this Agreement where full
underwriting evidence according to our regular underwriting rules
is not required, the insurance will continue to be reinsured with
you provided it meets the initial minimum amount stated in
Schedule A.
2. If the insurance reinsured under this Agreement increases and;
A. The increase is subject to new underwriting evidence, the
provisions of Article I will apply to the increase in
reinsurance.
B. The increase is not subject to new underwriting evidence, as with
the Guaranteed Insurability Rider, you will accept automatically
the increase in reinsurance, but not to exceed our automatic
binding limit, as long as the increase resulted in accordance
with our established underwriting rules.
3. If the insurance reinsured under this Agreement is increased or reduced,
the reinsurance for the individual risk involved will be increased or
reduced proportionally by taking into account Article I, Sections 1.G. &
1.H., on the effective date of increase or reduction.
4. If any portion of the total insurance retained by us on an individual
life reduces or terminates, any reinsurance under this Agreement based
on the same life will also be reduced or terminated. We will reduce our
reinsurance by applying the retention limits which were in effect at the
time the policy was issued. We will not be required to retain an amount
in excess of our regular retention limit for the age, mortality rating
and risk classification at the time of issue for any policy on which
reinsurance is being reduced.
We must first reduce the reinsurance of the insurance which has the same
mortality rating as the terminated insurance. If further reduction is
required, the reinsurance to be terminated or reduced will be effected
in the inverse order in which the reinsurance was first reinsured.
5. If the insurance for a risk is shared by more than one pool of
reinsurers, the reduced reinsurance will be effected proportionally
within each pool, but in the inverse order by pool in which the
insurance was first reinsured.
6. If insurance reinsured under this Agreement is terminated, the
reinsurance for the individual risk involved will be terminated on the
effective date of termination.
7. On facultative reinsurance, if we wish to reduce the mortality rating,
this reduction will be subject to and reinsured under the facultative
provisions of this Agreement.
8. You will refund to us all unearned reinsurance premiums arising from
reductions, terminations and changes as described in this Article.
ARTICLE X
INCREASE IN RETENTION
1. If we should increase our retention limits, prompt written notice of the
increase must be given to you.
2. We will have the option of recapturing the reinsurance under this
Agreement when our retention limit increases. We may exercise our option
to recapture by giving written notice to you within ninety (90) days
after the effective date of the increase.
3. If we exercise our option to recapture, then;
A. We must reduce the reinsurance on each individual life on which
we retained our maximum retention limit for the age and mortality
rating that was in effect at the time the reinsurance was ceded
to you.
B. No recapture will be made to reinsurance on an individual life if
(a) we retained a special retention limit less than our maximum
retention limit for the age and mortality rating in effect at the
time the reinsurance was ceded to you, or if (b) we did not
retain insurance on the life.
C. We must increase our total amount of insurance on the individual
life up to our new retention limit by reducing the reinsurance.
If an individual life is shared by more than one reinsurer, your
percentage of the reduced reinsurance will be the same percentage
as your initial reinsurance on the individual risk.
D. The reduction of reinsurance will become effective on the later
of the following dates:
(1) The policy anniversary date immediately following the
effective date of our increase in retention limits.
(2) The number of years stated in Schedule A starting with
the 'policy date' for the risk involved.
ARTICLE XI
REINSTATEMENT
If an insurance policy lapses for nonpayment of premium and is reinstated under
our terms and rules, the reinsurance will be reinstated by you as follows:
Automatic Cases:
We must pay you all back reinsurance premiums in the same manner as we
received insurance premiums under our policy. When reinstated by us, the
policy will automatically be reinstated by you.
Facultative Cases:
Reinstatement evidence will be submitted to you for your approval.
Reinstatement approval is required before we reinstate the policy with
you. Upon your approval, we must pay you all back reinsurance premiums
in the same manner as we received insurance premiums under our policy.
ARTICLE XII
EXPENSES
We must pay the expense of all medical examinations, inspection fees and other
charges in connection with the issuance of the insurance.
ARTICLE XIII
CLAIMS
1. When we are advised of a claim, we must promptly notify you.
2. If a claim is made under insurance reinsured under this Agreement, you
will abide the issue as it is settled by us. We will request payment of
the reinsurance proceeds on an incurred basis. Upon request, we will
deliver a copy of the proof of death and the claimant's statement to
you.
3. Payment of reinsurance proceeds will be made in a single sum regardless
of our mode of settlement.
4. We must promptly notify you of our intent to contest insurance reinsured
under this Agreement, or to assert defenses to a claim for such
insurance. If our contest of such insurance results in the reduction of
our liability, you will share in this reduction. Your percentage of the
reduction will be your net amount of risk on the individual life as it
relates to our total net amount at risk on the date of the death of the
insured.
If you should decline to participate in the contest or assertion of
defenses, you will then release all of your liability by paying us the
full amount of reinsurance and not sharing in any subsequent reduction
in liability.
5. If the amount of insurance provided by the policy or policies reinsured
under this Agreement is increased or reduced because of a misstatement
of age or sex established after the death of the insured, you will share
with us in this increase or reduction. Your share of this increase or
reduction will be the percentage that your net liability relates to our
total net liability and that of other reinsurers immediately prior to
this increase or reduction. In the case of reinsurance on the yearly
renewable term basis, your reinsurance will be calculated from the
inception date of the policy on the adjusted amounts using the premiums
and reserves applicable to the correct age or sex. Any adjustment in
reinsurance premiums will be made without interest.
6. We must pay the routine expenses incurred in connection with settling
claims. These expenses may include compensation of agents and employees
and the cost of routine investigations.
7. You will share with us all expenses that are not routine. Expenses that
are not routine are those directly incurred in connection with the
contest or the possibility of a contest of insurance or the assertion of
defenses. These expenses will be shared in proportion to the net amount
at risk for both of us. However, if you have released your liability
under Section 4. of this Article, you will not share in any expenses
incurred after your date of release.
ARTICLE XIV
EXTRA-CONTRACTUAL DAMAGES
1. In no event, will you have any liability for any extra-contractual
damages which are awarded against us as a result of acts, omissions or
course of conduct committed by us in connection with the insurance
reinsured under this Agreement.
2. You do recognize that circumstances may arise under which you, in
equity, should share, to the extent permitted by law, in paying certain
assessed damages. Such circumstances are difficult to define in advance,
but involve those situations in which you were an active party in the
act, omission or course of conduct which ultimately results in the
assessment of such damages. The extent of such sharing is dependent on
good faith assessment of culpability in each case, but all factors being
equal, the division of any such assessment would be in the proportion of
total risk accepted by each party for the plan of insurance involved.
ARTICLE XV
INSPECTION OF RECORDS
You will have the right, at any reasonable time, to inspect our books and
documents which relate to reinsurance under this Agreement.
ARTICLE XVI
INSOLVENCY
1. If we become insolvent, all of the reinsurance due us will be paid in
full directly to our liquidator, receiver, or statutory successor
immediately upon demand without decrease.
2. If we become insolvent, the liquidator will give you written notice of a
pending claim against us for insurance reinsured under this Agreement
within a reasonable time after the claim is filed in the insolvency
proceeding. During the insolvency proceedings where the claim is to be
settled, you may investigate this pending claim and mediate in our or
our liquidator's name, but at your own expense, with any defense or
defenses which you may believe available to us or our liquidator.
3. The expenses incurred by you will be chargeable, subject to court
approval, against us as part of the expense of liquidation. The benefit
which we may accumulate solely as a result of the defense undertaken by
you will be shared proportionately. Where two or more reinsurers are
involved in the same claim, and a majority in interest elect to mediate
a defense or defenses to this claim, the expense will be shared as
though such expense had been incurred by us.
ARTICLE XVII
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 will be officers of life insurance or
life reinsurance companies other than the contracting companies or their
affiliates. Each of the contracting companies will appoint one of the
arbitrators and these two arbitrators will select the third. 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, each Arbitrator will nominate three candidates within
ten days thereafter, two of whom the other will decline, and the decision
will be made by drawing lots.
3. With regard to Section 2. of this Article, arbitration must be conducted
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association which will be in effect on the date of delivery
of demand for arbitration.
4. Each contracting company must pay part of the arbitration expenses as
allocated by the arbitrators.
5. The award agreed by the arbitrators will be final, and judgment may be
entered upon it in any court having jurisdiction.
ARTICLE XVIII
SPECIAL TERMINATION
[Text Redacted]
ARTICLE XIX
DEFERRED ACQUISITION COST TAX
Both companies agree that, with respect to Section 1.848-2(g)(8) of the Income
Tax Regulations issued December 29, 1992 under Section 848 of the Internal
Revenue Code of 1986, as amended:
1. The term "party" will refer to either you or us, as appropriate;
2. The term "net consideration" will refer to either net consideration as
defined in Regulation Section 1.848-2(f) or gross amount of premiums and
other consideration as defined in Regulation Section 1.848-3(b), as
appropriate;
3. Both companies will attach a schedule to their federal income tax return
which identifies the relevant reinsurance agreements for which the joint
election under the Regulation has been made. The joint election will be
effective for the year that this Agreement was entered into, and for all
subsequent years that this Agreement remains in effect.
4. The company with positive net consideration for this Agreement for each
taxable year will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1);
5. Both companies agree to exchange information pertaining to the amount of
net consideration under this Agreement each year to ensure consistency,
or as may otherwise be required by the Internal Revenue Service;
6. By June 1 of each tax year, the company that administers the business
under this Agreement (the "submitting company") will submit to the other
company its calculation of the net consideration for the preceding
calendar year. This calculation will be accompanied by a statement
signed by an officer of the submitting company declaring that the
company will report such net consideration in its tax return for the
previous calendar year;
7. Within thirty (30) days of receipt of the submitting company's
calculation, the other company may contest that calculation by providing
the submitting company with a written alternative calculation. If the
other company does not provide the submitting company with a written
alternative calculation, then the other company will report in its tax
return for the previous year the net consideration as determined by the
submitting company.
8. If the other company contests the calculation provided by the submitting
company, both companies will act in good faith to reach an agreement on
the correct net consideration within thirty (30) days of the date that
the other company provides its alternative calculation. If both
companies reach an agreement on a net consideration amount, each company
will report such amount in their respective tax returns for the previous
calendar year.
ARTICLE XX
SEVERABILITY CLAUSE
If any provision of this Agreement is declared or found to be illegal,
unenforceable or void by any administrative agency, regulatory body, or court of
competent jurisdiction, such finding shall not affect the remaining provisions
of this Agreement, and all other provisions hereof shall remain in full force
and effect.
ARTICLE XXI
PARTIES TO AGREEMENT
This is an Agreement solely between you and us. There will be no legal
relationship between you and any person having an interest of any kind in any of
our insurance.
ARTICLE XXII
DURATION OF AGREEMENT
1. Except as provided under Article XVIII, this Agreement may be terminated
by either company giving thirty (30) days written notice of termination.
The day the notice is deposited in the mail addressed to the Home
Office, or to an Officer of either company will be the first day of the
thirty (30) day period.
2. During the thirty (30) day period, this Agreement will continue to be in
force.
3. After termination, we are both liable for all automatic reinsurance
which becomes effective prior to termination of this Agreement and also
for all facultative reinsurance approved by you based upon applications
you receive prior to termination of this Agreement.
ARTICLE XXIII
ENTIRE AGREEMENT
This Agreement, including any amendments and addenda, forms our entire agreement
with you in connection with the reinsurance provided under this Agreement, and
there are no understandings between the companies other than as expressed in
this Agreement.
Any change or modification to this Agreement will be null and void unless made
by amendment to this Agreement and signed by both companies.
EXECUTION
Executed in duplicate by Executed in duplicate by
XYZ COMPANY TRANSAMERICA OCCIDENTAL
LIFE INSURANCE COMPANY
at City, State at Los Angeles, California
on ________________________, Year. on ________________________, Year.
By _____________________________ By _____________________________
Title: Vice President
By _____________________________ By _____________________________
Title: Vice President
REINSURANCE
AGREEMENT
No. abc
Between
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
of
Los Angeles, California
and
[Name Redacted]
of
[City, State]
TABLE OF CONTENTS
Section Page
A. REINSURANCE COVERAGE 1
B. PAYMENTS BY CEDING COMPANY 2
C. PAYMENTS BY REINSURER 2
D. REPORTS AND ACCOUNTING FOR REINSURANCE 4
E. TERMS OF REINSURANCE 5
F. MATERIAL CHANGES 6
G. CONFIDENTIAL INFORMATION 6
H. CLAIMS 7
I. RECAPTURE 7
J. EXTRA-CONTRACTUAL DAMAGES 8
K. ARBITRATION 8
L. INSOLVENCY β
β. βββββββββββββββ ββ
β. βββββββββββ 11
O. PAYMENTS AND ACCOUNTING UPON 12
TERMINATION OF AGREEMENT
P. OFFSET 13
Q. MISCELLANEOUS 13
Q.1 Interpretation of Terms
Q.2 Errors and Omissions
Q.3 Inspection of Records
Q.4 Continuation
Q.5 Conversions and Replacements
Q.6 Assignment of Rights
Q.7 Entire Agreement
Q.8 Modification of Agreement
Q.9 Severability
Q.10 Approvals and Consent
Q.11 Notices
R. EXECUTION 15 DEFINITION OF TERMS 16
TABLE OF CONTENTS (Continued)
Page
SCHEDULE I 19
QUOTA SHARE AND POLICIES SUBJECT
TO REINSURANCE
SCHEDULE II, PART A 20
SUMMARY OF MONETARY TRANSACTIONS
SCHEDULE II, PART B 22
SETTLEMENT CALCULATION
SCHEDULE III 23
ANNUAL & MONTHLY REPORTS
SCHEDULE IV 24
ALLOWANCES
SCHEDULE V 25
INVESTMENT INCOME ON RESERVES
18
M O D I F I E D C O I N S U R A N C E A G R E E M E N T
between
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY of
Los Angeles California
referred to as the "CEDING COMPANY", "Reinsured", "We", "Us", "Our"
and
[name redacted]
of
[City, State]
referred to as the "REINSURER", "You", "Your"
SECTION A
REINSURANCE COVERAGE
1. We (the CEDING COMPANY) shall cede, and you (the REINSURER) shall accept,
reinsurance of a Quota Share of the Policies on a modified coinsurance
basis.
2. Your liability shall begin simultaneously with ours, but in no event prior
to the Effective Date.
3. The Effective Date of this Agreement is [Month Day, Year].
4. Reinsurance of a Policy shall be maintained in force without reduction so
long as our liability under such Policy remains in force without reduction,
unless reinsurance is terminated or reduced as provided herein.
5. In no event shall reinsurance be in force under this Agreement for a Policy
unless the Policy was issued in a jurisdiction in which we are duly
licensed and/or authorized to do business.
SECTION B
PAYMENTS BY CEDING COMPANY
For each Accounting Period we shall make the following payments to you:
1. The ongoing reinsurance premiums equal to the Quota Share of the premiums
paid on the Policies.
2. The Quota Share of the positive net transfers from the separate accounts to
the fixed account.
3. The Quota Share of [xx]% of the average separate account fund balances,
collected by us as an investment fee.
4. The REINSURER and the CEDING COMPANY shall agree upon the Prescribed Cost
of Insurance Rates as defined in the Definition of Terms twenty (20) days
prior to their effective date. We will thereafter charge such rates to the
Policies as each Policy reaches its next Policy monthiversary. If we
decrease the cost of insurance charges at any time in a manner which is not
as agreed upon, for each Accounting Period we shall pay you an amount equal
to the Quota Share of the excess of (a) the cost of insurance charges which
would have been charged by us if the Prescribed Cost of Insurance Rates had
been charged during the Accounting Period over (b) the cost of insurance
charges actually charged by us during such Accounting Period.
5. The Quota Share of the absolute value of the General Account Mean Reserve
Adjustment, as described in Section C paragraph 4 below, if the Mean
Reserve Adjustment is negative.
SECTION C
PAYMENTS BY REINSURER
For each Accounting Period you shall make the following payments to us:
1. The Quota Share of the following amounts incurred by the CEDING COMPANY:
(a) death benefits (b) maturities
(c) cash surrender values and withdrawals
(d) miscellaneous interest payments to policyholders on amounts owed to
them or held on deposit for them (e) accelerated death benefits
2. The Quota Share of the positive net transfers from the fixed account to the
separate accounts.
3. The Quota Share of the following allowances incurred during the Accounting
Period pursuant to Schedule IV:
(a) issue cost (b) maintenance cost (c) agents compensation (d) premium
taxes (e) Unusual Expenses (f) DAC tax
4. The Quota Share of the General Account Mean Reserve Adjustment, if it is
positive. The Mean Reserve Adjustment shall equal (a) less (b) less (c),
where:
(a) is the total amount of Modified Coinsurance Reserves held in the
General Account on the Last Day of the Current Accounting Period,
(b) is the total amount of Modified Coinsurance Reserves held in the
General Account on the Last Day of the Preceding Accounting
Period, and
(c) is one Accounting Period's Investment Income on Reserves, as
defined in Schedule V.
Notwithstanding the above, for the Terminal Accounting Period, (a) shall
equal the Modified Coinsurance Reserve held in the General Account
immediately prior to termination.
5. Reimbursement for our loss of investment return on the Risk Based Capital
which we must retain relative to your Quota Share of the assets supporting
the reserves. This loss shall be calculated monthly, based upon values on
the Last Day of the Accounting Period which ends the current month. This
loss of investment return shall equal (a) plus (b), where:
(a) is 1/12 of 0.09 times ([yy]% of Total Separate Account surrender
charges at the end of the month, plus [zz]% of Total General
Account Reserve at the end of the month,), and
(b) is 1/12 of 0.09 times ([kk]% of Policy premiums collected year to
date).
SECTION D
REPORTS AND ACCOUNTING FOR REINSURANCE
1. You will perform the necessary Policy, claim and reinsurance
administration functions and will provide us with the information
necessary for monetary settlements between our companies and for our
financial reporting and management of the Policies. This information
includes the following:
o A summary of all monetary transactions under this Agreement utilizing
a written report within ten (10) days following the end of each month.
The report shall be formatted as set forth in Schedule II, parts A and
B. Any net amounts due from you shall be payable by you when
submitting the reports to us. Subject to your receipt of Unusual
Expense data from us, if applicable, within five (5) days following
the end of the month, payments not received by us within ten (10) days
of receipt of the reports shall be subject to interest charges for the
late period at an annual rate of [nn]%. If the reports show a net
amount due from us, the net amount shall be due and payable by us
within ten (10) days of our receipt of such reports. Payments made
after that time frame shall be subject to interest charges for the
late period at an annual interest rate of [nn]%. If we do not transmit
the Unusual Expense data within five (5) days following the end of the
month, the ten day deadline shall be extended by as many working days
as the Unusual Expense data was overdue.
o Reports which we may need to prepare our tax, statutory and GAAP
financial statements, including but not limited to information
described in Schedules II and III. The annual information shall be
submitted at the end of each calendar year within twenty (20) days
following the end of the calendar year, and the monthly
information shall be submitted at the end of each calendar month
within ten (10) days following the end of the calendar month.
2. Each party shall provide the other with a copy of their most recent
financial reports prepared in accordance with GAAP and their most
recent statutory statement as soon as they are available.
3. If either party becomes aware that the summary of monetary transactions
for an Accounting Period as required in this section did not accurately
reflect the actual experience of the Policies during the Accounting
Period, you shall promptly submit a revised summary to us. Any amount
shown by the revised summary as owned by either you or us to the other
shall be paid promptly.
4. We may change Schedules II and III in order to obtain the data we
reasonably need to properly administer this Agreement or to prepare our
financial statements. Such schedule changes shall become effective only
upon thirty (30) days prior written notice to you.
SECTION E
TERMS OF REINSURANCE
1. All monetary amounts expressed in this Agreement are expressed in United
States dollars and all amounts payable pursuant to this Agreement are
payable in United States dollars.
2. This is an Agreement for indemnity reinsurance solely between the CEDING
COMPANY and the REINSURER. The acceptance of reinsurance hereunder shall
not create any right or legal relation whatever between the REINSURER and
any party other than the CEDING COMPANY.
3. You shall not participate in our capital gains and losses.
4. If a Policy lapses for nonpayment of premium or other reason and is
reinstated under our terms and rules, the reinsurance will be reinstated by
you. We shall pay you the Quota Share of the reinstatement premiums paid
under the Policy.
5. Both parties agree to the DAC Tax Election pursuant to Section
1.848-2(g)(8) of the Income Tax Regulation under Section 848 of the
Internal Revenue code of 1986, as amended, whereby:
(a) the party with the net positive consideration for this Agreement for
each taxable year will capitalize specified policy acquisition expenses
with respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1); and
(b) both parties agree to exchange information pertaining to the amount of
net consideration under this Agreement each year to ensure consistency.
The term "net consideration" will refer to either net consideration as defined
in Regulation Section 1.848-2(f) or gross amount of premiums and other
consideration as defined in Regulation Section 1.848-3(b), as appropriate.
This DAC Tax Election shall be effective for all years for which this Agreement
remains in effect.
The CEDING COMPANY and the REINSURER represent and warrant that they are
subject to U.S. taxation under either the provisions of subchapter L of
Chapter 1 or the provisions of subpart F of subchapter N of Chapter 1 of
the Internal Revenue Code of 1986, as amended.
SECTION F
MATERIAL CHANGES
1. We shall promptly notify you of any proposed Material Change in the terms
of the Policies.
2. Following a Material Change, you may at your sole discretion (a) continue
to reinsure the Policies under current terms, (b) require that the payments
by either you or us for the Accounting Period during which the Material
Change occurred be adjusted to compensate for the Material Change, (c)
retroactively adjust your Quota Share of the Policies to compensate for the
Material Change, or (d) implement any combination of (a) through (c).
SECTION G
CONFIDENTIAL INFORMATION
1) You will hold in trust for us and will not disclose or cause to be
disclosed to any non-party to this Agreement, any of our confidential
information. Confidential information is information which relates to our
policyowner data, experience information, including but not limited to
mortality and/or lapse information, risk selection guidelines, any and all
information contained in our current and future underwriting manuals, trade
secrets, research, products and business affairs, but does not include:
a. Information which is generally known or easily ascertainable by
non-parties of ordinary skill; and b. Information acquired from non-parties
who have no confidential commitment to either you or us.
2) You will take all necessary and appropriate measures to ensure that your
employees and agents abide by the terms of this Article.
3) Notwithstanding the foregoing, we acknowledge that you may aggregate our
data with that of other companies reinsured by you on the condition that
our data not be identified by our corporate name, logo or any other means.
We also acknowledge that, upon request, you may make available any
necessary data or information to your auditors, or any governmental or
administrative agencies in the course of their examination of you.
SECTION H
CLAIMS
1. Your Quota Share of claims shall be made in a single sum regardless of our
mode of settlement.
2. We must promptly notify you of our intent to contest insurance reinsured
under this Agreement, or to assert defenses to a claim for such insurance.
If you agree to participate in the costs of the contest or assertion of
defenses at your Quota Share, then the cost or benefit of any change in the
liability which results will be shared by you at your Quota Share.
3. If you should decline to participate in the contest or assertion of
defenses, you will then be released by us from all of your liability by
paying us the full amount of reinsurance and not sharing in any subsequent
reduction in liability.
4. If the amount of insurance provided by the Policies reinsured under this
Agreement is increased or reduced because of a misstatement of age or sex
established after the death of the insured, you will share with us in this
increase or reduction at the Quota Share rate.
SECTION I
RECAPTURE
1) We may recapture the Quota Share reinsurance from you in return for a
payment to be made to you.
2) The recapture payment will be equal to the present value of future
projected distributable surplus increments, where the present value is
based on the discount rate applicable at the time of original issue in our
pricing analysis, and other assumptions as agreed to by both parties or an
independent consulting actuary retained at that time by both parties.
SECTION J
EXTRA-CONTRACTUAL DAMAGES
1. In no event, will you have any liability for any extra-contractual damages
which are awarded against us as a result of acts, omissions or course of
conduct committed by us in connection with the insurance reinsured under
this Agreement.
2. You do recognize that circumstances may arise under which you, in equity,
should share, to the extent permitted by law, in paying certain assessed
damages. Such circumstances are difficult to define in advance, but involve
those situations in which you were an active party in the act, omission or
course of conduct which ultimately results in the assessment of such
damages. The extent of such sharing is dependent on good faith assessment
of culpability in each case, but all factors being equal, the division of
any such assessment would be in the proportion of total risk accepted by
each party for the plan of insurance involved.
SECTION K
ARBITRATION
1. All disputes and differences between the CEDING COMPANY and the REINSURER
with respect to this Agreement will be decided by arbitration, regardless
of the insolvency of either party, unless the conservator, receiver,
liquidator, or statutory successor is specifically exempted from an
arbitration proceeding by applicable state law.
2. Either party may initiate arbitration by providing written notification to
the other party. Such written notice shall set forth a brief statement of
the issue(s), the failure of the parties to reach agreement, and the date
of the demand for arbitration.
3. An arbitration panel shall be chosen consisting of three arbitrators. The
arbitrators must be impartial and must be or must have been officers of
life insurance or life reinsurance companies other than the parties or
their affiliates. Each party shall select an arbitrator within thirty days
from the date of the demand. If either party shall refuse or fail to
appoint an arbitrator within the time allowed, the party that has appointed
an arbitrator may notify the other party that, if it has not appointed its
arbitrator within the following ten days, the arbitrator will appoint an
arbitrator on its behalf. The two arbitrators shall select a third
arbitrator within thirty days of the appointment of the second arbitrator.
If the two arbitrators fail to agree on the selection of the third
arbitrator within the time allowed, either party may ask [Text Redacted] to
appoint the third arbitrator. However, if [Text Redacted] is unable to
appoint an arbitrator who is impartial and who is or was an officer of a
life insurance company other than the parties or their affiliates, then
either party may ask a court to appoint the third arbitrator pursuant to
the Uniform Arbitration Act or any similar statute empowering the court to
appoint an arbitrator.
4. The arbitration panel shall interpret this Agreement as an honorable
engagement rather than merely a legal obligation, and shall consider
practical business and equitable principles as well as industry custom and
practice regarding the applicable insurance and reinsurance business. The
panel is released from judicial formalities and shall not be bound by
strict rules of procedure and evidence.
5. The arbitration panel shall determine all arbitration schedules and
procedural rules. Organizational and other meetings shall be held in [City,
State], unless the panel shall select another location. The panel shall
decide all matters by majority vote. (If no two panel members reach the
same decision, then the average of the two closest mathematical
determinations will constitute the panel's decision.)
6. Decisions of the arbitration panel shall be final and binding on both
parties. The panel may, at its discretion, award costs and expenses it
deems appropriate, including but not limited to attorneys' fees and
interest. Judgment may be entered upon the final decision of the panel in
any court of competent jurisdiction. The panel may not award exemplary or
punitive damages. Unless the panel decides otherwise, the parties will be
separately responsible for paying all fees and expenses charged by its
respective counsel, accountants, actuaries, and other representatives in
connection with the arbitration, and the parties shall bear equally the
fees and expenses of the arbitrators and any ancillary expenses associated
with a hearing (e.g., any rental fee for use of the hearing room, etc.).
SECTION L
INSOLVENCY
1. For the purpose of this Agreement, either party shall be deemed "insolvent"
when it:
a) applies for or consents to the appointment of a rehabilitator,
conservator, liquidator, or statutory successor of its properties or
assets; or
b) makes an assignment for the benefit of its creditors; or c) is
adjudicated as bankrupt or insolvent; or
d) files or consents to the filing of a petition in bankruptcy, seeks
reorganization or an arrangement with creditors or takes advantage of
any bankruptcy, dissolution liquidation, or similar law or statute; or
e) becomes the subject of an order to rehabilitate or an order to
liquidate as defined by the insurance code of the jurisdiction of the
domicile of the CEDING COMPANY or the REINSURER, as the case may be.
2. In the event of the insolvency of either party, any amounts owed by us to
you and by you to us with respect to this Agreement shall be set-off and
only the balance shall be paid.
3. If we become insolvent, you shall be liable only for the amounts reinsured
and shall not be or become liable for any amounts or reserves to be held by
us on Policies reinsured under this Agreement.
4. Your Quota Share of a claim or other benefit to the policyholder, when such
Quota Share is ascertained, shall be payable upon demand by us, at the same
time as we shall pay our net retained portion of such an obligation, with
reasonable provision for verification before payment. The reinsurance shall
be payable by you on the basis of our liability under the Policies without
diminution because of our insolvency.
5. In the event of insolvency and the appointment of a conservator, liquidator
or statutory successor of the CEDING COMPANY, such portion shall be payable
to such conservator, liquidator or statutory successor immediately upon
demand, with reasonable provisions for verification, on the basis of claims
allowed against us by any court of competent jurisdiction or by any
conservator, liquidator or statutory successor of the CEDING COMPANY having
authority to allow such claims, without diminution because of such
insolvency or because such conservator, liquidator or statutory successor
has failed to pay all or a portion of any claims.
6. Our conservator, liquidator, or statutory successor shall give you written
notice of the pendency of a claim against us indicating the Policy, within
a reasonable time after such claim is filed. You may interpose, at your own
expense, in the proceeding where such claim is to be adjudicated, any
defense or defenses which you may deem available to us, or our conservator,
liquidator or statutory successor.
7. Any expense incurred by you pursuant to Section L paragraph 2, above, shall
be payable subject to court approval out of our estate as part of the
expense of conservation or liquidation to the extent of the benefit which
may accrue to us in conservation or liquidation, solely as a result of the
defense undertaken by you. Where two or more reinsurers are participating
in the same claim and a majority in interest elect to interpose defense to
such claim, the expense shall be apportioned in accordance with the terms
of this Agreement as though such expense had been incurred by us.
SECTION M
REPRESENTATIONS
1. The CEDING COMPANY and the REINSURER each acknowledges its responsibility for
independently forming its own conclusions regarding:
(a) the compliance of this Agreement with the laws and regulations of any
particular state or jurisdiction;
(b) the statutory or other accounting impact of this Agreement on the
CEDING COMPANY'S and the REINSURER'S financial statements; and
(c) the tax impact of this Agreement on either party.
2. Unless otherwise explicitly provided for herein, the CEDING COMPANY and the
REINSURER shall each be solely responsible for determining and discharging
any state or federal income tax liability resulting from this Agreement,
including any tax liability resulting from the initial monetary
transactions.
SECTION N
TERMINATION
1. Except as otherwise provided in this section, this Agreement shall be
unlimited in duration.
2. Upon 90 days' notice, either party may terminate this Agreement with
respect to new business not yet issued at the end of the 90 day
notification period.
3. If no new Policies are being issued under this Agreement, either because
they are no longer being offered for sale or this Agreement has been
terminated with respect to new business, and no Policies are in force under
this Agreement as of the end of any Accounting Period, then this Agreement
will automatically terminate.
4. The termination of this Agreement or of any reinsurance hereunder shall not
affect any rights or obligations of either party applicable to the period
prior to the effective date of termination.
5. [Text Redacted]
SECTION O
PAYMENTS AND ACCOUNTING UPON TERMINATION OF AGREEMENT
1. If this Agreement is terminated, you shall summarize all monetary
transactions for the Terminal Accounting Period and report its summary to
us within forty (40) days of the later of the effective date of termination
or of notice of termination. The report shall be in the form of Schedule
II, Parts A and B.
2. Following the summarization of all monetary transactions for the Terminal
Accounting Period, neither the CEDING COMPANY nor the REINSURER shall owe
the other any additional payment or amount pursuant to this Agreement.
3. You shall provide us with information we may need to prepare our tax,
statutory and GAAP financial statements for the Terminal Accounting Period
as required by Section D.
4. If you ever become aware that your summary of monetary transactions for the
Terminal Accounting Period as required in this section did not accurately
reflect the actual experience of the Policies during the Terminal
Accounting Period, you shall promptly submit a revised summary to us, and
the terminal payment shall be recalculated. Any amount shown by the revised
summary as owed by either us or you to the other shall be paid promptly.
SECTION P
OFFSET
Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favor of or against either us
or you with respect to this Agreement or any other agreement between you and us
are deemed to be mutual debts and credits and shall be set off and only the
balance shall be allowed or paid.
SECTION Q
MISCELLANEOUS
1. Certain terms used in this Agreement are defined in the Definitions of
Terms schedule and are to be interpreted in accordance with such
definitions. In the absence of a specific definition, a term used in this
Agreement is to be interpreted in accordance with customary insurance and
reinsurance industry practices.
2. Any Error made by either us or you in the administration of reinsurance
under this Agreement shall be corrected by the submission of revised
reports and restoring both us and you to the positions each of us would
have occupied had no Error occurred, including appropriate interest.
3. Each party shall have the right at any reasonable time during normal
business hours to inspect, at the office of the other party, all books and
documents relating to reinsurance under this Agreement.
4. Any Policy continued into Continuation Policies issued by us, our successor
or any of our affiliates shall automatically be reinsured by you according
to the reinsurance method under which new issues of the continued Policy is
reinsured unless you, in your sole discretion, choose not to reinsure such
Policies. We will pay you the highest net reinsurance premium rates of the
members of the reinsurance pool covering new issues of the continued
Policy.
5. Policies which are issued as the result of a conversion or exchange of a
Term, Whole Life, Universal Life or any other policy issued by CEDING
COMPANY are excluded from reinsurance coverage under this Agreement.
6. Neither we nor you may assign any of the rights and obligations under this
Agreement, nor may either party sell, assumption reinsure or transfer the
Policies without the prior written consent of the other party. Consent will
not be withheld if the assignment, sale, assumption reinsurance or transfer
does not have a material effect on the risks transferred or the expected
economic results to the party requested to consent. This provision shall
not prohibit you from reinsuring the Policies on an indemnity basis.
7. This Agreement represents the entire agreement between the CEDING COMPANY
and the REINSURER and supersedes, with respect to its subject matter, any
prior oral or written agreements between the parties. Any amendments to
this Agreement shall be set forth in writing and signed by all required
parties.
8. No modification or waiver of any provision of this Agreement shall be
effective unless set forth in a written amendment to this Agreement which
is executed by both parties. A waiver shall constitute a waiver only with
respect to the particular circumstance for which it is given and not a
waiver of any future circumstance.
9. If any provision of this Agreement is declared or found to be illegal,
unenforceable or void by any administrative agency, regulatory body, or
court of competent jurisdiction, such finding shall not affect the
remaining provisions of this Agreement, and all other provisions hereof
shall remain in full force and effect.
10. In any instance where agreement, approval, acceptance or consent of any
party is required by any provision of this Agreement, such action shall not
be unreasonably delayed or withheld.
11. Notices with respect to this Agreement shall be sent by Express Mail to
For REINSURER
[Name], Vice President
[Name and address redacted]
For CEDING COMPANY
General Counsel
Transamerica Occidental Life Insurance Co
ββββ β. βββββ ββ.
βββ βββββββ, ββ βββββ
With a copy to
[Name, company, and address redacted]
SECTION R
EXECUTION
IN WITNESS WHEREOF,
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
of
Los Angeles, California,
and
[Name redacted]
of
City, State
have by their respective officers executed this Agreement in duplicate on the
dates shown below.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
Signed at Los Angeles, California
By ___________________________ By ___________________________
Title: Second Vice President Title: Vice President
Date: _________________________ Date: _________________________
[Name Redacted]
Signed at [City, State]
By ______________________________
Title: Vice President
Date
--------------------------------------
DEFINITION OF TERMS
[Text redacted]
Accounting Period - for the month in which this Agreement becomes effective, the
period beginning on the Effective Date and ending on the last day of the current
month. Thereafter, the period beginning on the day following the last day of the
preceding month and ending on the last day of the current month.
Agreement - this document and all schedules and amendments to it.
Benefits - the death benefits and other insurance benefits provided by us
pursuant to the Policies.
Continuation Policy - a new Policy changing or replacing a Policy made or issued
both (1) not in compliance with the terms of the Policy and (2) without the same
new underwriting information that we would obtain in the absence of the Policy,
without a suicide exclusion period or contestable period as long as those
contained in new issues of the CEDING COMPANY, or without the payment of the
same commissions in the first year that we would have paid in the absence of the
Policy. For purposes of Section F, "MATERIAL CHANGES," a creation of a
continuation policy shall constitute a material change.
Effective Date - the date set forth in Section A, paragraph 3.
Error - any isolated, inadvertent deviation from the terms of this Agreement
resulting from the act or omission of an employee of either the CEDING COMPANY
or the REINSURER whose principal function is administrative in nature.
Execution Date - the date this Agreement is signed by the last of the parties to
sign it.
Investment Income on Reserves - the interest on modified coinsurance reserves
set forth in Schedule V.
Material Change - a change that a prudent insurance executive would consider as
likely to have a material impact on the REINSURER'S experience under this
Agreement.
Monthiversary - the period one calendar month following the same date of the
previous calendar month.
Net Transfers to the Separate Accounts - the net amount of all monies and
accruals flowing to the Separate Accounts from the General Account less monies
and accruals flowing from the Separate Account to the General Account, if
positive. If this amount is negative, then there is a Net Transfer from the
Separate Accounts.
Policy(ies) - the insurance policy(ies) identified in Schedule I which are
reinsured pursuant to this Agreement.
Possible Separate Account Surrender Charges - the charges which make up the
difference between the Separate Account value and the cash value of the Separate
Accounts (e.g., the charges that would be assessed if all funds in Separate
Accounts were lapsed).
Prescribed Cost of Insurance Rates - the scale of current cost of insurance
rates in effect when a Policy is issued or such different rates as mutually
agreed to by the REINSURER and the CEDING COMPANY, subject to the terms and
conditions of the Policy and any regulation or law.
Quota Share - the percentage of the Policies set forth in Schedule I which is
ceded by the CEDING COMPANY to the REINSURER pursuant to this Agreement.
Reserve Change - the increase in the Reserves from the Last Day Of The Preceding
Accounting Period to the Last Day Of The Current Accounting Period. This will be
a negative number if the change was a decrease.
Reserves - shall equal our statutory reserve liability, including any excess
interest or deficiency reserves, calculated on the basis used by us in compiling
its statutory financial statement as required by the laws of its state of
domicile.
Risk Based Capital - this refers to the amount of capital that a "well
capitalized" company would have according to the formula used by the National
Association of Insurance Commissioners.
Terminal Accounting Period - the period commencing on the day following the Last
Day Of The Preceding Accounting Period and ending on the effective date of
termination pursuant to any notice of termination given under this Agreement or
such other date as shall be mutually agreed to in writing.
Unusual Expenses - when you have agreed to participate in the costs of the
contest of, or assertion of defenses against a claim, these are the non-routine
charges incurred by us in defending or investigating such a claim for
policyholder benefits or in rescinding a Policy. The Unusual Expenses include
penalties, attorney's fees, and interest imposed automatically by statute
against us and arising solely out of a judgment rendered against us in a suit
for policyholder benefits, provided that the following categories of expenses or
liabilities shall not be considered "Unusual Expenses:"
(a) routine investigative or administrative expenses;
(b) expenses incurred in connection with a dispute or contest arising out
of conflicting claims of entitlement to policyholder benefits which we
admit are payable;
(c) expenses, fees, settlements, or judgments arising out of or in
connection with claims against us for punitive or exemplary damages;
and
(d) expenses, fees, settlements, or judgments arising out of or in
connection with claims made against us and based on alleged or actual
bad faith, failure to exercise good faith, or tortuous conduct.