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EXHIBIT A (9)
Reinsurance Agreement
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BMA
REINSURANCE AGREEMENT
between
SAFECO LIFE INSURANCE COMPANY
Seattle, Washington
hereinafter referred to as the CEDING COMPANY
and
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
Kansas City, Missouri
hereinafter referred to as BMA
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AUTOMATIC TREATY
TABLE OF CONTENTS
ARTICLE PAGE
I BASIS OF REINSURANCE .................................................1
II LIABILITY ............................................................2
III ADMINISTRATIVE REPORTING .............................................3
IV PLANS OF REINSURANCE .................................................5
V REINSURANCE PREMIUM ..................................................5
VI PREMIUM ACCOUNTING ...................................................6
VII OVERSIGHTS ......................... .................................7
VIII REDUCTIONS, TERMINATIONS AND CHANGES .................................7
IX INCREASE IN RETENTION AND RECAPTURES..................................8
X REINSTATEMENTS .......................................................9
XI EXPENSE OF ORIGINAL POLICY............................................9
XII CLAIMS................................................................9
XIII TAX CREDITS...........................................................10
XIV INSPECTION OF RECORDS ................................................11
XV INSOLVENCY............................................................11
XVI ARBITRATION...........................................................12
XVII PARTIES TO AGREEMENT .................................................12
XVIII TERMINATION OF AGREEMENT..............................................13
SCHEDULES
A SPECIFICATIONS
B BENEFITS AND NAR CALCULATIONS
C ADDITIONAL INFORMATION AND EXCEPTIONS
EXHIBITS
I RETENTION LIMITS
IA UNDERWRITING GUIDELINES
II REINSURANCE PREMIUMS
III COMMISSIONS AND ALLOWANCES (COINSURANCE)
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ARTICLE I
BASIS OF REINSURANCE
REINSURANCE UNDER THIS AGREEMENT MUST BE INDIVIDUAL INSURANCE. THE CEDING
COMPANY SHALL AUTOMATICALLY REINSURE THE LIFE INSURANCE FOR THE PLAN(S) AS
STATED IN SCHEDULE A AND ANY ADDITIONAL BENEFITS LISTED IN SCHEDULE B.
1. REQUIREMENTS FOR AUTOMATIC REINSURANCE
A. The individual risk must be a permanent resident of the United
States or Canada.
B. The individual risk must be underwritten by the CEDING COMPANY
according to the standard underwriting practices and guidelines as
shown in Exhibit IA. The CEDING COMPANY shall immediately notify
BMA of any changes in underwriting practices or guidelines. Any
risk falling into a category of special underwriting programs shall
be excluded from this Agreement.
C. Any risk offered on a facultative basis to BMA or any other
reinsurer shall not qualify for automatic reinsurance.
D. The maximum issue age on any risk shall be age 70. Issue ages over
70 must be submitted facultatively.
E. The mortality rating on any one risk must not exceed Table 8, or
300%, or its equivalent on a flat extra premium basis. Cases
exceeding Table 8, or 300%, or its equivalent must be submitted
facultatively.
F. The maximum amount of insurance issued and applied for in all
companies on any one risk shall not exceed the Jumbo limits as
stated in Schedule A.
G. On any risk, the CEDING COMPANY must retain the amounts of
insurance as stated in Exhibit I.
H. The maximum amounts of insurance to be reinsured on any one life
shall not exceed the automatic binding limits as stated in Schedule
A.
I. The minimum amount of insurance to be ceded shall be $5,000.
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2. REQUIREMENTS FOR FACULTATIVE REINSURANCE
A. Plan of Insurance Listed in Schedule A:
(1) If the Requirements for Automatic Reinsurance are met but
the CEDING COMPANY prefers to apply for facultative
reinsurance, or
(2) If Requirements for Automatic Reinsurance are not met then
the CEDING COMPANY must submit to BMA all the underwriting
documentation relating to the insurability of the individual
risk for facultative reinsurance.
B. Plan of Insurance Not Listed in Schedule A:
On a Yearly Renewable Term treaty the CEDING COMPANY may
submit an application for facultative reinsurance on any
plan(s).
On a Coinsurance treaty the Ceding Company cannot submit an
application for facultative reinsurance on plan(s) other
than the plan(s) listed in Schedule A.
C. An application for facultative reinsurance may include life insurance
with or without either disability waiver of premium or accidental
death or both. Only accidental death reinsurance may be submitted
without an application for life insurance.
D. Copies of all underwriting papers relating to the insurability of the
individual risk must be sent to BMA for facultative reinsurance.
After BMA has examined the underwriting papers, BMA will promptly
notify the CEDING COMPANY of the underwriting offer subject to
additional requirements, the final underwriting offer or declination.
Any final underwriting offer on the individual risk will
automatically terminate upon the earliest of:
(1) The date BMA receives notice of a withdrawal/cancellation by
the CEDING COMPANY,
(2) 120 days after the date on which the offer was made, or
(3) The date specified in BMA`s approval to extend the offer.
E. The minimum amount of insurance to be ceded shall be $5,000.
ARTICLE II
LIABILITY
1. BMA's liability for automatic reinsurance shall begin simultaneously with
the CEDING COMPANY's liability.
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2. Except for additional coverage pertaining to conditional receipt as
described in Schedule C, BMA's liability for facultative reinsurance on
individual risks shall not begin unless and until the CEDING COMPANY has
accepted BMA's final and unconditional written offer on the application
for facultative reinsurance.
3. BMA's liability for reinsurance on individual risks shall terminate when
the CEDING COMPANY's liability terminates.
4. As long as the original policy remains in full force, all paid-up
additions and accumulated dividends shall be the liability of the CEDING
COMPANY.
5. In no event shall reinsurance under this Agreement be in force unless the
insurance issued directly by the CEDING COMPANY is in force and is issued
and delivered in a jurisdiction in which the CEDING COMPANY is properly
licensed.
6. The payment of reinsurance premiums in accordance with this Agreement
shall be a condition precedent to the liability of BMA under reinsurance
covered by this Agreement
ARTICLE III
ADMINISTRATIVE REPORTING
1. Self-Administered Business
Promptly after liability for insurance has begun on an individual risk, the
CEDING COMPANY shall have the responsibility of maintaining adequate records for
the administration of the reinsurance account and shall furnish BMA with monthly
reports, in substantial conformity with the following:
A. MONTHLY NEW BUSINESS REPORT
(1) policy number (10) amount reinsured
(2) full name of insured (11) automatic/facultative indicator
(3) date of birth (12) state of residence
(4) sex (13) table rating
(5) issue age (14) flat extra (amount + number of years)
(6) policy date (15) death benefit option (UL products)
(7) underwriting classification (16) net amount at risk
(8) plan of insurance (17) transaction code
(9) amount issued (18) currency if other than U.S.
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B. MONTHLY CONVERSION REPORT
The CEDING COMPANY shall furnish BMA with a separate listing of
reinsurance policies that are conversions or replacements to the plan(s)
as stated in Schedule A. The listing should provide the following
information:
(1) 1 through 18 in 1.A above (4) attained age
(2) original policy date (5) duration
(3) original policy number (6) effective date if other than policy date
C. MONTHLY PREMIUM REPORT
At the end of each month the CEDING COMPANY shall send to BMA a listing of
all reinsurance policies issued or renewing during the past month
accompanied by the reinsurance premiums for such policies. The listing
should be segregated into first year issues and renewals and should
provide the following information:
(1) 1 through 18 in 1.A above
(2) current net amount at risk
(3) On Yearly Renewable Term treaties the net reinsurance premium due
for each reinsured policy with the premium for life and each
supplemental benefit separated.
(4) On Coinsurance treaties the gross reinsurance premium,
commissions, net reinsurance premium and other amounts (e.g.
dividends, cash surrender values) with premium separated for life
and each supplemental benefit.
All monthly lists shall be submitted to BMA no later than the 20th day of
the following month.
D. MONTHLY CHANGE REPORT
The CEDING COMPANY shall report the details of all policy terminations and
changes on the reinsured policies. In addition to the data indicated in
1.A, above, the report should provide information about the nature, the
effective date, and the financial result of the change with respect to
reinsurance.
E. MONTHLY POLICY EXHIBIT REPORT
The CEDING COMPANY shall provide a summary of new issues, terminations,
recaptures, changes, death claims and reinstatements during the month and
the inforce reinsurance at the end of the month.
F. QUARTERLY REPORTING
1. Within ten (10) days following the end of the quarter, the CEDING
COMPANY shall provide BMA with Premiums Due and Unpaid and
Commissions Due and Unpaid. This report may be in summary form
reporting totals by line of business with separate totals for first
year and renewals.
2. Within ten (10) days following the end of the quarter, the CEDING
COMPANY shall provide BMA with totals for the reserve liability
including statutory reserves by valuation basis segregated by
Yearly Renewable Term and Coinsurance.
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G. ANNUAL INFORCE LISTING
Within ten (10) days after the close of the year, the CEDING
COMPANY shall furnish BMA a listing of reinsurance in force by
policy, by year of issue, segregated by Yearly Renewable Term
and Coinsurance and include tax reserves for the same.
H. CLAIMS
Claims shall be reported as incurred on an individual basis.
2. Individual Cession Business
Promptly after liability for reinsurance has begun on the individual risk the
CEDING COMPANY shall send BMA a "Reinsurance Cession". Based on the information
on the "Reinsurance Cession", BMA will prepare and send the CEDING COMPANY a
"Reinsurance Cession Card". When reinsurance is reduced or changed the CEDING
COMPANY shall send BMA an "Amended Reinsurance Cession".
ARTICLE IV
PLANS OF REINSURANCE
1. Life reinsurance shall be ceded on the basis stated in Schedule A.
2. Copies of all life insurance policies, riders, rate manuals, benefit
forms, commuted value tables and cash value tables shall be provided by
the CEDING COMPANY to BMA, and BMA shall be promptly notified of any
changes therein.
ARTICLE V
REINSURANCE PREMIUMS
1. Life Reinsurance Premiums
A. Life Reinsurance Premiums Paid on a Coinsurance Basis
The CEDING COMPANY shall pay the current premium as shown in Exhibit
II based on the amount of life insurance reinsured, less the
allowance stated in Exhibit III. In addition, the CEDING COMPANY
shall pay any substandard table extra and flat extra premiums, but
shall exclude the policy fee. In the event the current premium is
changed, BMA shall be notified by the CEDING COMPANY immediately.
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B. Life Reinsurance Premiums on a Yearly Renewable Term Basis
The life reinsurance premium on the net amount at risk shall be based
on rates shown in Exhibit II.
For those premiums less than the net premium rate or rates based on
the 1980 Smoker/Nonsmoker CSO Table at 4 1/2% interest, only the
latter rate or rates shall be guaranteed. Should BMA increase the
reinsurance premiums to the 1980 Smoker/Nonsmoker CSO Table at 4 1/2%
interest, then the CEDING COMPANY shall have the right to immediately
recapture any business affected by that change.
ARTICLE VI
PREMIUM ACCOUNTING
1. Payment of Reinsurance Premium.
A. The reinsurance premiums shall be paid to BMA using the rates shown
in Exhibit II.
B. On issues ceded by individual cessions BMA shall send the CEDING
COMPANY each month two copies of a statement listing first year and
renewal reinsurance premiums less refunds and allowances which are
due during the current month.
C. On self-administered business the CEDING COMPANY shall provide the
statement to BMA using the format described in Article III Self-
Administered Business.
D. If a net reinsurance premium balance is payable to BMA the CEDING
COMPANY shall pay this balance within forty-five (45) days after the
close of that month. If the full balance is not received within the
forty-five (45) day period, the reinsurance premiums for reinsurance
risks listed on the statement, for which payment was not received,
shall be delinquent and the liability of BMA shall cease as of the
date reinsurance premium were due.
E. If a net reinsurance premium balance is payable to the CEDING
COMPANY, BMA shall pay this net balance within forty-five (45) days
after the monthly statement was sent to the CEDING COMPANY. If the
monthly statement has not been returned within forty-five (45) days,
BMA shall assume the CEDING COMPANY has verified and is in agreement
with the net balance and shall make payment to the CEDING COMPANY.
2. Currency.
The reinsurance premiums and benefits payable under this Agreement shall be
payable in the lawful money of the United States or Canada.
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ARTICLE VII
OVERSIGHTS
1. If there is an unintentional oversight or clerical error in the
administration of this Agreement by either the CEDING COMPANY or BMA, it
can be corrected provided the correction takes place promptly after the
time the oversight or clerical error is first discovered. In that event,
the CEDING COMPANY and BMA will be restored to the position they would
have occupied had such oversight or clerical error not occurred.
ARTICLE VIII
REDUCTIONS, TERMINATIONS AND CHANGES
1. A. If in accordance with policy provisions the original policy
is converted to permanent life insurance, the life risk under the
converted policy which exceeds the amount of risk originally
retained by the CEDING COMPANY shall continue to be reinsured with
BMA.
B. If there is a replacement where full underwriting evidence is not
required according to the CEDING COMPANY regular underwriting rules,
the life risk which exceeds the amount of risk originally retained by
the CEDING COMPANY shall continue to be reinsured with BMA-
C. If there is a replacement where full underwriting evidence is
required by the CEDING COMPANY, reinsurance may be ceded to BMA
subject to a written agreement between BMA and the CEDING COMPANY.
2. If the amount of insurance under a policy or rider reinsured under this
Agreement increases and
A. The increase is subject to new underwriting evidence, the provisions
of Article I shall apply to the increase in reinsurance.
B. The increase is not subject to new underwriting evidence, BMA shall
accept automatically the increase in reinsurance but not to exceed
the automatic binding limit as stated in Schedule A.
3. If the amount of insurance under a policy or rider reinsured under this
Agreement is increased or reduced, any increase or reduction in
reinsurance for the risk involved shall be effective on the effective date
of the increase or reduction in the amount of insurance.
4. If any portion of the prior insurance retained by the CEDING COMPANY
on an individual life reduces of terminates, any reinsurance under
this Agreement based on the same life shall also be reduced or
terminated. The CEDING COMPANY shall reduce its reinsurance by
applying the retention limits which were in effect at the time the
policy was issued. The "reinsurance adjustment due to lapse or
reduction of previous insurance" shall be effective on the same date
as the lapse or reduction of prior insurance. The reinsurance to be
terminated or reduced shall be determined in chronological order by
the date the risk was first reinsured. Two or more policies issued
the same date shall be considered one policy.
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5. If the insurance for a risk is shared by more than one reinsurer, BMA's
percentage of the increased or reduced reinsurance shall be the same as
BMA's percentage of initial reinsurance of the individual risk.
6. If a risk reinsured under this Agreement is terminated, the reinsurance
for that risk shall be terminated as of the effective date of the
termination.
7. For facultative reinsurance, if the CEDING COMPANY reduces the mortality
rating, the reduction shall be subject to the facultative provisions of
this Agreement as stated in Article I, Section 2.
8. BMA shall refund all unearned reinsurance premiums not including policy
fees, less applicable allowances, arising from reductions, terminations
and changes as described in this Article.
ARTICLE IX
INCREASE IN RETENTION
AND RECAPTURES
1. If the CEDING COMPANY changes its retention limits, as listed in Exhibit
I, prompt written notice of the change shall be provided to BMA.
2. The CEDING COMPANY shall have the option of recapturing the reinsurance
under this Agreement in the event the CEDING COMPANY increases its
retention limit and the policies have been in force the required length of
time as stated in Schedule A. The CEDING COMPANY may exercise its option
to recapture by giving written notice to BMA within ninety (90) days after
the effective date of the increase in retention. If the recapture option
is not exercised within ninety days (90) days after the effective date of
the increase in retention the CEDING COMPANY may choose to recapture at a
later date. In that case, the date of the written notification to BMA
shall determine the effective date the recapture program shall begin.
3. If the CEDING COMPANY exercises its option to recapture, then:
A. The CEDING COMPANY shall reduce the reinsurance on all individual
risks on which it retained its maximum retention for the age and
mortality rating that was in effect at the time the reinsurance was
ceded.
B. The CEDING COMPANY shall increase its total amount of insurance on
the individual risk up to its new retention by reducing the amount of
reinsurance. If an individual risk is shared by more than one
reinsurer, BMA's percentage of the reduced reinsurance shall be the
same as BMA's initial percentage of reinsurance on the individual
risk.
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C. The reduction of reinsurance shall become effective on the later of the
following dates:
(1) The policy anniversary date immediately following the date the
recapture program is to begin as determined by paragraph 2. of
this Article;
(2) The number of years stated in Schedule A starting with the
"policy date."
D. In the event the CEDING COMPANY overlooks any reduction in the amount
of a reinsurance policy because of an increase in the CEDING
COMPANY's retention, the acceptance by BMA of reinsurance premiums
under these circumstances shall not constitute a liability on the
part of BMA for such reinsurance. BMA shall be liable only for a
refund of premiums.
4. No recapture shall be permitted for reinsurance on an individual risk if
(a) the CEDING COMPANY retained less than its maximum retention for the
age and mortality rating in effect at the time the reinsurance was ceded
to BMA, or if (b) the CEDING COMPANY did not retain any of the individual
risk.
ARTICLE X
REINSTATEMENT
1. If a policy reinsured under this Agreement lapses for nonpayment of
premium or is continued on the Reduced Paid-up or Extended Term Insurance
basis, and is reinstated in accordance with the terms of the policy and
the CEDING COMPANY's rules, the reinsurance on such policy shall
automatically be reinstated by BMA upon written notice of such
reinstatement. The CEDING COMPANY shall pay BMA all back reinsurance
premiums.
ARTICLE XI
EXPENSE OF ORIGINAL POLICY
The CEDING COMPANY shall bear the expense of all medical examinations,
inspection fees, and other charges in connection with the issuance of the
insurance.
ARTICLE XII
CLAIMS
1. The CEDING COMPANY shall give BMA prompt notice of any claim. Copies of
the proofs obtained by the CEDING COMPANY together with a statement
showing the amount due or paid on such claim by the CEDING COMPANY shall
be furnished to BMA. at the time payment is requested.
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2. BMA shall accept the decision of the CEDING COMPANY in settling the claim
and shall pay its portion to the CEDING COMPANY upon receipt of proof that
the CEDING COMPANY has paid the claimant. It is agreed, however, that if a
lesser amount at risk is retained by the CEDING COMPANY than the amount
ceded to BMA, the CEDING COMPANY shall consult with BMA concerning its
investigation and/or payment of the claim, although the final decision
shall be that of the CEDING COMPANY.
3. The CEDING COMPANY shall notify BMA of its intention to contest,
compromise, or litigate a claim involving reinsurance, and BMA shall pay
its share of the payment and specific claim expenses therein involved.
"Claim expenses" shall be deemed to mean only the reasonable legal and
investigative expenses connected with the litigation or settlement of
claims. "Claim expenses" shall not include expenses incurred in connection
with a dispute or contest arising out of conflicting claims of entitlement
to policy proceeds which the CEDING COMPANY admits are payable or any
routine claim administrative expenses including compensation of salaried
officers and employees of the CEDING COMPANY and any possible
extracontractual damages.
4. In the event the amount of insurance provided by a policy or policies
reinsured hereunder is increased or reduced because of a misstatement of
age or sex established after the death of the insured, BMA shall share in
the increase or reduction in the proportion that the net liability of BMA
bore to the sum of the retained net liability of the CEDING COMPANY and
the net liability of other reinsurers immediately prior to such increase
or reduction. The reinsurance with BMA shall be written from commencement
on the basis of the adjusted amounts using premiums and reserves at the
correct ages and sex. The adjustment for the difference in premiums shall
be made without interest.
5. It is understood and agreed that the payment of a death claim by BMA shall
be made in one sum regardless of the mode of settlement under the policy
of the CEDING COMPANY.
6. In no event shall BMA have any liability for any Extra-Contractual damages
which are assessed against the CEDING COMPANY as a result of acts,
omissions or course of conduct committed by the CEDING COMPANY or its
agents, other than a good faith decision to deny claim liability, in
connection with insurance reinsured under this Agreement. It is recognized
that there may be special circumstances involved which indicate that BMA
should participate in certain assessed damages. These circumstances are
not amenable to advance specific definition, but could include those
situations in which BMA was an active party in the act, omission or course
of conduct which ultimately results in the assessment of such damages. The
extent of such participation will be determined on a good faith assessment
of culpability in each case, but all factors being equal, the division of
any such assessment will generally be in the proportion of net liability
borne by each party.
7. If a claim is approved for disability waiver of premium insurance
reinsured under this Agreement, the CEDING COMPANY shall continue to pay
reinsurance premiums to BMA. BMA shall reimburse the CEDING COMPANY BMA's
share of the annual liability.
ARTICLE XIII
TAX CREDITS
In jurisdictions which impose premium taxes on the CEDING COMPANY without
deduction for reinsurance, BMA shall reimburse the CEDING COMPANY for taxes
paid on the amount of the reinsurance premiums on the basis shown in Schedule A,
unless BMA itself is required to pay a direct tax on such reinsurance premiums.
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ARTICLE XIV
INSPECTION OF RECORDS
BMA shall have the right, at any reasonable time, to inspect at the office of
the CEDING COMPANY, all books and documents which relate to reinsurance under
this Agreement.
ARTICLE XV
INSOLVENCY
1. In the event of insolvency of the CEDING COMPANY, all reinsurance shall be
payable by BMA directly to the CEDING COMPANY or its liquidator, receiver,
or statutory successor, on the basis of the liability of the CEDING
COMPANY under the policy or policies reinsured, without diminution because
of the insolvency of the CEDING COMPANY.
2. It is agreed that the liquidator, receiver, or statutory successor of the
insolvent CEDING COMPANY shall give written notice to BMA of the pending
of a claim against the insolvent CEDING COMPANY on any policy reinsured
within a reasonable time after such claim is filed in the insolvency
proceedings. During the pendency of any such claim BMA may investigate
such claim and interpose, in the proceeding where such claim is to be
adjudicated, any defense or defenses which BMA may deem available to the
CEDING COMPANY or its liquidator, receiver, or statutory successor. The
expense thus incurred by BMA shall be chargeable, subject to court
approval, against the insolvent CEDING COMPANY as part of the expense of
liquidation to the extent of a proportionate share of the benefit which
may accrue to the CEDING COMPANY solely as a result of the defense
undertaken by BMA.
3. Where two or more reinsurers are participating in the same claim and a
majority in interest elect to interpose a defense to such claim, the
expense shall be apportioned in accordance with the terms of the Agreement
as though such expenses had been incurred by the CEDING COMPANY.
4. Any debts or credits, matured or unmatured, liquidated or unliquidated, in
favor of or against either the CEDING COMPANY or BMA with respect to this
agreement or with respect to any other claim of one party against the
other are deemed mutual debts or credits, as the case may be, and shall be
set off, and only the balance shall be allowed or paid.
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ARTICLE XVI
ARBITRATION
1. It is the intention of the CEDING COMPANY and BMA that the customs and
practices of the insurance and reinsurance industry shall be given full
effect in the operation and interpretation of this Agreement. The parties
agree to act in all things with the highest good faith. However, if BMA
and the CEDING COMPANY cannot mutually resolve a dispute or claim which
arises out of or relates to this agreement, the dispute or claim shall be
settled through arbitration.
2. The arbitrators shall be impartial regarding the dispute, and shall base
their decision on the terms and conditions of this agreement plus, as
necessary, on the customs and practices of the insurance and reinsurance
industry.
3. There shall be three arbitrators who must be officers of life insurance
companies other than the parties to this agreement. Each of the parties to
this agreement shall appoint one of the arbitrators and these two
arbitrators shall select the third. If a party to this agreement fails to
appoint an arbitrator within thirty days after the other party to this
agreement has given notice of the arbitrator appointment, the American
Arbitration Association shall appoint an arbitrator for the party to this
Agreement that has failed to do so. Should the two arbitrators be unable
to agree on the choice of the third, then the appointment of this
arbitrator is left to the American Arbitration Association.
4. Except for the appointment of arbitrators in accordance with the
provisions of Section 3 of this Article, arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association which are in effect on the date of delivery of
demand for arbitration. Arbitration shall be conducted in Kansas City,
Missouri.
5. Each party to this agreement shall pay part of the arbitration expenses
which are apportioned to it by the arbitrators.
6. The award agreed by the arbitrators shall be final, and judgment may be
entered upon it in any court having jurisdiction.
ARTICLE XVII
PARTIES TO AGREEMENT
This is an Agreement for indemnity reinsurance solely between the CEDING COMPANY
and BMA. The acceptance of reinsurance under this Agreement shall not
create any right or legal relation whatever between BMA and the insured, owner,
or any other party to or under any policy reinsured under this Agreement.
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ARTICLE XVIII
TERMINATION OF AGREEMENT
1. This Agreement may be terminated at any time by either party giving at
least ninety (90) 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 shall be the first day of the ninety-day (90) period.
2. The CEDING COMPANY shall continue to cede reinsurance and BMA shall
continue to accept reinsurance, as provided for by the terms of this
Agreement, until the date of termination.
3. All automatic reinsurance which became effective prior to the termination
of this Agreement and all facultative reinsurance approved by BMA based
upon applications received prior to termination of this Agreement shall
remain in effect until its termination or expiration, unless the CEDING
COMPANY and BMA mutually decide otherwise.
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IN WITNESS WHEREOF, this agreement shall be effective with policies dated 12:01
A.M. January 1, 1993 and is hereby executed in duplicate between
SAFECO LIFE INSURANCE COMPANY
Seattle, Washington
referred to as the CEDING COMPANY
and
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
Kansas City, Missouri
referred to as BMA,
and duly signed by both parties' respective officers as follows:
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
CEDING COMPANY
/s/ [Signature Illegible] Actuary 1-25-93
_____________________________ _________________________
Signature Title
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ Asst. Vice Pres.
_____________________________ _________________________
Signature Title
Jan. 26, 1993
______________________
date
BMA
/s/ [Signature illegible]
_____________________________ Managing Director/Reinsurance
signature title
/s/ ▇.▇. ▇▇▇▇▇ Reinsurance
_____________________________ Administrative Vice President
signature title
February 2, 1993
_____________________________
date
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SCHEDULE A
SPECIFICATIONS
1. TYPE OF BUSINESS:
Life insurance issued by the CEDING COMPANY
2. TYPE OF REPORTING
Self-administered
3. PLANS OF INSURANCE:
Single life plans
4. BASIS OF REINSURANCE: Automatic Yearly Renewable Term
SURNAME ALPHABETIC DIVISION: A-Z
25% Quota share
5. JUMBO LIMIT:
A. Life: $20,000,000
B. Accidental Death: $300,000
6. BINDING LIMIT:
A. Life: Two (2) times the retention of the CEDING COMPANY
B. Waiver of Premium or Monthly Cost of Insurance: Amounts
equal to but not exceeding the premiums payable to the
CEDING COMPANY for the amount of life insurance ceded to
BMA.
C. Accidental Death: $200,000
7. YEARS TO RECAPTURE:
Ten (10) years
8. PREMIUM TAX REIMBURSEMENT:
Premium taxes reimbursed based on reinsurance premiums received.
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SCHEDULE B
The following benefits are reinsured under this agreement:
1. LIFE
A. Single Life Plans - The net amount at risk shall be provided by
the CEDING COMPANY on the self-administered reports.
2. WAIVER OF PREMIUM OR MONTHLY COST OF INSURANCE
Reinsurance premiums in the first year is zero. Renewal reinsurance
premiums to BMA are 90% of the gross disability premium charged the
insured by the CEDING COMPANY on the initial amount reinsured for
waiver of premium and the amount reinsured for monthly cost of
insurance.
3. ACCIDENTAL DEATH
Reinsurance premium in the first year is zero. Renewal premiums are
90% of the premium charged the insured by the CEDING COMPANY on the
initial amount reinsured.
20
SCHEDULE C
ADDITIONAL INFORMATION
1. This agreement includes coverage for conditional receipt liability
for facultative cases sent to BMA In no event shall BMA's
conditional receipt liability exceed $750,000.00 or the automatic
binding limit specified in Schedule A, whichever is less.
BMA's conditional receipt liability shall begin simultaneously with
the CEDING COMPANY's liability and shall cease upon:
A. BMA's declination of the risk, or
B. The first acceptance by the CEDING COMPANY of an unconditional
offer by a reinsurer other than BMA, or
C. The expiration of 120 days from the date BMA's facultative
offer is communicated to the CEDING COMPANY.
2. This agreement includes coverage for a Guaranteed Insurability
Option Rider using the rates shown in Schedule 1.
3. BMA will accept individual cessions up to $10,000,000 on the
premium schedules marked Exhibit II and III; reinsurance rates
marked Exhibit IV will apply to amounts in excess of $10,000,000.
4. Reinsurance premiums are based on a percentage applied to BMA's ALB
rates.
5. There arc no policy fees paid to BMA under this agreement.
6. Term riders reinsured shall be charged the same rate as the base
plan.
EXCEPTIONS
1. Article III, Administrative Reporting,
All reporting will be furnished to BMA on a quarterly basis.
21
EXHIBIT I
RETENTION SCHEDULE
CEDING COMPANY: SAFECO LIFE INSURANCE COMPANY
CEDING COMPANY'S MAXIMUM LIMITS OF RETENTION - MALE AND FEMALE
EFFECTIVE WITH POLICIES DATED:
LIFE
Please be sure to show your limit of retention for all ages and all rate
classifications. Show "none" in all categories where you have no retention.
SUBSTANDARD SUBSTANDARD SUBSTANDARD
ISSUE TABLE FLAT EXTRA TABLE FLAT EXTRA TABLE FLAT EXTRA
AGES STANDARD All
All* $500,000 $500,000
*Ages 0-80
DISABILITY
Is your Disability (Waiver of Premium, Waiver of Monthly Deduction) retention
the same as Life? No
----
If not, explain. U.L. PLANS: REINSURED IN PROPORTION TO BASE COVERAGE REINSURED.
NON U.L. PLANS: (THESE ARE PRIMARILY TERM): RETENTION OF
$10,000 ANNUAL PREMIUM.
Do you have a separate retention for Payor Benefit issued in connection with
children's policies, based on commuted amount of premium? No If so, what is
the commuted amount retention? ----
----
ACCIDENTAL DEATH (ADB)
$ 250,000 (maximum issue: lesser of: $250,000 or 3 times base)
Does your ADB retention apply to any ADB rate classification assigned? No
----
Is ADB retention in addition to Life amount above? No
----
22
EXHIBIT IA
UNDERWRITING GUIDELINES
Principle Underwriting Manual NARe'S
SAFECO LIFE MEDICAL REQUIREMENTS
*AGES 0-34 AGES 35-45 AGES 46-50 AGES 51-60 AGES 61-70 AGES 71-80
---------- ---------- ---------- ---------- ---------- ----------
**Amounts Non-Med Non-Med Non-Med Paramed-I Paramed-II MD Exam
0-50,000 EKG
SMA-HORL
50,001- Non-Med Non-Med Paramed-I Paramed-I Paramed-II MD Exam
99,999 EKG
SMA-HORL
100,000- Paramed-I Paramed-I Paramed-I Paramed-I Paramed-II MD Exam
249,999 MP-▇▇▇▇ ▇▇-▇▇▇▇ ▇▇-▇▇▇▇ ▇▇-▇▇▇▇ ▇▇-HORL EKG
SMA-HORL
250,000- Paramed-I Paramed-I Paramed-II Paramed-II MD-Exam MD Exam
499,999 MP-▇▇▇▇ ▇▇-▇▇▇▇ ▇▇-▇▇▇▇ ▇▇-HORL EKG EKG
SMA-HORL SMA-HORL
500,000- Paramed-I Paramed-II Paramed-II MD Exam MD Exam MD Exam
1,000,000 SMA-HORL SMA-HORL SMA-HORL EKG XKG EKG
SMA-HORL SMA-HORL SMA-HORL
1,000,001- MD Exam MD Exam MD Exam MD Exam MD Exam MD Exam
2,000,000 SMA-HORL EKG EKG XKG XKG EKG
SMA-HORL SMA-HORL SMA-HORL SMA-HORL SMA-HORL
X-Ray
***Over MD Exam MD Exam MD Exam MD Exam MD Exam MD Exam
2,000,000 EKG XKG XKG XKG XKG EKG
SMA-HORL SMA-HORL SMA-HORL SMA-HORL SMA-HORL SMA-HORL
SMKR: X-Ray SMKR: X-Ray SMKR: X-Ray X-Ray
NOTE: HOS-HORL required with every exam or blood test.
*NON-MEDICAL: AGES 0-15 ARE NON-MEDICAL THROUGH $249,999. ENTER CHART AT
$250,000 and up.
**If GIO is applied for, include amount of first GIO option in arriving at the
exam requirements.
***A chest X-Ray is required for amounts $5 million and up, all ages, smokers
and non-smokers.
SEE REVERSE SIDE FOR LIST OF APPOINTED PARAMEDICAL COMPANIES AND INSTRUCTIONS
FOR ORDERING MEDICAL REQUIREMENTS.
Effective June 15, 1992
23
EXHIBIT IIA
FLAT EXTRA PREMIUMS
PERMANENT EXTRAS (for more than Five Years)
Reinsurance premium in the first year are zero. In renewal years,
it is 80% of the flat extra premium charged the insured by the
CEDING COMPANY, multiplied by the initial amount ceded. (For cost
of insurance plans use net amount at risk)
TEMPORARY EXTRA (for Five Years or Less)
Reinsurance premium is 80% of the flat extra premium charged the
insured by the CEDING COMPANY in first and renewal years,
multiplied by the initial amount ceded. (For cost of insurance
plans, use net amount at risk)
SUBSTANDARD PREMIUMS
Substandard premiums are increased standard premiums 25% per Table.
24
ADDENDUM
to the Automatic Umbrella Reinsurance Agreement
covering Single life plans
dated January 1, 1993
between
SAFECO LIFE INSURANCE COMPANY
Seattle, Washington
(hereinafter called the CEDING COMPANY)
and
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
Kansas City, Missouri
(hereinafter called the BMA)
Purpose: To include BMA's second excess automatic coverage on the
Variable Universal Life plan.
1. BMA shall accept two times the retention of the CEDING
COMPANY (25% of the maximum $4,000,000 pool) of the
second excess coverage for the Variable Universal Life
plan. BMA will not participate in the first excess (30%
of the issue amount) up to the maximum of first excess
participation ($214,000). When the insurance amount
exceeds the CEDING COMPANY's retention and the first
excess limits, BMA will accept 25% of the second excess
reinsurance.
2. THE EFFECTIVE DATE shall be January 1, 1993.
Except as herein amended, the provisions of the said Reinsurance Agreement shall
remain unchanged.
IN WITNESS WHEREOF, this addendum is hereby executed in duplicate between the
parties concerned, and is duly signed by both parties respective officers as
follows:
CEDING COMPANY Actuary
/s/ [Signature Illegible] 1-25-93
_______________________________ ___________________
signature title
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ Asst. Vice President
_______________________________ ____________________
signature title
Jan. 26, 1993
________________________
date