Modco Account Clause Samples
A MODCO Account clause establishes a modified coinsurance account between a ceding insurer and a reinsurer, used to track the assets and liabilities associated with reinsured policies. In practice, the ceding company retains the assets supporting the reinsured business, while the reinsurer's share of profits, losses, and reserves is recorded in the MODCO account rather than being transferred directly. This arrangement allows the ceding insurer to maintain control over invested assets and ensures that both parties' financial interests are accurately reflected, thereby facilitating efficient administration and reducing the need for frequent asset transfers.
Modco Account. (a) From and after the Effective Time, the Ceding Company shall establish and maintain on its books and records a notional account within its Separate Accounts (the “Modco Account”), which shall (a) be clearly designated as a segregated account on the books and records (and in the information systems) of the Ceding Company, (b) be separate and apart from the general and other accounts of the Ceding Company, (c) be comprised (as subaccounts thereunder) of each Separate Account in respect of the Reinsured Policies and (d) into which shall be allocated, in the aggregate, all Separate Account Assets and Separate Account Liabilities with respect to the Separate Accounts.
(b) Without limiting Section 2.2, the Ceding Company shall own and control all Separate Account Assets in the Modco Account. All investment income, capital gains and losses earned or accrued on the Separate Account Assets shall be allocated to the Modco Account.
Modco Account. (a) As of the Effective Date, the Ceding Company shall establish a modified coinsurance account (the “Modco Account”) on the books and records of the Ceding Company, which shall consist of, collectively, a custody account established by the Ceding Company with The Bank of New York Mellon (as custodian of such custody account, the “Custodian”), a Quota Share allocation of the assets maintained by the Ceding Company in the portfolio of the Separate Account supporting the Ceding Company’s payment obligations with respect to the separate account fixed annuity contracts comprising the Reinsured Policies, a Quota Share allocation of the Existing ▇▇▇▇▇▇ and certain additional Permitted Assets allocated by the Ceding Company to the Modco Account. The Modco Account and the assets maintained therein will be owned and maintained by the Ceding Company and will be used exclusively for the purposes set forth in this Agreement. The assets maintained in the Modco Account shall be invested in and consist only of Permitted Assets, and the Permitted Assets shall be valued, for the purposes of this Agreement, according to their Statutory Carrying Value. In accordance with Iowa SAP, the Ceding Company elects to cede all capital gains and losses in respect of the assets maintained in the Modco Account to the Reinsurer on a gross basis.
(b) Notwithstanding any other provision hereof, assets held in the Modco Account may be withdrawn by the Ceding Company at any time and shall be utilized and applied by the Ceding Company or any of its successors in interest by operation of law, including any liquidator, rehabilitator, receiver or conservator of the Ceding Company, without diminution because of insolvency on the part of the Ceding Company or the Reinsurer, only for the following purposes:
(i) to reimburse the Ceding Company for the Quota Share of premiums which are returned to the owners of the Reinsured Policies because of cancellations of such Reinsured Policies;
(ii) to reimburse the Ceding Company for the Reinsured Liabilities paid pursuant to the provisions of the Reinsured Policies;
(iii) to pay any Weekly Settlement Amount, Monthly Settlement Amount, Quarterly Settlement Amount and other undisputed amounts due to the Ceding Company under this Agreement; and
(iv) to pay any Modco Adjustment due from the Ceding Company to the Reinsurer; provided, however, that, other than withdrawals made by the Ceding Company for the purpose of effectuating the payment of the Weekly Settlem...
Modco Account. In order to secure the obligations of the Reinsurer to the Ceding Company hereunder with respect to the ModCo Contract Liabilities, the Ceding Company shall establish a modified coinsurance account on its books and records (the “ModCo Account”). The ModCo Account shall be clearly designated as a segregated account on the books, records and information systems of the Ceding Company and shall be comprised of the assets held in the Specified Trust Accounts. The Ceding Company will own all assets held in relation to the ModCo Account.