FIRST AMENDMENT TO
SERVICE EXPENSE REIMBURSEMENT AGREEMENT
(Texas)
This Amendment is entered into as of July 1, 2005 (the "First Amendment
Effective Date") by and among American Bankers Life Assurance Company of
Florida, as successor in interest to Voyager Life Insurance Company, Voyager
Property & Casualty Insurance Company, American Bankers Life Assurance Company
of Florida, American Bankers Insurance Company of Florida and American Bankers
General Agency, Inc. on behalf of Ranchers & Farmers Mutual Insurance Company
(collectively "Company") and CAI, L.P., successor in interest to Affiliates
Insurance Agency, Inc. ("Customer") and amends that certain Service Expense
Reimbursement Agreement entered into between Company and Customer effective July
1, 1998 (the "Agreement").
In consideration of the mutual promises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. The Agreement shall be amended so as to delete Voyager Life Insurance
Company and Voyager Property & Casualty Insurance Company as signatories,
and to add American Bankers Insurance Company of Florida as a signatory.
2. Section 8 of the Agreement shall be amended to read as follows:
8. Company may prospectively change the rates of Expense Reimbursement
for products on Schedule A upon thirty (30) days advance notice if
required by state regulatory authority, or in the event of a premium
rate decrease. Company may decrease the rates of Expense Reimbursement
upon thirty (30) days advance notice in the event of a projected
deficit under the Group Experience Rating/ Contingent Compensation
Addendum, in which event such decrease shall be only in an amount
which Company deems necessary to prevent or cure such deficit, and
such decreased rates shall continue in effect only for the period of
time necessary to prevent or cure such deficit. In all other respects,
this Agreement may be altered or amended only in writing signed by
both of the parties.
3. Section 9 of the Agreement shall be amended to read as follows:
9. (a) Term.
This Agreement shall be for a term of four years from the First
Amendment Effective Date, and shall automatically renew for successive
one (1) year terms (each a "Renewal Term") unless written notice is
given at least ninety (90) days prior to the effective date of any
term. In the event, as of any renewal date, any deficit exists under
the
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Contingent Compensation Addendum, then Customer shall not have the
right to terminate this Agreement or any group master policy until
such time as the deficit is cured.
(b) Termination by mutual consent. This Agreement may be terminated at
any time by the mutual consent of both Customer and Company.
(c) Termination with cause by Company.
Subject to the cure provisions contained herein, Company may
immediately terminate this agreement by written notice to Customer in
the event of (i) Customer's violation of any applicable law relating
to the offer, sale or administration of the insurance or debt
protection programs and the violation continues for fifteen (15) days
after Customer has received notice of the violation; (ii) material
breach of this Agreement by Customer, which material breach continues
for thirty (30) days after Customer has received notice of the breach;
(iii) gross neglect of duty, fraud, misappropriation, or embezzlement
by Customer or its affiliates of funds owed to Company or any of its
affiliates under this Agreement or any other agreement with Customer
or any of its affiliates; (iv) Customer or any of its affiliates shall
become the subject of any order or injunction of any court or
governmental body relating to the offer, sale or administration of the
insurance or debt protection programs and such order or injunction is
not dismissed within thirty (30) days; or (v) Customer's voluntary
bankruptcy, insolvency or assignment for the benefit of creditors. For
purposes of this Agreement, an "affiliate" of Company is defined as
any entity that is a member company of Assurant Solutions/Assurant
Specialty Property or any entity under common ownership with such
entity, and an "affiliate" of Customer shall mean any subsidiary,
parent or successor corporation of Customer.
(d) Termination with cause by Customer.
Subject to the cure provisions contained herein, Customer may
immediately terminate this Agreement by written notice to Company in
the event of (i) Company's violation of any applicable law relating to
the offer, sale or administration of the insurance or debt protection
programs and the violation continues for fifteen (15) days after
Company has received notice of the violation; (ii) material breach of
this Agreement by Company, which material breach continues for thirty
(30) days after Company has received notice of the breach; (iii) gross
neglect of duty, fraud, misappropriation, or embezzlement by Company
of funds owed Customer under this Agreement or any other agreement
with Company or any of its affiliates; (iv) Company or its affiliates
shall become the subject of any order or injunction of any court or
governmental body relating to the offer, sale or administration of the
insurance or debt protection programs and such order or injunction is
not dismissed within thirty (30) days; or (v) Company's voluntary
bankruptcy, insolvency or assignment for the benefit of creditors.
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(e) Right to cure.
Both parties shall have the right to cure any event that would provide
either party the right to terminate this Agreement for cause within
thirty (30) days after written notice is received of the occurrence of
such event unless a shorter period of time to cure such occurrence is
provided by this Agreement. Such notice shall include a specific
reference to the provision or provisions of this Agreement which are
alleged to have been breached, a description of the event giving rise
to the alleged violation, and the action to be taken by the party
alleged to have violated the Agreement. During the cure period,
neither party shall terminate the Agreement. Paragraphs 9(c)(iii) and
9(d)(iii) are hereby expressly excluded from this right to cure.
4. Section 21. shall be added to the Agreement as follows:
21. As soon as practicable, Company agrees to retain a program
management/training resource who will reside in Texas and who will
have daily interaction with Customer's representatives in an effort to
increase sales volume. One resource shall be hired with respect to all
products underwritten or issued by Company and its affiliates under
this and any other agreement between Company and Customer.
5. Section 22 shall be added to the Agreement as follows:
22. Exclusivity.
During the term of this Agreement, as extended from time to time,
Customer shall utilize Company exclusively for the insurance written
hereunder, or any product which provides similar coverage.
Notwithstanding the foregoing, in the event a product offered by
Company hereunder is discontinued in any state and Company is unable
to offer a substantially similar replacement product immediately,
Customer may obtain such discontinued product for its customers in the
affected state from another carrier. Company will provide Customer
notice of plans to discontinue a product ninety (90) days prior to
discontinuation, unless a regulatory mandate does not allow for as
much as ninety (90) days advance notice.
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Further, in the event of a proposed rate decrease in any state which
results in a rate for any product or group of products which would
produce a decrease in annual premium production or debt protection
fees greater than $100,000, then Company shall have sixty (60) days
from and after the scheduled implementation date of the rate decrease
to attempt to obtain approval of a different rate. If Company is
unable within said sixty (60) days to obtain approval of a rate which
is within one percent (1%) of the rate for a similar product available
through another carrier in said state, then at the end of said sixty
(60) day period Customer may offer such product through another
carrier in the affected state until such time as Company can offer a
rate for a substantially similar product that is within one percent
(1%) of the alternative carriers' rate.
Customer shall not terminate or aid, directly or indirectly, in the
termination of any insurance written hereunder unless such termination
is initiated by an insured, without encouragement by Customer. Nothing
herein shall prohibit individual customer cancellations handled in the
normal course of business.
Further, in the event Customer implements a debt protection program,
Company shall administer said debt protection program at a fee equal
to 9.25% of net fees charged to participants under such program, which
shall decrease to 9% at such time as the cumulative total of (i) net
fees for the debt protection program and (ii) net premiums written
since the First Amendment Effective Date for the business written
under this Agreement and the Louisiana SERA (as defined in Section
A.(1)(b)(ii) of the Group Experience Rating/Contingent Compensation
Addendum), reaches $125,000,000.
6. The amounts to be used for future inception-to-date calculations under the
Group Experience Rating/Contingent Compensation Addendum as of the First
Amendment Effective Date are set forth on Schedule C attached hereto and
made a part hereof.
7. The first paragraph of Section A and paragraph (1) of Section A of the
Group Experience Rating/Contingent Compensation Addendum shall be amended
to read as follows:
A. Within 10 days after each calendar quarter commencing with the First
Amendment Effective Date and continuing while said Service Expense
Reimbursement Agreement is in force, Company agrees to return Group
Experience Rating/Contingent Compensation Credit on the coverages
written under said Agreement as follows:
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(1) Premium amounts will be calculated as follows and added together.
(a) The cumulative net earned premiums written in the State of Texas
prior to the First Amendment Effective Date, which shall be based
upon the agreed-upon cumulative figures set forth in paragraph 5
of the First Amendment, for each type of insurance shown in
Paragraph H of this Addendum, multiplied by 90%.
(b) The cumulative net earned premiums in the State of Texas
commencing with the First Amendment Effective Date and continuing
for all months (each month being considered as a full month
rather than day-by-day) in which some time during such month the
total combined net fees and insurance premiums written since the
First Amendment Effective Date under the following agreements
amount to $125,000,000 or less:
(i) this Agreement, and
(ii) the Service Expense Reimbursement Agreement effective July
1, 1998 covering Louisiana business entered into between
Voyager Life Insurance Company, Voyager Property & Casualty
Insurance Company, American Bankers Life Assurance Company
of Florida, Ranchers & Farmers Mutual Insurance Company and
CAI, L.P., successor in interest to Affiliates Insurance
Agency, Inc., as amended from time to time (in which
American Bankers Insurance Company of Florida and American
Reliable Insurance Company were subsequently added and
Voyager Life Insurance Company and Ranchers & Farmers Mutual
Insurance Company were subsequently deleted as signatories)
(the "Louisiana SERA"), and
(iii) net fees for the debt protection program
multiplied by 89.75%; and
(c) The cumulative net earned premiums in the State of Texas
commencing with the first full month (each month being considered
as a full month rather than day-by-day) written since the First
Amendment Effective Date, in which the total combined net fees
and insurance premiums under the agreements set forth in
paragraphs (i) through (iii) immediately above, exceed
$125,000,000, multiplied by 90%
and from the total there shall be deducted the sum of the following
items for each type of insurance:
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(d) The cumulative total of all losses and loss expenses, including
all allocated loss adjustment expenses incurred, and
(e) All reserves, and
(f) The cumulative total of all earned expense reimbursements, paid
or allowed Customer by Company, and
(g) The cumulative total of all amounts previously paid to Customer
in accordance with this Addendum.
8. The last paragraph of Section A of the Group Experience Rating/Contingent
Compensation Addendum, which is set forth below, shall be deleted in its
entirety:
For purposes of this Addendum, any amounts accumulated under that
certain Group Experience Rating/Contingent Compensation Credit
Addendum, made effective December 30, 1994, from the sale of the above
described Insurance in Texas shall be included in the calculations of
the Group Experience Rating/Contingent Compensation Credit under this
Paragraph A.
9. Section G of the Group Experience Rating/Contingent Compensation Addendum
shall be amended to read as follows:
G. In the event of termination of the Service Expense Reimbursement
Agreement, Company shall continue to pay expense reimbursement
payments as outlined in Section A of this Addendum. However, in the
event a "deficit" exists or is projected at any time as a result of
the calculation under Section A of this Addendum, Company may decrease
the rate of Expense Reimbursement as provided in Section 8 of the
Agreement.
10. Section H of the Group Experience Rating/Contingent Compensation Addendum
shall be amended to read as follows:
H. It is hereby understood that Paragraph A pertains to only the
following types of insurance, at the indicated percent rates as shown
for each type of insurance:
Type of Insurance Percent Rate
----------------- ------------
Credit Life (*)
Credit Accident & Health (*)
Credit Property (*)
Involuntary Unemployment Ins. (*)
Leased Property (*)
--------
(*)
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(i) The Percent Rate shall be 90% prior to the First Amendment Effective
Date.
(ii) After the First Amendment Effective Date, the portion of insurance
under this Agreement to which the Percent Rate applies shall be 89.75%
as to any month (each month being considered as a full month rather
than day-by-day) in which the total combined net fees and insurance
premiums written since the First Amendment Effective Date under the
following agreements amount to $125,000,000 or less: (a) this
Agreement, and (b) the Louisiana SERA, and (c) net fees for the debt
protection program.
(iii) After the First Amendment Effective Date, the portion of insurance
under this Agreement to which the Percent Rate applies shall be 90%
commencing with any month (each month being considered as a full month
rather than day-by-day) in which the total combined net fees and
insurance premiums written since the First Amendment Effective Date
under the agreements listed in paragraphs (a) through (c) immediately
preceding exceed $125,000,000.
The attached Schedule B sets forth an illustration of the calculation of
the Group Experience Rating/Contingent Compensation Credit using the above
rates.
11. Section I of the Group Experience Rating/Contingent Compensation Addendum
shall be amended to read as follows:
Until such time as this Agreement is terminated, Company agrees to pay
Customer investment income on the cash held by the Company, at the interest
rate of an 18 month CD, as posted on the Bank One/Chase website. The cash
held by the Company shall be calculated according to the following formula:
[*]% of the cumulative net written premium
Less: the cumulative losses and loss expenses paid;
the cumulative advance commissions paid or retained; and
the cumulative contingent commissions paid or due.
Equals: cash held by Company.
Each month the average cash held for the month will be calculated based on
current and prior month balances of total cash held. The average cash held
for the month shall be multiplied by the 18 month CD rate posted in the
Bank One/Chase website at the end of the month divided by 12, to determine
the interest accrued for the month. The product of this
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calculation for each of the three months in a quarter shall be added to
determine the investment income to be paid on cash withheld for the
quarter.
----------
[*] This percentage rate shall be the same as that applied under Section H
of this Addendum, as amended by the First Amendment, based on the blended
rate that results from the sliding scale contained therein.
12. Schedule A of the Agreement shall be deleted in its entirety and restated
as attached to this First Amendment.
13. Section J. shall be added to the Group Experience Rating/Contingent
Compensation Addendum and shall read as follows:
J. In the event Company has exercised its right to change the rate of
Expense Reimbursement as provided in Section 8 of the Service Expense
Reimbursement Agreement, as amended, Company and Customer shall
thereafter conduct a review of the Group Experience Rating/Contingent
Compensation Addendum to determine whether any adjustments under said
Addendum are appropriate in order to avoid a future deficit or to
maintain equity as to the Company and/or Customer in the calculation
under the Group Experience Rating/Contingent Compensation Addendum.
Any adjustment to the Group Experience Rating/Contingent Compensation
Addendum shall be made only upon mutual written agreement, and any
dispute relating thereto shall be resolved in accordance with the
arbitration provisions of Section 10 of this Agreement.
14. All other provisions of the Agreement shall remain in full force and
effect, unaffected hereby.
IN WITNESS WHEREOF, this Amendment is executed as of the date set forth above by
the duly authorized representative of each party.
CAI, L.P., by its General Partner
Conn Appliances, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Title: Treasurer
-------------------------------
Date: 7/21/2005
--------------------------------
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AMERICAN BANKERS LIFE ASSURANCE
COMPANY OF FLORIDA as successor in
Interest to VOYAGER LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Title: Senior Vice President
-----------------------------
Date: 7/21/2005
------------------------------
VOYAGER PROPERTY & CASUALTY
INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Title: Senior Vice President
-----------------------------
Date: 7/21/2005
------------------------------
AMERICAN BANKERS LIFE ASSURANCE
COMPANY OF FLORIDA
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Title: Senior Vice President
-----------------------------
Date: 7/21/2005
------------------------------
AMERICAN BANKERS INSURANCE
COMPANY OF FLORIDA
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------
Title: Senior Vice President
-----------------------------
Date: 7/21/2005
------------------------------
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AMERICAN BANKERS GENERAL
AGENCY, INC. on behalf of
RANCHERS & FARMERS MUTUAL
INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
-----------------------
Title: President
-----------------------------
Date: 7/21/2005
------------------------------
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SCHEDULE A
This Schedule A is attached to and by reference made a part of the Service
Expense Reimbursement Agreement indicated above (the "Agreement") between the
insurance companies named below ("Company") and CAI, L.P. ("Customer"). This
Schedule A is effective June 30, 2005.
Maximums Allowed
------------------------------------------------------------------------------------
Expense
Reimbursement
Company* Insurance Type State Rate Coverage Benefits Term
---------- --------------- ----- ---- -------- -------- ----
------------------------------------------------------------------------------------
ABLAC Credit Life - SP TX 35% $20,000 N/A 60 mos.
------------------------------------------------------------------------------------
ABLAC Credit Life - MOB TX 35% $20,000 N/A 1 mo.
------------------------------------------------------------------------------------
ABLAC Credit Accident & TX 35% N/A $800 60 mos.
Health - SP
------------------------------------------------------------------------------------
ABLAC Credit Accident & TX 35% N/A $800 1 mo.
Health - MOB
------------------------------------------------------------------------------------
R&F Credit Property - SP TX 35% $20,000 N/A 60 mos.
------------------------------------------------------------------------------------
R&F Credit Property - MOB TX 35% $20,000 N/A 1 mo.
------------------------------------------------------------------------------------
R&F Leased Property TX 35% $10,000 N/A 1 mo.
------------------------------------------------------------------------------------
ABIC Involuntary TX 35% N/A $500 60 mos.
Unemployment - SP
------------------------------------------------------------------------------------
ABIC Involuntary TX 35% N/A $500 60 mos.
Unemployment - MOB
------------------------------------------------------------------------------------
*Initials designate the following companies:
ABIC - American Bankers Insurance Company of Florida
ABLAC - American Bankers Life Assurance Company of Florida
R&F - Ranchers & Farmers Mutual Insurance Company
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SCHEDULE B
If, as of the end of any month, total combined net fees and insurance premiums
written since the First Amendment Effective Date under the specified agreements
total $125,000,000 or less, the Percent Rate under Section H of the Group
Experience Rating/Contingent Compensation Addendum, based upon which a payment
shall be made at the end of the respective quarter, shall be 89.75% as to each
such month (each month being considered as a full month rather than day-by-day).
If, as of the end of any month, total combined net fees and insurance premiums
written since the First Amendment Effective Date under the specified agreements
exceed $125,000,000, the Percent Rate under Section H of the Group Experience
Rating/Contingent Compensation Addendum, based upon which a payment shall be
made at the end of the respective quarter, shall be 90% for that month (each
month being considered as a full month rather than day-by-day) and thereafter.
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