[TransAccumulator VUL]
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 Cedar Rapids, Iowa
(Executive Offices: Los Angeles, California)
Effective Month Day, Year
TABLE OF CONTENTS
ARTICLE I - BASIS OF REINSURANCE 1
ARTICLE II - LIABILITY 3
ARTICLE III - NOTIFICATION OF REINSURANCE 4
ARTICLE IV - PLANS OF REINSURANCE 4
ARTICLE V - REINSURANCE PREMIUMS 4
ARTICLE VI - PREMIUM ACCOUNTING 5
ARTICLE VII - CONFIDENTIAL INFORMATION 6
ARTICLE VIII - ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT 7
ARTICLE IX - OVERSIGHTS 8
ARTICLE X - REDUCTIONS, TERMINATIONS AND CHANGES 8
ARTICLE XI - INCREASE IN RETENTION 9
ARTICLE XII - REINSTATEMENT 11
ARTICLE XIII - EXPENSES 11
ARTICLE XIV - CLAIMS 11
ARTICLE XV - EXTRA-CONTRACTUAL DAMAGES 13
ARTICLE XVI - INSPECTION OF RECORDS 13
ARTICLE XVII - INSOLVENCY 13
ARTICLE XVIII - ARBITRATION 14
ARTICLE XIX - SPECIAL TERMINATION 15
ARTICLE XX - DEFERRED ACQUISITION COST TAX 16
ARTICLE XXI - SEVERABILITY CLAUSE 17
ARTICLE XXII - PARTIES TO AGREEMENT 17
ARTICLE XXIII - DURATION OF AGREEMENT 17
ARTICLE XXIV - ENTIRE AGREEMENT 18
SCHEDULE A - SPECIFICATIONS 20
SCHEDULE B - BENEFITS 22
SCHEDULE C - DEFINITIONS 23
SCHEDULE D - CONDITIONAL RECEIPT 26
EXHIBIT I - REINSURANCE CESSION CARD 28
EXHIBIT II - REINSURANCE PREMIUMS 29
EXHIBIT III - RETENTION, BINDING AND ISSUE LIMITS 31
EXHIBIT IV - SPECIAL AUTOMATIC BINDING CAPACITY 32
EXHIBIT V - BASE RATES 34
EXHIBIT VI - SUBSTANDARD TABLE A RATES 35
EXHIBIT VII - WAIVER PROVISION ANNUALIZED MO. DEDUCTION RATES PER $1,000 36
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. 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. The individual risk must be underwritten by us according to our
standard underwriting practices and guidelines. Any risk falling
into the category of special underwriting programs will be
excluded from this Agreement unless previously agreed to by you
via a letter amendment.
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 80; and for
disability waiver of premium, age 55. The issue age basis for
policies issued under this Agreement is age nearest birthday.
E. The mortality rating on each individual 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. The mortality
rating for a disability waiver of premium risk must not exceed
Table 4, Table D, or 200%.
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 may include life
insurance with or 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. 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 offering and our
accepting the risk in writing.
3. Your maximum liability under the conditional receipt or temporary
insurance agreement is limited to the lesser of i and ii below:
i. The Conditional Receipt Automatic Acceptance Limit as shown in Schedule
D.
ii. The Reinsurer's Automatic portion reinsured as shown in Schedule A.
4. Your liability for reinsurance on the individual risk will terminate
when our liability terminates.
ARTICLE III - NOTIFICATION OF REINSURANCE
1. For automatic reinsurance, we will notify you on the quarterly statement
as described in Article VI.
2. For facultative reinsurance, promptly after our liability for insurance
has begun on the individual risk, we will prepare and send you a
"Reinsurance Cession Card", Exhibit I. You will complete the
"Reinsurance Cession Card" and return one copy to us.
3. When reinsurance is reduced or changed, we will notify you on the
quarterly accounting statement or we will send you an amended
"Reinsurance Cession Card".
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 V and VI 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. For automatic reinsurance, such payments will be made following
the close of each calendar quarter, and would cover policies that
have newly become in force or reached their anniversaries in that
quarter. At the close of each calendar quarter, we will send you
a statement and a listing of new business, changes and
terminations.
C. For facultative reinsurance, such payments will be made following
the close of each month, and would cover policies that have newly
become in force or reached their anniversaries in that month.
Each month we will send you a statement listing first year and
renewal reinsurance premiums less refunds and allowances
(dividends and cash values, if applicable) which are due during
the current month.
D. If a net reinsurance premium balance is payable to you, we will
include with the statement the amount of the net balance.
E. 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 - ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT
You agree that you will abide by the following statement in connection with this
reinsurance agreement:
Your company and all of your representatives and service providers will
hold all private, non-public policyholder information furnished to you
for the purpose of providing services to you under any reinsurance
agreement in strict confidence. By reference to private, non-public
policyholder information, you mean all policyholder or other consumer
financial or health information furnished to or obtained by you, your
representatives or your service providers in order to carry out your
duties and obligations under this reinsurance agreement with us. You will
only use such information for the purpose of performing services under
this reinsurance agreement. Such information will only be disclosed to a
third party for the purpose of carrying out your duties under this
reinsurance agreement, to retrocessionaires or your service providers or
as required or permitted by law. You will take reasonable steps necessary
to protect such information from unauthorized or inadvertent disclosure.
ARTICLE IX - 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 X - 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.
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, 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 XI - 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 or on the
"Reinsurance Cession Card".
ARTICLE XII - 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 XIII - EXPENSES
We must pay the expense of all medical examinations, inspection fees and other
charges in connection with the issuance of the insurance.
ARTICLE XIV - 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. If a claim is approved for disability waiver of premium insurance
reinsured under this Agreement, we will continue to pay the reinsurance
premiums to you. You will reimburse us for your share of the annual
liability.
7. 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.
8. 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 XV - 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 XVI - 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 XVII - 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 XVIII - 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 XIX - SPECIAL TERMINATION
[Text Redacted]
ARTICLE XX - 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 XXI - 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 XXII - 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 XXIII - DURATION OF AGREEMENT
1. Except as provided under Article XIX, 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 XXIV - 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 of Cedar Rapids, Iowa
(Executive Offices:
Los Angeles, California)
on _________________, Year. on _________________, Year.
By _________________________ By _________________________
Title: Vice President
By _________________________ By _________________________
Title: Second Vice President