EXHIBIT 10.5
AMENDED AND RESTATED
REINSURANCE AGREEMENT
BETWEEN
COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY
AND
ALLSTATE LIFE INSURANCE COMPANY
RECITALS
This Amended and Restated Reinsurance Agreement dated and effective as of June
1, 2004 (hereinafter "Agreement") is made and entered into by and between
COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY, a life insurance company domiciled in
the State of Texas (hereinafter "Ceding Company") and ALLSTATE LIFE INSURANCE
COMPANY, a life insurance company domiciled in the State of Illinois
(hereinafter the "Reinsurer").
WHEREAS, the Ceding Company and Reinsurer entered into that certain Reinsurance
Agreement, effective June 30, 2000 ("Original Agreement"), pursuant to which the
Ceding Company ceded to the Reinsurer, and the Reinsurer accepted on a
coinsurance basis 100% of the Ceding Company's Net Ceded Liabilities (as defined
in Article I below) under certain annuity contracts and supplemental agreements.
WHEREAS, the Ceding Company and Reinsurer desire to amend the Original Agreement
and to restate all its terms, covenants and conditions as set forth below.
NOW THEREFORE, in consideration of the above stated premises and the promises
and the mutual agreements set forth below the Ceding Company and the Reinsurer
agree as follows.
ARTICLE I
DEFINITIONS
Unless otherwise defined herein, as used in this Agreement the following terms
shall have the meanings ascribed to them below:
A. "Annual Statement" shall mean the Ceding Company's Life and Accident and
Health
1
Companies Annual Statement for the General Account as filed with the Texas
Insurance
Department.
B. "Code" shall mean the Internal Revenue Code of 1986, as amended.
C. "Effective Date" shall mean the effective date of this Agreement, which
shall be June 30, 2000. The Amended and Restated version of this Agreement
dated June 1, 2004 shall become effective June 1, 2004.
D. "Excluded Liabilities" shall mean (i) Extra-Contractual Obligations, and
(ii) liabilities ceded by Ceding Company under Third-Party Reinsurance
Agreements.
E. "Extra-Contractual Obligations" shall mean all liabilities and obligations
for consequential, extra-contractual, exemplary, punitive, special or
similar damages or any other amounts due or alleged to be due (other than
those arising under the express terms and conditions of the Policies) which
arise from any real or alleged act, error or omission, whether or not
intentional, in bad faith or otherwise, including without limitation, any
act, error or omission relating to: (i) the marketing, underwriting,
production, issuance, cancellation or administration of the Policies; (ii)
the handling of claims or disputes in connection with the Policies; or
(iii) the failure to pay or the delay in payment of benefits or claims,
under or in connection with the Policies.
F. "Initial Settlement Date" shall have the meaning set forth in Article IV of
this Agreement.
G. "Net Benefits" shall mean the actual amounts paid or incurred by the Ceding
Company with respect to the Policies for all surrenders, withdrawals (full
and partial), death benefits, annuitizations, and payments on supplemental
contracts, net of Excluded Liabilities.
H. "Net Ceded Liabilities" shall mean any and all liabilities of the Ceding
Company arising under the Policies, but shall not include Excluded
Liabilities.
I. "Net Statutory Reserves" shall have the meaning set forth in Article V of
this Agreement.
J. "Policy or Policies" shall mean the annuity contracts defined in Exhibit A
which are underwritten or reinsured by the Ceding Company. For the
avoidance of doubt, "Policies" refers to annuity contracts which are
in-force on the Effective Date or issued after the Effective Date,
including (i) any supplemental agreements or benefits arising out of the
Policies, (ii) policies, or portions thereof, recaptured by the Ceding
Company under Third-Party Reinsurance Agreements, and (iii) Policies
reinsured by Ceding Company.
K. "Terminal Accounting and Settlement" shall have the meaning set forth in
Article XIV of this Agreement.
L. "Third-Party Reinsurance Agreements" shall mean any written reinsurance
agreements under
2
which Ceding Company has ceded liabilities with respect to the Policies,
other than this Agreement.
ARTICLE II
BASIS OF REINSURANCE
The Ceding Company agrees to cede and the Reinsurer agrees to accept Net Ceded
Liabilities. The reinsurance provided hereunder shall be on a 100% coinsurance
basis.
ARTICLE III
LIABILITY OF REINSURER; COINSURANCE PROVISIONS
A. All of the Net Ceded Liabilities shall be reinsured pursuant to the terms
of this Agreement as of the Effective Date.
B. The liability of the Reinsurer with respect to Policies in force on the
Effective Date will begin on the Effective Date. The liability of the
Reinsurer with respect to any application received or any contract issued
after the Effective Date and reinsured hereunder will begin simultaneously
with that of the Ceding Company. The Reinsurer's liability with respect to
any Policy will terminate on the date the Ceding Company's liability on
such contract terminates or the date this Agreement is terminated,
whichever is earlier. However, termination of this Agreement will not
terminate the Reinsurer's liability for Net Benefits prior to the date of
termination. If any of the Policies are reduced or terminated by payment of
a death benefit, withdrawal or surrender, the reinsurance will be reduced
proportionately or terminated.
C. The reinsurance provided under this Agreement is subject to the same
limitations and conditions as set forth in the Policies.
D. Ceding Company shall not make any changes after the Effective Date in the
provisions and conditions of any Policy except with Reinsurer's prior
written consent, including, but not limited to any changes to comply with
any applicable law, rule or regulation.
E. Some of the Policies ceded under this Agreement provide that the Ceding
Company may in its discretion, from time to time, as provided in the policy
or contract, declare interest rates, cost of insurance rates, purchase
payments or other non-guaranteed elements that are or affect required
purchase payments or are used to determine contract values. The Ceding
Company agrees, while this Agreement is in effect, to set such
discretionary interest rates, cost of insurance rates, or other
non-guaranteed elements to be declared on the Policies and the effective
dates thereof only with Reinsurer's written approval. The Ceding Company
and Reinsurer agree to fully cooperate in obtaining any required regulatory
approvals in connection with setting or changing such discretionary
interest rates, cost of insurance rates, or other non-guaranteed elements.
F. Ceding Company shall not make any changes or modifications to any of the
Policies, nor
3
waive or exercise any of its rights under any of the Policies without the
prior written consent of Reinsurer.
G. Conversions, exchanges, or replacements of Policies are not reinsured under
this Agreement, unless agreed to in writing by Reinsurer.
ARTICLE IV
CLAIMS
A. Reinsurer shall not be liable to pay Ceding Company for any
Extra-Contractual Obligations, except to the extent such liabilities or
obligations arise directly from and are proximately caused by the gross
negligence or willful acts or omissions of Reinsurer, its agents,
contractors or employees in the performance of Reinsurer's duties and
obligations under this Agreement or that certain Administrative Services
Agreement dated June 1, 2004 by and between the Ceding Company and
Reinsurer ("Administrative Services Agreement") whereby Ceding Company has
engaged Reinsurer to service the Policies.
In the event of a change in the amount of the Ceding Company's liability on
a Policy due to a misstatement of age or sex, the Reinsurer's liability
will be changed proportionately.
B. In the event that the Administrative Services Agreement is terminated for
any reason and is not replaced by another services agreement for the
Policies between Ceding Company and Reinsurer or any of its affiliates or
subsidiaries, the following subsections, shall then apply;
1. The Ceding Company shall notify the Reinsurer, as soon as possible,
whenever the Ceding Company has received a notice on any Policy
reinsured under this Agreement.
2. The Ceding Company shall promptly provide the Reinsurer with proper
claim papers and proofs when requesting payment. The Reinsurer shall
promptly pay its share of each claim in a lump sum. Reinsurer shall
have the right to approve all claim payments, and any decision by
Ceding Company to contest, compromise or litigate a claim shall be
subject to Reinsurer's prior written approval.
ARTICLE V
RESERVE TRANSFERS
The parties acknowledge that an initial reserve transfer occurred under the
original Reinsurance Agreement effective June 30, 2000, as described below.
4
A. On June 30, 2000, an estimate was made of the net statutory reserves as
calculated in B(i) below ("Net Statutory Reserves"). After receiving
approval from all necessary regulatory authorities, assets consisting of
policy loans, cash and investments (at market value) including accrued
investment income and net of unearned investment income were transferred by
the Ceding Company to the Reinsurer in an amount equal to the Net Statutory
Reserves.
B. Within ninety (90) days following the effective date of the Original
Agreement ("Initial Settlement Date"), Ceding Company paid to Reinsurer, or
received from Reinsurer, as the case may be, cash in an amount equal to (i)
less (ii), where (i) and (ii) are as defined below. Ceding Company also
paid to Reinsurer, or received from Reinsurer, as the case may be, interest
on such amount at the rate specified in (iii) below.
(i) Net Statutory Reserves determined as the portion of the following
items (a) through (e), minus items (f) through (g) attributable to
the Policies (or portion of such policies) ceded to Reinsurer under
the Original Agreement. The applicable portion of these items were
calculated as of the effective date of the Original Agreement and
were based on the corresponding items from Ceding Company's Annual
Statement.
ITEM NAIC STATEMENT REFERENCE* DESCRIPTION
---- ------------------------- -----------
(a) Page 3, Line 1 Aggregate reserve for life policies and
contracts
(b) Page 3, Line 3 Supplementary contracts without life
contingencies
(c) Page 3, Lines 4.1 & 4.2 Policy and contract claims
(d) Page 3, Line 9 Premium and annuity considerations
received in advance
(e) Page 3, Lines 11.1, 11.2 & 11.3 Policy and contract liabilities not
included elsewhere
(f) Page 2, Line 15 Life insurance premiums and annuity
considerations deferred and uncollected
5
(g) Page 40, Column 3, Line 32 Interest Maintenance Reserve adjustment for
current year's liability gains\losses
released from the reserves resulting from
this transaction
*References herein are to the 1999 NAIC Statutory Statement.
(ii) The amount transferred under Paragraph A of this Article V.
(iii) Interest on cash transferred at an effective rate of seven percent
(7%) per annum, simple rate, from the effective date of the Original
Agreement to the Initial Settlement Date.
ARTICLE VI
SETTLEMENT AND REPORTING
A. While this Agreement is in effect, Ceding Company shall pay to Reinsurer no
less frequently than quarterly, with respect to eligible Policies, a
reinsurance premium equal to (or the accounting equivalent of) the sum of
Items (a) and (b) less (c) below.
(a) Gross premiums (direct and reinsurance assumed) collected by Ceding
Company during the settlement period.
(b) Policy loan repayments collected by Ceding Company with respect to
the Policies.
(c) Gross premiums refunded by Ceding Company during the settlement
period to policyholders.
B. While this Agreement is in effect, Reinsurer shall pay to Ceding Company no
less frequently than quarterly, a benefit and expense allowance equal to
(or the accounting equivalent of) the sum of Items (a), (b), (c), (d), (e)
and (f), as applicable for the period since the date of Reinsurer's last
payment to Ceding Company.
(a) Net Benefits paid or incurred by Ceding Company with respect to the
Policies.
(b) Commissions and other sales compensation paid or incurred by Ceding
Company with respect to the Policies.
6
(c) Premium taxes paid or incurred by Ceding Company with respect to the
Policies.
(d) Policy loan distributions to policyholders paid or incurred by
Ceding Company with respect to the Policies.
(e) Net reinsurance premiums paid or incurred by Ceding Company to
another reinsurer with respect to the Policies.
(f) So long as Ceding Company and Reinsurer remain affiliates, general
insurance expenses and insurance taxes, licenses and fees excluding
income taxes (Annual Statement Page 4 Lines 23 and 24) paid or
incurred by Ceding Company with respect to the Policies shall be
paid by Reinsurer to Ceding Company.
C. Ceding Company will provide Reinsurer with accounting reports on a time
schedule determined by Reinsurer, which schedule shall be no less
frequently than quarterly within fifteen (15) days following the end of
each calendar quarter. These reports will contain sufficient information
about the Policies to enable the Reinsurer to prepare its quarterly and
annual financial reports.
D. Settlements as set out in Article VI, Paragraphs 1 and 2 will occur on a
time schedule determined by Reinsurer, which schedule shall be no less
frequently than quarterly within sixty (60) days following the end of each
calendar quarter.
E. In the event the Administrative Services Agreement is terminated for any
reason and is not replaced by another services agreement for the Policies
between Ceding Company and Reinsurer or any of its affiliates or
subsidiaries, then subsections A. through D. above shall be of no force and
effect and this subsection E. shall apply in lieu thereof.
1. Reinsurance premiums are payable monthly in arrears. The Ceding
Company shall calculate the amount of reinsurance premium due within
45 days after the end of each month, and shall send the Reinsurer a
statement showing premiums, expense allowances, claims, reserves and
other information for the applicable month as requested by
Reinsurer.
2. If an amount is due the Reinsurer, the Ceding Company shall pay that
amount together with the statement. If Ceding Company fails to pay
the amount due within 45 days after the close of the month ("Premium
Due Date"), then interest shall accrue on the amount due beginning
on the day following the Premium Due Date up to and including the
day such premium payment is paid by the Ceding Company. The rate of
interest charged per month shall be the greater of: (i) the 30 Day
Treasury ▇▇▇▇ rate as published in the Money Rate Section or any
successor section of the Wall Street Journal on the first business
day following the Premium Due Date, or (ii) 4% per annum.
7
The payment of reinsurance premium is a condition precedent to the
liability of the Reinsurer for reinsurance covered by this
Agreement. In the event that reinsurance premiums are not paid
within 60 days after the Premium Due Date, the Reinsurer shall have
the right to terminate the reinsurance under all policies having
reinsurance premiums in arrears, with 30 days prior written notice.
If all reinsurance premiums in arrears, including any that become in
arrears during the 30 day notice period, are not paid before the
expiration of the notice period, the Reinsurer 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 respective Premium Due Dates.
Terminated reinsurance may be reinstated, subject to approval by the
Reinsurer, within 45 days of the date of termination, and upon
payment of all reinsurance premiums in arrears including any
interest accrued thereon. The Reinsurer 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 shall not prejudice the Reinsurer's right to collect
premiums for the period during which reinsurance was in force prior
to the expiration of the 30 days notice.
3. If an amount is due the Ceding Company, the Reinsurer shall remit
such amount within 60 days of receipt of the statement. If the
Reinsurer fails to pay the amount due within the 60 day period, then
interest shall accrue from the day following the end of the 60 day
period up to and including the day the Reinsurer pays the amount
due. Interest shall be at the rate described in paragraph E.2.
above.
ARTICLE VII
TAX MATTERS
With respect to this Agreement, the Ceding Company and the Reinsurer hereby
make the election as set forth in Exhibit B and as provided for in section
1.848-2(g)(8) of the Treasury Regulations. Each of the parties hereto
agrees to take such further actions as may be necessary to ensure the
effectiveness of such election.
ARTICLE VIII
RESERVE CREDIT
The Reinsurer shall, to the extent necessary, together with all its subsequent
retrocessionaires, establish adequate net reserves, and shall agree in good
faith to take any other steps necessary, pursuant to the requirements of Texas
or any other state or jurisdiction in which the Ceding
8
Company is licensed or accredited, for the Ceding Company to take statutory
credit for reinsurance ceded to an unadmitted, unauthorized or unaccredited
reinsurer, up to the full amount of the reserve that the Ceding Company would
have established for the Policies if it had retained the Policies.
ARTICLE IX
OVERSIGHTS
The Reinsurer shall be bound as the Ceding Company is bound, and it is expressly
understood and agreed that if failure to reinsure or failure to comply with any
terms of this Agreement is shown to be unintentional and the result of clerical
error, misunderstanding or oversight on the part of either the Ceding Company or
the Reinsurer, both the Ceding Company and the Reinsurer shall be restored to
the positions they would have occupied had such error or oversight not occurred.
ARTICLE X
INSPECTION OF RECORDS
Either party, their respective employees or authorized representatives, may
audit, inspect and examine, during regular business hours, at the home office of
either party, any and all books, records, statements, correspondence, reports,
trust accounts and their related documents or other documents that relate to the
Policies covered under this Agreement. The audited party agrees to provide a
reasonable workspace for such audit, inspection or examination and to cooperate
fully and to faithfully disclose the existence of and produce any and all
necessary and reasonable materials requested by such auditors, investigators, or
examiners. The party performing a routine audit shall provide no less than five
(5) working days advance notice to the other party. The expense of the
respective party's employee(s) or authorized representative(s) engaged in such
activities will be borne solely by such party.
ARTICLE XI
INSOLVENCY
A. The portion of any risk or obligation assumed by the Reinsurer, when such
portion is ascertained, shall be payable on demand of the Ceding Company at
the same time as the Ceding Company shall pay its net retained portion of
such risk or obligation, and the reinsurance shall be payable by the
Reinsurer on the basis of the liability of the Ceding Company under the
Policies without diminution because of the insolvency of the Ceding
Company. In the event of the insolvency of the Ceding Company and the
appointment of a conservator, liquidator or statutory successor of the
Ceding Company, such portion shall be payable to such conservator,
liquidator or statutory successor immediately upon demand, on the basis of
claims allowed against the Ceding Company by any court of
9
competent jurisdiction or, by any conservator, liquidator or statutory
successor of the Ceding Company having authority to allow such claims,
without diminution because of such insolvency or because such conservator,
liquidator or statutory successor has failed to pay all or a portion of any
claims. Payments by the Reinsurer as above set forth shall be made directly
to the Ceding Company or its conservator, liquidator or statutory
successor.
B. Further, in the event of the insolvency of the Ceding Company, the
liquidator, receiver or statutory successor of the insolvent Ceding Company
shall give written notice to the Reinsurer of the pendency of any
obligation of the insolvent Ceding Company on any Net Ceded Liability,
whereupon the Reinsurer may investigate such claim and interpose at its own
expense, in the proceeding where such claim is to be adjudicated, any
defense or defenses which it may deem available to the Ceding Company or
its liquidator or statutory successor. The expense thus incurred by the
Reinsurer shall be chargeable, subject to court approval, against the
insolvent Ceding Company as part of the expenses of liquidation to the
extent of a proportionate share of the benefit which may accrue to the
Ceding Company solely as a result of the defense undertaken by the
Reinsurer.
C. In the event of the Reinsurer's insolvency, any payments due the Reinsurer
from the Ceding Company pursuant to the terms of this Agreement will be
made directly to the Reinsurer or its conservator, liquidator, receiver or
statutory successor.
ARTICLE XII
ARBITRATION
A. Prior to initiation of arbitration, the Reinsurer and Ceding Company agree
that they will first negotiate diligently and in good faith to agree on a
mutually satisfactory resolution of any dispute. Provided, however that if
any such dispute cannot be resolved within sixty (60) days (or such longer
period as the parties may agree) after written notice invoking the
negotiation period of this article is delivered by either party, the
Reinsurer and the Ceding Company agree that they will submit this dispute
to arbitration as described below.
B. The Reinsurer and the Ceding Company intend that any and all disputes
between them under or with respect to this Agreement be resolved without
resort to any litigation. As a condition precedent to any right of action
hereunder, any dispute or difference between the Ceding Company and the
Reinsurer relating to the interpretation or performance of this Agreement,
including its formation or validity, or any transaction under this
Agreement, whether arising before or after termination, shall be submitted
to arbitration. Arbitration shall be the method of dispute resolution,
regardless of the insolvency of either party, unless the conservator,
receiver, liquidator or statutory successor is specifically exempted from
arbitration proceeding by applicable state law of the insolvency.
10
C. Arbitration shall be initiated by the delivery of written notice of demand
for arbitration ("Arbitration Notice") by one party to another. Such
written notice shall contain a brief statement of the issue(s), remedies
sought, and the failure of the parties to reach amicable agreement as
provided in Paragraph A above.
D. The arbitrators and umpire shall be present or former disinterested
officers of life reinsurance or insurance companies other than the two
parties to the Agreement or any company owned by, or affiliated with,
either party. Each party shall appoint an individual as arbitrator and the
two so appointed shall then appoint the umpire. If either party refuses or
neglects to appoint an arbitrator within thirty (30) days after delivery of
the Arbitration Notice, the other party may appoint the second arbitrator.
If the two arbitrators do not agree on an umpire within thirty (30) days of
the appointment of the second appointed arbitrator, each of the two
arbitrators shall nominate three individuals. Each arbitrator shall then
decline two of the nominations presented by the other arbitrator. The
umpire shall be chosen from the remaining two nominations by drawing lots.
E. The arbitration hearings shall be held in the city in which the Reinsurer's
head office is located or any such other place as may be mutually agreed.
Each party shall submit its case to the arbitrators and umpire within one
hundred and eighty (180) days of the selection of the umpire or within such
longer period as may be agreed.
F. The arbitration panel shall make its decision with regard to the custom and
usage of the insurance and reinsurance business. The arbitration panel
shall interpret this Agreement as an honorable engagement; they are
relieved of all judicial formalities and may abstain from following strict
rules of law. The arbitration panel shall be solely responsible for
determining what evidence shall be considered and what procedure they deem
appropriate and necessary in the gathering of such facts or data to decide
the dispute.
G. The decision in writing of the majority of the arbitration panel shall be
final and binding upon the parties. Judgment may be entered upon the final
decision of the arbitration panel in any court having jurisdiction.
H. The jointly incurred costs of the arbitration are to be borne equally by
both parties. Jointly incurred costs are specifically defined as any costs
that are not solely incurred by one of the parties (e.g., attorneys' fees,
expert witness fees, travel to the hearing site, etc.). Costs incurred
solely by one of the parties shall be borne by that party. Once the panel
has been selected, the panel shall agree on one billable rate for each of
the arbitrators and umpire and that sole cost shall be disclosed to the
parties and become payable as a jointly incurred cost as described above.
11
ARTICLE XIII
PARTIES TO AGREEMENT
This Agreement is solely between the Ceding Company and the Reinsurer. The
acceptance of reinsurance hereunder shall not create any right or legal relation
whatever between the Reinsurer and any party in interest under any Policy.
Ceding Company shall be and remain solely liable to any insured, contract owner,
or beneficiary under any contract reinsured hereunder.
ARTICLE XIV
DURATION OF AGREEMENT AND TERMINATION
A. DURATION. This agreement will be effective as of the Effective Date, and
will be unlimited as to its duration. This Agreement may not be terminated
by either party, except as provided for in Article VI.
B. TERMINATION FOR NEW BUSINESS. This agreement will be terminated for new
business effective May 31, 2004 at 11:59pm.
ARTICLE XV
GENERAL PROVISIONS
A. ENTIRE AGREEMENT. This Agreement constitutes the entire contract between
the Reinsurer and the Ceding Company with respect to the Policies. No
variation, modification or changes to this Agreement shall be binding
unless in writing and signed by an officer of each party.
B. NOTICES. Any notice or communication given pursuant to this Agreement must
be in writing and (1) delivered personally, (2) sent by facsimile
transmission, (3) delivered by overnight express, or (4) sent by registered
or certified mail, postage prepaid, to such address or addresses each party
may designate from time to time for receipt of notices or communications.
The initial notice addresses are as follows:
If to the Reinsurer:
Allstate Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President and
Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Ceding Company: Columbia Universal Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
12
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Appointed Actuary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications required or permitted under the terms
of this Agreement that are addressed as provided in this Article XV shall:
(1) if delivered personally or by overnight express, be deemed given upon
delivery; (2) if delivered by facsimile transmission, be deemed given when
electronically confirmed; and (3) if sent by registered or certified mail,
be deemed given when received. Any party from time to time may change its
address for notice purposes by giving a similar notice specifying a new
address, but no such notice shall be deemed to have been given until it is
actually received by the party sought to be charged with the contents
thereof.
C. EXPENSES. Except as may be otherwise expressly provided in this Agreement,
whether or not the transactions contemplated hereby are consummated, each
of the parties hereto shall pay its own costs and expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
D. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall
constitute one and the same instrument and shall become effective when one
or more counterparts have been signed by each of the parties and delivered
to the other parties.
E. NO THIRD PARTY BENEFICIARY. Except as otherwise provided herein, the terms
and provisions of this Agreement are intended solely for the benefit of the
parties hereto, and their respective successors or permitted assigns, and
it is not the intention of the parties to confer third-party beneficiary
rights upon any other person, and no such rights shall be conferred upon
any person or entity not a party to this Agreement.
F. AMENDMENT. This Agreement may only be amended or modified by a written
instrument executed by both parties hereto.
G. ASSIGNMENT; BIND EFFECT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole
or in part, by any of the parties hereto without the prior written consent
of the other party, which consent shall not be unreasonably withheld, and
any such assignment that is attempted without such consent shall be null
and void. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the parties
and their respective successors and permitted assigns.
H. INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if
the rights or obligations of the parties hereto under this Agreement will
not be materially and adversely affected thereby, (1) such provision shall
be fully severable; (2) this Agreement shall be construed and enforced as
if such illegal, invalid, or unenforceable provision had never comprised a
part
13
hereof; and (3) the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom.
I. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of
Illinois, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
J. WAIVER. Any term or condition of this Agreement may be waived in writing at
any time by the party that is entitled to the benefit thereof. A waiver on
one occasion shall not be deemed to be a waiver of the same or any other
breach or nonfulfillment on a future occasion. All remedies, either under
the terms of this Agreement, or by law or otherwise afforded, shall be
cumulative and not alternative, except as otherwise provided by law.
K. HEADINGS, ETC. The headings used in this Agreement have been inserted for
convenience and do not constitute matter to be construed or interpreted in
connection with this Agreement. Unless the context of this Agreement
otherwise requires, (1) words using the singular or plural number also
include the plural or singular number, respectively; (2) the terms
"HEREOF," "HEREIN," "HEREBY," "HERETO," "HEREUNDER," and derivative or
similar words refer to this entire Agreement (including the exhibits
hereto); (3) the term "ARTICLE" refers to the specified Article of this
Agreement; (d) the term "EXHIBIT" refers to the specified Exhibit attached
to this Agreement; and (e) the term "PARTY" means, on the one hand, the
Ceding Company, and on the other hand, the Reinsurer.
L. OFFSET. Any debits or credits incurred after the Effective Date in favor of
or against either the Ceding Company or the Reinsurer with respect to this
Agreement are deemed mutual debits or credits, as the case may be, and
shall be set off against each other dollar for dollar.
M.. COMPLIANCE WITH LAWS. The parties hereto shall at all times comply with all
applicable laws in performing their obligations under this Agreement.
N. SURVIVAL. All provisions of this Agreement shall survive its termination to
the extent necessary to carry out the purposes of this Agreement or to
ascertain and enforce the parties' rights or obligations hereunder existing
at the time of termination.
O. PRIOR AGREEMENT SUPERCEDED. Subject to state regulatory approval, this
Amended and Restated
Reinsurance Agreement supercedes in its entirety, the
Original Agreement dated June 30, 2000.
P. CALENDAR DAYS. Unless otherwise specified, all references to "day" in this
Agreement shall mean calendar days.
14
IN WITNESS HEREOF, the parties to this Agreement have caused it to be duly
executed in duplicate by their respective officers on the dates shown below.
ALLSTATE LIFE INSURANCE COMPANY
By: /s/
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Group Vice President and Controller
------------------------------------
Date: July 27, 2004
-------------------------------------
COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY
By: /s/
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Title: Treasurer
------------------------------------
Date: July 27, 2004
-------------------------------------
15
EXHIBIT A
ELIGIBLE AND INELIGIBLE POLICIES
Policies eligible for reinsurance under this Agreement are defined as all
annuity contracts and supplementary contracts with and without life
contingencies, assumed, issued, or reinsured by the Ceding Company. For the
avoidance of doubt, this Agreement is intended to include all policies,
certificates, and contracts assumed, issued, or reinsured by the Ceding Company,
expressly excluding any contracts covered under that certain
Reinsurance
Agreement between the parties dated June 1, 2004, under which Ceding Company's
life and health business is reinsured on a 100% coinsurance.
16
EXHIBIT B
TAX ELECTION
The Ceding Company and the Reinsurer hereby make an election pursuant to
Treasury Regulations Section 1.848-2(g)(8). This election shall be effective for
the tax year during which the Effective Date falls and all subsequent taxable
years for which this Agreement remains in effect. Unless otherwise indicated,
the terms used in this Exhibit are defined by reference to Treasury Regulations
Section 1.848-2 as in effect on the date hereof. As used below, the term "PARTY"
or "PARTIES" shall refer to the Ceding Company or the Reinsurer, or both, as
appropriate.
1. The party with the Net Positive Consideration (as defined in Section 848 of
the Code and related Treasury Regulations) with respect to the transactions
contemplated under this Agreement for any taxable year covered by this
election will capitalize specified policy acquisition expenses with respect
to such transactions without regard to the general deductions limitation of
Section 848(c)(1) of the Code.
2. The parties agree to exchange information pertaining to the amount of Net
Consideration (as defined in Section 848 of the Code and related Treasury
Regulations) under this Agreement each year to ensure consistency or as is
otherwise required by the Internal Revenue Service. The exchange of
information each year will follow the procedures set forth below:
(a) By April 1 of each year, the Ceding Company will submit a schedule to
the Reinsurer of its calculation of the Net Consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an authorized representative of
the Ceding Company stating the amount of the Net Consideration the
Ceding Company will report in its tax return for the preceding
calendar year.
(b) Within thirty (30) days of the Reinsurer's receipt of the Ceding
Company's calculation, the Reinsurer may contest such calculation by
providing an alternative calculation to the Ceding Company in writing.
If the Reinsurer does not notify the Ceding Company that it contests
such calculation within said 30-day period, the calculation will be
presumed correct and the Reinsurer shall also report the Net
Consideration as determined by the Ceding Company in the Reinsurer's
tax return for the preceding calendar year.
(c) If the Reinsurer provides an alternative calculation of the Net
Consideration pursuant to clause (b), the parties will act in good
faith to reach an agreement as to the correct amount of Net
Consideration within thirty (30) days of the date the Ceding Company
receives the alternative calculation from the Reinsurer. When the
Ceding Company and the Reinsurer reach agreement on an amount of Net
Consideration, each party shall report the applicable amount in their
respective tax returns for the preceding calendar year.
17
