EX-g.5
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MUNICH AMERICAN REASSURANCE COMPANY
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Automatic YRT
Reinsurance Agreement
between
▇▇▇▇▇▇▇ National Life Insurance Company
Lansing, Michigan
(hereinafter referred to as the "Ceding Company")
and
Munich American Reassurance Company
Atlanta, Georgia
(hereinafter referred to as "MARC")
Effective March 8, 2004
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Treaty # 3138
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TABLE OF CONTENTS
PAGE
ARTICLE 1 - PREAMBLE..............................................................................................1
1.1 PARTIES TO THE AGREEMENT...............................................................................1
1.2 COMPLIANCE.............................................................................................1
1.3 CONSTRUCTION...........................................................................................1
1.4 ENTIRE AGREEMENT.......................................................................................1
1.5 SEVERABILITY...........................................................................................1
ARTICLE 2 - AUTOMATIC REINSURANCE.................................................................................2
2.1 GENERAL CONDITIONS.....................................................................................2
2.2 NEW BUSINESS...........................................................................................2
2.3 RETAINED AMOUNTS.......................................................................................2
2.4 UNDERWRITING STANDARDS.................................................................................2
ARTICLE 3 - FACULTATIVE REINSURANCE...............................................................................3
ARTICLE 4 - COMMENCEMENT OF LIABILITY.............................................................................4
4.1 AUTOMATIC REINSURANCE..................................................................................4
4.2 FACULTATIVE REINSURANCE................................................................................4
ARTICLE 5 - REINSURED RISK AMOUNT.................................................................................5
5.1 LIFE...................................................................................................5
ARTICLE 6 - PREMIUM ACCOUNTING....................................................................................6
6.1 PREMIUMS...............................................................................................6
6.2 PAYMENT OF PREMIUMS....................................................................................6
6.3 DELAYED PAYMENT........................................................................................6
6.4 FAILURE TO PAY PREMIUMS................................................................................6
6.5 PREMIUM RATE GUARANTEE.................................................................................7
ARTICLE 7 - REDUCTIONS, TERMINATIONS AND CHANGES..................................................................8
7.1 REDUCTIONS AND TERMINATIONS............................................................................8
7.2 INCREASES..............................................................................................8
7.3 RISK CLASSIFICATION CHANGES............................................................................9
7.4 REINSTATEMENT..........................................................................................9
7.5 NONFORFEITURE BENEFITS.................................................................................9
ARTICLE 8 - CONVERSIONS, EXCHANGES, AND REPLACEMENTS.............................................................10
8.1 CONVERSIONS...........................................................................................10
8.2 EXCHANGES AND REPLACEMENTS............................................................................10
ARTICLE 9 - CLAIMS...............................................................................................11
9.1 NOTICE................................................................................................11
9.2 PROOFS................................................................................................11
9.3 AMOUNT AND PAYMENT OF REINSURANCE BENEFITS............................................................11
9.4 CONTESTABLE CLAIMS....................................................................................12
9.5 CLAIM EXPENSES........................................................................................12
9.6 MISREPRESENTATION OR SUICIDE..........................................................................12
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9.7 MISSTATEMENT OF AGE OR SEX............................................................................12
9.8 EXTRA-CONTRACTUAL DAMAGES.............................................................................13
ARTICLE 10 - RETENTION LIMIT CHANGES.............................................................................14
ARTICLE 11 - RECAPTURE...........................................................................................15
ARTICLE 12 - GENERAL PROVISIONS..................................................................................16
12.1 CURRENCY..............................................................................................16
12.2 PREMIUM TAX...........................................................................................16
12.3 INSPECTION OF RECORDS.................................................................................16
12.4 FORMS, MANUALS & ISSUE RULES..........................................................................16
12.5 INTEREST RATE.........................................................................................16
12.6 OTHER.................................................................................................16
12.7 CREDIT FOR REINSURANCE................................................................................16
ARTICLE 13 - DAC TAX.............................................................................................17
ARTICLE 14 - OFFSET..............................................................................................18
ARTICLE 15 - INSOLVENCY..........................................................................................19
15.1 INSOLVENCY OF A PARTY TO THIS AGREEMENT...............................................................19
15.2 INSOLVENCY OF THE CEDING COMPANY......................................................................19
ARTICLE 16 - ERRORS AND OMISSIONS................................................................................20
ARTICLE 17 - DISPUTE RESOLUTION..................................................................................21
ARTICLE 18 - ARBITRATION.........................................................................................22
ARTICLE 19 - CONFIDENTIALITY.....................................................................................24
ARTICLE 20 - DURATION OF AGREEMENT...............................................................................26
ARTICLE 21 - EXECUTION...........................................................................................27
Exhibits
A - Retention Limits of the Ceding Company
B - Plans Covered and Binding Limits
C - Forms, Manuals and Issue Rules
D - Reinsurance Premiums
E - Self-Administered Reporting
F - List of Risks Reinsured
G - List of Amendments
H - In Force Summary Form
I - Application for Facultative Reinsurance Form
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ARTICLE 1 - PREAMBLE
1.1 PARTIES TO THE AGREEMENT
This is a YRT agreement for indemnity reinsurance (the "Agreement")
solely between ▇▇▇▇▇▇▇ National Life Insurance Company, Lansing,
Michigan (referred to as the "Ceding Company"), and Munich American
Reassurance Company of Atlanta, Georgia ("MARC"), collectively referred
to as the "parties".
The acceptance of risks under this Agreement will create no right or
legal relationship between MARC and the insured, owner or beneficiary
of any insurance policy or other contract of the Ceding Company.
The Agreement will be binding upon the Ceding Company and MARC and
their respective successors and assigns.
1.2 COMPLIANCE
This Agreement applies only to the issuance of insurance by the Ceding
Company in a jurisdiction in which it is properly licensed.
The Ceding Company represents that, to the best of its knowledge, it is
in compliance with all state and federal laws applicable to the
business reinsured under this Agreement. In the event the Ceding
Company is found to be in non-compliance with any law material to this
Agreement, the Agreement will remain in effect and the Ceding Company
will indemnify MARC for any direct loss MARC suffers as a result of the
non-compliance, and will seek to remedy the non-compliance.
1.3 CONSTRUCTION
This Agreement will be construed in accordance with the laws of the
state of Michigan.
1.4 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the business reinsured hereunder. There are no
understandings between the parties with respect to the business
reinsured hereunder other than as expressed in this Agreement. Any
change or modification to this Agreement will be null and void unless
made by amendment to this Agreement and signed by both parties.
1.5 SEVERABILITY
If any provision of this Agreement is determined to be invalid or
unenforceable, such determination will not impair or affect the
validity or the enforceability of the remaining provisions of this
Agreement.
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ARTICLE 2 - AUTOMATIC REINSURANCE
2.1 GENERAL CONDITIONS
The Ceding Company will automatically cede to MARC new business as
defined in Section 2.2 on the life insurance policies, supplementary
benefits, and riders listed in Exhibit B issued on and after the
effective date of this Agreement. The basis for the automatic
reinsurance is shown in Exhibit B.
MARC will automatically accept its share of the above-referenced
policies up to the limits shown in Exhibit B, provided that:
(a) The insured, at the time of the application, must be a permanent
resident of the United States or Canada,
(b) the Ceding Company keeps its full retention, as specified in
Exhibit A, or otherwise holds its full retention on a life under
previously issued inforce policies and applies the same
underwriting standards it would have applied if the new policy
had fallen completely within its regular retention,
(c) the Ceding Company applies its normal underwriting guidelines in
accordance with Section 2.4 of this article and Section 12.4,
(d) the total of the new ultimate amount of reinsurance required
including contractual increases, and the amount already reinsured
on that life under this Agreement and all other agreements
between MARC and the Ceding Company, does not exceed the
Automatic Binding Limits set out in Exhibit B,
(e) the amount of life insurance in force in all companies, including
any coverage to be replaced plus the amount currently applied for
on that life in all companies, does not exceed the Jumbo Limit
stated in Exhibit B, and
(f) the application is on a life that has not been submitted
facultatively to MARC or any other reinsurer, unless the reason
for any prior facultative submission was solely for capacity that
may now be accommodated within the terms of this Agreement.
2.2 NEW BUSINESS
New business as defined in this article and Article 8.2 are those
policies on which (a) the Ceding Company has obtained complete and
current underwriting evidence on the full amount issued, (b) the full
normal commissions are paid by the Ceding Company for the new plan, and
(c) the suicide and contestable provisions apply from the effective
date of the new plan.
2.3 RETAINED AMOUNTS
The Ceding Company may not reinsure on any basis any portion of the
amount it has retained on the business covered under this Agreement,
without prior notification to MARC.
2.4 UNDERWRITING STANDARDS
The parties hereby declare and agree that all policies and benefits
covered under this Agreement shall be issued in accordance with the
Ceding Company's normal underwriting standards and guidelines. These
rules shall be provided to MARC in writing and any material changes in
them shall be subject to the written approval of MARC before being
applied to policies and benefits to be covered by this Agreement.
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ARTICLE 3 - FACULTATIVE REINSURANCE
3.1 The Ceding Company may submit any application on a plan or rider
identified in Exhibit B to MARC for its consideration on a
facultative basis.
The Ceding Company will apply for reinsurance on a facultative basis by
sending to MARC an Application for Facultative Reinsurance, providing
the information outlined in Exhibit I. Accompanying this Application
will be copies of all underwriting evidence that is available for risk
assessment including, but not limited to, copies of the application for
insurance, medical examiners' reports, attending physicians'
statements, inspection reports, and any other information bearing on
the insurability of the risk. The Ceding Company also will notify MARC
of any outstanding underwriting requirements at the time of the
facultative submission. Any subsequent information received by the
Ceding Company that is pertinent to the risk assessment will be
immediately transmitted to MARC.
After consideration of the Application for Facultative Reinsurance and
related information, MARC will promptly inform the Ceding Company of
its underwriting decision. MARC's offer will expire at the end of 120
days, unless otherwise specified by MARC.
If the underwriting decision is acceptable, the Ceding Company will
notify MARC in writing of its acceptance of the offer.
Unless the Ceding Company gives notification before the expiration
date, there shall not be any reinsurance on the risk and Errors and
Omissions will not apply.
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ARTICLE 4 - COMMENCEMENT OF LIABILITY
4.1 AUTOMATIC REINSURANCE
For automatic reinsurance, MARC's liability for amounts ceded hereunder
will commence at the same time as the Ceding Company's liability.
4.2 FACULTATIVE REINSURANCE
For facultative reinsurance, MARC's liability will commence at the same
time as the Ceding Company's liability, provided that MARC has made a
facultative offer and that offer was accepted in accordance with the
terms of this Agreement.
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ARTICLE 5 - REINSURED RISK AMOUNT
5.1 LIFE
The reinsured net amount at risk of the policy is defined as the policy
face amount less the cash value, account value, or terminal reserve,
less the amount retained by the Ceding Company, and for automatic
policies, multiplied by MARC's share as stated in Exhibit B. For
variable amount plans, the reinsured net amount at risk is calculated
using the account value in effect at the end of the monthly reinsurance
billing period.
Any change in the net amount at risk due to changes in the policy's
cash value or account value will be shared proportionately between the
Ceding Company and MARC.
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ARTICLE 6 - PREMIUM ACCOUNTING
6.1 PREMIUMS
Reinsurance premium rates for life insurance and other benefits
reinsured under this Agreement are shown in Exhibit D. The rates will
be applied to the reinsured net amount at risk.
The Ceding Company will pay MARC the percentages of the premium rates
shown in Exhibit D.
6.2 PAYMENT OF PREMIUMS
Reinsurance premiums are payable annually and in advance. The Ceding
Company will calculate the amount of reinsurance premium due and,
within ten (10) days after the end of the month, will send MARC a
statement that contains the information shown in Exhibit E, showing
reinsurance premiums due for that period. If an amount is due MARC, the
Ceding Company will remit that amount together with the statement. If
an amount is due the Ceding Company, MARC will remit such amount within
twenty (20) days of receipt of the statement.
6.3 DELAYED PAYMENT
Premium balances that remain unpaid for more than thirty (30) days
after the Remittance Date will incur interest from the end of the
reporting period. The Remittance Date is defined as thirty (30) days
after the end of the reporting period. Interest will be calculated
using the index specified in Article 12.5.
6.4 FAILURE TO PAY PREMIUMS
The payment of reinsurance premiums is a condition precedent to the
liability of MARC for reinsurance covered by this Agreement. In the
event that reinsurance premiums are not paid within thirty (30) days of
the Remittance Date, MARC will have the right to terminate the
reinsurance under all policies having reinsurance premiums in arrears.
If MARC elects to exercise its right of termination, it will give the
Ceding Company thirty (30) days written notice of its intention. Such
notice will be sent by certified mail.
If all reinsurance premiums in arrears, including any that become in
arrears during the thirty (30) day notice period, are not paid before
the expiration of the notice period, MARC will be relieved of all
liability under those policies as of the last date to which premiums
have been paid for each policy. Reinsurance on policies on which
reinsurance premiums subsequently fall due will automatically terminate
as of the last date to which premiums have been paid for each policy,
unless reinsurance premiums on those policies are paid on or before
their Remittance Dates.
Terminated reinsurance may be reinstated, subject to approval by MARC,
within thirty (30) days of the date of termination, and upon payment of
all reinsurance premiums in arrears including any interest accrued
thereon. MARC will 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 will not prejudice
MARC's right to collect premiums for the period during which
reinsurance was in force prior to the expiration of the thirty (30)
days notice.
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The Ceding Company will not force termination under the provisions of
this Article solely to avoid the provisions regarding recapture in
Article 11, or to transfer the reinsured policies to another reinsurer.
6.5 PREMIUM RATE GUARANTEE
MARC does not guarantee the premium rates for more than one (1) year,
hence deficiency reserves are not required.
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ARTICLE 7 - 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, MARC will, upon receipt of
notification of the change, provide adjusted reinsurance coverage in accordance
with the provisions of this Agreement. The Ceding Company will notify MARC of
any such change within thirty (30) days of its effective date.
7.1 REDUCTIONS AND TERMINATIONS
In the event of the reduction, lapse, or termination of a policy or
policies reinsured under this Agreement or any other agreement, the
Ceding Company will, reduce or terminate reinsurance on that life. The
reinsured amount on the life with all reinsurers will be reduced,
effective on the same date, by the amount required such that the Ceding
Company maintains its retention as defined under this Agreement.
The reinsurance reduction will apply first to the policy or policies
being reduced and then, on a chronological basis, to other reinsured
policies on the life, beginning with the oldest policy. If a fully
retained policy on a life that is reinsured under this Agreement is
terminated or reduced, the Ceding Company will reduce the existing
reinsurance on that life by a corresponding amount, with the
reinsurance on the oldest policy being reduced first. If the amount of
reduction exceeds the risk amount reinsured, the reinsurance on the
policy or policies will be terminated.
MARC will refund any unearned reinsurance premiums net of allowances.
However, the reinsured portion of any policy fee will be deemed earned
for a policy year if the policy is reinsured during any portion of that
policy year.
7.2 INCREASES
(A) NONCONTRACTUAL INCREASES
If the amount of insurance is increased as a result of a
noncontractual change, the increase will be underwritten by
the Ceding Company in accordance with its customary standards
and procedures and will be considered new reinsurance under
this Agreement. MARC's approval is required if the original
policy was reinsured on a facultative basis or if the new
amount will cause the reinsured amount on the life to exceed
either the Automatic Binding Limits or the Jumbo Limits shown
in Exhibit B.
MARC will assume its share of the entire amount in excess of
the Ceding Company's applicable retention. Premiums for the
additional reinsurance will be at the new-issue rate from the
point of increase.
(B) CONTRACTUAL INCREASES
For policies reinsured on an automatic basis, reinsurance of
increases in amount resulting from contractual policy
provisions will be accepted only up to the Automatic Binding
Limits shown in Exhibit B.
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For policies reinsured on a facultative basis, reinsurance
will be limited to the ultimate amount shown in MARC's
facultative offer. Reinsurance premiums for contractual
increases will be on a point-in-scale basis from the original
issue age of the policy.
7.3 RISK CLASSIFICATION CHANGES
If the policyholder requests a Table Rating reduction or removal of a
Flat Extra, such change will be underwritten according to the Ceding
Company's normal underwriting practices. Risk classification changes on
facultative policies will be subject to MARC's approval.
7.4 REINSTATEMENT
If a policy reinsured on an automatic basis is reinstated in accordance
with its terms and in accordance with Ceding Company rules and
procedures, MARC will, upon notification of reinstatement,
automatically reinstate the reinsurance coverage. If a policy reinsured
on a facultative basis is reinstated, approval by MARC will be required
prior to the reinstatement of the reinsurance if the Ceding Company's
regular reinstatement rules indicate that more evidence than a
Statement of Good Health is required.
Upon reinstatement of the reinsurance coverage, the Ceding Company will
pay the contractual reinsurance premiums plus accrued interest for the
period and at the interest rate for which it receives premiums in
arrears.
7.5 NONFORFEITURE BENEFITS
(A) EXTENDED TERM
If the original policy lapses and extended term insurance is
elected under the terms of the policy, reinsurance will
continue on the same basis as under the original policy until
the expiry of the extended term period.
(B) REDUCED PAID-UP
If the original policy lapses and reduced paid-up insurance is
elected under the terms of the policy, the amount reinsured
will be reduced.
Reinsurance will be reduced by the full amount of the
reduction. The reinsurance premiums will be calculated in the
same manner as reinsurance premiums were calculated on the
original policy. If the amount of reduction exceeds the risk
amount reinsured, the reinsurance on the policy will be
terminated.
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ARTICLE 8 - CONVERSIONS, EXCHANGES, AND REPLACEMENTS
If a policy reinsured under this Agreement is converted, exchanged or replaced,
the Ceding Company will promptly notify MARC. Unless mutually agreed otherwise,
policies that are not reinsured with MARC and that exchange or convert to a plan
covered under this Agreement will not be reinsured hereunder.
8.1 CONVERSIONS
MARC will continue to reinsure policies resulting from the contractual
conversion of any policy reinsured under this Agreement, in an amount
not to exceed the original amount reinsured hereunder. If the plan to
which the original policy is converting is reinsured by MARC, either
under this Agreement or under a different Agreement, reinsurance
premium rates for the resulting converted policy will be those
contained in the Agreement that covers the plan to which the original
policy is converting. However, if the new plan is not reinsured by
MARC, reinsurance premiums for a policy resulting from a contractual
conversion will be agreed upon between the parties. Reinsurance
premiums and any allowances for conversions will be on a point-in-scale
basis from the original issue age of the policy.
If the conversion results in an increase in the risk amount, the
increase will be underwritten by the Ceding Company in accordance with
its customary standards and procedures. MARC will accept such
increases, subject to the new business provisions of this Agreement.
Reinsurance premiums and any allowances for increased risk amounts will
be first-year premiums at the agreed-upon premium rate.
8.2 EXCHANGES AND REPLACEMENTS
A policy resulting from an internal exchange or replacement will be
underwritten by the Ceding Company in accordance with its underwriting
guidelines, standards and procedures for exchanges and replacements. If
the Ceding Company's guidelines treat the policy as new business, then
the reinsurance will also be considered new business. For purposes of
this Article, new business is defined as those policies on which:
(a) the Ceding Company has obtained complete and current underwriting
evidence on the full amount; and
(b) the full normal commissions are paid by the Ceding Company for
the new plan; and
(c) the Suicide and Contestable provisions apply from the effective
date of the new plan.
MARC's approval to exchange or replace the policy will be required if
the original policy was reinsured on a facultative basis.
If the Ceding Company's guidelines do not treat the policy as new
business, the exchange or replacement will continue to be ceded to
MARC. The rates will be based on the original issue age, underwriting
class and duration since the issuance of the original policy.
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ARTICLE 9 - CLAIMS
Claims covered under this Agreement include only death claims, which are those
due to the death of the insured on a policy reinsured under this Agreement, and
any additional benefits specified in Exhibit B, which are provided by the
underlying policy and are reinsured under this Agreement.
9.1 NOTICE
The Ceding Company will notify MARC, as soon as reasonably possible,
after it receives a claim on a policy reinsured under this Agreement.
9.2 PROOFS
The Ceding Company will not be required to provide proper claim proofs
if MARC's share of a claim is equal to or less than [REDACTED]. MARC,
however, reserves the right to request a complete copy of the file for
any claim. If MARC's share of a claim is over [REDACTED], the Ceding
Company will promptly provide MARC with proper claim proofs, including
a copy of the proof of payment by the Ceding Company, a copy of the
claimant statement and a copy of the insured's death certificate. In
addition, for contestable claims, the Ceding Company will send to MARC
a copy of all papers in connection with the claim, including
investigation papers, the underwriting file and underwriter's notes.
9.3 AMOUNT AND PAYMENT OF REINSURANCE BENEFITS
As soon as MARC receives proper claim notice and proof of the claim,
MARC will promptly pay the reinsurance benefits due the Ceding Company.
The Ceding Company's contractual liability for policies reinsured under
this Agreement is binding on MARC. However, for claims incurred during
the contestable period if the total amount of reinsurance ceded to all
Reinsurers on the policy is greater than the amount retained by the
Ceding Company, or if the Ceding Company retained less than its usual
retention on the policy, the Ceding Company will consult with MARC
before conceding liability or making settlement to the claimant. The
Ceding Company will wait at least ten (10) business days for MARC's
recommendation.
For claims under Accelerated Benefit riders, the reinsurance benefit is
MARC's proportionate share of the accelerated death benefit payable
(the death benefit less the Ceding Company's discount percentage and
subject to Ceding Company's cap on dollar amount or percentage of the
total death benefit payable to the insured). Immediately following
payment of any accelerated death benefit claim, the net amount at risk
reinsured hereunder for the policy will be reduced proportionately with
the reduction in face amount of the policy.
The total reinsurance recoverable from all companies will not exceed
the Ceding Company's total contractual liability on the policy, less
the amount retained. The maximum reinsurance death benefit payable to
the Ceding Company under this Agreement is the risk amount specifically
reinsured with MARC. MARC will also pay its proportionate share of the
interest that the Ceding Company pays on the death proceeds until the
date of settlement.
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Life benefit payments will be made in a single sum, regardless of the
Ceding Company's settlement options.
9.4 CONTESTABLE CLAIMS
The Ceding Company will promptly notify MARC of its intention to
contest, compromise, or litigate a claim involving a reinsured policy.
The Ceding Company will also promptly and fully disclose all
information relating to the claim. Once notified, MARC will have
fifteen (15) business days to notify the Ceding Company in writing of
its decision to accept participation in the contest, compromise, or
litigation. If MARC has accepted participation, the Ceding Company will
promptly advise MARC of all significant developments in the claim
investigation, including notification of any legal proceedings against
it in response to denial of the claim.
If MARC does not accept participation, MARC will then fulfill its
obligation by paying the Ceding Company its full share of the
reinsurance amount, and will not share in any subsequent reduction or
increase in liability.
If MARC accepts participation and the Ceding Company's contest,
compromise, or litigation results in a reduction or increase in
liability, MARC will share in any such reduction or increase in
proportion to its share of the risk on the contested policy.
9.5 CLAIM EXPENSES
MARC will pay its share of reasonable claim investigation and legal
expenses connected with the litigation or settlement of contractual
liability claims unless MARC has discharged its liability pursuant to
Section 9.4 above. If MARC has so discharged its liability, MARC will
not participate in any expenses incurred thereafter.
MARC will not reimburse the Ceding Company for routine claim and
administration expenses, including but not limited to the Ceding
Company's home office expenses, compensation of salaried officers and
employees, and any legal expenses other than third party expenses
incurred by the Ceding Company. Claim investigation expenses do not
include expenses incurred by the Ceding Company as a result of a
dispute or contest arising out of conflicting claims of entitlement to
policy proceeds or benefits.
Furthermore, MARC will not reimburse the Ceding Company for any
expenses, if said expense was not incurred by the Ceding Company while
investigating, defending or settling a claim.
9.6 MISREPRESENTATION OR SUICIDE
If the Ceding Company returns premium to the policyowner or beneficiary
as a result of misrepresentation or suicide of the insured, MARC will
refund its proportionate share of the premium refund to the Ceding
Company in lieu of any other form of reinsurance benefit payable under
this Agreement.
9.7 MISSTATEMENT OF AGE OR SEX
In the event of a change in the amount of the Ceding Company's
liability on a reinsured policy due to a misstatement of age or sex,
MARC's liability will change proportionately. The face amount of the
reinsured policy will be adjusted from the inception of the policy, and
any difference will be settled without interest.
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MUNICH RE GROUP
9.8 EXTRA-CONTRACTUAL DAMAGES
MARC will not participate in punitive or compensatory damages that are
awarded against the Ceding Company as a result of an act, omission, or
course of conduct committed solely by the Ceding Company, its agents,
or representatives in connection with claims covered under this
Agreement. MARC will, however, pay its share of statutory penalties
awarded against the Ceding Company in connection with claims covered
under this Agreement if MARC elected in writing to join in the contest
of the coverage in question.
The parties recognize that circumstances may arise in which equity
would require MARC, to the extent permitted by law, to share
proportionately in punitive and compensatory damages. Such
circumstances are difficult to define in advance, but would generally
be those situations in which MARC was an active party and, in writing,
recommended, consented to, or ratified the act or course of conduct of
the Ceding Company that ultimately resulted in the assessment of the
extra-contractual damages. In such situations, MARC and the Ceding
Company will share such damages so assessed, in equitable proportions.
For purposes of this Article, the following definitions will apply.
"PUNITIVE DAMAGES" are those damages awarded as a penalty, the amount
of which is neither governed nor fixed by statute.
"COMPENSATORY DAMAGES" are those amounts awarded to compensate for the
actual damages sustained, and are not awarded as a penalty, nor fixed
in amount by statute.
"STATUTORY PENALTIES" are those amounts awarded as a penalty, but are
fixed in amount by statute.
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ARTICLE 10 - RETENTION LIMIT CHANGES
10.1 If the Ceding Company changes its maximum retention limits as shown in
Exhibit A, it will provide MARC with written notice of the intended
changes thirty (30) days in advance of their effective date.
A change to the Ceding Company's maximum retention limits will not
affect the reinsured policies in force except as specifically provided
elsewhere in this Agreement. Furthermore, unless agreed between the
parties, an increase in the Ceding Company's retention schedule will
not effect an increase in the total risk amount that it may
automatically cede to MARC.
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ARTICLE 11 - RECAPTURE
11.1 Whenever the Ceding Company increases its maximum retention limits over
the maximum retention limits set forth in Exhibit A, the Ceding Company
has the option to recapture certain risk amounts. If the Ceding Company
has maintained its maximum stated retention (not a special retention
limit) for the plan and the insured's issue age, sex, and mortality
classification, it may apply its increased retention limits to reduce
the amount of reinsurance in force as follows.
(a) The Ceding Company must give MARC thirty (30) days written notice
prior to the commencement of recapture.
(b) The reduction of reinsurance on affected policies will become
effective on the policy anniversary date immediately following
the notice of election to recapture; however, no reduction will
be made until a policy has been in force for at least twenty (20)
years.
(c) If any reinsured policy is recaptured, all reinsured policies
eligible for recapture under the provisions of this Article must
be recaptured up to the Ceding Company's new maximum retention
limits in a consistent manner and the Ceding Company must
increase its total amount of insurance on each reinsured life.
The Ceding Company may not revoke its election to recapture for
policies becoming eligible at future anniversaries.
If portions of the reinsured policy have been ceded to more than one
reinsurer, the Ceding Company must allocate the reduction in
reinsurance so that the amount reinsured by each reinsurer after the
reduction is proportionately the same as if the new maximum dollar
retention limits had been in effect at the time of issue.
The amount of reinsurance eligible for recapture is based on the
current amount at risk as of the date of recapture. For a policy issued
as a result of exchange, conversion, or re-entry, the recapture terms
of the reinsurance agreement covering the original policy will apply,
and the duration period for the purpose of recapture will be measured
from the effective date of the reinsurance on the original policy.
If there is a reinsured waiver of premium claim in effect when
recapture takes place, MARC will continue to pay its share of the
waiver claim until it terminates. MARC will not be liable for any other
benefits, including the basic life risk, that are eligible for
recapture. All such eligible benefits will be recaptured as if there
were no waiver claim in effect.
After the effective date of recapture, MARC will not be liable for any
reinsured policies or portions of such reinsured policies eligible for
recapture that the Ceding Company has overlooked, provided however that
MARC will be liable for a refund in full of any premium so received.
No recapture will be permitted if the Ceding Company has either
obtained or increased stop loss reinsurance coverage as justification
for the increase in retention limits.
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ARTICLE 12 - GENERAL PROVISIONS
12.1 CURRENCY
All payments and reporting by both parties under this Agreement will be
made in United States dollars.
12.2 PREMIUM TAX
MARC will not reimburse the Ceding Company for premium taxes.
12.3 INSPECTION OF RECORDS
MARC and the Ceding Company, or their duly authorized representatives,
will have the right to inspect original papers, records, and all
documents relating to the business reinsured under this Agreement
including underwriting, claims processing, and administration. Upon
reasonable advance written notice, such access will be provided during
regular business hours at the office of the inspected party.
12.4 FORMS, MANUALS & ISSUE RULES
The Ceding Company affirms that its retention schedule, underwriting
guidelines, issue rules, premium rates and policy forms applicable to
the Reinsured Policies and in use as of the effective date, have been
supplied to MARC.
The Ceding Company will promptly notify MARC of any proposed material
changes in its underwriting guidelines. This Agreement will not extend
to policies issued pursuant to such changes unless MARC has consented
in writing to accept policies subject to such changes.
It is the Ceding Company's responsibility to ensure that its practice
and applicable forms are in compliance with current Medical Information
Bureau (MIB) guidelines.
12.5 INTEREST RATE
If, under the terms of this Agreement, interest is accrued on amounts
due either party, such interest will be calculated using the 180 day
treasury rate as reported in the WALL STREET JOURNAL on the date the
payment becomes due, except as it pertains to Article 9, and outlined
elsewhere in this Agreement.
12.6 OTHER
MARC will not participate in gross annual premiums paid by the
policyholder, policy fees, expense charges assessed, cash values,
accumulation fund amounts, dividends nor any benefits not expressly
referred to herein.
12.7 CREDIT FOR REINSURANCE
It is the intention of both MARC and the Ceding Company that the Ceding
Company qualifies for reinsurance credit in the state of Michigan for
reinsurance ceded hereunder. Without limiting the generality of the
immediately preceding sentence, MARC shall, in conformity with all
applicable laws and regulations governing MARC, take any and all
commercially reasonable steps within its control so that the Ceding
Company may take full credit in its SAP financial statements for the
business ceded under this Agreement.
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ARTICLE 13 - DAC TAX
13.1 The parties to this Agreement agree to the following provisions
pursuant to Section 1.848-2(g)(8) of the Income Tax Regulations
effective December 29, 1992, under Section 848 of the Internal Revenue
Code of 1986, as amended:
(a) The term `party' refers to either the Ceding Company or MARC, as
appropriate.
(b) The terms used in this Article are defined by reference to
Regulation Section 1.848-2, effective December 29, 1992.
(c) The party with the net positive consideration for this Agreement
for each taxable year will capitalize specified policy
acquisition expenses with respect to this Agreement without
regard to the general deductions limitation of Section 848(c)(1).
(d) Both parties agree to exchange information pertaining to the
amount of net consideration under this Agreement each year to
ensure consistency, or as otherwise required by the Internal
Revenue Service.
(e) The Ceding Company will submit a schedule to MARC by April 1 of
each year with its calculation of the net consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an officer of the Ceding
Company stating that the Ceding Company will report such net
consideration in its tax return for the preceding calendar year.
MARC may contest such calculation by providing an alternative
calculation to the Ceding Company in writing within thirty (30)
days of MARC's receipt of the Ceding Company's calculation. If
MARC does not so notify the Ceding Company within the required
timeframe, MARC will report the net consideration as determined
by the Ceding Company in MARC's tax return for the previous
calendar year.
(f) If MARC contests the Ceding Company'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 MARC submits its alternative calculation. If the Ceding
Company and MARC reach an agreement on an amount of net
consideration, each party will report the agreed upon amount in
its tax return for the previous calendar year.
(g) Both the Ceding Company and MARC represent and warrant that they
are subject to United States taxation under either Subchapter L
or Subpart F of Part III of Subchapter N of the Internal Revenue
Code of 1986, as amended.
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ARTICLE 14 - OFFSET
14.1 Any debts or credits, in favor of or against either MARC or the Ceding
Company with respect to this Agreement or any other reinsurance
agreement between the parties, are deemed mutual debts or credits and
may be offset and only the balance will be allowed or paid.
The right of offset will not be affected or diminished because of the
insolvency of either party.
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ARTICLE 15 - INSOLVENCY
15.1 INSOLVENCY OF A PARTY TO THIS AGREEMENT A party to this Agreement will
be deemed insolvent when it:
(a) applies for or consents to the appointment of a receiver,
rehabilitator, conservator, liquidator or statutory successor of
its properties or assets; or
(b) is adjudicated as bankrupt or insolvent; or
(c) files or consents to the filing of a petition in bankruptcy,
seeks reorganization to avoid insolvency or makes formal
application for any bankruptcy, dissolution, liquidation or
similar law or statute; or
(d) becomes the subject of an order to rehabilitate or an order to
liquidate as defined by the insurance code of the jurisdiction of
the party's domicile.
15.2 INSOLVENCY OF THE CEDING COMPANY
In the event of the insolvency of the Ceding Company, all reinsurance
payments due under this Agreement will be payable directly to the
liquidator, rehabilitator, receiver, or statutory successor of the
Ceding Company, without diminution because of the insolvency, for those
claims allowed against the Ceding Company by any court of competent
jurisdiction or by the liquidator, rehabilitator, receiver or statutory
successor having authority to allow such claims.
In the event of insolvency of the Ceding Company, the liquidator,
rehabilitator, receiver, or statutory successor will give written
notice to MARC of all pending claims against the Ceding Company on any
policies reinsured within a reasonable time after such claim is filed
in the insolvency proceeding. While a claim is pending, MARC may
investigate and interpose, at its own expense, in the proceeding where
the claim is adjudicated, any defense or defenses that it may deem
available to the Ceding Company or its liquidator, rehabilitator,
receiver, or statutory successor.
The expense incurred by MARC will be chargeable, subject to court
approval, against the Ceding Company as part of the expense of
liquidation to the extent of a proportionate share of the benefit that
may accrue to the Ceding Company solely as a result of the defense
undertaken by MARC. Where two or more reinsurers are participating in
the same claim and a majority in interest elect to interpose a defense
or defenses to any such claim, the expense will be apportioned in
accordance with the terms of this Agreement as though such expense had
been incurred by the Ceding Company.
MARC will be liable only for the amounts reinsured and will not be or
become liable for any amounts or reserves to be held by the Ceding
Company on policies reinsured under this Agreement.
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ARTICLE 16 - ERRORS AND OMISSIONS
16.1 If through unintentional error, oversight, omission, or
misunderstanding (collectively referred to as "errors"), MARC or the
Ceding Company fails to comply with the terms of this Agreement and if,
upon discovery of the error by either party, the other is promptly
notified, each thereupon will be restored to the position it would have
occupied if the error had not occurred, including interest, except as
provided for in Article 3.
If it is not possible to restore each party to the position it would
have occupied but for the error, the parties will endeavor in good
faith to promptly resolve the situation in a manner that is fair and
reasonable, and most closely approximates the intent of the parties as
evidenced by this Agreement.
However, MARC will not provide reinsurance for policies that do not
satisfy the parameters of this Agreement, nor will MARC be responsible
for negligent or deliberate acts or for repetitive errors in
administration by the Ceding Company. If either party discovers that
the Ceding Company has failed to cede reinsurance as provided in this
Agreement, or failed to comply with its reporting requirements, MARC
may require the Ceding Company to audit its records for similar errors
and to take the actions reasonably necessary to avoid similar errors in
the future.
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ARTICLE 17 - DISPUTE RESOLUTION
17.1 In the event of a dispute arising out of or relating to this agreement,
the parties agree to the following process of dispute resolution.
Within thirty (30) days after MARC or the Ceding Company has first
given the other party written notification of a specific dispute, each
party will appoint a designated company officer to attempt to resolve
the dispute. The officers will meet at a mutually agreeable location as
soon as possible and as often as necessary, in order to gather and
furnish the other with all appropriate and relevant information
concerning the dispute. The officers will discuss the problem and will
negotiate in good faith without the necessity of any formal arbitration
proceedings. During the negotiation process, all reasonable requests
made by one officer to the other for information will be honored. The
designated officers will decide the specific format for such
discussions.
If the officers cannot resolve the dispute within thirty (30) days of
their first meeting, the dispute will be submitted to formal
arbitration, unless the parties agree in writing to extend the
negotiation period for an additional thirty (30) days.
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ARTICLE 18 - ARBITRATION
18.1 It is the intention of MARC and the Ceding Company that the customs and
practices of the life insurance and reinsurance industry will be given
full effect in the operation and interpretation of this Agreement. The
parties agree to act in all matters with the highest good faith. If
MARC and the Ceding Company cannot mutually resolve a dispute that
arises out of or relates to this Agreement, and the dispute cannot be
resolved through the dispute resolution process described in Article
17, the dispute will be decided through arbitration.
To initiate arbitration, either the Ceding Company or MARC will notify
the other party in writing of its desire to arbitrate, stating the
nature of its dispute and the remedy sought. The party to which the
notice is sent will acknowledge to the notification in writing within
fifteen (15) days of its receipt.
There will be three arbitrators who will be current or former officers
of life insurance or life reinsurance companies other than the parties
to this Agreement, their affiliates or subsidiaries. Each of the
parties will appoint one of the arbitrators and these two arbitrators
will select the third. If either party refuses or neglects to appoint
an arbitrator within sixty (60) days of the initiation of the
arbitration, the other party may appoint the second arbitrator. If the
two arbitrators do not agree on a third arbitrator within sixty (60)
days of the appointment of the second arbitrator, then each arbitrator
shall nominate three candidates [within ten (10) days thereafter], two
of whom the other shall decline, and the decision shall be made by
drawing lots for the final selection.
Once chosen, the arbitrators are empowered to select the site of the
arbitration and decide all substantive and procedural issues by a
majority of votes. The site of arbitration will be Lansing, Michigan,
unless some other place is mutually agreed upon by the Ceding Company
and MARC. As soon as possible, the arbitrators will establish
arbitration procedures as warranted by the facts and issues of the
particular case. The arbitrators will 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 may
consider any relevant evidence; they will weigh the evidence and
consider any objections. Each party may examine any witnesses who
testify at the arbitration hearing.
The arbitrators will base their decision on the terms and conditions of
this Agreement and the customs and practices of the life insurance and
reinsurance industries rather than on strict interpretation of the law.
The decision of the arbitrators will be made by majority rule and will
be submitted in writing. The decision will be final and binding on both
parties and there will 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 arbitrators may not
award any exemplary or punitive damages.
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Unless the arbitrators decide otherwise, each party will bear the
expense of its own arbitration activities, including its appointed
arbitrator and any outside attorney and witness fees. The parties will
jointly and equally bear the expense of the third arbitrator and other
costs of the arbitration.
This Article will survive termination of this Agreement.
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ARTICLE 19 - CONFIDENTIALITY
19.1 PRIVACY
MARC agrees to treat Customer Information provided by the Ceding Company as
confidential, as prescribed under Federal and State laws and
regulations related to privacy. Customer Information includes, but is
not limited to, medical, financial, and other personal information
about proposed, current, and former policyowners, insureds, applicants,
and beneficiaries of policies issued by the Ceding Company. MARC may
disclose such information to its retrocessionaires as necessary to
perform its internal risk-management functions and to comply with
retrocessionaire requirements. MARC may also disclose such information
to its external auditors as necessary to comply with audit
requirements. MARC will take reasonable steps to assure such outside
parties maintain the confidentiality of Customer Information.
MARC will furnish to the Ceding Company a copy of MARC's privacy policy
upon request.
19.2 PROPRIETARY INFORMATION
(a) The Ceding Company and MARC acknowledge that compliance with the
terms of this agreement requires that they exchange Proprietary
Information with each other.
(b) Proprietary Information includes, but is not limited to, business
plans, trade secrets, experience studies, underwriting manuals,
guidelines and decisions, applications, policy forms, quote
terms, actuarial data and assumptions, valuations, financial
condition, and the specific terms and conditions of this
agreement.
(c) Proprietary Information will not include information that:
(i) is or becomes available to the general public other than as
a result of disclosure by the party receiving the
information (hereinafter the "Recipient");
(ii) is developed independently by the Recipient;
(iii) is acquired by the Recipient from a third party that is not
known by the Recipient to be bound to keep the information
confidential; or
(iv) was already within the possession of the Recipient, and not
subject to a confidentiality agreement, prior to being
furnished by the other party.
19.3 MARC and the Ceding Company shall hold all Proprietary Information
received from the other party in confidence and will not disclose such
information except to their own directors, officers, employees,
affiliates, and advisors (collectively the "Representatives") who need
to know such information in connection with the proper execution of
this agreement. MARC and the Ceding Company shall inform all
Representatives of the confidentiality of the Proprietary Information
and will direct such Representatives to treat the information
accordingly.
19.4. MARC may disclose Proprietary Information to its retrocessionaires or
MIB as necessary to perform its internal risk-management functions and
to comply with retrocessionaire requirements. The Ceding Company or
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MARC may disclose Proprietary Information to its external auditors as
necessary to comply with audit requirements. The parties will take
reasonable steps to assure such outside parties maintain the
confidentiality of such Proprietary Information.
19.5 Either party may disclose Proprietary Information when legally
compelled to do so. In such event, the party so compelled will provide
the other party with prompt notice prior to disclosure so that the
other party may seek an appropriate remedy.
19.6 The provisions of this Article survive for two years beyond the
termination of the last in force policy reinsured under this Agreement.
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ARTICLE 20 - DURATION OF AGREEMENT
20.1 This Agreement is indefinite as to its duration. The Ceding Company or
MARC may terminate this Agreement with respect to the reinsurance of
new business by giving thirty (30) days written notice of termination
to the other party, sent by certified mail. The first day of the notice
period is deemed to be the date the document is postmarked.
During the notification period, the Ceding Company will continue to
cede and MARC will continue to accept policies covered under the terms
of this Agreement. Reinsurance coverage on all reinsured policies will
remain in force until the termination or expiry of the policies or
until the contractual termination of reinsurance under the terms of
this Agreement, whichever occurs first.
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ARTICLE 21 - EXECUTION
21.1 This Agreement is effective as of March 8, 2004, and applies to all
eligible policies with issue dates on or after such date and to
eligible policies applied for on or after such date that were backdated
for up to six (6) months to save age. This Agreement has been made in
duplicate and is hereby executed by all parties.
▇▇▇▇▇▇▇ National Life Insurance Company Munich American Reassurance Company
By: ▇▇▇▇ ▇. ▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------ --------------------------------------------
(signature) (signature)
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------ --------------------------------------------
(print or type name) (print or type name)
Title: SVP & Chief Actuary Title: Vice President
------------------------------------------ --------------------------------------------
Date: June 2, 2005 Date: May 13, 2005
------------------------------------------ --------------------------------------------
Location: Lansing, MI Location: Atlanta, GA
------------------------------------------ --------------------------------------------
Attest: ▇▇▇▇▇▇▇ ▇. ▇▇▇ Attest: ▇▇▇▇▇ BURGGEMANN
------------------------------------------ ---------------------------------------------
(signature) (signature)
Title: Vice President Title: AVP & Actuary
------------------------------------------ --------------------------------------------
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EXHIBIT A
RETENTION LIMITS OF THE CEDING COMPANY
A.1 LIFE INSURANCE - MAXIMUM LIMITS OF RETENTION
(a) Domestic and Canadian Business
------------------- ------------------------ ---------------------- ------------------------
Issue Ages Standard - Table 2 Table 3 - Table 8 Table 9 - Table 16
------------------- ------------------------ ---------------------- ------------------------
------------------- ------------------------ ---------------------- ------------------------
0-65 [REDACTED] [REDACTED] [REDACTED]
------------------- ------------------------ ---------------------- ------------------------
------------------- ------------------------ ---------------------- ------------------------
66-75 [REDACTED] [REDACTED] [REDACTED]
------------------- ------------------------ ---------------------- ------------------------
------------------- ------------------------ ---------------------- ------------------------
76 and over [REDACTED] [REDACTED] [REDACTED]
------------------- ------------------------ ---------------------- ------------------------
(b) Mexican Business
------------------- ------------------------ ---------------------- ------------------------
Issue Ages Standard - Table 2 Table 3 - Table 8 Table 9 - Table 16
------------------- ------------------------ ---------------------- ------------------------
------------------- ------------------------ ---------------------- ------------------------
0-65 [REDACTED] [REDACTED] [REDACTED]
------------------- ------------------------ ---------------------- ------------------------
------------------- ------------------------ ---------------------- ------------------------
66-75 [REDACTED] [REDACTED] [REDACTED]
------------------- ------------------------ ---------------------- ------------------------
------------------- ------------------------ ---------------------- ------------------------
76 and over [REDACTED] [REDACTED] [REDACTED]
------------------- ------------------------ ---------------------- ------------------------
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EXHIBIT B
PLANS COVERED AND BINDING LIMITS
The business automatically reinsured under this Agreement is defined as follows.
B.1 PLANS, RIDERS AND BENEFITS
Policies issued on plans with effective dates within the applicable
period shown below may qualify for automatic reinsurance under the
terms of this Agreement.
Commencement Termination
Plan Identification Form No. Date Date
----------------------------------- ----------------------- -------------------------- ----------------------
Flexible Premium Variable
Universal Life Insurance
Policy-Perspective Investor VUL VUL1802 March 8, 2004
(including Extended Maturity
Option Other Insured Term
Insurance Rider Scheduled Term 9443 March 8, 2004
Insurance Rider
9440 March 8, 2004
B.2 Basis
MARC's share will be fifteen percent (15%) of the excess over the
Ceding Company's retention specified in Exhibit A. This amount will not
exceed MARC's share of the maximum Automatic Binding Limits specified
in Exhibit B.3.
B.3 Automatic Binding Limits
(a) Life
DOMESTIC AND CANADIAN BUSINESS
----------------------------------------------------------------------------------------------
MARC's Maximum Share
----------------------------------------------------------------------------------------------
--------------------- ------------------------ ---------------------- ------------------------
Ages Standard - Table 2 Table 3 - Table 8 Table 9 - Table 16
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
0-65 [REDACTED] [REDACTED] [REDACTED]
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
66-75 [REDACTED] [REDACTED] [REDACTED]
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
76-85 [REDACTED] 0 0
--------------------- ------------------------ ---------------------- ------------------------
----------------------------------------------------------------------------------------------
Pool Maximum
----------------------------------------------------------------------------------------------
--------------------- ------------------------ ---------------------- ------------------------
Ages Standard - Table 2 Table 3 - Table 8 Table 9 - Table 16
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
0-65 [REDACTED] [REDACTED] [REDACTED]
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
66-75 [REDACTED] [REDACTED] [REDACTED]
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
76-85 [REDACTED] 0 0
--------------------- ------------------------ ---------------------- ------------------------
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MEXICAN BUSINESS
----------------------------------------------------------------------------------------------
MARC's Maximum Share
----------------------------------------------------------------------------------------------
--------------------- ------------------------ ---------------------- ------------------------
Ages Standard - Table 2 Table 3 - Table 8 Table 9 - Table 16
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
0-65 [REDACTED] [REDACTED] [REDACTED]
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
66-75 [REDACTED] [REDACTED] [REDACTED]
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
76-85 [REDACTED] 0 0
--------------------- ------------------------ ---------------------- ------------------------
----------------------------------------------------------------------------------------------
Pool Maximum
----------------------------------------------------------------------------------------------
--------------------- ------------------------ ---------------------- ------------------------
Ages Standard - Table 2 Table 3 - Table 8 Table 9 - Table 16
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
0-65 [REDACTED] [REDACTED] [REDACTED]
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
66-75 [REDACTED] [REDACTED] [REDACTED]
--------------------- ------------------------ ---------------------- ------------------------
--------------------- ------------------------ ---------------------- ------------------------
76-85 [REDACTED] 0 0
--------------------- ------------------------ ---------------------- ------------------------
The pool maximum autobind amounts above exclude the Ceding
Company's retention.
(b) Scheduled Term Insurance Rider (STR) - MARC shall reinsure the STR
as follows:
1. STR available only on base insured.
2. STR will be treated as an increase in specified death
benefit.
3. All increases as a result of the STR will be fully
underwritten.
4. MARC will only participate on the STR on those policies that
were reinsured with MARC at the original issue date. MARC
will not participate in any deferred reinsurance coverage.
5. All STR scheduled increases will be underwritten for the
highest total increase amount at the time the STR is applied
for.
6. Any increases to the Target Death Benefit after issue will
be fully underwritten.
7. A refusal to accept a scheduled increase will void any
future scheduled increases, subject to new underwriting.
(c) Accelerated Living Benefit ▇▇▇▇▇
▇▇▇▇ will participate in its share of this benefit.
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B.4 JUMBO LIMITS
The Ceding Company will not cede any risk automatically if, according
to information available to the Ceding Company, the total amount in
force and applied for on the life with all insurance companies,
including any amount to be replaced, exceeds the applicable amounts
shown below.
(a) Life (with or without Waiver of Premium): [REDACTED]
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EXHIBIT C
FORMS, MANUALS AND ISSUE RULES
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EXHIBIT D
REINSURANCE PREMIUMS
D.1 LIFE
Plans covered under this Agreement will be reinsured on a YRT basis.
(a) Flexible Premium Variable Universal Life Policy
Scheduled Term Insurance Rider
The premium basis for the first [REDACTED] of reinsurance
ceded will be based on the following percentages of the Ceding
Company's annualized monthly projected cost-of-insurance per
[REDACTED] rates multiplied by the Ceding Company's banding
table for policies with Specified and/or Target Death Benefits
greater than or equal to [REDACTED]:
CLASS 1 2-10 11 ON
----- ----- ---- -----
Male Preferred Plus Non-Tobacco 0% 56% 90%
Male Preferred Non-Tobacco 0% 62% 85%
Male Non-Tobacco 0% 65% 73%
Male Preferred Tobacco 0% 67% 68%
Male Tobacco 0% 84% 85%
Female Preferred Plus Non-Tobacco 0% 55% 96%
Female Preferred Non-Tobacco 0% 61% 90%
Female Non-Tobacco 0% 66% 80%
Female Preferred Tobacco 0% 70% 71%
Female Tobacco 0% 88% 89%
(b) Other Insured Term Insurance Rider
The premium basis for the first [REDACTED] of reinsurance
ceded will be the following percentages based on the OIR
projected cost of insurance rates:
CLASS 1 2 ON
----- ----- ----
Preferred Plus Non-Tobacco 0% 80%
Preferred Non-Tobacco 0% 82%
Non-Tobacco 0% 78%
Preferred Tobacco 0% 70%
Tobacco 0% 83%
(c) Amounts of reinsurance in excess of [REDACTED] on any one life
shall be reinsured on the basis of MARC's Non-Refund YRT
Premium Rates.
D.2 AGE BASIS
Age Nearest
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D.3 POLICY FEES
MARC will not participate in any policy fees.
D.4 RECAPTURE PERIOD
Number of years: 20
------
D.5 SUBSTANDARD RATINGS
Premiums will be based on the standard rate increased by an extra 25%
per table of assessed rating.
Allowances are the same as those for standard life coverage.
D.6 FLAT EXTRAS
The total premium remitted to MARC will include the flat extra premium
minus the allowances shown below.
TYPE OF FLAT EXTRA PREMIUM FIRST YEAR RENEWAL
-------------------------- ---------- -------
Temporary (1-5 years) 90% 90%
Permanent (6 years & greater) 25% 90%
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EXHIBIT E
SELF-ADMINISTERED REPORTING
E.1 The Ceding Company will self-administer all reinsurance reporting. The
Ceding Company will send MARC the reports listed below at the frequency
specified.
TRANSACTION REPORTS [monthly]
1. New Business
2. First Year - Other than New Business
3. Renewal Year
4. Changes and Terminations
5. Accounting Information
PERIODIC REPORTS
6. Statutory Reserve Information (quarterly) 7. Policy Exhibit
Information (monthly)
8. Inforce (monthly)
A brief description of the data requirements follows below.
TRANSACTION REPORTS
The Ceding Company agrees to provide the following policy data in each
report as outlined in Exhibits E, F and G, and as referenced below:
1. NEW BUSINESS
This report will include new issues only, the first time the
policy is reported to MARC. Automatic and Facultative business
will be identified separately.
2. FIRST YEAR - OTHER THAN NEW BUSINESS
This report will include policies previously reported on the
new business detail and still in their first duration, or
policies involved in first year premium adjustments.
3. RENEWAL YEAR
All policies with renewal dates within the Accounting Period
will be listed.
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[GRAPHIC OMITTED] MARC
MUNICH RE GROUP
4. CHANGES AND TERMINATIONS
Policies affected by a change during the current reporting
period will be included in this report. Type of change or
termination activity must be clearly identified for each
policy.
The Ceding Company will identify the following transactions
either by separate listing or unique transaction codes:
Terminations, Reinstatements, Changes, Conversions, and
Replacements. For Conversions and Replacements, the Ceding
Company will report the original policy date, as well as the
current policy date.
5. ACCOUNTING INFORMATION
Premiums and allowances will be summarized for Life coverages,
Benefits, and Riders by the following categories: Automatic
and Facultative, First Year and Renewals.
PERIODIC REPORTS
6. STATUTORY RESERVE INFORMATION
Statutory reserves will be summarized for Life coverages,
Benefits and Riders. The Ceding Company will specify the
reserve basis used.
7. POLICY EXHIBIT INFORMATION
This is a summary of transactions during the current period
and on a year-to-date basis, reporting the number of policies
and reinsured amount.
8. INFORCE
This is a detailed report of each policy in force.
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[GRAPHIC OMITTED] MARC
MUNICH RE GROUP
EXHIBIT F
LIST OF RISKS REINSURED
The "List of Risks Reinsured," showing all renewing policies, should be prepared
and submitted monthly, quarterly, or annually according to the terms of the
Agreement. At least once a year at the end of each year, a list must be
submitted by the Ceding Company to MARC including ALL risks reinsured under this
Agreement. Premiums due should be included only for the period being reported.
The information required to be shown on such lists is set out below.
A. Policy number
B. Name of insured (MINIMUM is surname and first initial; prefer to have
first name and middle initial as well.)
C. Sex
D. Date of birth (month, day, year)
E. Issue age
* F. Attained age
G. Policy date (month, day, year) or date of increase/decrease in
specified amount
H. Transaction code (in force)
1. First year, newly reported (i.e., new business)
2. First year, previously reported (i.e., renewal business in first
policy year)
3. Renewal
I. Substandard rating (table, mortality percentage, flat extra amount and
duration. Show multiple of standard for ADB or WPD.)
J. Plan or plan code (IF more than one plan is covered by the Agreement)
K. Underwriting class (smoker, nonsmoker, preferred, etc.)
L. Specified amount issued (life, ADB, WPD)
M. Death benefit option (i.e., cash value INCLUDED IN or IN ADDITION TO
the specified amount)
* N. Current death benefit (under original policy)
O. Proportion reinsured this policy (where applicable)
P. Amount reinsured
Q. Current reinsurance amount at risk
R. Reinsurance premium (life, ADB, WPD)
* S. Net cash amount due MARC (life, ADB, WPD)
* T. Automatic or facultative
* U. Currency code if not U.S. currency
* Desirable but not required
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[GRAPHIC OMITTED] MARC
MUNICH RE GROUP
EXHIBIT F
(CONTINUED)
There should be separate subtotals for all items listed below. Each subtotal
should include:
Policy count (life--separately for new business, renewals, and combined)
Reinsurance amount at risk (separately for new business, renewals, and combined)
Reinsurance premium (separately for new business, renewals, and combined)
Reinsurance commission (separately for new business, renewals, and combined) Net
amount due MARC (separately for new business, renewals, and combined)
The various policy details including reinsurance amount at risk and proportion
reinsured shown on the "List of Risks Reinsured" should correspond to the in
force AFTER any changes reported concurrently on the "List of Amendments." We
need a grand total each reporting period for policy count in force and
reinsurance amount at risk in force (separately for new business, renewals, and
combined). A separate total of ADB in force is needed. This need not be
separated into new business and renewals.
A grand total of reinsurance premium and net amount due MARC, including all in
force and amendments, should be shown (separately for first year, renewals, and
combined categories). Separate totals should be provided for life, ADB, and WPD.
This may be shown on the "List of Risks Reinsured" or may be included in a
separate summary.
Where premiums for more than one period are being reported on a single list, the
basic identification (policy number, name of insured, sex, date of birth, age,
and policy date) need be shown only one time on the first line for the policy.
Subsequent lines should each relate to a different period and the period
involved should be indicated.
Although an increase or decrease in the specified amount will not, as a rule,
result in the issuance of a new policy, the amount of such increase or decrease
should be reported separately from the base specified amount so that differences
in premium rates can be reflected. For example, the amount of increase in
specified amount might involve a substandard rating that differs from the rating
for the base specified amount. In any such case, it might be a good idea to
assign a separate policy number suffix.
Any significant deviations from these reporting guidelines must be agreed to by
MARC.
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[GRAPHIC OMITTED] MARC
MUNICH RE GROUP
EXHIBIT G
LIST OF AMENDMENTS
Each "List of Amendments" (monthly, quarterly, or annual) should show details
for each policy for which any transaction (see codes 4-12 below) occurred which
has an effect on either the reinsurance amount at risk or reinsurance premium.
The basic policy details to be shown include the following:
a. Policy number
b. Name of insured
* ▇. ▇▇▇▇ of birth
d. Transaction code (changes to in force)
4. Termination without value
5. Policy not placed (NTO)
6. Surrender (full or partial)
7. Reinstatement
8. Increase in specified amount
9. Decrease in specified amount
10. Conversion or change of plan (e.g., Option A to Option B)
11. Death
12. Other (Please describe.) Under item 12, we would like you to
describe any other amendments such as partial recapture, full
recapture, table rating reduction, etc,
e. Effective date of transaction
f. Net increase or decrease in reinsurance amount at risk from the
reinsurance amount at risk last reported to MARC before the change
g. Reinsurance premium adjustment (separately for first year/renewal)
h. Net adjustment due MARC (separately for first year/renewal)
i. Currency code if not U.S. currency
Subtotals of policy count and reinsurance amount at risk should be provided for
each transaction code where the transaction is such that the life policy count
in force is altered by the transaction. For items g and h only grand totals are
required (separately for first year/renewal/combined).
The premium adjustments should include adjustments UP TO the current reporting
period (e.g., month, quarter). Premiums for the current reporting period should
appear on the "List of Risks Reinsured."
It is not necessary to adhere strictly to the set of transaction codes shown
above as long as the amendments are clearly identified and appropriate subtotals
and totals can be provided.
*Desirable but not required
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[GRAPHIC OMITTED] MARC
MUNICH RE GROUP
EXHIBIT H
IN-FORCE SUMMARY FORM
SELF-ADMINISTERED LIFE REINSURANCE
Summary Report
For the Period _________________ through
To Munich American Reassurance Company
Account
Company Name Number
---------------------------------------------------- --------------------------------------
Treaty ID:
-------------------------------------------------------------------------------
Plan ID:
---------------------------------------------------------------------------------------
Prepared By Date Phone
---------------------------------------------------- ------------------- --------------
I. Policy Exhibit Summary (Life Reinsurance Only)
====================================================================================================================
Number of Amount of
Policies Reinsurance
--------------------------------------------------------------------------------------------------------------------
A. In Force As Of Last Report
--------------------------------------------------------------------------------------------------------------------
B. New Paid Reinsurance Ceded
--------------------------------------------------------------------------------------------------------------------
C. NTO
--------------------------------------------------------------------------------------------------------------------
D. Reinstatements
--------------------------------------------------------------------------------------------------------------------
E. Administrative New Business (Conversions, Etc.)
--------------------------------------------------------------------------------------------------------------------
F. Lapses
--------------------------------------------------------------------------------------------------------------------
G. Recaptures
--------------------------------------------------------------------------------------------------------------------
H. Surrenders (Coinsurance Only)
--------------------------------------------------------------------------------------------------------------------
I. Death
--------------------------------------------------------------------------------------------------------------------
J. Expiries
--------------------------------------------------------------------------------------------------------------------
K. Administrative Lapses
--------------------------------------------------------------------------------------------------------------------
L. Increase/Decrease XXXXXX
--------------------------------------------------------------------------------------------------------------------
M. In Force As Of Current Report
--------------------------------------------------------------------------------------------------------------------
N. ADB In Force As of Current Report XXXXXX
====================================================================================================================
II. Accounting Summary
================ ================================= ================================= ========== =================
Premiums Commissions
Net Due
Category Other* MARC-Life
-------------- ------------------ -------------- ------------------
First Year Renewal Year First Year Renewal Year
---------------- -------------- ------------------ -------------- ------------------ ---------- -----------------
Life
---------------- -------------- ------------------ -------------- ------------------ ---------- -----------------
WP
---------------- -------------- ------------------ -------------- ------------------ ---------- -----------------
ADB
---------------- -------------- ------------------ -------------- ------------------ ---------- -----------------
---------------- -------------- ------------------ -------------- ------------------ ---------- -----------------
Total
================ ============== ================== ============== ================== ========== =================
* If more than one category is included (e.g., surrender benefits,
dividends), please show details on the reverse side of this form.
RADF61
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[GRAPHIC OMITTED] MARC
MUNICH RE GROUP
FACULTATIVE-AUTOMATIC SUBMISSION Munich American Reassurance Company
Ceding Co.: _________________________ ORIGINAL-ADDITIONAL-MIB Inquiry Only ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Address: ____________________________ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Underwriter's Name: _________________ DATE: _______________ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Underwriting Area: __________________
------------------------------------------------------------------------------------------------------------------------------------
Insured's Name (Lst, Fst, M) Policy Number:______________ Original Pol No.:_____________________
Date of Birth:_____ Issue Age:___ Sex:____ Policy Date:________________ Original Pol Date:____________________
Birth State:_________ Birth Country:______ Reins Eff Date:_____________ Original Iss Age:_____________________
Reside State:________ Reside Country:_____ Continuation:__________ Duration:_____
Occupation:_______________________________ Policy Certificate ID:______
Second Insured's Name:____________________
Date of Birth:_____ Issue Age:___ Sex:____
------------------------------------------------------------------------------------------------------------------------------------
Plan Name:_______ Smoker Code:____________ ----------------------------------------------------------------------------
Plan Name:_______ Smoker Code:____________ LIFE | WPD | ADB | |
----------------------------------------------------------------------------
Previous In Force | | | |
Life Rates:_______________________________ ----------------------------------------------
Previous Retained | | | |
Reserve Basis:____________________________ ----------------------------------------------
Issued This Policy | | | |
----------------------------------------------
Benefit 1:___________ Ben 1 Rating:_______ Reinsured Amount | | | |
Benefit 2:___________ Ben 2 Rating:_______ ----------------------------------------------------------------------------
Benefit 3:___________ Ben 3 Rating:_______ -------------------------------- ------------------------------------------------
Benefit 4:___________ Ben 4 Rating:_______ Policy | | Amount In Force Policies
Benefit 5:___________ Ben 5 Rating:_______ Year | Age | At Risk ------------------------------------------------
-------------------------------- Policy Issue Amount | Retained Amount
| | ------------------------------------------------
-------------------------------- |
| | ------------------------------------------------
Flat Extra 1: Flat Ex 1 Dur: -------------------------------- |
Flat Extra 2: Flat Ex 2 Dur: | | ------------------------------------------------
-------------------------------- |
| | ------------------------------------------------
-------------------------------- |
| | ------------------------------------------------
-------------------------------- |
| | ------------------------------------------------
--------------------------------
| | Comments
-------------------------------- ---------------------------------------
| | ------------------------------------------------
-------------------------------- ------------------------------------------------
| | ------------------------------------------------
--------------------------------
| |
--------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Submission Type: Fac______ Auto_________
Original Submission Date:________________ ---------------------------------------------------------------------------------
Offer Accepted Date:_____________________ Submitted File Includes:
Withdrawal Date:_________________________ ---------------------------------------------------------------------------------
------------------------------------------- | Application | | X-Ray
Circle Withdrawal Reason: ---------------------------------------------------------------------------------
| Medical Examination | | Other Medical Underwriting Data
1. Underwriting Not Complete ---------------------------------------------------------------------------------
2. Policy Not Delivered | Blood Profile | | Inspection Report
3. All Within Our Retention ---------------------------------------------------------------------------------
4. Placed With Automatic Reinsurer Report | Heart Chart | | Additional Inspection
5. Placed With Another Reinsurer ---------------------------------------------------------------------------------
| Attending Physician's Report | | Aviation Questionnaire
a) Rating b) Requirements ---------------------------------------------------------------------------------
c) Quicker Response | Microscopic Urinalysis | | Other Non-medical Data
------------------------------------------- ---------------------------------------------------------------------------------
| Electrocardiogram | |
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------