Automatic Self
Administered YRT Reinsurance Agreement
between
American National
Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ 77550(hereinafter
referred to as the “Ceding Company”)
and
General & Cologne
Life Re of America
Stamford, CT(hereinafter
referred to as the “Reinsurer”)
Effective: June 1, 2003
Treaty #: U24
Table of Contents
1.1 Parties to the Agreement............................................... 4
1.2 Compliance............................................................. 4
1.3 Construction........................................................... 4
1.4 Entire Agreement....................................................... 4
1.5 Severability........................................................... 4
Automatic Reinsurance........................................................... 4
2.1 General Conditions..................................................... 4
2.2 Retained Amounts....................................................... 5
Facultative Reinsurance......................................................... 5
Commencement of Liability....................................................... 6
4.1 Automatic Reinsurance.................................................. 6
4.2 Facultative Reinsurance................................................ 6
4.3 Conditional Receipt or Temporary Insurance............................. 6
Reinsured Risk Amount........................................................... 6
5.1 Life................................................................... 6
5.2 Waiver of Premium...................................................... 6
5.3 Accidental Death Benefit............................................... 6
Premium Accounting.............................................................. 7
6.1 Premiums............................................................... 7
6.2 Payment of Premiums.................................................... 7
6.3 Delayed Payment......................................................... 7
6.4 Failure to Pay Premiums................................................. 7
6.5 Premium Rate Guarantee................................................. 7
Reductions, Terminations and Changes............................................ 8
7.1 Reductions and Terminations............................................ 8
7.2 Increases.............................................................. 8
7.3 Risk Classification Changes............................................ 9
7.4 Reinstatement.......................................................... 9
7.5 Nonforfeiture Benefits................................................. 9
Conversions, Exchanges and Replacements......................................... 9
8.1 Conversions............................................................ 9
8.2 Exchanges and Replacements............................................. 10
Claims.......................................................................... 10
9.1 Notice................................................................. 10
9.2 Proofs................................................................. 10
9.3 Amount and Payment of Reinsurance Benefits............................. 10
9.4 Contestable Claims..................................................... 11
9.5 Claim Expenses......................................................... 11
9.6 Misrepresentation or Suicide........................................... 11
9.7 Misstatement of Age or Sex............................................. 11
9.8 Extra-Contractual Damages.............................................. 12
Credit for Reserves............................................................. 12
10.1 Reserve Methodology and Reporting...................................... 12
Retention Limit Changes......................................................... 12
Recapture....................................................................... 13
General Provision............................................................... 14
13.1 Currency............................................................... 14
13.2 Premium Tax............................................................ 14
13.4 Minimum Cession........................................................ 14
13.5 Inspection of Records.................................................. 14
13.6 Forms, Manuals & Issue Rules....................................... 14
DAC Tax......................................................................... 14
Offset.......................................................................... 15
Insolvency...................................................................... 15
16.1 Insolvency of a Party to this Agreement................................ 15
16.2 Insolvency of the Ceding Company....................................... 15
16.3 Insolvency of the Reinsurer............................................ 16
Errors and Omissions............................................................ 16
Dispute Resolution.............................................................. 17
Arbitration..................................................................... 17
Confidentiality................................................................. 18
Duration of Agreement........................................................... 18
Execution....................................................................... 19
EXHIBITS
A -......Retention Limits of the Ceding Company
B -......Plans Covered and Binding Limits
C -......Forms, Manuals, and Issue Rules
D -......Allocation Rules for Placement of Facultative Cases
E -......Reinsurance Premiums
F -......Conversion Premiums
G -......Self-Administered Reporting
H -......Application for Facultative Reinsurance Form
I -.....Contestable Claims Procedures
Preamble
1.1......PARTIES TO THE
AGREEMENT
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This
is a YRT agreement for indemnity reinsurance (the “Agreement”) solely between
American National Insurance Company of Texas (the “Ceding Company”), General
& Cologne Life Re of America of Connecticut (the “Reinsurer”), collectively
referred to as the “parties”. |
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The
acceptance of risks under this Agreement will create no right or legal relationship
between the Reinsurer and the insured, owner or beneficiary of any insurance policy or
other contract of the Ceding Company. |
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The
Agreement will be binding upon the Ceding Company and the Reinsurer and their respective
successors and assigns. |
1.2 COMPLIANCE........
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This
Agreement applies only to the issuance of insurance by the Ceding Company in a
jurisdiction in which it is properly licensed. |
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The
Ceding Company represents that, to the best of its knowledge, it is in compliance with all
state and federal laws applicable to the business reinsured under this Agreement. In the
event that the Ceding Company is found to be in non-compliance with any law material to
this Agreement, the Agreement will remain in effect and the Ceding Company will indemnify
the Reinsurer for any direct loss the Reinsurer suffers as a result of the non-compliance,
and will seek to remedy the non-compliance. In the event the Ceding Company is unable to
cure said non-compliance in a reasonable time after discovery, the Reinsurer may terminate
this agreement for new business. |
1.3 CONSTRUCTION......
This
Agreement will be construed in accordance with the laws of the state of Texas.
1.4 ENTIRE AGREEMENT..
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This
Agreement constitutes the entire agreement between the parties with respect to the
business reinsured hereunder. There are no understandings between the parties other than
as expressed in this Agreement. Any change or modification to this Agreement will be null
and void unless made by written amendment to this Agreement and signed by both parties. |
1.5 SEVERABILITY......
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If
any provision of this Agreement is determined to be invalid or unenforceable, such
determination will not impair or affect the validity or the enforceability of the
remaining provisions of this Agreement. |
AUTOMATIC REINSURANCE
2.1 GENERAL CONDITIONS
| |
On
and after the effective date of this Agreement, the Ceding Company will automatically cede
to the Reinsurer a portion of the life insurance policies, supplementary benefits, and
riders listed in Exhibit B. The insured, at the time of the application, must be a
permanent resident of the United States or Canada. |
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The
Reinsurer will automatically accept its share of the above-referenced policies up to the
limits shown in Exhibit B, provided that: |
| a. |
the Ceding Company keeps its full retention, as specified in Exhibit A, or
otherwise holds its full retention on a life under previously issued inforce
policies |
| b. |
the Ceding Company applies its normal underwriting guidelines |
| c. |
the total of the new ultimate amount of reinsurance required including
contractual increases, and the amount already reinsured on that life under this
Agreement and all other agreements between the Reinsurer and the Ceding Company,
does not exceed the Automatic Binding Limits set out in Exhibit B |
| d. |
the amount of life insurance in force in all companies, including any coverage
to be replaced plus the amount currently applied for on that life in all
companies, does not exceed the Jumbo Limit stated in Exhibit B, and |
| e. |
the application is on a life that has not been submitted facultatively to the
Reinsurer or any other reinsurer within the last 2 years, unless the reason for
any prior facultative submission was solely for capacity that may now be
accommodated within the terms of this Agreement. |
2.2 RETAINED AMOUNTS..
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The
Ceding Company may not reinsure the amount it has retained on the business covered under
this Agreement, on any basis, without prior notification to the Reinsurer. |
FACULTATIVE REINSURANCE
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3.1 |
The Ceding Company may submit any application on a plan or rider identified in Exhibit B
to the Reinsurer for its consideration on a facultative basis. |
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The
Ceding Company will apply for reinsurance on a facultative basis by sending to the
Reinsurer an Application for Facultative Reinsurance, providing the information outlined
in Exhibit H. Accompanying this Application will be copies of all underwriting evidence
that is available for risk assessment including, but not limited to, copies of the
application for insurance, medical examiners’ reports, attending physicians’
statements, inspection reports, and any other information bearing on the insurability of
the risk. The Ceding Company also will notify the Reinsurer of any outstanding
underwriting requirements at the time of the facultative submission. Any subsequent
information received by the Ceding Company that is pertinent to the risk assessment will
be immediately transmitted to the Reinsurer. |
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After
consideration of the Application for Facultative Reinsurance and related information, the
Reinsurer will promptly inform the Ceding Company of its underwriting decision. The
Reinsurer’s offer will expire at the end of 120 days, unless otherwise specified by
the Reinsurer. |
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If
the unconditional underwriting decision is acceptable, the Ceding Company will notify the
Reinsurer in writing of its acceptance of the offer provided the insured is still alive.
If any risk is to be submitted to more than one reinsurer for consideration, the
Allocation Rules for Placement of Facultative Cases as outlined in Exhibit D will apply. |
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The
relevant terms and conditions of this Agreement will apply to those facultative offers
made by the Reinsurer and accepted by the Ceding Company. |
COMMENCEMENT OF LIABILITY
4.1 AUTOMATIC REINSURANCE
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For
automatic reinsurance, the Reinsurer’s liability will commence at the same time as
the Ceding Company’s liability. |
4.2 FACULTATIVE
REINSURANCE
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For
facultative reinsurance, the Reinsurer’s liability will commence at the same time as
the Ceding Company’s liability, provided that the Reinsurer has made an unconditional
facultative offer and that offer was accepted, in accordance with the terms of this
Agreement. |
4.3 CONDITIONAL RECEIPT
OR TEMPORARY INSURANCE
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Reinsurance
coverage under a conditional receipt or temporary insurance provision is limited to the
Reinsurer’s share of amounts within the Conditional Receipt or Temporary Insurance
Limits specified in Exhibit B. The Reinsurer will accept liability provided that the
Ceding Company has followed its normal cash-with-application procedures for such coverage. |
REINSURED RISK AMOUNT
5.1 LIFE
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For
policies with the level death benefit option, the net amount at risk of the policy is
defined as the policy face amount less the account value. For policies with the varying
death benefit option, the net amount at risk of the policy is defined as the policy face
amount. The reinsured net amount at risk for automatic policies is determined by
multiplying the total net amount at risk on the policy by the Reinsurer’s share as
defined in Exhibit B. For variable amount plans, the net amount at risk is calculated
using the account value in effect at the end of monthly reinsurance billing period. The
Ceding Company will maintain a quota share retention on each policy, up to the maximum
limits of its retention per life for the insured’s issue age and rating, as shown in
Exhibit A. Risk amounts above that limit will be reinsured under the terms of this
Agreement on an excess basis, but up to limits specified in Exhibit A. |
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The
Ceding Company’s retention on the policy will remain constant. Any change in the net
amount at risk due to changes in the policy’s cash value or account value will be
allocated to the reinsured amount. |
5.2 WAIVER OF PREMIUM
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The
reinsured proportion of Disability Waiver of Premium will not be greater than the
proportion reinsured on the corresponding life insurance benefit. |
5.3 ACCIDENTAL DEATH
BENEFIT
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The
Accidental Death Benefit amount reinsured will not be greater than the corresponding life
insurance benefit reinsured. |
PREMIUM ACCOUNTING
6.1 PREMIUMS
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Reinsurance
premium rates for life insurance and other benefits reinsured under this Agreement are
shown in Exhibit E. The rates will be applied to the reinsured net amount at risk. |
The
Ceding Company will pay the Reinsurer the percentages of the premium rates shown in
Exhibit E.
6.2 PAYMENT OF PREMIUMS
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Reinsurance
premiums are payable monthly and in arrears. The Ceding Company will calculate the amount
of reinsurance premium due and, within 30 days after the end of the month, will send the
Reinsurer a statement that contains the information shown in Exhibit G, showing
reinsurance premiums due for that period. If an amount is due the Reinsurer, the Ceding
Company will remit that amount together with the statement. If an amount is due the Ceding
Company, the Reinsurer will remit such amount within 30 days of receipt of the statement. |
6.3 DELAYED PAYMENT
The
Remittance Date is defined as 30 days after the end of the reporting period.
6.4 FAILURE TO PAY
PREMIUMS
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The
payment of reinsurance premiums is a condition precedent to the liability of the Reinsurer
for reinsurance covered by this Agreement. In the event that reinsurance premiums are not
paid within 60 days of the Remittance Date, the Reinsurer will have the right to terminate
the reinsurance under all policies having reinsurance premiums in arrears. If the
Reinsurer elects to exercise its right of termination, it will give the Ceding Company 90
days written notice of its intention. Such notice will be sent by certified mail. |
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If
all reinsurance premiums in arrears, including any that become in arrears during the 90
day notice period, are not paid before the expiration of the notice period, the Reinsurer
will be relieved of all liability under those policies as of the last date to which
premiums have been paid for each. Reinsurance on policies on which reinsurance premiums
subsequently fall due will automatically terminate as of the last date to which premiums
have been paid for each policy, unless reinsurance premiums on those policies are paid on
or before their Remittance Dates. |
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Terminated
reinsurance may be reinstated, subject to approval by the Reinsurer, within 30 days of the
date of termination, and upon payment of all reinsurance premiums in arrears including any
interest accrued thereon. The Reinsurer will have no liability for any claims incurred
between the date of termination and the date of the reinstatement of the reinsurance. The
right to terminate reinsurance will not prejudice the Reinsurer’s right to collect
premiums for the period during which reinsurance was in force prior to the expiration of
the 90 days notice. |
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The
Ceding Company will not force termination under the provisions of this Article solely to
avoid the provisions regarding recapture in Article 12, or to transfer the reinsured
policies to another reinsurer. |
6.5 PREMIUM RATE GUARANTEE
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Although
the Reinsurer anticipates that the premium rates in Exhibit D will apply indefinitely,
they are only guaranteed for one (1) year. After one year the Reinsurer may increase the
reinsurance premium rates. If the Reinsurer raises its reinsurance premium rates on any
block of inforce business reinsured under this Agreement on which the Ceding Company has
not raised its retail premiums or cost-of-insurance charges, the Ceding Company may
recapture that block of business as of the effective date of the increase in reinsurance
premiums. The recapture will become effective on individual policy anniversary dates
beginning no sooner than 90 days after the Ceding Company has provided notice of its
intent to recapture. However, if the Ceding Company has raised its retail premiums or
cost-of-insurance charges on the block of inforce business since the effective date of
this Agreement, whether before or after the |
Reinsurer’s
premium increase, the Ceding Company’s right to recapture will be as described in
Article 12.
REDUCTIONS, TERMINATIONS
AND CHANGES
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Whenever
a change is made in the status, plan, amount or other material feature of a policy
reinsured under this Agreement, the Reinsurer will, upon receipt of notification of the
change, provide adjusted reinsurance coverage in accordance with the provisions of this
Agreement. The Ceding Company will notify the Reinsurer of any such change within 60 days
of its effective date. |
7.1 REDUCTIONS AND
TERMINATIONS
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In
the event of the reduction, lapse, or termination of a policy or policies reinsured under
this Agreement or any other agreement, the Ceding Company will reduce or terminate
reinsurance on that life. The reinsured amount on the life with all reinsurers will be
reduced, effective on the same date, by the amount required such that the Ceding Company
maintains its retention as defined under this Agreement. |
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The
reinsurance reduction will apply first to the policy or policies being reduced and then,
on a chronological basis, to other reinsured policies on the life, beginning with the
oldest policy. If a fully retained policy on a life that is reinsured under this Agreement
is terminated or reduced, the Ceding Company will reduce the existing reinsurance on that
life by a corresponding amount, with the reinsurance on the oldest policy being reduced
first. If the amount of reduction exceeds the risk amount reinsured, the reinsurance on
the policy or policies will be terminated. |
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The
Reinsurer will refund any unearned reinsurance premiums net of allowances. However, the
reinsured portion of any policy fee will be deemed earned for a policy year if the policy
is reinsured during any portion of that policy year. |
7.2 INCREASES
a. Noncontractual Increases
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If
the amount of insurance is increased as a result of a noncontractual change, the increase
will be underwritten by the Ceding Company in accordance with its customary standards and
procedures and will be considered new reinsurance under this Agreement. The
Reinsurer’s approval is required if the original policy was reinsured on a
facultative basis or if the new amount will cause the reinsured amount on the life to
exceed either the Automatic Binding Limits or the Jumbo Limits shown in Exhibit B. |
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The
Ceding Company and the Reinsurer will share the increased amount proportionately. Once the
Ceding Company’s maximum retention has been reached, the remaining amount will be
reinsured on an excess basis. |
b. Contractual Increases
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For
policies reinsured on an automatic basis, reinsurance of increases in amount resulting
from contractual policy provisions will be accepted only up to the Automatic Binding
Limits shown in Exhibit B. |
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For
policies reinsured on a facultative basis, reinsurance will be limited to the ultimate
amount shown in the Reinsurer’s facultative offer. Reinsurance premiums for
contractual increases will be on a point-in-scale basis from the original issue age of the
policy. |
7.3 RISK CLASSIFICATION
CHANGES
| |
If
the policyholder requests a Table Rating reduction or removal of a Flat Extra, such change
will be underwritten according to the Ceding Company’s normal underwriting practices.
Risk classification changes on facultative policies will be subject to the
Reinsurer’s approval. |
7.4 REINSTATEMENT
| |
If
a policy reinsured on an automatic basis is reinstated in accordance with its terms and in
accordance with Ceding Company rules and procedures, the Reinsurer will, upon notification
of reinstatement, reinstate the reinsurance coverage. If a policy reinsured on a
facultative basis is reinstated, approval by the Reinsurer will be required prior to the
reinstatement of the reinsurance if the Ceding Company’s regular reinstatement rules
indicate that more evidence than a Statement of Good Health is required. |
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Upon
reinstatement of the reinsurance coverage, the Ceding Company will pay the contractual
reinsurance premiums plus accrued interest for the period and at the interest rate which
it receives on premiums in arrears. |
7.5 Nonforfeiture Benefits
a. Extended Term
| |
If
the original policy lapses and extended term insurance is elected under the terms of the
policy, reinsurance will continue on the same basis as under the original policy until the
expiry of the extended term period. |
b. Reduced Paid-up
| |
If
the original policy lapses and reduced paid-up insurance is elected under the terms of the
policy, the amount reinsured will be reduced. |
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The
amount reinsured and the amount retained will be reduced proportionately. The reinsurance
premiums will be calculated in the same manner as reinsurance premiums were calculated on
the original policy. |
CONVERSIONS, EXCHANGES
AND REPLACEMENTS
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If
a policy reinsured under this Agreement is converted, exchanged or replaced, the Ceding
Company will promptly notify the Reinsurer. Unless mutually agreed otherwise, policies
that are not reinsured with the Reinsurer and that exchange or convert to a plan covered
under this Agreement will not be reinsured hereunder. |
8.1 CONVERSIONS
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The
Reinsurer will continue to reinsure policies resulting from the contractual conversion of
any policy reinsured under this Agreement, in an amount not to exceed the original amount
reinsured hereunder. If at any time a policy reinsured under this Agreement is converted
to a plan of Life Insurance not covered under this Agreement, the terms of reinsurance,
including premium rates, will remain the same as the original Agreement. Reinsurance
premiums and any allowances for conversions will be on a point-in-scale basis from the
original issue age of the policy. |
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If
the conversion results in an increase in the risk amount, the increase will be
underwritten by the Ceding Company in accordance with its customary standards and
procedures. The Reinsurer will accept its share of such increases, subject to the new
business provisions of this Agreement. Reinsurance premiums and any allowances for
increased risk amounts will be first-year premiums at the agreed-upon premium rate. |
8.2 EXCHANGES AND
REPLACEMENTS
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A
policy resulting from an internal exchange or replacement will be underwritten by the
Ceding Company in accordance with its underwriting guidelines, standards and procedures
for exchanges and replacements. If the Ceding Company’s guidelines treat the policy
as new business, then the reinsurance will also be considered new business. For purposes
of this Article, new business is defined as those policies on which: |
| a. |
the Ceding Company has obtained complete and current underwriting evidence on
the full amount; and |
| b. |
the full normal commissions are paid for the new plan; and |
| c. |
the Suicide and Contestable provisions apply as if the policy were newly
issued. |
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The
Reinsurer’s approval to exchange or replace the policy will be required if the
original policy was reinsured on a facultative basis. |
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If
the Ceding Company’s guidelines do not treat the policy as new business, the exchange
or replacement will continue to be ceded to the Reinsurer. The rates will be based on the
original issue age, underwriting class and duration since the issuance of the original
policy. |
CLAIMS
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Claims
covered under this Agreement include only death claims, which are those due to the death
of the insured on a policy reinsured under this Agreement, and any additional benefits
specified in Exhibit B, which are provided by the underlying policy and are reinsured
under this Agreement. |
9.1 NOTICE
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The
Ceding Company will notify the Reinsurer, as soon as reasonably possible, after it
receives a claim on a policy reinsured under this Agreement. |
9.2 PROOFS
| |
The
Ceding Company will promptly provide the Reinsurer with proper claim proofs, including a
copy of the proof of payment by the Ceding Company, and a copy of the insured’s death
certificate. In addition, for contestable claims, the Ceding Company will send to the
Reinsurer a copy of all papers in connection with the claim, except as provided in Exhibit
I. |
9.3 AMOUNT AND PAYMENT OF
REINSURANCE BENEFITS
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For
noncontestable claims $2,000,000 or less, as soon as the Reinsurer receives proper claim
notice and proof of the reinsured claim, the Reinsurer will promptly pay the reinsurance
benefits due the Ceding Company. The Ceding Company’s contractual liability for
policies reinsured under this Agreement is binding on the Reinsurer. |
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However,
for noncontestable claims over $2,000,000 or claims incurred during the contestable
period, the Ceding Company will consult with the Reinsurer before conceding liability or
making settlement with the claimant. However, such consultation shall not impair the
Ceding Company’s freedom to determine its course of action on the claim, and the
final decision shall be that of the Ceding Company. In reaching its decision, the Ceding
Company shall act with good faith and in accord with its standard practices applicable to
all claims, whether reinsured or not. For contestable claims, the Ceding Company will wait
at least 10 days for the Reinsurer’s recommendation. Exhibit I describes the
procedures for claims incurred during the contestable period. |
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The
total reinsurance recoverable from all companies will not exceed the Ceding Company’s
total contractual liability on the policy, less the amount retained. The maximum
reinsurance death benefit payable to the Ceding Company under this Agreement is the risk
amount specifically reinsured with the Reinsurer. The Reinsurer will also pay its
proportionate share of the interest that the Ceding Company pays on the death proceeds. |
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Life
benefit payments will be made in a single sum, regardless of the Ceding Company’s
settlement options. |
9.4 CONTESTABLE CLAIMS
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The
Ceding Company will promptly notify the Reinsurer of its intention to contest, compromise,
or litigate a claim involving a reinsured policy in accordance with the procedures shown
in Exhibit I. Once notified, the Reinsurer will have 10 days to notify the Ceding Company
in writing of its decision to accept participation in the contest, compromise, or
litigation. If the Reinsurer has accepted participation, the Ceding Company will promptly
advise the Reinsurer of all significant developments in the claim investigation, including
notification of any legal proceedings against it in response to denial of the claim. |
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If
the Reinsurer does not accept participation, the Reinsurer will then fulfill its
obligation by paying the Ceding Company its full share of the reinsurance amount, and will
not share in any subsequent reduction or increase in liability. |
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If
the Reinsurer accepts participation and the Ceding Company’s contest, compromise, or
litigation results in a reduction or increase in liability, the Reinsurer will share in
any such reduction or increase in proportion to its share of the risk on the contested
policy. |
9.5 CLAIM EXPENSES
| |
The
Reinsurer will pay its share of reasonable claim investigation and legal expenses
connected with the litigation or settlement of contractual liability claims unless the
Reinsurer has discharged its liability pursuant to Section 9.4 above. If the Reinsurer has
so discharged its liability, the Reinsurer will not participate in any expenses incurred
thereafter. |
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The
Reinsurer will not reimburse the Ceding Company for routine claim and administration
expenses, including but not limited to the Ceding Company’s or any subsidiary or
affiliate home office expenses, compensation of salaried officers and employees, and any
legal expenses other than third party expenses incurred by the Ceding Company. Claim
expenses do not include expenses incurred by the Ceding Company as a result of a dispute
or contest arising out of conflicting claims of entitlement to policy proceeds or
benefits. |
9.6 MISREPRESENTATION OR
SUICIDE
| |
If
the Ceding Company returns premium to the policyowner or beneficiary as a result of
misrepresentation or suicide of the insured, the Reinsurer will refund net reinsurance
premiums received on that policy without interest to the Ceding Company in lieu of any
other form of reinsurance benefit payable under this Agreement. |
9.7 MISSTATEMENT OF AGE
OR SEX
| |
In
the event of a change in the amount of the Ceding Company’s liability on a reinsured
policy due to a misstatement of age or sex, the Reinsurer’s liability will change
proportionately. The face amount of the reinsured policy will be adjusted from the
inception of the policy, and any difference will be settled without interest. |
9.8 EXTRA-CONTRACTUAL
DAMAGES
| |
The
Reinsurer will not participate in punitive or compensatory damages that are awarded
against the Ceding Company as a result of an act, omission, or course of conduct committed
solely by the Ceding Company, its agents, or representatives in connection with claims
covered under this Agreement. The Reinsurer will, however, pay its share of statutory
penalties awarded against the Ceding Company in connection with claims covered under this
Agreement if the Reinsurer elected in writing to join in the contest of the coverage in
question. |
| |
The
parties recognize that circumstances may arise in which equity would require the
Reinsurer, to the extent permitted by law, to share proportionately in punitive and
compensatory damages. Such circumstances are difficult to define in advance, but would
generally be those situations in which the Reinsurer was an active party and, in writing,
recommended, consented to, or ratified the act or course of conduct of the Ceding Company
that ultimately resulted in the assessment of the extra-contractual damages. In such
situations, the Reinsurer and the Ceding Company will share such damages so assessed, in
proportion to their share of the risk. |
For
purposes of this Article, the following definitions will apply.
| |
“Punitive
Damages” are those damages awarded as a penalty, the amount of which is neither
governed nor fixed by statute. |
| |
“Compensatory
Damages” are those amounts awarded to compensate for the actual damages sustained,
and are not awarded as a penalty, nor fixed in amount by statute. |
“Statutory
Penalties” are those amounts awarded as a penalty, but are fixed in amount by
statute.
Waiver of Premium
| |
The
reinsurance benefit for an approved waiver of premium claim will be the Reinsurer’s
proportionate share of the annual gross premium waived on the policy by the Ceding
Company. The Ceding Company will continue to pay the life reinsurance premium; however, it
will not pay the reinsurance premium for the waiver benefit for the duration of the waiver
claim period. The Reinsurer will pay waiver benefits annually regardless of the mode of
premium payment specified in the policy. |
CREDIT FOR RESERVES
10.1 RESERVE METHODOLOGY
AND REPORTING
| |
The
parties intend that the Ceding Company will receive full statutory reserve credit in its
state of domicile for the insurance risks ceded to the Reinsurer. The parties agree to
make all reasonable efforts to ensure that this is accomplished. |
| |
The
Ceding Company will provide a reserve summary for business reinsured under this agreement
to the Reinsurer on an annual basis, along with a detailed description of its reserving
assumptions and any changes in these assumptions applicable to each calendar year. |
RETENTION LIMIT CHANGES
| |
11.1 |
If the Ceding Company changes its maximum retention limits as shown in Exhibit A, it will
provide the Reinsurer with written notice of the intended changes ninety (90) days in
advance of their effective date. |
| |
A
change to the Ceding Company’s maximum retention limits will not affect the reinsured
policies in force except as specifically provided elsewhere in this Agreement.
Furthermore, unless agreed between the parties, an increase in the Ceding Company’s
retention schedule will not effect an increase in the total risk amount that it may
automatically cede to the Reinsurer. |
RECAPTURE
| |
12.1 |
Recapture is not available until the end of the 10th policy year, and then must be in
conjunction with an increase in the Ceding Company’s maximum schedule of retention.
The amount eligible for recapture will be the difference between the amount originally
retained and the amount the Ceding Company would have retained on the same quota share
basis had the new retention schedule been in effect at the time of issue. |
| |
a. |
The Ceding Company must give the Reinsurer 90 days written notice prior to its
intended date to commence recapture. |
| |
b. |
The reduction of reinsurance on affected policies will become effective on the
policy anniversary date immediately following the notice of election to
recapture; however, no reduction will be made until a policy has been in force
for at least 10 years. |
| |
c. |
If any reinsured policy is recaptured, all reinsured policies eligible for
recapture under the provisions of this Article must be recaptured up to the
Ceding Company’s new maximum retention limits in a consistent manner and
the |
| |
d. |
ceding Company must increase its total amount of insurance on each reinsured
life. The Ceding Company may not revoke its election to recapture for policies
becoming eligible at future anniversaries. |
| |
If
portions of the reinsured policy have been ceded to more than one reinsurer, the Ceding
Company must allocate the reduction in reinsurance so that the amount reinsured by each
reinsure after the reduction is proportionately the same as if the new maximum dollar
retention limits had been in effect at the time of issue. |
| |
The
amount of reinsurance eligible for recapture is based on the current amount at risk as of
the date of recapture. For a policy issued as a result of exchange, conversion, or
re-entry, the recapture terms of the reinsurance agreement covering the original policy
will apply, and the duration period for the purpose of recapture will be measured from the
effective date of the reinsurance on the original policy. |
| |
If
there is a reinsured waiver of premium claim in effect when recapture takes place, the
Reinsurer will continue to pay its share of the waiver claim until it terminates. The
Reinsurer will not be liable for any other benefits, including the basic life risk, that
are eligible for recapture. All such eligible benefits will be recaptured as if there were
no waiver claim in effect. |
| |
After
the effective date of recapture, the Reinsurer will not be liable for any reinsured
policies or portions of such reinsured policies eligible for recapture that the Ceding
Company has overlooked. |
| |
The
terms and conditions for the Ceding Company to recapture reinsured policies, as made
necessary by the insolvency of the Reinsurer, are set forth in Article 16.2. |
| |
No
recapture will be permitted if the Ceding Company has either obtained or increased stop
loss reinsurance coverage as justification for the increase in retention limits. |
GENERAL PROVISION
13.1 CURRENCY
All
payments and reporting by both parties under this Agreement will be made in United States
dollars.
13.2 PREMIUM TAX
The
Reinsurer will not reimburse the Ceding Company for premium taxes.
13.4 MINIMUM CESSION
| |
The
Ceding Company will not cede a policy to the Reinsurer unless the amount to be reinsured
at issue exceeds the Initial Minimum Cession amount shown in Exhibit B. |
| |
Reinsurance
will be cancelled on any policy when its reinsured net amount at risk falls below the
Trivial Amount limit shown in Exhibit B. |
13.5 INSPECTION OF RECORDS
| |
The
Reinsurer and the Ceding Company, or their duly authorized representatives, will have the
right to inspect data and files relating to the business reinsured under this Agreement
including underwriting, claims processing, and administration. Such access will be
provided during regular business hours at the office of the inspected party. |
13.6 FORMS, MANUALS &
ISSUE RULES
| |
The
Ceding Company affirms that its retention schedule, underwriting guidelines, issue rules,
premium rates and policy forms applicable to the Reinsured Policies and in use as of the
effective date, have been supplied to the Reinsurer. |
| |
The
Ceding Company will promptly notify the Reinsurer of any proposed material changes in its
underwriting guidelines. This Agreement will not extend to policies issued pursuant to
such changes unless the Reinsurer has consented in writing to accept policies subject to
such changes. Such changes will be attached to the treaty. Material changes, for the
purpose of this provision, are changes that have an impact on expected mortality or the
pricing of the mortality risk. |
| |
It
is the Ceding Company’s responsibility to ensure that its practice and applicable
forms are in compliance with current Medical Information Bureau (MIB) guidelines. |
DAC TAX
14.1 The parties to this Agreement agree to the following provisions pursuant to Section 1.848-2(g)(8) of the Income
Tax Regulations effective December 29, 1992, under Section 848 of the Internal Revenue Code of 1986, as amended:
a. The term `party' refers to either the Ceding Company or the Reinsurer, as appropriate.
b. The terms used in this Article are defined by reference to Regulation Section 1.848-2,
effective December 29, 1992.
| c. |
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). |
| d. |
Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency, or as
otherwise required by the Internal Revenue Service. |
| e. |
The Ceding Company will submit a schedule to the Reinsurer by June 30 of each
year with its calculation of the net consideration for the preceding calendar
year. This schedule of calculations will be accompanied by a statement signed by
an officer of the Ceding Company stating that the Ceding Company will report
such net consideration in its tax return for the preceding calendar year. The
Reinsurer may contest such calculation by providing an alternative calculation
to the Ceding Company in writing within 15 days of the Reinsurer’s receipt
of the Ceding Company’s calculation. If the Reinsurer does not so notify
the Ceding Company within the required timeframe, the Reinsurer will report the
net consideration as determined by the Ceding Company in the Reinsurer’s
tax return for the previous calendar year. |
| f. |
If the Reinsurer contests the Ceding Company’s calculation of the net
consideration, the parties will act in good faith to reach an agreement as to
the correct amount within 15 days of the date the Reinsurer submits its
alternative calculation. If the Ceding Company and the Reinsurer reach an
agreement on an amount of net consideration, each party will report the agreed
upon amount in its tax return for the previous calendar year. |
| g. |
Both the Ceding Company and the Reinsurer represent and warrant that they are
subject to United States taxation under either Subchapter L or Subpart F of Part
III of Subchapter N of the Internal Revenue Code of 1986, as amended. |
OFFSET
| |
15.1 |
Any undisputed debts or credits, in favor of or against either the Reinsurer or the Ceding
Company with respect to this Agreement, are deemed mutual debts or credits and may be
offset, and only the balance will be allowed or paid. |
The
right of offset will not be affected or diminished because of the insolvency of either
party.
INSOLVENCY
| |
16.1 |
INSOLVENCY OF A PARTY TO THIS AGREEMENT A party to this Agreement will be deemed insolvent
when it: |
| a. |
applies for or consents to the appointment of a receiver, rehabilitator,
conservator, liquidator or statutory successor of its properties or assets; or |
| b. |
is adjudicated as bankrupt or insolvent; or |
| c. |
files or consents to the filing of a petition in bankruptcy, seeks
reorganization to avoid insolvency or makes formal application for any
bankruptcy, dissolution, liquidation or similar law or statute; or |
| d. |
becomes the subject of an order to rehabilitate or an order to liquidate as
defined by the insurance code of the jurisdiction of the party’s domicile. |
16.2 INSOLVENCY OF THE
CEDING COMPANY
| |
In
the event of the insolvency of the Ceding Company, all reinsurance payments due under this
Agreement will be payable directly to the liquidator, rehabilitator, receiver, or
statutory successor of the Ceding Company, without diminution because of the insolvency,
for those claims allowed against the Ceding Company by any court of competent jurisdiction
or by the liquidator, rehabilitator, receiver or statutory successor having authority to
allow such claims. |
| |
In
the event of insolvency of the Ceding Company, the liquidator, rehabilitator, receiver, or
statutory successor will give written notice to the Reinsurer of all pending claims
against the Ceding Company on any policies reinsured within a reasonable time after such
claim is filed in the insolvency proceeding. While a claim is pending, the Reinsurer may
investigate and interpose, at its own expense, in the proceeding where the claim is
adjudicated, any defense or defenses that it may deem available to the Ceding Company or
its liquidator, rehabilitator, receiver, or statutory successor. |
| |
The
expense incurred by the Reinsurer will be chargeable, subject to court approval, against
the Ceding Company as part of the expense of liquidation to the extent of a proportionate
share of the benefit that may accrue to the Ceding Company solely as a result of the
defense undertaken by the Reinsurer. Where two or more reinsurers are participating in the
same claim and a majority in interest elect to interpose a defense or defenses to any such
claim, the expense will be apportioned in accordance with the terms of this Agreement as
though such expense had been incurred by the Ceding Company. |
| |
The
Reinsurer will be liable only for the amounts reinsured and will not be or become liable
for any amounts or reserves to be held by the Ceding Company on policies reinsured under
this Agreement. |
16.3 INSOLVENCY OF THE
REINSURER
| |
In
the event of (1) the Reinsurer’s insolvency or (2) failure to affirm future solvency,
the Ceding Company may cancel the Agreement for future new business and will notify the
Reinsurer in writing of its intent. The parties agree to waive the notification period for
this cancellation, and the effective date will be no earlier than the effective date of
the Reinsurer’s insolvency. |
| |
Upon
giving written notice to the Reinsurer, the Ceding Company may also recapture all of the
inforce business reinsured by the Reinsurer under this Agreement. |
| |
Failure
to affirm future solvency is established when (1) a regulatory authority requires the
Reinsurer to prepare and file financial plans because of risked based capital level
concerns or a regulatory authority takes corrective actions because risked based capital
levels are not adequate, and (2) the Reinsurer is not able to provide adequate validation
to the Ceding Company for the continued solvency of the Reinsurer. The Reinsurer must
notify the Ceding Company of the initial regulatory action immediately and has 30 days
from that date of the initial regulatory action to provide adequate solvency validation to
the Ceding Company. At any time during the continuing regulatory action, the Ceding
Company may request adequate solvency validation from the Reinsurer and the Reinsurer will
have 30 days after each notice to substantiate it’s justification. |
ERRORS AND OMISSIONS
| |
17.1 |
If through unintentional error, oversight, omission, or misunderstanding (collectively
referred to as “errors”), the Reinsurer or the Ceding Company fails to comply
with the terms of this Agreement and if, upon discovery of the error by either party, the
other is promptly notified, each thereupon will be restored to the position it would have
occupied if the error had not occurred. |
| |
If
it is not possible to restore each party to the position it would have occupied but for
the error, the parties will endeavor in good faith to promptly resolve the situation in a
manner that is fair and reasonable, and most closely approximates the intent of the
parties as evidenced by this Agreement. |
| |
However,
the Reinsurer will not provide reinsurance for policies that do not satisfy the parameters
of this Agreement, nor will the Reinsurer be responsible for negligent or deliberate acts
or for repetitive errors in administration by the Ceding Company. If either party
discovers that the Ceding Company has failed to cede reinsurance as provided in this
Agreement, or failed to comply with its reporting requirements, the Reinsurer may require
the Ceding Company to audit its records for similar errors and to take the actions
necessary to avoid similar errors in the future. |
DISPUTE RESOLUTION
| |
18.1 |
In the event of a dispute arising out of or relating to this agreement, the parties agree
to the following process of dispute resolution. Within 15 days after the Reinsurer or the
Ceding Company has first given the other party written notification of a specific dispute,
each party will appoint a designated company officer to attempt to resolve the dispute.
The officers will meet at a mutually agreeable location as soon as possible and as often
as necessary, in order to gather and furnish the other with all appropriate and relevant
information concerning the dispute. The officers will discuss the problem and will
negotiate in good faith without the necessity of any formal arbitration proceedings.
During the negotiation process, all reasonable requests made by one officer to the other
for information will be honored. The designated officers will decide the specific format
for such discussions. |
| |
If
the officers cannot resolve the dispute within 30 days of their first meeting, the dispute
will be submitted to formal arbitration, unless the parties agree in writing to extend the
negotiation period for an additional 30 days. |
ARBITRATION
| |
19.1 |
It is the intention of the Reinsurer and the Ceding Company that the customs and practices
of the life insurance and reinsurance industry will be given full effect in the operation
and interpretation of this Agreement. The parties agree to act in all matters with the
highest good faith. However, if the Reinsurer and the Ceding Company cannot mutually
resolve a dispute that arises out of or relates to this Agreement, and the dispute cannot
be resolved through the dispute resolution process described in Article 18, the dispute
will be decided through arbitration. |
| |
To
initiate arbitration, either the Ceding Company or the Reinsurer will notify the other
party in writing of its desire to arbitrate, stating the nature of its dispute and the
remedy sought. The party to which the notice is sent will respond to the notification in
writing within fifteen (15) days of its receipt. |
| |
There
will be three arbitrators who will be disinterested current or former officers of United
States life insurance or life reinsurance companies other than the parties to this
Agreement, their affiliates or subsidiaries. Each of the parties will appoint one of the
arbitrators and these two arbitrators will select the third. If either party refuses or
neglects to appoint an arbitrator within sixty (60) days of the initiation of the
arbitration, the other party may appoint the second arbitrator. If the two arbitrators do
not agree on a neutral third arbitrator within thirty (30) days of the appointment of the
second arbitrator, then the appointment of the neutral third arbitrator will be left to
the American Arbitration Association or its successor. |
| |
Once
chosen, the arbitrators are empowered to decide all substantive and procedural issues by a
majority of votes. The arbitration proceedings will be held in Galveston, Texas. As soon
as possible, the arbitrators will establish arbitration procedures as warranted by the
facts and issues of the particular case. The arbitrators will have the power to determine
all procedural rules of the arbitration, including but not limited to inspection of
documents, examination of witnesses and any other matter relating to the conduct of the
arbitration. The arbitrators may consider any relevant evidence; they will weigh the
evidence and consider any objections. Each party may examine any witnesses who testify at
the arbitration hearing. |
| |
The
arbitrators will base their decision on the terms and conditions of this Agreement and the
customs and practices of the life insurance and reinsurance industries rather than on
strict interpretation of the law. The decision of the arbitrators will be made by majority
rule and will be submitted in writing. The decision will be final and binding on both
parties and there will be no appeal from the decision. Either party to the arbitration may
petition any court having jurisdiction over the parties to reduce the decision to
judgment. The arbitrators may not award exemplary or punitive damages. |
| |
Unless
the arbitrators decide otherwise, each party will bear the expense of its own arbitration
activities, including its appointed arbitrator and any outside attorney and witness fees.
The parties will jointly and equally bear the expense of the third arbitrator and other
costs of the arbitration. |
This
Article will survive termination of this Agreement.
CONFIDENTIALITY
| |
20.1 |
Reinsurer hereby acknowledges that from time to time in the performance of its duties and
obligations under the Agreement, Reinsurer may receive certain information about
policyholders or certificateholders of Insurer that may be characterized as
“Nonpublic Personal Information” under Title V of the federal ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act and/or state insurance laws and/or regulations enacted and/or promulgated in
accordance therewith (collectively the “Privacy Act”). “Nonpublic Personal
Information” includes any personally identifiable financial and/or health information
about Insurer’s customers, and any list, description or other grouping of customers
that is derived using any personally identifiable information that is not publicly
available. |
| |
Reinsurer
and Insurer hereby acknowledge and agree that they are “nonaffiliated third
parties” with respect to one another for purposes of the Privacy Act. Reinsurer and
Insurer further acknowledge and agree that Insurer’s disclosure of nonpublic personal
information to Reinsurer under this Agreement is made under one or more exceptions to the
Privacy Act’s opt-out or opt-in requirements. Reinsurer agrees not to disclose the
nonpublic personal information received from Insurer to any other person or to use the
nonpublic personal information received pursuant to this Agreement except: (1) as
necessary in the ordinary course of business in order to carry out Reinsurer’s
obligations under this Agreement; or (2) as allowed under a recognized exception or
permitted redisclosure under the Privacy Act. This provision shall survive the termination
of this Agreement. |
| |
20.2 |
The Ceding Company and the Reinsurer agree that Proprietary Information will be treated as
confidential. Proprietary Information includes, but is not limited to, business plans and
trade secrets, mortality and lapse studies, underwriting manuals and guidelines,
applications and contract forms, and the specific terms and conditions of this Agreement. |
Proprietary
Information will not include information that:
| a. |
is or becomes available to the general public through no fault of the party
receiving the Proprietary Information (the “Recipient”); b. is
independently developed by the Recipient; c. is acquired by the Recipient from a
third party not covered by a confidentiality agreement; or d. is disclosed under
a court order, law or regulation. |
| |
The
parties will not disclose such information to any other parties unless agreed to in
writing, except as necessary for retrocession purposes, as requested by external auditors,
as required by court order, or as required or allowed by law or regulation. |
| |
The
Ceding Company acknowledges that the Reinsurer can aggregate data with other companies
reinsured with the Reinsurer as long as the data cannot be identified as belonging to the
Ceding Company. |
DURATION OF AGREEMENT
| |
21.1 |
This Agreement is indefinite as to its duration. The Ceding Company or the Reinsurer may
terminate this Agreement with respect to the reinsurance of new business by giving 90 days
written notice of termination to the other party, sent by certified mail. The first day of
the notice period is deemed to be the date the document is postmarked. |
| |
During
the notification period, the Ceding Company will continue to cede and the Reinsurer will
continue to accept policies covered under the terms of this Agreement. Reinsurance
coverage on all reinsured policies will remain in force until the termination or expiry of
the policies or until the contractual termination of reinsurance under the terms of this
Agreement, whichever occurs first. |
EXECUTION
| |
22.1 |
This Agreement is effective as of June 1, 2003, and applies to all eligible policies with
issue dates on or after such date, not withstanding that such policies may have been
backdated for up to six (6) months to save age. This Agreement has been made in duplicate
and is hereby executed by both parties. |
American National Insurance Company General & Cologne Life Re of America
By: ____________________________ By: ____________________________
(signature) (signature)
____________________________ ____________________________
(print or type name) (print or type name)
Title: Title:
Date: Date:
Location: Galveston, TX Location:
Attest:____________________________ Attest: ____________________________
(signature) (signature)
Title: Title:
EXHIBIT A
Retention Limits of the Ceding Company
A.1
(a) Life Insurance - Maximum Limits of Retention
----------------------- -----------------------------------
Issue Age Standard - Table [ 16]
----------------------- -----------------------------------
All 700,000
----------------------- -----------------------------------
(b)
First Dollar Quota Share – Ceding Company’s Quota Share Percentage The
Ceding Company will retain 14.5% of each policy up to the
above maximum dollar retention limits.
A.2 WAIVER OF PREMIUM
DISABILITY BENEFITS
Same as Life Insurance
A.3 ACCIDENTAL DEATH
BENEFITS
$250,000
EXHIBIT B
Plans Covered and Binding Limits
The business automatically reinsured
under this Agreement is defined as follows.
B.1 PLANS, RIDERS AND
BENEFITS
Policies issued on plans with
effective dates within the applicable period shown below may qualify for automatic
reinsurance under the terms of this Agreement.
Commencement Date
Plan Identification Policy Form
Passport ▇▇ ▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ Select I, Indiv. FPUL June 1, 2003
Advocate UL, Indiv. MLUL June 1, 2003
Passport Select II, Indiv. FPUL2 June 1, 2003
Passport Select II 60/40, Indiv FPUL2U June 1, 2003
Passport Select II CCV, Indiv FPUL2 June 1, 2003
Passport Select II CCV 60/40, Indiv FPUL2U June 1, 2003
Passport UL Unisex PULU June 1, 2003
Passport Select I, 60/40 Indiv FPULU June 1, 2003
Advocate UL Unisex - Indiv MLULU June 1, 2003
UL501 UL501 June 1, 2003
Passport Select I, Group GFPULC June 1, 2003
Advocate UL, Group GMLULC June 1, 2003
Passport Select II, Group GFPUL2C June 1, 2003
Passport Select II 60/40, Group ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇ U UL501U June 1, 2003
Passport Select I 60/40, Group GFPULUC June 1, 2003
Advocate UL , Unisex Group GMLULUC June 1, 2003
Passport Accumulator UL DIUL June 1, 2003
Passport Select I, Florida FPUL(14) June 1, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ MLUL(14) June 1, 2003
Pension Universal PULU June 1, 2003
Passport Select I, Florida FPUL(14) June 1, 2003
Variable Universal Life FL89 June 1, 2003
Variable Universal Life II VULIP June 1, 2003
WealthQuest VUL Individual WQVUL June 1, 2003
WealthQuest VUL Indiv - Unisex WQVULU June 1, 2003
WealthQuest VUL Group GWQVULP June 1, 2003
WealthQuest VUL Group - Unisex GWQVULPU June 1, 2003
WealthQuest VUL Group Certificate GWQVULC June 1, 2003
WealthQuest VUL Group Cert - Unisex GWQVULCU June 1, 2003
Automatic Increase Benefit Rider WQAIB June 1, 2003
Automatic Increase Benefit Rider GWQAIB June 1, 2003
Level Term Rider SDL93 June 1, 2003
Level Term Rider (Passport Series) ULLT June 1, 2003
Level Term Rider ULLT93 June 1, 2003
Level Coverage Rider ▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇ Term Rider - Unisex (Passport Series) LTR June 1, 2003
Level Coverage Rider - Unisex ULAC June 1, 2003
Commencement Date
Plan Identification Policy Form
Waiver of Premium Disability Benefits ULDW91 June 1, 2003
Waiver of Premium Disability Benefits WQVULDW June 1, 2003
Waiver of Premium Disability Benefits SVULDW June 1, 2003
Accidental Death Benefit ULADB83 June 1, 2003
B.2 BASIS
The Reinsurer’s share will be
21.052630% of the total ceded amount on each policy on a first dollar quota share basis.
This amount will not exceed the Reinsurer’s share of the maximum Automatic Binding
Limits specified in Exhibit B.3.
B.3 AUTOMATIC BINDING
LIMITS
(a) Life
(Pool) Maximum
Issue Ages Standard - Table 16
----------------------- -------------------------------------------------------------
All $10,000,000
----------------------- -------------------------------------------------------------
The (pool) maximum autobind amounts
above exclude the Ceding Company’s retention
(b)
Waiver of Premium Disability Benefits: Same as for life insurance
(c)
Accidental Death Benefits: $250,000
B.4 JUMBO LIMITS
The Ceding Company will not cede any
risk automatically if, according to information available to the Ceding Company, the total
amount in force and applied for on the life with all insurance companies, including any
amount to be replaced, exceeds the applicable amounts shown below.
(a)
Life: $25,000,000
(b)
Waiver of Premium Disability Benefits: Same as for life insurance
(c)
Accidental Death Benefits: $250,000
B.5 CONDITIONAL RECEIPT
OR TEMPORARY INSURANCE AGREEMENT
The amount of such coverage provided
by the Reinsurer will be limited to its share of the following amounts provided by the
Ceding Company’s Conditional Receipt or Temporary Insurance Agreement.
Age Maximum Amount
----------------------- ------------------------------------------------------------------------------
All The lessor of (1) Automatic Binding Limit in Exhibit B.3. and (2) the amount
less the Maximum Retention in Exhibit A
----------------------- ------------------------------------------------------------------------------
B.6 CESSION LIMITS
(a)
Minimum Initial Cession: Total amount ceded to all reinsurers must exceed
$85,500
(b)
Trivial Amount: Total amount ceded to all reinsurers must exceed $25,000
EXHIBIT C
Forms, Manuals and Issue
Rules
The Underwriting Manual to be used is
the Swiss Re Life & Health America Inc. manual.
EXHIBIT D
Allocation Rules for Placement of
Facultative Cases
Does not apply.
EXHIBIT E
Reinsurance Premiums
E.1 LIFE
| |
Plans
covered under this Agreement will be reinsured on a YRT basis. Reinsurance premiums will
be based on the 75-80 Select & Ultimate (Male & Female) ALB rate scale shown in
this Exhibit E, minus the following discounts. |
Plan(s)/Rider(s) Classification Discount %
Life Coverage Preferred Tobacco - Non User 72% All Years
Standard Tobacco - Non User 52% All Years
Standard Tobacco - User 2% All Years
E.2 AGE BASIS
Age Last Birthday
E.3 POLICY FEES
The Reinsurer will not participate in
any policy fees.
E.4 RECAPTURE PERIOD
Number of years: 10
E.5 STANDARD RATINGS
Premiums will be based on the
standard rate increased by an extra 25% per table of assessed rating.
Discounts are the same as those for standard life coverage.
E.6 EXTRAS
The total premium remitted to the
Reinsurer will include the flat extra premium minus the discounts shown below.
Type of Flat Extra Premium First Year Renewal
Temporary (1-5 years) 10% 10%
Permanent (6 years & greater) 75% 10%
E.7 RIDERS AND BENEFITS
Waiver of Premium
Reinsurance premiums will be 0% of
the Ceding Company’s premiums, as shown in this Exhibit, in the first policy year and
90% in renewal years.
Accidental Death Benefit
Reinsurance premiums will be $0.25
per thousand in the first policy year and $0.90 per thousand in renewal years.
PREMIUM RATES FOR PLANS,
BENEFITS AND RIDERS
EXHIBIT F
Conversion Premiums
Premium rates for conversions to
plans not covered by an existing agreement with the Reinsurer, shall be the same as the
rates defined in Exhibit E of this agreement.
EXHIBIT G
Self-Administered
Reporting
G.1
The Ceding Company will
self-administer all reinsurance reporting. The Ceding Company will send the Reinsurer the
reports listed below at the frequency specified.
Transaction Reports:
Monthly
1. New Business
2. First Year –
Other than New Business3.
Renewal Year4.
Changes and Terminations5.
Accounting
Information
Periodic Reports Annually
6. Statutory Reserve
Information7.
Policy Exhibit Information8.
Inforce
A brief description of the data
requirements follows below.
Transaction Reports
The
Ceding Company agrees to report policy data using the TAI system.
1. New Business
This report will include new issues
only, the first time the policy is reported to the Reinsurer. Automatic and Facultative
business will be identified separately.
2. First Year –
Other than New Business
This report will include policies
previously reported on the new business detail and still in their first duration, or
policies involved in first year premium adjustments.
3. Renewal Year
All policies with renewal dates
within the Accounting Period will be listed.
4. Changes and
Terminations
Policies affected by a change during
the current reporting period will be included in this report. Type of change or
termination activity must be clearly identified for each policy.
The Ceding Company will identify the
following transactions either by separate listing or unique transaction codes:
Terminations, Reinstatements, Changes, Conversions, and Replacements. For Conversions and
Replacements, the Ceding Company will report the original policy date, as well as the
current policy date.
5. Accounting Information
Premiums and allowances will be
summarized for Life coverages, Benefits, and Riders by the following categories: Automatic
and Facultative, First Year and Renewals.
Periodic Reports
6. Statutory Reserve
Information
Statutory reserves will be summarized
for Life coverages, Benefits and Riders. The Ceding Company will specify the reserve basis
used.
7. Policy Exhibit
Information
This is a summary of transactions
during the current period and on a year-to-date basis, reporting the number of policies
and reinsured amount.
8. Inforce
This is a detailed report of each
policy in force.
EXHIBIT H
Application for Facultative Reinsurance
Submitted to:
From: Date:
Policy Number: Increasing Amount: Yes No
Plan Name: If increasing, ultimate amount:
-------------- Birth date Tobacco
Last Name First Middle M/D/Y Sex Use Pref Class
--------------- ------------- -------- ------------- ------- --------- -----------
----------------------------------------------------------------------------------
Joint Insured
--------------- ------------- -------- ------------- ------- --------- -----------
--------------- ------------- -------- ------------- ------- --------- -----------
Life Specify others, e.g. Second
Life, Waiver, ADB, etc.
-------------------------------- -------- ---------------------------------------
Previous inforce with co.:
-------------------------------- -------- ------------------- -------------------
Of which we retain:
-------------------------------- -------- ------------------- -------------------
Now applying for:
-------------------------------- -------- ------------------- -------------------
Of which we will retain:
-------------------------------- -------- ------------------- -------------------
Reins. Amount Applied for:
--------------------------------
In excess of Jumbo: Yes No If Replacement: Internal External
Our Mortality Assessment: Special Risk Features:
(table &/or flat extra) Aviation
Foreign/Travel
Occupation/Avocation
Enclosed Requirements:
Requirements to follow:
Remarks:
Underwriting Contact: Tel #:
e-mail:
EXHIBIT I
Contestable Claims
Procedures
The following claim paying procedures
shall be applied to contestable claims of policies issued by the Ceding Company:
| |
CLAIMS
UP TO $200,000: These claims shall be adjudicated and paid by the Ceding Company
without consultation with any Reinsurers sharing in the ceded risk (Pool Reinsurers). Pool
Reinsurers will receive an initial claim notification. Requests for payment will include a
death certificate and proof of payment only. |
| |
CLAIMS
FROM $200,001 TO $999,999: All Pool Reinsurers shall receive an initial claim
notification, which will identify the Lead Reinsurer on the claim. If the claim is
contestable, the Ceding Company shall send underwriting and investigation data to the
assigned Lead Reinsurer. The Ceding Company shall only consult with the Lead Reinsurer
before making a decision. If the Lead Reinsurer and the Ceding Company agree that the
claim is payable, then the claims will be paid. The Ceding Company will then submit their
claim to the remaining Pool Reinsurers along with the death certificate, the proof of
payment, and a copy of the communication between the Lead Reinsurer and the Ceding Company
that the claim is payable. |
| |
CLAIMS
OF $1,000,000 AND OVER: All Pool Reinsurers shall be involved in the review of the
claim and will receive copies of all documents. Each Reinsurer shall be consulted prior to
payment of the claim. |
| |
CLAIM
DENIALS, COMPROMISES, OR REDUCED BENEFITS DUE TO SUICIDE: In any of these situations,
each member of the Pool will be advised of the planned action. The Ceding Company will
send copies of the claim file to each pool member for their own review. Each Pool Member
will decide if they are in agreement with the prevailing claims decision. |
Lead
Claim Reinsurers may need to confer with the other Pool Reinsurers on unusually complex
claim situations.
LEAD CLAIM REINSURERS
------------------------------------------- --------------------
Lead Lead Claim
Reinsurer Alpha Split
------------------------------------------- --------------------
General & Cologne Re A-F
------------------------------------------- --------------------
Swiss Re G-M
------------------------------------------- --------------------
Munich N-T
------------------------------------------- --------------------
▇▇▇▇▇▇▇ U-Z
------------------------------------------- --------------------
| |
For |
facultative contestable claims of policies issued by the Ceding company, the Lead Claim
Reinsurer will be the Reinsurer which underwrote the policy. |