General & Cologne Life Re
Automatic Yearly Renewable Term
Reinsurance Agreement
Treaty #U001-006
between
Union Central Life Insurance Company
Cincinnati, Ohio
and
General & Cologne Life Re of America
Stamford, Connecticut
REINSURANCE AGREEMENT
Summary
COMPANY: UNION CENTRAL LIFE INSURANCE COMPANY
Cincinnati, Ohio
TREATY NUMBER: U001-006
ACCOUNT NUMBER: 3637
REINSURER: GENERAL & COLOGNE LIFE RE OF AMERICA
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
EFFECTIVE DATE: March 1, 2000
PLANS COVERED: See Exhibit A
TYPE OF TREATY: Automatic YRT
RETENTION: See Exhibit A
BINDING LIMIT: See Exhibit A
PREMIUMS: The premium rates are shown in Exhibit B.
ADMINISTRATIVE See Exhibit C
BASIS:
POLICY FEE: No policy fee.
PREMIUM TAX: Not reimbursed.
MINIMUM CESSION: Amounts of reinsurance less than $25,000 will
not be ceded under this Agreement. Cessions
less than $25,000 can be automatically
terminated at the option of Company or the
Reinsurer.
MINIMUM
FACULTATIVE
SUBMISSION: Greater of $50,000 or the plan minimum
reinsurance risk per cession.
JUMBO LIMIT: See Exhibit A.
RECAPTURE: After 20 policy years.
In the event of any conflict between this Summary Page and the
terms and conditions of the Reinsurance Agreement, the terms and
conditions of the Agreement shall govern.
>page>
TABLE OF CONTENTS
PAGE
ARTICLE I.
PARTIES TO THE AGREEMENT 1
ARTICLE II. AUTOMATIC REINSURANCE 2
A. General Conditions
B. Coverages
C. Ceding upon Maximum Retention
D. Ceding upon Less than Maximum Retention
ARTICLE III. FACULTATIVE REINSURANCE 3
A. Procedure
B. Continuing Notice Obligation
C. Minimum Facultative Submission
ARTICLE IV. LIABILITY 4
A. Automatic Reinsurance
B. Facultative Reinsurance
C. Conditional Receipt
ARTICLE V. REINSURANCE BENEFIT AMOUNTS 5
A. Life
B. Waiver of Premium
C. Accidental Death Benefit
ARTICLE VI. REDUCTIONS, TERMINATIONS AND CHANGES 7
A. Reductions and Terminations
B. Contractual Increases
C. Noncontractual Increases
D. Nonforfeiture Benefits
E. Reinstatements
ARTICLE VII. CONVERSIONS, EXCHANGES AND REPLACEMENTS 8
A. Conversions
B. Exchanges and Replacements
ARTICLE VIII. PREMIUMS 9
A. Premium Payment
B. Delayed Payment
C. Failure to Pay Premium
D. Premium Rate Guarantee
ARTICLE IX. CLAIMS 10
A. Liability
B. Proof of Loss
C. Settlement
D. Contested Claims
E. Extra-Contractual Damages
F. Misstatement
TABLE OF CONTENTS
PAGE
ARTICLE X. RECAPTURE 12
ARTICLE XI. GENERAL PROVISIONS 13
A. Premium Tax
B. Offset
C. Currency
D. Company Data
E. Errors and Omissions
F. Inspection of Records
ARTICLE X11. DAC TAX 14
ARTICLE XIII. INSOLVENCY 15
ARTICLE XIV. ARBITRATION 16
ARTICLE XV. DURATION OF AGREEMENT 17
ARTICLE XVI. EXECUTION 18
EXHIBIT A - PLANS, RETENTION AND BINDING LIMITS
EXHIBIT B - REINSURANCE PREMIUMS
EXHIBIT C - REPORTING METHOD
EXHIBIT D - APPLICATION FORM
ARTICLE I
PARTIES TO THE AGREEMENT
This is an agreement for indemnity reinsurance (the "Agreement")
solely between Union Central Life Insurance Company, of
Cincinnati, Ohio (the "Company") and General & Cologne Life Re
of America, a Connecticut Corporation (the "Reinsurer"). This
Agreement shall be construed in accordance with the laws of the
State of Connecticut.
This Agreement shall constitute the entire agreement between the
parties with respect to the business reinsured hereunder. There
shall be no understanding between the parties other than that
expressed in this Agreement. Any change or modification to this
Agreement shall be null and void unless made by amendment to
this Agreement and signed by both parties.
The acceptance of risks under this Agreement shall create no
right or legal relation whatsoever between the Reinsurer and the
insured, owner, or beneficiary of any insurance policy or other
contract of the Company.
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GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE II
AUTOMATIC REINSURANCE
A. General Conditions. On or after 12:01 A.M. Eastern Standard
Time on the effective date of this Agreement, reinsurance
under this Agreement shall be in force and binding on the
Reinsurer provided that the issuance of such insurance by
the Company constitutes the transaction of business in a
jurisdiction in which the Company is properly licensed, the
insurance is issued on the lives of residents of the United
States or Canada, and the reinsurance premiums continue to
be paid in accordance with this Agreement.
B. Coverages. Life insurance, Waiver of Premium Disability
benefits for an amount not greater than the corresponding
life insurance, Accidental Death Benefits and benefits
under associated riders are the coverages reinsured
automatically under this Agreement, up to the limits
shown in Exhibit A.
C. Ceding upon Maximum Retention. When the Company retains its
maximum limit of retention with respect to a life, as shown
in Exhibit A, the Company shall cede and the Reinsurer shall
automatically accept as reinsurance under the terms and
conditions of this Agreement, liability on individual life
insurance on such life, together with all reinsured
supplemental coverages, provided that the policies, are
issued directly by the Company on those plans of insurance
shown in Exhibit A and fully underwritten by the Company at
its home office or any regional home office in accordance
with its usual underwriting standards and requirements
which the Reinsurer has acknowledged in writing.
Reinsurance shall not be ceded automatically to the
Reinsurer on any risk if:
1. the amount of reinsurance causes the Binding Limit, shown
in Exhibit A, to be exceeded, or
2. the amount of insurance causes the Jumbo Limit, as shown
in Exhibit A, to be exceeded, or
3. the Company has submitted the risk for facultative
underwriting consideration to any reinsurer, including
the Reinsurer, within five years, or
4. the substandard mortality rating assessed to the risk
exceeds Table P (500%) or its equivalent on an extra
premium basis, or
5. the risk at the time of issue exceeds the maximum issue
age shown in Exhibit A.
D. Ceding While Retaining Less Than Full Retention. When the
Company retains or has retained less than its maximum limit
of retention on a life and all other conditions in Section C
above are satisfied, the Company may cede automatically only
an amount equal to or less than the amount retained.
2
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE III
FACULTATIVE COVERAGE
A. Procedure. When a risk does not qualify for automatic
reinsurance or if the Company so desires, the Company may
request facultative consideration of any risk on those plans
of insurance shown in Exhibit A by sending the Reinsurer a
reinsurance application form, in substantially the form as
set forth in Exhibit D, showing details of the risk together
with copies of the original application and all information
known to the Company pertaining to the insurability of the
risk. The Reinsurer shall give the reinsurance application
prompt consideration and shall notify the Company of its
decision and risk classification.
After the first premium has been received by the Company
on a policy that has been submitted to and accepted by the
Reinsurer on a facultative basis, the Company shall promptly
report placement of the policy to the Reinsurer in the
agreed upon format.
Unless specifically agreed to the contrary, the Reinsurer
shall hold its offer on a pending case open for ninety (90)
days, at the end of which time the Reinsurer shall, in the
absence of notification of case status, routinely close its
file and consider the offer to reinsure as formally
withdrawn.
B. Continuing Notice Obligation. Both prior to and subsequent
to the Reinsurer's acceptance of a risk, the Company shall
send to the Reinsurer all information that is related to the
insurability of such risk.
C. Minimum Facultative Submission. The minimum facultative
submission under this Agreement shall be as shown in the
Summary Page.
3
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE IV
LIABILITY
A. Automatic Reinsurance. The liability of the Reinsurer on any
automatic reinsurance covered under this Agreement shall
begin and end simultaneously with that of the Company,
subject to the conditions of Article II.
B. Facultative Reinsurance. The liability of the Reinsurer on
any facultative reinsurance covered under this Agreement
shall begin and end simultaneously with that of the Company
provided that the Reinsurer has given the Company an offer
to reinsure the risk, and the Company has indicated
acceptance and acts in accordance with the Reinsurer's
offer. The Reinsurer shall become liable for its share of
the risk, provided that the policy has been delivered
according to the usual procedures of the Company and that
the Company has followed its facultative coverage rules for
reinsurance placement.
C. Conditional Receipt. The Reinsurer will accept liability on
the Company's Conditional Receipt or Pre-paid business up to
the amount shown in Exhibit A, provided that all procedures,
terms and conditions of the Company's Conditional Receipt
are followed. All Conditional Receipt forms in use by the
Company, as well as any subsequent changes or modifications
must be approved in writing by the Reinsurer.
1. Coverage for Automatic Reinsurance. The Reinsurer's
liability on automatic reinsurance shall begin and end
with the Company's conditional receipt liability.
2. Coverage for Facultative Reinsurance. For those risks
submitted facultatively, conditional receipt liability
shall not commence until the Reinsurer has made an
explicit acceptance of the risk.
3. Discrepancy with Conditional Receipt. In the case where
the conditional receipt is given for an amount less than
the policy application, the Reinsurer shall not be liable
for more than its proportionate share of the maximum
limit as shown in the Company's conditional receipt.
4
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE V
REINSURANCE BENEFIT AMOUNTS
A. Life. Reinsurance under this Agreement for Life Insurance is
on a Yearly Renewable Term Reinsurance basis. The
reinsurance benefit shall be determined in the manner
described below, unless otherwise mutually agreed.
1. Cash Value Plans. The net amount at risk of the policy is
defined to be the death benefit minus the terminal
reserve. The amount of reinsurance benefit at each policy
duration is the death benefit of the policy minus the
initial amount retained minus the terminal reserve on the
portion of the policy reinsured. The Company shall notify
the Reinsurer of the Reserve Calculation Method being
used. The Reinsurer may interpolate or use reasonable
approximations.
2. Universal Life. The net amount at risk is defined to be
the death benefit minus the account value. The amount of
reinsurance benefit at each policy duration is the net
amount at risk at each duration minus the initial amount
retained by the Company.
3. Level Term Plans. For level term plans having no cash
value and those with a duration of 20 years or less, the
reinsurance benefit is the initial face amount reinsured
without regard to terminal reserves.
4. Decreasing Term Plans. The amount of reinsurance benefit
at each policy duration is the death benefit at each
policy duration minus the initial amount retained by the
Company.
For reinsurance of plans with fluctuating net amounts at risk or
with increasing or decreasing death benefits, the reinsurance
benefit for the entire policy year shall be the reinsurance
benefit calculated by the Company at the beginning of each
policy year, in accordance with the methods outlined above. The
Reinsurers liability shall be the amount calculated at the
beginning of each policy year. If there is a change in the
policy, the Company shall send amended reinsurance benefit
amounts to the Reinsurer.
5
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE V
REINSURANCE BENEFIT AMOUNTS
(continued)
B. Disability Waiver of Premium. The Disability Waiver of
Premium benefit amount r,-insured shall not be greater than
the amount of the corresponding Life Insurance benefit
reinsured. The Disability Waiver benefit amount shall, at
the Company's option, be supplied to the Reinsurer for at
least ten (10) policy years at a time, or else determined
by the Reinsurer from the Company rate materials in its
possession, using any reasonable approximations that may
be necessary. For Universal Life products the benefit amount
shall be the cost of insurance premium waived by the
Company.
C. Accidental Death Benefit. The Accidental Death Benefit
amount reinsured shall not be greater than the amount of
the corresponding Life Insurance benefit reinsured.
6
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE VI
REDUCTIONS, TERMINATIONS AND CHANGES
Whenever a change is made in the status, plan, amount or other
material feature of a policy reinsured under this Agreement, the
Reinsurer shall, upon receipt of notification of the change,
provide appropriately adjusted reinsurance coverage. The Company
shall notify the Reinsurer of any such change, not more than
sixty days after its effective date.
A. Reductions and Terminations. In the event of the reduction,
lapse or termination of insurance with the Company on a
life, the Company shall reduce reinsurance [by a like amount
in order to remain fully retained on the risk. If there is
more than one reinsured policy on the life, the reduction
will apply first to the policy being reduced and then, on a
chronological basis, to other reinsured policies on the life
commencing with that policy most recently issued. In the
event that there is more than one reinsurer on the policy
being reduced, the reduction in reinsurance shall be
proportionate among the reinsurers. The Reinsurer shall
refund any unearned premiums. However, policy fees, if any,
shall be deemed earned for a policy year if during any
portion of such policy year, ceded insurance is exposed to
risk.
B. Contractual Increases. For policies reinsured on an
automatic basis, reinsurance on net amount at risk increases
resulting from contractual policy provisions will be limited
to 150% of the Initial Amount at Risk. For policies
reinsured on a facultative basis, reinsurance will be
limited to the ultimate amount shown in the facultative
offer.
C. Noncontractual Increases. If a change results in the amount
of insurance being increased, the increase will be
considered new reinsurance under this Agreement and shall be
underwritten by the Company in accordance with its
customary standards and procedures. If the policy were
submitted to the Reinsurer facultatively, increases must be
approved by the Reinsurer.
D. Nonforfeiture Benefits. If the original policy lapses and
extended term insurance or reduced paid-up insurance is
granted under the terms of the policy, the Reinsurer, upon
notification of such change, will proportionately adjust
the amount of reinsurance and accept appropriately adjusted
reinsurance premiums calculated in the same manner as
reinsurance premiums were calculated on the original
policy. However, the Reinsurer shall not provide coverage
for extended term insurance on policies originally issued
at substandard ratings greater than 150% of standard or
the equivalent in flat extra premium unless the Reinsurer
specifically agrees in advance.
E. Reinstatement. If a policy that has lapsed or surrendered
is reinstated in accordance with its terms and in
accordance with Company rules and procedures, the
Reinsurer shall, upon notification of reinstatement,
reinstate the pre-existing reinsurance coverage. However,
if the policy were facultatively reinsured with the
Reinsurer, approval by the Reinsurer shall be required
prior to the reinstatement of the reinsurance if the
Company retained less than fifty (50) percent of the
risk and the policy has been lapsed for more than 90 days.
Upon reinstatement of the reinsurance coverage, the
Company shall pay the reinsurance premiums which would
have accrued had the policy not lapsed, together with
interest at the same rate as the Company receives under
its policy.
7
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE VII
CONVERSIONS, EXCHANGES AND REPLACEMENTS
A. Conversions. The Reinsurer shall continue to accept
reinsurance resulting from the contractual conversion
of any policy reinsured under this Agreement, in an
amount not to exceed the original amount reinsured
hereunder. Reinsurance premiums for such conversions
shall be on an attained age and duration basis at the
agreed upon conversion premium rates.
If the conversion results in an increase in risk, the
increase shall require evidence of insurability.
Reinsurance premiums for increases shall be first-year
premiums at the agreed upon premium rate.
B. Exchanges and Replacements. The Reinsurer will consider
exchanges and replacements to the plans reinsured under
this agreement. First-year premium calculations will
apply to any policy on which:
1. The Company has obtained complete and current
underwriting evidence on the full amount; and
2. the full normal commissions are paid for the new plan;
and
3. the Suicide and Contestable provisions apply as if the
policy were newly issued.
Reinsurance premiums shall be the agreed upon exchange
premiums.
8
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE VIII
PREMIUMS
A. Payment of Premiums. Reinsurance premiums for life
insurance, waiver of premium disability benefits and
accidental death benefits shall be the premiums
shown in Exhibit B. Reinsurance premiums are payable in
accordance with the method outlined in Exhibit C.
B. Delayed Payment. Premium balances which remain unpaid for
more than sixty (60) days shall incur interest from the
due date, calculated from that date by using the 13-week
Treasury Xxxx rate reported for the last working day of
the calendar month in the "Money Rates" section of The
Wall Street Journal or comparable publications.
C. Failure to Pay Premiums. The payment of reinsurance
premiums shall be a condition precedent to the liability
of the Reinsurer for reinsurance covered by this
Agreement. In the event that reinsurance premiums are
not paid when due, the Reinsurer shall 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 shall give the
Company thirty (30) days written notice of its intention
to terminate said reinsurance. If all reinsurance premiums
in arrears, including any which may become in arrears
during the thirty day period, are not paid before the
expiration of said period, the Reinsurer shall be
relieved of all liability. Policies on which reinsurance
premiums subsequently fall due will automatically
terminate if reinsurance premiums are not paid.
Terminated reinsurance may be reinstated, subject to
approval by the Reinsurer, within sixty (60) days of
the date of termination upon payment of all reinsurance
premiums in arrears. The Reinsurer shall 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 shall not prejudice the
Reinsurers right to collect premiums for the period
reinsurance was in force prior to the expiration of the
thirty day notice.
D. Premium Rate Guarantee. The Reinsurer anticipates continuing
to accept premiums on the basis of the rates shown in
Exhibit B, however, the Reinsurer can only guarantee that
the life reinsurance premium rates payable under this
Agreement shall not exceed the one-year term net premiums
computed on the 1980 CSO Mortality Table at the maximum
valuation interest rate allowable for the policies
reinsured.
9
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE IX
CLAIMS
A. Liability. Whenever a claim is made on a policy reinsured
under this Agreement, the Reinsurer shall consider its
liability to the Company to be for the amount of
reinsurance for that policy as determined in Article V
and Exhibit A. If the Company has been paying premium to
the Reinsurer on an estimated reinsured net amount at
risk, the Reinsurer's claim liability shall not exceed
that amount provided by the Company. The Reinsurer will
accept the good faith decision of the Company in settling
a claim and shall pay the amount of its liability in
effect at the time of settlement, including its
proportionate share of any interest paid to the claimant.
If the Company has retained either a) less than its full
retention or b) twenty percent or less of the risk, the
Company shall consult with the Reinsurer before making an
admission of liability on any claim on which death has
occurred during the contestable period. If the Company
chooses to pay such a claim that the Reinsurer believes
should be contested, then the dispute may be submitted
to arbitration.
B. Proof of Loss. In every case of loss, the Company shall
provide the Reinsurer with copies of all proofs of loss,
underwriting papers, investigation reports and a statement
showing the amount paid on the claim by the Company, plus
any information the Reinsurer may request.
C. Settlement
1. Life. For Life insurance claims, the Reinsurer shall pay
its share of death benefits in a lump sum regardless of
the form of claim settlement by the Company.
2. Waiver of Premium. For an approved Waiver of Premium
benefit claim, the Reinsurer shall pay its share of the
gross premium waived by the Company, and the Company
shall continue to pay the total reinsurance premium,
excluding the corresponding waiver premium. If the policy
is subject to recapture, the reinsurance premium shall
be appropriately adjusted. For Universal Life products,
the gross premium waived shall be the cost of insurance
premium waived by the Company. The Reinsurer may pay
Waiver of Premium claims in one payment per year
regardless of the mode of premium payment specified in
the policy.
D. Contested Claims. The Company shall notify the Reinsurer of
its intention to contest or compromise a claim. Unless
agreed otherwise, all contestable claims will be routinely
investigated. If the Reinsurer chooses not to participate
in a contested claim, it shall pay its full amount of
reinsurance liability on such claim and shall thereby be
relieved of all future liability with respect to such
contested claim.
If the Reinsurer joins the Company in a contest or
compromise, the Reinsurer shall participate in the same
proportion that the amount at risk reinsured with the
Reinsurer bears to the total amount at risk to the
Company on the claim and shall share in the reduction in
liability in the same proportion. The Reinsurer shall pay
its share of "routine expenses" which are considered to be
investigative or administrative
10
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE IX
CLAIMS
expenses incurred by the Company that are customarily
incurred with respect to most claims. Participation in
"unusual expenses" shall require written consent by the
Reinsurer. Unusual expenses shall include, but not be
limited to, fees of outside attorneys, investigators or
consultants. The Reinsurer shall not reimburse expenses
or compensation of salaried officers and employees of the
Company or expenses incurred by the Company as a result
of a dispute arising out of conflicting claims of
entitlement to policy proceeds or benefits.
E. Extra-Contractual Obligations. The Reinsurer shall not be
liable for punitive, exemplary or any other noncontractual
damages assessed against the Company on the basis of fault
or wrongdoing on the part of the Company, its agents or
representatives. However, should the Reinsurer have
concurred in the acts or omissions giving rise to such
damages, the Reinsurer will pay its proportionate share of
such damages.
F. Misstatement. In the event of an increase or decrease in
the amount of the Company's liability on a policy reinsured
hereunder because of a misstatement of age, sex, or other
risk classification, which is established after the death
of the insured, the Company and the Reinsurer shall share
in the change in amount in proportion to its respective
net liability prior to the change. The reinsurance premium
for the policy year of death shall be recalculated on the
basis of the adjusted amount using premiums and reserves
at the correct risk classification, and the adjustment for
the difference in reinsurance premiums shall be made
without interest.
11
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE X
RECAPTURE
Whenever the Company changes its limits of retention, it shall
promptly notify the Reinsurer. If the Company increases its
retention limits, it may exercise its right of recapture and
reduce the existing reinsurance by a corresponding amount, in
accordance with the following rules.
1. No reduction shall be made in the reinsurance on any policy
unless the Company retained its maximum retention limit
for the plan, age and mortality ratings at the time the
policy was issued.
2. The reduction in reinsurance shall be made on the next
anniversary of each policy affected. However, no reduction
shall be made until a policy has been in-force for twenty
years.
3. The Company shall give the Reinsurer ninety (90) days
written notice of its intention to recapture existing
business reinsured under this Agreement in accordance with
its new limits of retention.
4. If any reinsurance is recaptured following a retention
increase, all reinsurance which is subject to recapture
under these provisions must be similarly recaptured.
5. If there is reinsurance in other companies on risks
eligible for recapture, the Reinsurer's reduction will
be in proportion to its share of the total reinsurance
on the life.
6. In the event that any reinsurance policy affected by
recapture is overlooked, the acceptance by the Reinsurer
of reinsurance premiums after the effective dates of the
reductions or cancellations shall not constitute or
determine a liability on the part of the Reinsurer for
such reinsurance, and the Reinsurer shall be liable only
for a refund of the premiums so received, without interest.
7. No reduction may be made in any supplemental benefits
reinsured unless the life reinsurance is also being reduced.
8. If at the time of recapture the risk is an active claim for
Waiver of Premium Disability, the life risk shall be
considered subject to recapture. However, the original
disability reinsurance shall remain in force until such
time as the disability claim ceases.
12
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE XI
GENERAL PROVISIONS
A. Premium Tax. The Reinsurer shall not reimburse the Company
for premium taxes on reinsurance premiums.
B. Offset. Upon notice to the other party, the Company or the
Reinsurer may offset any balance(s) due from one party to
the other from premiums, allowances, claims, or any other
amount(s) due under this Agreement.
C. Currency. All payments under this Agreement shall be made
in United States currency.
D. Company Data. The Company agrees to keep the Reinsurer
informed of the identity and terms of its policies, riders
and contracts reinsured under this Agreement, as well as
any special programs affecting reinsurance hereunder, with
copies of its application forms, policy forms,
supplementary agreements, rate books, plan codes and all
other materials relevant to the coverages reinsured.
Further, the Company agrees to furnish the Reinsurer with
all underwriting manuals or criteria, requirements, and
retention schedules affecting reinsurance ceded and to keep
the Reinsurer fully informed of all subsequent changes to
said materials.
E. Errors and Omissions. Administrative or clerical error or
omissions of an accidental or unintentional nature shall be
corrected, and both parties shall be restored to the
positions they would have occupied had no such error or
omission occurred. Errors of judgment are not covered by
this provision.
F. Inspection of Records. The Reinsurer and the Company, or
duly authorized representatives, shall have the right at
any reasonable time to inspect, at the office of the other,
all books and documents relating, directly or indirectly,
to any business reinsured under this Agreement.
13
GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE XII
DAC TAX
The Company and the Reinsurer hereby agree to the following
pursuant to Section 1.8482(g)(8) of the Income Tax Regulations
issued December 29, 1992, under Section 848 of the Internal
Revenue Code of 1986, as amended. This election shall be
effective for all taxable years for which this Agreement remains
in effect.
1. The term "party" will refer to either the Company or the
Reinsurer, as appropriate.
2. The terms used in this Article are defined by reference to
Regulation Section 1.848-2 in effect as of December 29,
1992.
3. The party with the net positive consideration for this
Agreement for each taxable year will capitalize specified
policy acquisition expense with respect to this Agreement
without regard to the general deductions limitation of
Section 848 (c)(1).
4. The Company and the Reinsurer agree to exchange information
pertaining to the amount of the net consideration under
this Agreement each year to ensure consistency or as
otherwise required by the Internal Revenue Service.
5. The Reinsurer will submit a schedule to the Company by
June 1 of each year of its calculation of the net
consideration for the preceding calendar year. This
schedule of calculations will be accompanied by a state-
ment signed by an officer of the Reinsurer stating that
the Reinsurer will report such net consideration in its
tax return for the preceding calendar year.
6. The Company may contest such calculation by providing an
alternative calculation to the Reinsurer in writing within
30 days of the Company's receipt of the Reinsurer's
calculation. If the Company does not so notify the
Reinsurer, the Company will report the net consideration
as determined by the Reinsurer in the Company's tax
return for the previous calendar year.
7. If the Company contests the Reinsurer's calculation of
the net consideration, the parties will act in good faith
to reach an agreement as to the correct amount within
thirty (30) days of the date the Company submits its
alternative calculation. If the Company and the Reinsurer
reach agreement on an amount of net consideration, each
party shall report such amount in their respective tax
returns for the previous calendar year.
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GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE XIII
INSOLVENCY
A. Insolvency of the Company. In the event of insolvency of
the Company, all payments due the Company by the
Reinsurer shall be payable directly to the Company, its
liquidator, receiver or statutory successor on the basis
of the liability of the Company under the policies
reinsured without diminution because of insolvency of
the Company.
In the event of insolvency of the Company, the liquidator,
receiver or statutory successor shall give the Reinsurer
written notice of the pendency of a claim on a policy
reinsured within a reasonable time after the claim is
filed in the solvency proceeding. During the pendency of
the claim, the Reinsurer may investigate the claim and,
in a proceeding where the claim is to be adjudicated, the
Reinsurer may, at the Reinsurer's own expense, interpose
in the name of the Company (its liquidator, receiver or
statutory successor) any defense or defenses which the
Reinsurer may deem available to the Company or its
liquidator, receiver or statutory successor.
Subject to court approval, the expense thus incurred by
the Reinsurer shall be chargeable against the Company
as part of the expense of liquidation to the extent of
the proportionate share of the benefit which may accrue
to the Company solely as a result of the defense
undertaken by the Reinsurer. Where two or more reinsurers
participate in the same claim and a majority in interest
elect to interpose a defense to the claim, the expense
shall be apportioned in accordance with the terms of the
reinsurance agreements as if the expense had been incurred
by the Company.
B. Insolvent of the Reinsurer. In the event of the insolvency
of the Reinsurer, the Company may retain all or any
portion of any amount then due or which may become due
the Reinsurer under this Agreement and use such amounts
for the purposes of paying any and all liabilities of the
Reinsurer incurred under this Agreement. When all such
liability hereunder has been discharged, the Company shall
pay the Reinsurer, its successor, or statutory receiver,
the balance of such amounts withheld as may remain.
In the event of the insolvency of the Reinsurer, the
Company may, upon 90 days written notice to the Reinsurer,
its liquidator, receiver or statutory successor, recapture,
without penalty, the entire amount of reinsurance under
this Agreement.
C. Definition of Insolvency. For purposes of this Agreement,
the Company or the Reinsurer shall be deemed insolvent if:
(1) a court order is issued voluntarily or involuntarily
placing it into conservatorship, rehabilitation,
receivership, or liquidation, or appointing a
conservator, rehabilitator, receiver or liquidator
to take over its business; or
(2) it has filed or consents to the filing of a petition
in bankruptcy, seeks reorganization or an arrangement
with creditors or takes advantage of any bankruptcy,
dissolution, liquidation or similar law or statute.
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GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE XIV
ARBITRATION
All disputes and differences between the Company and the
Reinsurer on which an amicable understanding cannot be reached
shall be resolved by arbitration at a mutually agreed upon
location. The arbitration hearing shall be before a board of
three arbitrators comprised of active or retired officers of
life insurance or reinsurance companies excluding, however,
officers and former officers of the Company and the Reinsurer.
Upon written request of either party sent by registered or
certified mail, each party shall choose an arbitrator and the
two chosen shall select a neutral arbitrator. If either party
refuses or neglects to appoint an arbitrator within sixty (60)
days after receipt of the written request for arbitration, the
appointing party may appoint a second arbitrator. The two
arbitrators shall have 30 days to agree on a method for
selecting the neutral arbitrator. If the two arbitrators fail to
agree on the selection method of the neutral arbitrator within
thirty (30) days of their appointment, each of the parties to
this Agreement shall name three (3) candidates to serve as the
neutral arbitrator. Beginning with the party who did not
initiate arbitration, each party shall eliminate one candidate
from the six listed until one candidate remains. If this
candidate declines to serve as the arbitrator, the candidate
last eliminated will be approached to serve. This process shall
be repeated until a candidate has agreed to serve as the neutral
arbitrator.
The selection and naming of all arbitrators shall be conducted
in a timely manner.
The parties hereby waive all objections to the above method of
choosing the arbitrators.
Each party shall submit its case to the arbitrators within
thirty (30) days of the appointment of the neutral arbitrator.
The arbitrators shall 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 will base their decision on the terms and
conditions of this Agreement and the customs and practices of
the insurance and reinsurance industries rather than on strict
interpretation of the law.
The decision of the arbitrators, in writing, will be made by
majority rule and shall be final and binding on both parties.
There shall 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 allocation of the costs of arbitration will be made by the
arbitrators.
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GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE XV
DURATION OF AGREEMENT
This Agreement shall be effective on and after the effective
date shown in Article XVI and shall be unlimited in duration .
It may be terminated at any time, insofar as it pertains to the
reinsurance of new business, by either party giving ninety (90)
days written notice of termination to the other. The Reinsurer
shall continue to accept new business during the ninety (90) day
period and shall continue to be liable on all in-force
reinsurance granted under this Agreement until the termination
or expiry of the insurance reinsured, except as provided in
Article VIII.C.
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GENERAL & COLOGNE LIFE RE OF AMERICA
ARTICLE XVI
EXECUTION
This Agreement represents the entire contract between the
Reinsurer and the Company and supersedes any prior oral or
written agreements.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed on the dates set forth below with an effective date of
March 1, 2000.
GENERAL & COLOGNE LIFE RE OF AMERICA TREATY #U001-006
BY: /s/ Xxxxxxx X. Xxxxx
TITLE: Vice President
DATE: 4/20/00
ATTEST: Xxxxxx X. Calena
UNION CENTRAL LIFE INSURANCE COMPANY
BY: /s/Xxx X. Xxxxxxxx
TITLE: 2nd Vice President & Actuary
DATE: 10/23/00
ATTEST: /s/Xxx X. XxXxxxxx
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GENERAL & COLOGNE LIFE RE OF AMERICA
