EXHIBIT 7
AUTOMATIC AND FACULTATIVE YEARLY
RENEWABLE TERM REINSURANCE AGREEMENT
between
PARAGON LIFE INSURANCE COMPANY
ST. LOUIS, MISSOURI
(hereinafter called the "CEDING COMPANY")
and
MEROPOLITAN LIFE INSURANCE COMPANY
NEW YORK, NEW YORK
(hereinafter called the "REINSURER")
This Reinsurance Agreement is Effective January 1, 2002
ARTICLE TABLE OF CONTENTS PAGE
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I Definitions 2
IA Automatic Coverage 3
II Facultative Provisions 4
III Yearly Renewable Term Premiums 5
IV Experience Refund Provision 6
V Self Administration 7
VI Reserves 8
VII Dac Tax Regulation 9
VIII Errors and Omissions 10
IX Expense of Original Contract 11
X Changes in Retention and Recapture Privileges 12
XI Terminations and Reductions 13
XII Reinstatements, Exchanges, Extended Term and Reduced Paid-Up Insurance 14
XIII Liability 15
XIV Claims 16
XV Arbitration 17
XVI Insolvency 18
XVII Right to Inspect 19
XVIII Duration of Reinsurance Agreement 20
XIX General Provisions 21
XX Execution of Reinsurance Agreement 23
EXHIBIT
A Retention Schedule
B Policy Plans Reinsured
C Premiums and Allowances
D Limits
E Statement Specifications
F Sample Policy Exhibit
REINSURANCE AGREEMENT
THIS REINSURANCE AGREEMENT (the "Reinsurance Agreement"), is made between
Paragon Life Insurance Company, a Missouri insurance company (the "CEDING
COMPANY") and Metropolitan Life Insurance Company, a New York insurance company
(the "REINSURER")
Reinsurance required by the CEDING COMPANY will be ceded to the REINSURER as
described in the terms of this Reinsurance Agreement.
This Reinsurance Agreement constitutes the entire agreement between the parties
with respect to the business being reinsured hereunder and there are no
understandings between the parties other than as expressed in this agreement.
Any change or modification to this agreement is null and void unless made by
amendment to this agreement and signed by both parties.
Page 1
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following respective
meanings:
"Reinsurance Effective Date" shall be January 1, 2002.
The term "Policy" contained herein shall refer collectively to an individual
policy or group certificate.
"Spouse Term Rider" shall refer to term coverage provided to a spouse in
connection with a Policy.
"Waiver of Monthly Deductions Benefits" shall mean any benefits payable in
connection with a Policy for which the premium is waived.
Page 2
ARTICLE IA
AUTOMATIC COVERAGE
A. Reinsurance hereunder will be ceded automatically by the CEDING COMPANY
to the REINSURER on a first dollar quota-share basis with the CEDING
COMPANY retaining l00% up to their maximum retention. The REINSURER's
percentage of participation in each risk ceded will be as shown in
Exhibit D.
B. The CEDING COMPANY will cede and the REINSURER will automatically accept
reinsurance if all of the following conditions are met for each life:
1. The CEDING COMPANY has retained 100% of each Policy, up to its
limit of retention as shown in Exhibit A, unless the CEDING
COMPANY's retention with respect to a particular life is already
full.
2. The amount does not exceed the automatic binding limits shown in
Exhibit D.
3. The CEDING COMPANY has not made facultative application for
reinsurance of the current or prior applications on the same
life to the REINSURER or any other reinsurer.
4. The risk is underwritten according to established standards
agreed upon by CEDING COMPANY and REINSURER. 5. The Plan is
listed in Exhibit B.
C. The CEDING COMPANY will cede and the REINSURER will accept Spouse Term
Rider coverage above the CEDING COMPANY retention established in Exhibit
A.
D. The CEDING COMPANY will retain all Waiver of Monthly Deductions Benefits
and premiums there-on.
The CEDING COMPANY will cede coverage on the above basis in B. and REINSURER
will automatically accept reinsurance on coverage under any Application
Supplement - Conditional Interim Coverage Agreement.
Page 3
ARTICLE II
FACULTATIVE PROVISIONS
A. The CEDING COMPANY will have the option to submit any case facultatively
which it does not cede automatically under the provisions of Article I.
B. The CEDING COMPANY will send copies of the original applications, all
medical reports, inspection reports, attending physician's statement and
any additional information pertinent to the insurability of the risk.
C. The CEDING COMPANY will also notify the REINSURER of any underwriting
information requested or received after the initial request for
reinsurance is made. For policies which contain automatic increase
provisions, the CEDING COMPANY will inform the REINSURER of the initial
and ultimate risk amounts for which reinsurance is being requested.
D. On a timely basis, the REINSURER will submit a written decision. In no
case will the REINSURER'S offer on facultative submissions be open after
one-hundred twenty (120) days have elapsed from the date of the
REINSURER'S offer to participate in the risk. Acceptance of the offer
and delivery of the Policy according to the rules of the CEDING COMPANY
must occur within one-hundred twenty (120) days of the final reinsurance
offer. Unless the REINSURER explicitly states in writing that the final
offer is extended, the offer will be automatically withdrawn at the end
of day 120.
E. The REINSURER will not be liable for proceeds paid under the CEDING
COMPANY'S conditional receipt or temporary insurance agreement for risks
submitted on a facultative basis.
Page 4
ARTICLE III
YEARLY RENEWABLE TERM PREMIUMS
A. Plans of insurance listed in Exhibit B will be reinsured on the yearly
renewable term basis with the REINSURER participating only in mortality
risks (not cash values, loans, dividends or other features specific to
permanent policies). The mortality risk shall be the net amount at risk
on that portion of the Policy which is reinsured with the REINSURER.
Accelerated Death Benefits shall completely settle the Policy and are
therefore considered as included in the net amount of mortality risk.
B. Premiums for reinsurance will be based on the rates and allowances
described in Exhibit C.
C. There will be no premium tax reimbursement. The rates in Exhibit C shall
compensate for any premium tax as appropriate.
D. The reinsurance rates contained in this Reinsurance Agreement are
guaranteed for one year.
Page 5
ARTICLE IV
EXPERIENCE REFUND PROVISION
This provision shall apply to Paragon Select GVUL and shall exclude special
plans as documented in Exhibit B.
Reinsurance Periods equal 12 month periods beginning January 1
Claims Incurred: Death claims and interest on death claims paid plus pending and
IBNR Reserves.
Earned Premium: Premium Payable plus Allowance according to Exhibit C plus
Annual Retrospective Premiums
Reinsurer's Fee: Amount specified by the Reinsurer to cover their expenses and
risk as determined in Exhibit C.
Experience Account (EA): Issue to Date (ITD) Claims Incurred Plus ITD
Reinsurer's Fee Plus ITD Interest on the EA Minus Earned Premium
Interest on the Experience Account is determined by the Prime Rate as stated in
the Wall Street Journal on the first business day of the Reinsurance Period
applied to the mean value of the EA at the beginning and at the end of the
Reinsurance Period. Intereste on the Annual Retrospective Premium is payable
with the Annual Retrospective Premium and accrues from the midpoint of the
Reinsurance Period to the date the payment is made.
Annual Retrospective Premium (Retro): This is additional premium payable either
to the Reinsurer or to the Ceding company. The Retro is payable to the Reinsurer
if the amount calculated as a Retro is positive. The Retro is payable to the
Ceding company if the amount calculated as a Retro is negative.
For Reinsurance Periods 2002 and 2003, the Retro equals the Experience Account
prior to its adjustment for the current year's Retro Minus 4% of Premium Payable
for calendar year's 2002 and 2003, respectively. But, the absolute value of
Retro is not to exceed the difference between cost of insurance charges (net of
loads) for the reinsured portion from group policyholders during the Reinsurance
Period and the Premium Payable for that period.
For Reinsurance Periods following 2003, the Retro equals the Experience Account
prior to its adjustment for the current year's Retro. But, the absolute value of
the Retro is not to exceed the difference between cost of insurance charges (net
of loads) for the reinsured portion from group policyholders during the
Reinsurance Period and the Premium Payable for that period.
Terminal Retrospective Premium: The Terminal Retrospective Premium is amount
payable to the Reinsurer if the EA is negative at contract termination. The
amount payable is the absolute value of the EA but not to exceed an amount
determined by taking 120% of the 1980 CSO Table C ultimate annual mortality
rates times the average covered face amount reinsured during the last
Reinsurance Period.
Interest on the Terminal Retrospective Premium is payable with the Terminal
Retrospective premium. It is determined by the Prime Rate as stated in the Wall
Street Journal on the first business day following termination accruing from the
end of the last Reinsurance Period to the date the Terminal Retrospective
Premium is paid.
Page 6
ARTICLE V
SELF ADMINISTRATION
A. The CEDING COMPANY will administer the records for the reinsurance ceded
to the REINSURER under this Reinsurance Agreement. The CEDING COMPANY
will furnish monthly statements to the REINSURER which contain the
following information split between Group and Ordinary Business:
1. A list of all premiums due for the current month, identifying
each Policy and explaining the reasons for each premium payment
and include subtotals including first year, renewal year
indication, automatic or facultative.
2. A list of new business, terminations and changes for the current
month. For new business and changes, the CEDING COMPANY must
identify the Reinsurance Agreement and provide information
adequate for the REINSURER to establish reserves, check
retention limits and check premium calculations.
3. Totals for inforce, new business, changes and each type of
termination, as of the end of the month. "Totals" refer to the
number of policies reinsured and the net amount at risk
reinsured. See sample Policy Exhibit in Exhibit F.
In addition, the CEDING COMPANY must provide the REINSURER with an
inforce listing of reinsured business at least once a year. This inforce
listing must contain information adequate for the REINSURER to audit its
inforce records. (See Exhibit E.)
B. If the CEDING COMPANY chooses to report its reinsurance transactions via
electronic media, the CEDING COMPANY shall consult with the REINSURER to
determine the appropriate reporting format. Should the CEDING COMPANY
subsequently desire to make changes in the data format or the code
structure, the CEDING COMPANY shall communicate such changes to the
REINSURER prior to the use of such changes in reports to the REINSURER.
C. The monthly statements shall be furnished to the REINSURER within thirty
one (31) days following the close of each month and will be accompanied
by payment of any net amount due the REINSURER or will require payment
of any net amount due CEDING COMPANY. Net Amount Due is defined to be
premiums less allowances less claim settlement amounts. However,
individual claim settlements in excess of $500,000 for claims payable in
2002 and $750,000 for claims payable in 2003 and later shall be settled
within seven (7) business days of the Reinsurer's receipt of notice of
claim including information and documentation described in Article XIII
of this Reinsurance Agreement, in lieu of being in the monthly net
amount due. All amounts due REINSURER or receivable from REINSURER not
paid within thirty one (31) days of the due date, defined as the end of
the month following the Policy monthly anniversary date, will be in
default.
D. The payment will accrue interest from the due date at the Prime Rate
plus 2% as stated in the Wall Street Journal on January 1 prior to the
due date of the net amount due when the Net Amount Due is not paid
within sixty (60) days of the due date.
E. The REINSURER will have the right to terminate this Reinsurance
Agreement when premiums are in default by giving ninety (90) days
written notice of termination to the CEDING COMPANY. As of the close of
the last day of this ninety (90) day notice period, the REINSURER'S
liability for all risks reinsured under this Reinsurance Agreement will
terminate. The first day of the ninety (90) day notice of termination,
resulting from default as described in Section C of this Article, will
be the day the notice is received in the mail by the CEDING COMPANY or
if the mail is not used, the day it is delivered to the CEDING COMPANY.
If all premiums in default are received within the ninety (90) day time
period, the Reinsurance Agreement will remain in effect.
Page 7
ARTICLE VI
RESERVES
The CEDING COMPANY agrees to post on its books any deficiency reserves on the
coverage reinsured under this Reinsurance Agreement.
Page 8
ARTICLE VII
DAC TAX REGULATION
The CEDING COMPANY and the REINSURER hereby agree to the following pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulations issued December 29, 1992,
under Section 848 of the Internal Revenue Code of 1986, as amended.
1. The term "party" will refer to either the CEDING COMPANY or the
REINSURER as appropriate.
2. The terms used in this Article are defined by reference to
Treasury Regulation Section 1.848-2 in effect as of December 29,
1992. The term "net consideration" will refer to net
consideration as defined in Treasury Regulation Section
1.848-2(f).
3. The party with the net positive consideration for this
Reinsurance Agreement for each taxable year will capitalize
specified Policy acquisition expenses with respect to this
Reinsurance Agreement without regard to the general deductions
limitation of IRS Section 848(c)(I).
4. The CEDING COMPANY and the REINSURER agree to exchange
information pertaining to the amount of net consideration under
this Reinsurance Agreement each year to ensure consistency. The
CEDING COMPANY and the REINSURER also agree to exchange
information which may be otherwise required by the IRS.
5. The CEDING COMPANY will submit a schedule to the REINSURER by
June 1 of each year of its calculation of the net consideration
for the preceding calendar year. This schedule of calculations
will be accompanied by a 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.
6. The REINSURER may contest such calculation by providing an
alternative calculation to the CEDING COMPANY in writing. If the
REINSURER does not so notify the CEDING COMPANY, the REINSURER
will report the net consideration as determined by the CEDING
COMPANY in the REINSURER'S tax return for the previous calendar
year.
7. If the REINSURER 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. If the CEDING
COMPANY and the REINSURER reach agreement on an amount of net
consideration, each party shall report such amount in their
respective tax returns for the previous calendar year. If the
CEDING COMPANY and the REINSURER fail to reach agreement on an
amount of net consideration, each party may choose to report
their own determination of net consideration on their respective
tax returns.
Page 9
ARTICLE VIII
ERRORS AND OMISSIONS
It is expressly understood and agreed that if failure to comply with any terms
of this Reinsurance Agreement is hereby shown to be unintentional or the result
of 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
position they would have occupied had no such error or oversight occurred,
subject always to the correction of the error or oversight.
Page 10
ARTICLE IX
EXPENSE OF ORIGINAL POLICY
The CEDING COMPANY will bear the expense of all medical examinations, inspection
fees and other charges incurred in connection with the original Policy.
Page 11
ARTICLE X
CHANGES IN RETENTION AND RECAPTURE PRIVILEGES
A. If, at any time, the CEDING COMPANY changes its existing retention
limits, as shown in Exhibit A, written notice of the change will
promptly be given to the REINSURER.
B. The CEDING COMPANY may apply the new limits of retention to existing
reinsurance and reduce and recapture reinsurance in force in accordance
with the following rules:
1. The CEDING COMPANY will notify the REINSURER of its intent to
recapture at least thirty (30) days prior to any recaptures.
2. No recapture will be made unless reinsurance has been in force
ten (10) years.
3. No recapture will be made unless the CEDING COMPANY retained its
maximum limit of retention for the plan, age and mortality
rating at the time the Policy was issued. No recapture will be
allowed in any class of fully reinsured business or in any
classes of risks for which the CEDING COMPANY established
special retention limits less than the CEDING COMPANY'S maximum
retention limits for the plan, age and mortality rating at the
time the Policy was issued.
4. If any reinsurance is recaptured all reinsurance eligible for
recapture under the provisions of this Article must be
recaptured.
C. If, at any time, CEDING COMPANY believes the rate basis on which
premiums under this Reinsurance Agreement are determined is
inappropriate for the business needs of the CEDING COMPANY, it has the
right to recapture all business reinsured hereunder. Notice to REINSURER
must be at least ninety (90) days prior to recapture.
Page 12
ARTICLE XI
TERMINATIONS AND REDUCTIONS
Terminations or reductions will take place in accordance with the following
rules, in order of priority:
1. The CEDING COMPANY must keep its initial or recaptured retention on the
Policy.
2. Termination or reduction of a wholly reinsured Policy will not affect
other reinsurance in force.
3. A termination or reduction on a wholly retained case will cause an equal
reduction in existing automatic reinsurance with the oldest Policy being
reduced first.
4. A termination or reduction will be made first to reinsurance of
partially reinsured policies with the oldest Policy being reduced first.
5. If the policies are reinsured with multiple reinsurers, the reinsurance
will be reduced by the ratio of the amount of reinsurance in each
company to the total outstanding reinsurance on the risk involved.
Whenever the amount of reinsurance on a Policy under this Reinsurance Agreement
reduces to $1,000 or less, the reinsurance will be wholly recaptured.
Page 13
ARTICLE XII
REINSTATEMENT. EXCHANGES, EXTENDED TERM
AND REDUCED PAID-UP INSURANCE
A. Reinstatements
Any Policy originally reinsured in accordance with the terms and
conditions of this Reinsurance Agreement by the CEDING COMPANY may be
automatically reinstated with the REINSURER as long as the Policy is
reinstated in accordance with the terms and rules of the CEDING COMPANY
as agreed upon by the REINSURER. Any Policy originally reinsured with
the REINSURER on a facultative basis which has been in a lapsed status
for more than ninety (90) days must be submitted with underwriting
requirements and approved by the REINSURER before it is reinstated. The
CEDING COMPANY will pay the REINSURER its share of amounts collected or
charged for the reinstatement of such policies.
B. Exchanges
Exchanges will be reinsured under this Reinsurance Agreement only if the
original Policy was reinsured with the REINSURER; the amount of
reinsurance under this Reinsurance Agreement will not exceed the amount
of the reinsurance on the original Policy with the REINSURER immediately
prior to the exchange. Premiums will be determined as follows:
1. If any business covered under this Reinsurance Agreement is
subsequently exchanged to any other plan reinsured by the
REINSURER, then such business shall be reinsured at the rates as
shown in the Reinsurance Agreement covering the new plan. Rates
and allowances or pay percentages applicable to the new plan
will be determined at point in scale based on the original
Policy that is being exchanged. If the Reinsurance Agreement
including the new rates requires Policy fees, then they shall
also apply to the new plan.
C. Extended Term and Reduced Paid-Up Insurance
Changes as a result of extended term or reduced paid-up insurance will
be handled like reductions.
NOTE: An original date Policy Reissue will not be treated as a continuation of
the original Policy. It will be treated as a new Policy and the original Policy
will be treated as Not Taken. All premiums previously paid to the REINSURER for
the original Policy will be refunded to the CEDING COMPANY. All premiums will be
due on the new Policy from the original issue date of the old Policy.
Page 14
ARTICLE XIII
LIABILITY
A. This is a Reinsurance Agreement solely between the REINSURER and the
CEDING COMPANY. In no instance will anyone other than the REINSURER or
the CEDING COMPANY have any rights under this agreement, and the CEDING
COMPANY will be and remain solely liable to any insured, Policyowner, or
beneficiary under any Policy reinsured hereunder.
B. The liability for all automatic reinsurance accepted by the REINSURER
under this Agreement will commence simultaneously with that of the
CEDING COMPANY.
C. Liability for all reinsurance submitted facultatively to the REINSURER
will commence when all of the following conditions have been met:
1. The REINSURER'S offer has been accepted and the CEDING COMPANY
has properly documented its records to reflect this acceptance,
and
2. The Policy has been delivered and paid for in accordance with
the CEDING COMPANY'S procedures, and
3. No more than one-hundred twenty (120) days have elapsed from the
date of the REINSURER'S final offer unless the REINSURER
explicitly states in writing that the final offer is extended
for some further period of time.
D. The liability of the REINSURER for all reinsurance under this Agreement
will cease simultaneously with the liability of the CEDING COMPANY and
will not exceed the CEDING COMPANY'S contractual liability under the
terms of its policies.
Page 15
ARTICLE XIV
CLAIMS
A. Prompt notice of a claim must be given to the REINSURER. In every case
of loss, copies of the proofs obtained by the CEDING COMPANY will be
taken by the REINSURER as sufficient. Copies thereof, together with
proof of the amount paid on such claim by the CEDING COMPANY will be
furnished to the REINSURER when requesting its share of the claim. The
REINSURER shall pay its share of all payable claims including
proportionate interest on death proceeds, however, if the amount
reinsured with the REINSURER is more than the amount retained by the
CEDING COMPANY and the claim is contestable, all papers in connection
with such claim, including all Policy forms/group certificates,
underwriting and investigation papers, must be submitted to the
REINSURER for its recommendation before admission of any liability on
the part of the CEDING COMPANY.
B. The CEDING COMPANY will notify the REINSURER of its intention to
contest, compromise, or litigate a claim. Unless it declines to be a
party to such action, the REINSURER will pay its share of any settlement
up to the maximum that would have been payable under the specific Policy
had there been no controversy plus its share of specific expenses,
except as specified below.
If the REINSURER declines to be a party to the contest, compromise, or
litigation of a claim. It will pay its full share of the amount
reinsured, as if there had been no contest, compromise, or litigation,
and its proportionate share of covered expenses incurred to the date it
notifies the CEDING COMPANY it declines to be a party.
In no event will the following categories of expenses or liabilities be
reimbursed:
1. Routine investigative or administrative expenses;
2. Salaries of employees or other internal expenses of the CEDING
COMPANY or the original issuing company.
3. Extra contractual damages, including punitive and exemplary
damages.
C. If the amount of insurance changes because of a misstatement of rate
classification, the REINSURER'S share of reinsurance liability will
change proportionately.
D. Any benefit payable under an Accelerated Death Benefit provision or
rider shall have the proportionate share of the amount at risk and any
interest thereon payable by the REINSURER. The Accelerated Death Benefit
is a complete settlement of the Policy.
Page 16
ARTICLE XV
ARBITRATION
A. It is the intention of the REINSURER and the CEDING COMPANY that the
customs and practices of the insurance and reinsurance industry will be
given full effect in the operation and interpretation of this
Reinsurance Agreement. The parties agree to act in all things with the
highest good faith. If the REINSURER or the CEDING COMPANY cannot
mutually resolve a dispute which arises out of or relates to this
Reinsurance Agreement, however, the dispute will be decided through
arbitration. The arbitrators will base their decision on the terms and
conditions of this Reinsurance Agreement plus, as necessary, on the
customs and practices of the insurance and reinsurance industry rather
than solely on a strict interpretation of the applicable law; there will
be no appeal from their decision, and any court having jurisdiction of
the subject matter and the parties may reduce that decision to judgment.
B. To initiate arbitration, either the CEDING COMPANY or the REINSURER will
notify the other party by Certified Mail of its desire to arbitrate,
stating the nature of its dispute and the remedy sought. The party to
which the notice is sent will respond to the notification in writing
within ten (10) days of its receipt.
C. There will be three arbitrators who will be current or former officers
of life insurance companies other than the contracting companies. Each
of the contracting companies 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, the other
party may appoint the second arbitrator. If the two arbitrators do not
agree on a third arbitrator within sixty (60) days of their appointment,
each of the arbitrators will nominate three individuals. Each arbitrator
will then decline two of the nominations presented by the other
arbitrator. The third arbitrator will then be chosen from the remaining
two nominations by drawing lots.
D. It is agreed that each of the three arbitrators should be impartial
regarding the dispute and should resolve the dispute on the basis
described in Section A of this Article. Therefore, at no time will
either the CEDING COMPANY or the REINSURER contact or otherwise
communicate with any person who is to be or has been designated as a
candidate to serve as an arbitrator concerning the dispute, except upon
the basis of jointly drafted communications provided by both the CEDING
COMPANY and the REINSURER to inform the arbitrators of the nature and
facts of the dispute. Likewise, any written or oral arguments provided
to the arbitrators concerning the dispute will be coordinated with the
other party and will be provided simultaneously to the other party or
will take place in the presence of' the other party. Further, at no time
will any arbitrator be informed that the arbitrator has been named or
chosen by one party or the other.
E. The arbitration hearing will be held on the date fixed by the
arbitrators. In no event will this date be later than six (6) months
after the appointment of the third arbitrator. As soon as possible, the
arbitrators will establish prearbitration procedures as warranted by the
facts and issues of the particular case. At least ten (10) days prior to
the arbitration hearing, each party will provide the other party and the
arbitrators with a detailed statement of the facts and arguments it will
present at the arbitration hearing. The arbitrators may consider any
relevant evidence; they will give the evidence such weight as they deem
it entitled to after consideration of any objections raised concerning
it. The party initiating the arbitration will have the burden of proving
its case by a preponderance of the evidence. Each party may examine any
witnesses who testify at the arbitration bearing.
F. The cost of arbitration will be borne by the losing party unless the
arbitrators decide otherwise.
Page 17
ARTICLE XVI
INSOLVENCY
A. In the event of the Ceding Company's insolvency, any payments due the
Ceding Company from the Reinsurer pursuant to the terms of this
Reinsurance Agreement will be made directly to the Ceding Company or its
conservator, liquidator, receiver or statutory successor. The
reinsurance will be payable by the Reinsurer on the basis of the
liability of the Ceding Company under the Policies reinsured without
diminution because of the insolvency of the Ceding Company or because
the conservator, liquidator, receiver or statutory successor of the
Company has failed to pay all or a portion of any claim. The
conservator, liquidator, receiver or statutory successor of the Ceding
Company will give the Reinsurer written notice of the pendency of a
claim against the Ceding Company on any Policy reinsured within a
reasonable time after such claim is filed in the insolvency proceeding.
During the pendency of any such claim, the Reinsurer may investigate
such claim and interpose in the Ceding Company's name (or in the name of
the Ceding Company's conservator, liquidator, receiver or statutory
successor), in the proceeding where such claim is to be adjudicated, any
defense or defenses which the Reinsurer may deem available to the Ceding
Company or its conservator, liquidator, receiver or statutory successor.
The expense thus incurred by the Reinsurer will be chargeable, subject
to court approval, against the Ceding Company as a part of the expense
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.
B. Any debts or credits, matured or unmatured, liquidated or unliquidated,
in favor of or against either the REINSURER or the CEDING COMPANY with
respect to this Reinsurance Agreement or with respect to any other claim
of one party against the other are deemed mutual debts or credits, as
the case may be, and will be offset, and only the balance will be
allowed or paid.
Page 18
ARTICLE XVII
RIGHT TO INSPECT
The REINSURER may at all reasonable times inspect the CEDING COMPANY'S original
papers, records, books, files, etc., relating to the business under this
Reinsurance Agreement.
Page 19
ARTICLE XVIII
DURATION OF REINSURANCE AGREEMENT
A. This Reinsurance Agreement may be terminated as to new reinsurance at
any time by either party giving ninety (90) days written notice of
termination. The day the notice is mailed to the other party's Home
Office, or, if the mail is not used, the day it is delivered to the
other party's Home Office or to an Officer of the other party will be
the first day of the ninety (90) day period.
B. During the ninety (90) day period, this Reinsurance Agreement will
continue to operate in accordance with its terms.
C. The REINSURER and the CEDING COMPANY will remain liable after
termination, in accordance with the terms and conditions of this
Reinsurance Agreement, with respect to all reinsurance effective prior
to termination of this Reinsurance Agreement.
Page 20
ARTICLE XIX
GENERAL PROVISIONS
1. Invalidity. Unless the invalidity or unenforcability of any provision or
portion hereof frustrates the intent of the parties or the purpose of this
Reinsurance Agreement, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions or portions hereof. In the
event that such provision shall be declared unenforceable by a court of
competent jurisdiction, such provision, to the extent declared unenforceable,
shall be stricken. However, in the event any such provision shall be declared
unenforceable due to its scope, breadth or duration, then it shall be modified
to the scope, breadth or duration permitted by law and shall continue to be
fully enforceable as so modified unless such modification frustrates the intent
of the parties or the purpose of this Reinsurance Agreement.
2. Entire Agreement. This Reinsurance Agreement and the Exhibits hereto
constitute the entire contract between the parties with respect to the
reinsurance of the Policies and there are no understandings between the parties
as to the reinsurance to be provided other than as expressed in this Reinsurance
Agreement. Any amendment or modification hereto shall be null and void unless
made by amendment to this Reinsurance Agreement and executed by all parties.
3. Governing Law. This Reinsurance Agreement shall be deemed to have been made
under and governed by the laws of the State of Missouri without regard to
Missouri's choice of law rules.
4. Counterparts. This Reinsurance Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Reinsurance
Agreement shall become effective when one or more counterparts have been signed
by each party hereto and delivered to the other parties hereto.
5. No Third Party Beneficiaries. Nothing in this Reinsurance Agreement is
intended or shall be construed to give any person, other than the parties
hereto, any legal or equitable right, remedy or claim under or in respect of
this Reinsurance Agreement or any provision contained herein.
6. Assignment. This Reinsurance Agreement shall be binding upon and insure to
the benefit of the parties hereto and their respective successors and assigns
and legal representatives. This Reinsurance Agreement is not assignable except
by operation of law or by mutual consent of the parties hereto.
7. Waivers. The terms of this Reinsurance Agreement may be waived only by a
written instrument signed by the party waiving compliance. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof. Nor shall any waiver on the part of any party of any right,
power or privilege, nor any signed or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
8. Headings. The headings in this Reinsurance Agreement are for the convenience
of reference only and shall not affect its interpretation.
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9. Exhibits. Each Exhibit referred to herein is incorporated into this
Reinsurance Agreement by such reference.
10. Preparation. The Reinsurance Agreement has been jointly prepared by the
parties hereto and the terms hereof will not be construed in favor or against
any such party by reason of its participation in such preparation.
11. Notices. All notices, requests, demands, approvals and other communications
under this Reinsurance Agreement shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission or sent by
certified, registered or express mail, postage prepaid. Any such notice or other
communication shall be deemed given: (i) upon actual delivery if presented
personally, (ii) on the day received if sent by prepaid telegram or telex or by
facsimile transmission, or (iii) three (3) business days following deposit in
the United States mail, if sent by certified, registered or express mail,
postage prepaid, in each case to the following addresses:
(i) If to the Ceding Company:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President & Chief Actuary
Paragon Life Insurance Company
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a concurrent copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President & Chief Financial Officer
Paragon Life Insurance Company
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(ii) If to Reinsurer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Director
Institutional Business - Finance
Metropolitan Life Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a concurrent copy to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Associate General Counsel
Metropolitan Life Insurance Company
Law Department/Area 6G
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Either party may, by notice given in accordance with this Reinsurance Agreement
to the other party, designate another address or person for receipt of notices
hereunder.
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ARTICLE XX
EXECUTION OF REINSURANCE AGREEMENT
In Witness of the above,
PARAGON LIFE INSURANCE COMPANY
of
St. Louis, Missouri
and
METROPOLITAN LIFE INSURANCE COMPANY
of
New York, New York
have by their respective officers executed and delivered this Reinsurance
Agreement in duplicate on the dates indicated below, with an effective date of
January 1, 2002.
PARAGON LIFE INSURANCE COMPANY METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------- -------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President & Chief Actuary Title: Vice President & Senior Actuary
---------------------------------------- -------------------------------------
Date: June 4, 2002 Date: August 7, 2002
------------------------------------------- -------------------------------------
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