The Cologne Life Re
SPECIFICATIONS PAGE
REINSURANCE AGREEMENT
COMPANY: STATE MUTUAL LIFE ASSURANCE COMPANY
Worcester, Massachusetts
TREATY NUMBER: S145-101-000
ACCOUNT NUMBER (S) 2360
REINSURER: THE COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
EFFECTIVE DATE: January 1, 1993.
PRODUCT COVERED: For business written on and after January 1, 1993 for
the plans listed in Exhibit A.
TYPE OF TREATY: Automatic and Facultative YRT.
BINDING LIMIT
AND QUOTA SHARE: 25% Quota share of all amounts in excess of the Ceding
Company's retention up to $6,700,000 per life to the
pool and a maximum automatic liability to the Cologne
of $2,000,000 per life.
PREMIUMS: The premium rates are shown in Exhibit B and for
amounts in excess of the reinsurance limit Exhibit B.3.
POLICY FEE: No Policy fee
PREMIUM TAX: Reimbursed, unless taxed directly to Cologne. Paid
monthly at the most recent calendar year rate applied
to the total premium.
JUMBO LIMIT: All life insurance in force and applied for with all
companies shall not be more than $10,000,000.
TRIVIAL AMOUNT: $25,001 reinsurance coverage per cession is the minimum
amount of reinsurance provided under this treaty for a
particular life. Cessions less than $25,001 will be
automatically terminated.
MINIMUM SUBMISSION: $50,001.
RECAPTURE: After 10 policy years
In the event of any conflict between this Specifications Page and the terms and
conditions of the Reinsurance Agreement, the terms and conditions of the
Agreement shall govern.
TABLE OF CONTENTS
AUTOMATIC REINSURANCE AGREEMENT
PAGE
----
Specifications Page 1
Table of Contents 2
GENERAL PROVISIONS
I. PARTIES TO THE AGREEMENT 4
II. REINSURANCE COVERAGE
A. General Conditions 4
B. Automatic Reinsurance
1. Ceding upon Maximum Retention 4
2. Notification 5
C. Facultative Reinsurance
1. Procedure 5
2. Commencement of Liability 5
3. Continuing Notice Obligation 5
D. Conditions Receipt Coverage
1. Coverage for Automatic Reinsurance 6
2. Coverage for Facultative Reinsurance 6
3. Discrepancy with Conditional Receipt 6
III. REINSURANCE BENEFITS AMOUNTS
A. Cash Value Plan 6
B. Universal Life Plan 6
C. Level Term Plans 6
D. Decreasing Term Plans 6
E. Supplemental Benefits 7
IV. POLICY CHANGES
A. Acceptance or Rejection of Change 7
B. Reduction of Insurance 7
C. Increase of Insurance 7
V. CLAIMS
A. Settlement of Claims 7
B. Misstatement of Status 9
VI. RECAPTURE
A. Recapture upon an Increase in Retention 9
VII. EXTERNAL REPLACEMENTS AND CONVERSIONS
A. Conditions of Acceptance 10
B. Premiums upon Acceptance 10
VIII. EFFECT OF LAPSE OR TERMINATION OF A POLICY
A. Reduction or Termination of Retained and Unretained polices 10
B. Extended Term or Reduced Paid-Up Insurance 10
C. Unearned Premium 11
D. Reinstatement 11
IX. MISCELLANEOUS PROVISIONS
A. Payment of Premiums and Policy Fees 11
B. Premium Tax Credits 11
C. Insolvency 11
D. Offset 12
E. Company Data 12
F. Oversights 12
G. Inspection of Records 12
X. ARBITRATION
A. Procedure 12
XI. TERMINATION OF IN-FORCE BUSINESS
A. Failure to Pay Premiums 13
XII. TERMINATION OF NEW BUSINESS
A. Duration of Agreement 13
Exhibits
Plans and Amounts Reinsured A.1
Company's Retention and Limits on Automatic Reinsurance A.2
Binding Limits A.3
Reinsurance Premiums B
Excess Rates B.1
Premium Accounting C
Self-Administered Bulk Reporting C.1
Individual Cession Form D
GENERAL PROVISIONS
I. PARTIES TO THE AGREEMENT
This is an agreement for indemnity reinsurance (the "Agreement") solely
between State Mutual Life Assurance Company (the "Company") and The
Cologne Life Reinsurance Company, a Connecticut Corporation ("Cologne").
The acceptance of risks under this Agreement shall create no right or
legal relation whatsoever between Cologne and the insured, owner, or
beneficiary of any insurance policy or other contract of the Company.
II. REINSURANCE COVERAGE
A. GENERAL CONDITIONS. On or after 12:01 A.M. Eastern Standard Time on
the effective date of this Agreement, as shown on the Specifications
Page, reinsurance provided for in this Agreement shall be in force and
binding on Cologne as long as the issuance of such insurance by the
Company constituted the doing of business in a jurisdiction in which
the Company was properly licensed, the insurance was issued on the
lives of the residents of the United States or Canada, and the
reinsurance premiums continued to be paid in accordance with this
Agreement.
B. AUTOMATIC REINSURANCE.
1. CEDING UPON MAXIMUM RETENTION. Whenever the Company retains its
maximum limit of retention with respect to a life, as shown in
Exhibit A, the Company shall cede and Cologne shall automatically
accept as reinsurance under the terms and conditions of this
Agreement, the liability in excess of the retention on such life,
together with all reinsured supplemental coverage's, provided that
the risks ceded were underwritten on policies issued directly by
the Company on those plans of insurance as set forth in Exhibit A
provided further that:
(a) the amount of reinsurance does not cause the Binding Limit
to be exceeded, as shown on the Specifications Page and
Exhibit A;
(b) the amount of insurance does not cause the Jumbo Limit to
be exceeded, as shown on the Specifications Page;
(c) the Company has not offered the risk facultatively to any
reinsurer, including Cologne, within two years; and
(d) the business ceded under this Agreement has been fully
underwritten by the Company at its home office or any
regional home office in accordance with its usual
underwriting standards and requirements which Cologne has
acknowledged in writing.
2. NOTIFICATION. Whenever Cologne has been bound on a policy in
accordance with the above conditions, the Company shall send
appropriate notification to Cologne within twenty (20) days after
the end of the month in which Cologne has become bound.
C. FACULTATIVE REINSURANCE.
1. PROCEDURE. If a risk should not qualify for automatic reinsurance
or if the Company so desires, the Company may request facultative
consideration of any risk by sending Cologne a reinsurance
application form, in substantially the form as set forth in Exhibit
D, showing details of the risk together with any medical
examination reports, electrocardiograms, inspection reports and any
other information known to the Company pertaining to the
insurability of the risk. Cologne shall give the reinsurance
application prompt consideration and shall notify the Company of
its decision. Unless specifically agreed to the contrary, Cologne
shall hold its offer on a pending case open for one hundred twenty
(120) days at which time Cologne shall, in the absence of
notification of case status, routinely close its file and consider
the offer to reinsure as formally withdrawn.
2. COMMENCEMENT OF LIABILITY. If Cologne offers to accept the risk and
the Company explicitly accepts and acts in accordance with
Cologne's decision, Cologne shall become liable for its share of
the risk, its liability commencing with that of the Company,
provided that the contract or policy has been delivered according
to the usual procedures of the Company.
3. CONTINUING NOTICE OBLIGATION. Both prior to and subsequent to
Cologne's acceptance of a risk, the Company shall send to Cologne
all information in its possession that is related to the
insurability of such risk.
D. CONDITIONAL RECEIPT COVERAGE.
1. COVERAGE FOR AUTOMATIC REINSURANCE. In the case of pre-paid or
conditional receipt liability, Cologne's liability on automatic
reinsurance shall begin and end with the Company's liability,
provided that all procedures, terms and conditions of the Company's
conditional receipt are followed and Cologne has provided the
Company with written acceptance of its conditional receipt form.
2. COVERAGE FOR FACULTATIVE REINSURANCE. For those risks submitted
facultatively, conditional receipt liability shall not commence
until Cologne has made an explicit acceptance of the risk.
3. DISCREPANCY WITH CONDITIONAL RECEIPT. In the case where the
conditional receipt is given for an amount less than the policy
application, cologne shall not be liable for more than its
proportionate share of the maximum limit as shown in the Company's
conditional receipt.
III. REINSURANCE BENEFIT AMOUNTS
LIFE. Reinsurance benefit amounts under Coinsurance shall follow the benefit
pattern of the coinsured plans. Reinsurance benefit amounts under Risk Premium
Reinsurance shall be determined in the manner described in paragraph A, B, C or
D below, unless otherwise agreed in specific instances:
A. CASH VALUE PLANS.
The Reinsurance benefit at each policy duration shall equal the difference
between the face amount of death benefit reinsured and the terminal reserve
for the amount reinsured based on the 1980 CSO Mortality Table using a 4 1/2%
interest rate, curtate functions, and the Commissioners Reserve Valuation
Method. Cologne may interpolate or use reasonable approximations for the plan
of insurance, etc.
B. UNIVERSAL LIFE.
In the year of issue the net amount at risk is defined to be the amount of
insurance reinsured. In all subsequent policy years, the net amount at risk
is defined to be the amount of insurance reinsured less the accumulated
policy value on the entire policy at the end of the prior year.
C. LEVEL TERM PLANS.
For level term plans having no cash values and those running 20 years or
less, the reinsurance benefit shall equal the face amount reinsured, ignoring
terminal reserves.
D. DECREASING TERM PLANS.
The reinsurance benefit shall equal the face amount of death benefit
reinsured.
E. SUPPLEMENTAL BENEFITS
1. ADB LIMITS. Not applicable.
2. DISABILITY WAIVER OF PREMIUM. Not Applicable
IV. POLICY CHANGES.
A. ACCEPTANCE OR REJECTION OF CHANGE. Whenever a change is made in the
status, plan, amount or other material feature of the policy issued by
the Company which has a liability ceded to Cologne under this Agreement,
Cologne shall, upon notification of the change, provide appropriately
adjusted reinsurance coverage.
B. REDUCTION OF INSURANCE. If a change results in the amount of insurance
being reduced, the amount of reinsurance shall be reduced proportionately
and any unearned premiums associated with the reduction shall be returned
to the Company.
C. INCREASE OF INSURANCE. If a change results in the amount of insurance
being increased, the increase will be considered as new reinsurance under
this Agreement and appropriate underwriting evidence will be required.
V. CLAIMS
A. SETTLEMENT OF CLAIMS. The Company shall obtain proof of death upon the
death of each insured. It shall investigate each death and assert any
defenses from liability under the policy in accordance with its normal
claims procedures. The Company shall notify The Cologne of each death.
The Cologne shall pay its share of the net amount at risk under the
policy after receiving proof of the deaths of all insureds. Copies of
proof or other documents bearing on such claim or proceeding shall be
furnished to The Cologne when requested.
B. The Cologne shall accept the good faith decision of the Company in
settling any claim or suit and shall pay, at its Home Office, its share
of the net reinsurance liability upon receiving proper evidence of the
Company's having settled with the claimant. Payment of net reinsurance
liability on account of death shall be made in one lump sum.
C. The Company shall consult with The Cologne before making an admission of
liability on any contestable claim on which the Company retains (a) less
than their full retention or (b) twenty percent or less of the risk.
D. If the Company should contest or compromise any claim or proceeding and
the amount of net liability thereby be reduced, or if at any time the
Company should recover monies from any third party in connection with or
arising out on any claim reinsured by The Cologne, The Cologne
reinsurance liability shall be reduced or The Cologne shall share in the
recovery, as the case may be, in the proportion that the net liability of
The Cologne bore to the total net liability existing as of the occurrence
of the claim. As used in this section, "recovery" shall include, but not
be limited to, settlements, judgments, awards and insurance payments of
any kind.
E. Any unusual expenses incurred by the Company in defending or
investigating a claim for policy liability or in taking up or rescinding
a policy reinsured hereunder shall be participated in by The Cologne in
the same proportion as described in section D, above.
F. In no event shall the following categories of expenses or liabilities be
considered, for purposes of this Agreement, as "unusual expenses" or
items of "net reinsurance liability:"
(1) routine investigative or administrative expenses;
(2) expenses incurred in connection with dispute or contest
arising out of conflicting claims of entitlement to policy
proceeds or benefits which the Company admits are payable;
(3) expenses, fees, settlements, or judgements arising out of or
in connection with claims against the Company for punitive
or exemplary damages, fees, or expenses against the Company,
the parties shall not be required to follow the reason
indicated by the court which awarded such damages, fees, or
expenses; rather, the parties shall act in good faith to
determine the actual reason for the award;
(4) expenses, fees, settlements, or judgements arising out of or
in connection with claims made against the Company and based
on alleged or actual bad faith, failure to exercise good
faith, or tortious conduct; in determining the reason for
the assessment of any damages, fees, or expenses against the
Company, the parties shall not be required to follow the
reason indicated by the court which awarded such damages,
fees, or expenses; rather, the parties shall act in good
faith to determine the actual reason for the award;
G. For purposes of this Agreement, penalties, attorney's fees, and interest
imposed automatically by statute against the Company and arising solely
out of a judgement being rendered against the Company in a suit for
policy benefits reinsured hereunder shall be considered " unusual
expenses".
H. In the event that the amount of insurance provided by a policy or
policies reinsured hereunder is increased or reduced because of a
misstatement of age or sex established after the death of the insured,
the net reinsurance liability of The Cologne shall increase or reduce in
the proportion that the net reinsurance liability of The Cologne bore to
the sum of the net retained liability of the Company and the liability of
other reinsurers immediately prior to the discovery of such misstatement
of age or sex. Reinsurance policies in force with The Cologne shall be
reformed on the basis of the adjusted amounts, using premiums and
reserves applicable to the correct age and sex. Any adjustment in
reinsurance premiums shall be without interest.
I. The Cologne shall refund to the Company any reinsurance premiums, without
interest, unearned as of the date of death of the life reinsured
hereunder.
J. If the Company pays interest from a specified date, such as the date of
death of the insured, on the contractual benefit of a policy reinsured
under this Agreement, The Cologne shall indemnify the Company for the
Cologne's share of such interest. Interest paid by The Cologne under this
section shall be computed at the same rate and commencing as of the same
date as that paid by the Company. The computation of interest paid The
Cologne under this section shall cease as of the earlier of (1) the date
of payment The Cologne's share of reinsurance liability and (2) the date
of termination of the period for which the Company has paid such
interest.
VI. RECAPTURE
RECAPTURE UPON AN INCREASE IN RETENTION. Whenever the Company changes its
limits of retention, it shall promptly inform Cologne and Cologne shall
accept the notice and make it part of this Agreement. At the effective
date of this Agreement, the retention limits of the Company are as shown
in Exhibit A. If the Company increases its retention limits, it may
exercise its right of recapture and reduce the existing reinsurance
in-force on all business on which it was fully retained in accordance
with the following rules.
1. The Company shall give Cologne ninety (90) days written notice of its
intention to recapture existing business reinsured under this
Agreement in accordance with its new limits of retention;
2. No reduction shall be made in the reinsurance on any policy unless the
Company retained its maximum retention limit for the plan, age and
mortality ratings at the time the policy was issued. If any
reinsurance is recaptured following a retention increase, all
reinsurance which is subject to recapture under these provisions must
be similarly recaptured. If there is reinsurance in other companies on
risks eligible for recapture, the necessary reduction is to be applied
pro rata to the total outstanding reinsurance; and
3. The reduction in reinsurance shall be made on the next anniversary of
each policy affected. However, no reduction shall be made until a
policy has been in-force for the minimum period necessary to qualify
for recapture, which is stated on the Specifications Page of this
Agreement.
4. In the event the Company overlooks any reductions or cancellations of
reinsurance which should be made on account of recapture, the
acceptance by Cologne of reinsurance premiums after the effective
dates of the reductions or cancellations shall not constitute or
determine a liability on the part of Cologne for such reinsurance, and
Cologne shall be liable only for a credit of the premiums so received,
without interest.
VII. EXTERNAL REPLACEMENTS AND CONVERSIONS
A. CONDITIONS OF ACCEPTANCE. Cologne will consider replacements or
conversions to the plans reinsured, provided the following conditions are
met:
1. The original policy was issued by the Company; and
2. The Company has received a release from the original reinsurer.
B. PREMIUM PAYABLE UPON ACCEPTANCE. First year premium calculations will
apply to any policy on which:
1. The Company has obtained complete and current underwriting evidence on
the full amount, which is satisfactory to Cologne.
2. The full normal commissions are paid for the new plan; and
3. The Suicide and Contestable provisions apply as if the policy were
newly issued.
Attained age and duration premium calculations will apply in all other
cases, for amounts not to exceed the amount of the original reinsurance.
The rate scale applicable to any such external replacement or exchange
shall be determined on an individual basis.
VIII. EFFECT OF LAPSE OR TERMINATION OF A POLICY
A. REDUCTION OR TERMINATION OF RETAINED AND UNRETAINED POLICIES. In the
event of the lapse or termination of a policy on which the Company has
retention, the Company may reduce reinsurance by a like amount in order
to remain fully retained on the risk. If the lapse or termination is on a
policy not reinsured, then any reduction made shall be on those policies
reinsured commencing with that policy most recently issued. In the event
there is more than one reinsurer, the reduction shall be proportionate
among the reinsurers.
B. EXTENDED TERM OR REDUCED PAID-UP INSURANCE. If the original policy lapses
and extended term insurance or reduced paid-up insurance is granted under
the terms of the policy, Cologne, upon notification of such change, will
adjust the amount of reinsurance and accept appropriately adjust
reinsurance premiums calculated in the same manner as on the original
policy. However, Cologne shall not provide coverage for extended term
insurance on policies originally issued at substandard ratings greater
than 150% of standard or the equivalent in flat extra premium unless
Cologne specifically agrees in advance to do so.
C. UNEARNED PREMIUM. Upon lapse, death of a policyholder or other
termination of a policy, Cologne shall refund any unearned premiums.
However, policy fees, if any, shall be deemed earned for a policy year if
during any portion of such policy year ceded insurance is exposed to
risk.
D. REINSTATEMENT. If a policy which has lapsed for nonpayment of premium is
reinstated in accordance with its terms and in accordance with Company
rules and procedures, Cologne shall, upon notification of reinstatement,
reinstate the pre-existing reinsurance coverage. Upon reinstatement of
the reinsurance coverage, the Company shall pay the reinsurance premiums
which would have accrued had the policy not lapsed, together with
interest at the same rate as the Company receives under its policy.
IX. MISCELLANEOUS PROVISIONS
A. PAYMENT OF PREMIUMS AND POLICY FEES. Premiums and policy fees shall be
paid by the Company to Cologne pursuant to the terms as set forth in the
Specifications Page.
B. PREMIUM TAX CREDITS. Cologne shall reimburse the Company for premium
taxes on reinsurance premiums, as provided in the Specifications Page.
C. INSOLVENCY. In the event of insolvency of the Company, all payments
normally made to it by Cologne shall be payable directly to the
liquidator, receiver or statutory successor of the Company on the basis
of the liability of the Company under the contract or contracts reinsured
without diminution because of insolvency of the Company.
In the event of insolvency of the Company, the liquidator, receiver or
statutory successor shall give Cologne written notice of the pendency of
a claim on a policy reinsured within a reasonable time after the claim is
filed in the solvency proceeding. During the pendency of the claim,
Cologne may investigate the claim, and in a proceeding where the claim is
to be adjudicated, Cologne may, at Cologne's own expense, interpose in
the name of the Company (its liquidator, receiver or statutory successor)
any defense or defenses which Cologne may deem available to the Company
or its liquidator, receiver or statutory successor.
The expense thus incurred by Cologne shall be chargeable, subject to
court approval, against the Company as part of the expense of liquidation
to the extent of a proportionate share of the amount of reinsurance which
may accrue to the Company solely as a result of the defense undertaken by
Cologne. Where two or more reinsurers participate in the same claim and a
majority in interest elect to interpose a defense to the claim, the
expense shall be apportioned in accordance with the terms of the
reinsurance agreements as though the expense had been incurred by the
Company.
D. OFFSET. Upon notice to the other party, the Company or Cologne may offset
any balance(s) owed to it by the other from premiums, allowances, claims,
or any other amount(s) due from one party to the other under this
Agreement.
E. COMPANY DATA. The Company agrees to keep Cologne informed of the identity
and terms of its policies, riders and contracts reinstated under this
Agreement, as well as any special programs affecting reinsurance
hereunder, with copies of its application forms, policy forms,
supplementary agreements, rate books, plan codes and all other materials
relevant to the coverages reinsured.
Further, the Company agrees to furnish Cologne with all underwriting
manuals or criteria, requirements, and retention schedules affecting
reinsurance ceded and to keep Cologne fully informed of all subsequent
changes to said materials.
F. OVERSIGHTS. Administrative or clerical error or omissions of an
accidental or unintentional nature shall be corrected and both parties
shall be restored to the positions they would have occupied had no such
error or omission occurred. Errors of judgement are not covered by this
provision.
G. INSPECTION OF RECORDS. Cologne, or their duly authorized representatives,
shall have the right at any reasonable time to inspect, at the office of
the Company, all books and documents relating, directly or indirectly, to
any business reinsured under this Agreement.
X. ARBITRATION
The Cologne and the Company intend that any dispute between them under or
with respect to this Agreement be resolved without resort to any
litigation. Accordingly, The Cologne and the Company agree that they will
negotiate diligently and in good faith to agree on a mutually
satisfactory resolution of any such dispute; PROVIDED, HOWEVER, that if
any such dispute cannot be resolved by them within sixty calendar days
(or such longer period as the parties may agree) after commencing such
negotiations, The Cologne and the Company agree that they will submit
such dispute to arbitration in the manner specified in, and such
arbitration proceeding will be conducted in accordance with, the rules of
the American Arbitration Association.
The arbitration hearing will be before a panel of three arbitrators, each
of whom must be a present or former officer of a life insurance or life
reinsurance company. The Cologne and the Company will each appoint one
arbitrator by written notification initiating the arbitration. These two
arbitrators will then select the third arbitrator within sixty calendar
days after the date of the mailing of the notification initiating
arbitration.
If either The Cologne or the Company fail to appoint an arbitrator, or
should the two arbitrators be unable to agree upon the choice of a third
arbitrator, the president of the American Arbitration Association or of
its successor organization or (if necessary) the president of any similar
organization designated by lot of The Cologne and the Company within
thirty calendar days after the request will appoint the necessary
arbitrators.
The vote or approval of a majority of the arbitrators will decide any
question considered by the arbitrators reach the same decision, then the
average of the two closest mathematical determinations will constitute
the decision of all three arbitrators. The place of arbitration will be
Stamford, Connecticut. Each decision (including without limitation each
award) of the arbitrators will be final and binding on all parties and
will be nonappealable, and (at the request of either of The Cologne or
the Company) any award of the arbitrators may be confirmed by a judgement
entered by any court of competent jurisdiction. Each party will be
responsible for paying (a) all fees and expenses charged by its
respective counsel, accountants, actuaries, and other representatives in
conjunction with such arbitration and (b) one-half of the fees and
expenses charged by each arbitrator.
XI. TERMINATION OF IN-FORCE BUSINESS
A. FAILURE TO PAY PREMIUMS. The payment of reinsurance premiums shall be a
condition precedent to the liability of Cologne for reinsurance covered
by this Agreement. In the event that reinsurance premiums are not paid
when due, Cologne shall have the right to terminate the reinsurance under
all policies having reinsurance premiums in arrears. If Cologne elects to
exercise its right of termination, it shall give the Company thirty (30)
days written notice of its intention to terminate said reinsurance.
If all reinsurance premiums in arrears, including any which may become in
arrears during the thirty day period, are not paid before expiration of
said period, Cologne shall be relieved of all liability. Policies on
which reinsurance premiums subsequently fall due will automatically
terminate if reinsurance premiums are not paid. Terminated reinsurance
may be reinstated at any time within sixty (60) days of the date of
termination upon payment of all reinsurance premiums in arrears, however,
Cologne shall 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 Cologne's right to
collect premiums for the period reinsurance was in force prior to the
expiration of the thirty day notice.
Premium balance which remain unpaid for more than sixty (60) days shall
incur interest from the due date calculated from that date by using the
13-week Treasury Bill rate reported for the last working day of the
calendar month in the "Money Rates" section of THE WALL STREET JOURNAL or
comparable publications.
XII. TERMINATION OF NEW BUSINESS
A. DURATION OF AGREEMENT. This Agreement shall have the effective date
shown on the Specifications Page and shall be unlimited in duration.
It may be terminated at any time, insofar as it pertains to the
handling of subsequent new business, by either party giving ninety
(90) days notice of termination in writing in advance. Cologne shall
continue to accept new business during the ninety (90) days notice and
shall continue to be liable on all in-force reinsurance granted under
this Agreement until the termination or expiry of the insurance
reinsured.
This Agreement represents the entire contract between Cologne and the Company
and supercedes any prior oral or written agreements.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the date set forth below:
THE COLOGNE LIFE REINSURANCE COMPANY STATE MUTUAL LIFE ASSURANCE
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxx, Xx.
---------------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxx Name: Xxxxxx X. Xxxxx, Xx.
------------------------------------- ----------------------------
Title: Senior Vice President Title: AVP & Actuary
------------------------------------ ---------------------------
Date: 5/28/93 Date: July 23, 1993
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ATTEST: /s/ ATTEST: /s/ Xxxxxxx X. Xxxxxxxx
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Name: /s/ Name: Xxxxxxx X. Xxxxxxxx
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Title: Vice President Title: VP & Actuary
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Date: (illegible) Date: July 23, 1993
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EXHIBIT A
PLANS AND AMOUNTS REINSURED
Omitted 1 Page
EXHIBIT A.1
STATE MUTUAL OF AMERICA RETENTION SCHEDULE
LIFE
STANDARD RISKS,
SPECIAL CLASSES SPECIAL CLASSES
A THROUGH H AND J, L, & P AND
FLAT EXTRAS OF FLAT EXTRAS OF
AGES $20.00 OR LESS $20.01 AND OVER
---- -------------- ---------------
0 $ 500,000 $ 250,000
1-60 2,000,000 1,000,000
61-70 1,000,000 500,000
71-80 500,000 250,000
Notes: (1) The above maximum limits are also the maximums on any one life for
all plans and riders combined.
(2) The minimum size reinsurance case will be $50,001.
AVIATION
Any situation involving aviation will use a $500,000 retention.
WAIVER OF PREMIUM DISABILITY & ACCIDENTAL DEATH BENEFITS
Fully retained
Effective date January 1, 1993
EXHIBIT B
REINSURANCE PREMIUMS
LIFE. The reinsurance premiums for the life risk except pension products ERL2
and increases on ERL1, shall be based on the annual mortality rates attached
Exhibit B.1 multiplied by the percentage specified below for the plans specified
below for the insured's age and table rating, if any. Mortality rates for
pension products ERL2 and increases on ERL1 shall be Exhibit B.2.
PERCENTAGE OF PREMIUMS TO COLOGNE
---------------------------------
NON
YEARS SMOKERS SMOKERS PLAN(S)
----- ------- ------- -------
1 0% 0% Universal Life Plans
2-10 54% 55% First-to-die-UL
11+ 72% 70% ELPlus, ELII, VEL, VEL 91
increases on these
Plans plus increases
On XXX & ERL1 and OIR
FIRST-TO-DIE. Premium is calculated on each insured and summed. A 5% discount on
the total reinsurance premium is allowed.
In the event that a risk is accepted and ceded with a flat extra premium, such
premiums shall be reported separately on a monthly premium basis at the
percentages specified below, multiplied by the face reinsured.
TYPE OF FLAT EXTRA PREMIUM FIRST YEAR RENEWAL
-------------------------- ---------- -------
Temporary extra payable 1-5 years 100% 100%
Extra payable 6 or more years 25% 90%
ACCIDENTAL DEATH BENEFIT (ADB): Not applicable.
WAIVER OF PREMIUM (WP): Not applicable.
OTHER SUPPLEMENTAL COVERAGES. Other supplemental coverages, as listed in Exhibit
A, will receive the same rates as the base policy.
RATE GUARANTEE. While Cologne anticipates continuing to accept premiums on the
basis of the attached rates, Cologne can only guarantee that the life
reinsurance premium rates payable under this Agreement shall not exceed the
one-year term net premiums computed on the 1980 CSO Mortality Table using 4 1/2%
interest and continuous functions.
EXCESSES: Reinsurance Amounts in excess of $3 million will be covered using the
YRT rate scale attached (Exhibit B.3). The non-smoker rate scale is multiplied
by 1.075.
CONVERSIONS: Conversions are allowed from a term to a universal life plan and
will be covered on a point-in-scale basis.
% of Premium (UL)
-B-
ANNUAL MORTALITY CHARGES
12 PAGES OMITTED
The Cologne Life Re
ADDENDUM TO TREATY # S145-101-000 DATED JANUARY 1993
CEDING COMPANY: STATE MUTUAL LIFE ASSURANCE COMPANY
Worcester, MA
REINSURANCE COMPANY: THE COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ACCOUNT NUMBER (S): 2360
AMENDMENT NUMBER: S145-101-001
EFFECTIVE DATE: January 1, 1993
SPECIAL PROVISION: Article V is hereby amended to include the following:
Notwithstanding anything in this Agreement to the
contrary, the term "unusual expenses" as used in
this Agreement shall include, but not be limited to:
1. any extra contractual award (including, but
limited to, punitive or exemplary damages)
imposed against the Company by a court or
regulatory body, except to the extent that the
award is based on conduct of the Company which
The Cologne did not have knowledge of nor
acquiesced in and which was in bad faith. For
purposes of this provision, in determining
whether the Company's conduct was in bad faith,
the decision of the court or regulatory body
will not be binding. Rather, the conduct will
only be considered to have been in bad faith to
the extent it deviates from accepted standards
of conduct among those familiar with the
operation on the insurance and reinsurance
business; and
2. any legal fees and costs incurred by the
Company in defending or investigating a claim
for policy liability or in taking up or
rescinding a policy reinsured under this
Agreement.
For purposes of this Agreement, any penalties,
attorney's fees, and interest imposed automatically
by statute against the Company and arising solely
out of judgement being rendered against the Company
in a suit for policy benefits reinsured under this
Agreement shall, in any event, be considered
"unusual expenses."
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
THE COLOGNE LIFE REINSURANCE CO. STATE MUTUAL LIFE ASSURANCE COMPANY
BY: /s/ BY: /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------- ---------------------------------
TITLE: Senior Vice Pres. TITLE: AVP & Actuary
----------------------------- ------------------------------
DATE: 8/26/93 DATE: September 10, 1993
------------------------------ -------------------------------
ATTEST: /s/ ATTEST: /s/
---------------------------- -----------------------------
Vice President
8/26/93
The Cologne Life Re
ADDENDUM TO TREATY DATED JANUARY 1993
CEDING COMPANY: STATE MUTUAL LIFE ASSURANCE COMPANY
Worcester, MA
REINSURANCE COMPANY: THE COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ACCOUNT NUMBER (S): 2360
EFFECTIVE DATE: July 1, 1993
AMENDMENT NUMBER: S145-101-002
TYPE OF BUSINESS: Automatic with Facultative Option YRT
SPECIAL PROVISIONS: The addition of two new universal life products:
ELPLUS (Form number (1019-93)
VEL93 (Form number (1018-93)
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
THE COLOGNE LIFE REINSURANCE CO. STATE MUTUAL LIFE ASSURANCE COMPANY
BY: /s/ BY: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------- -----------------------------------
TITLE: Senior Vice Pres. TITLE: AVP & Actuary
-------------------------- -------------------------------
DATE: 4/18/94 DATE: May 2, 1994
--------------------------- --------------------------------
ATTEST: /s/ ATTEST: /s/
------------------------- ------------------------------
(Illegible)
4/18/94
The Cologne Life Re
ADDENDUM TO TREATY DATED JANUARY 1, 1993
CEDING COMPANY: STATE MUTUAL LIFE ASSURANCE COMPANY
Worcester, MA
REINSURANCE COMPANY: THE COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ACCOUNT NUMBER (S): 2385
EFFECTIVE DATE: January 1, 1993
AMENDMENT NUMBER: S145-102-001
TYPE OF BUSINESS: Automatic with Facultative Option YRT
SPECIAL PROVISIONS: This treaty is hereby amended and becomes a part of the
above referenced
Reinsurance Agreement:
1. The attached DAC Tax Article, entitled Section
1.848-2(g)(8) Election, is hereby added to the
Agreement.
2. This Amendment does not alter, amend, or modify the
Reinsurance Agreement other than as stated in this
Amendment. It is subject to all of the terms and
conditions of the
Reinsurance Agreement together with
all Amendments and Addendums.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
THE COLOGNE LIFE REINSURANCE CO. STATE MUTUAL LIFE ASSURANCE COMPANY
BY: /s/ BY: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------- ----------------------------------
TITLE: Senior Vice Pres. TITLE: AVP & Actuary
-------------------------- --------------------------------
DATE: 12/30/93 DATE: May 2, 1994
--------------------------- --------------------------------
ATTEST: /s/ ATTEST: /s/
------------------------- -------------------------------
Vice President
12/15/93
DAC TAX ARTICLE
TREASURY REG. SECTION 1.848-2(g)(8)
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. This
election shall be effective for 1992 and for all subsequent taxable years for
which this Agreement remains in effect.
1. The term "party" will refer to either the Reinsured or the Reinsurer as
appropriate.
2. The terms used in this Article are defined by reference to Regulation
Section 1.848.2 in effect as of December 29, 1992.
3. 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).
4. The Ceding Company and Reinsurer agree to exchange information pertaining
to the amount of the net consideration under this Agreement each year to
ensure consistency or as otherwise required by the Internal Revenue
Service.
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 as determined by the
Ceding Company in the Reinsurer's tax return for the previous calendar
year.
6. The Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company in writing within 30 days of Reinsurer's
receipt of the Ceding Company's calculation. 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 within thirty (30) days of the date the Reinsurer
submits its alternative calculation. 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.
The Cologne Life Re
ADDENDUM TO TREATY DATED JANUARY 1993
CEDING COMPANY: STATE MUTUAL LIFE INSURANCE COMPANY
Worcester, MA
REINSURANCE COMPANY: THE COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ACCOUNT NUMBER (S): 2385
EFFECTIVE DATE: April 1, 1994
AMENDMENT NUMBER: S145-102-001
TYPE OF BUSINESS: Automatic with Facultative Option YRT
SPECIAL PROVISIONS: Effective April 1, 1994 treaty #000-000-000 is amended to
reflect that VEL93 and El Plus 93 products written by SMA
Life Assurance Company in New York will be ceded direct
to The Cologne Life Reinsurance Company.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
THE COLOGNE LIFE REINSURANCE STATE MUTUAL LIFE ASSURANCE COMPANY
COMPANY
BY: /s/ BY: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------- ----------------------------------
TITLE: Senior Vice Pres. TITLE: AVP & Actuary
-------------------------- --------------------------------
DATE: 4/26/94 DATE: May 2, 1994
--------------------------- --------------------------------
ATTEST: /s/ ATTEST: /s/
------------------------- -------------------------------
Vice President
4/18/94
The Cologne Life Re
ADDENDUM TO TREATY #S145-101-000 DATED JANUARY 1,1993
CEDING COMPANY: STATE MUTUAL LIFE INSURANCE COMPANY
Worcester, MA
REINSURANCE COMPANY: THE COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ACCOUNT NUMBER (S): 2360
EFFECTIVE DATE: May l, 1995
AMENDMENT NUMBER: S145-101-003
TYPE OF BUSINESS: Automatic w/Facultative Option
SPECIAL PROVISIONS: The addition of variable universal life product Select
Life (form number 1027-95)
This treaty is amended to include term coverage as
provided under the Survivorship Benefit when included in
First To Die Universal Life policies. This coverage will
only apply to insureds and amounts reinsured previous to
the first death and will cease 90 days after the death of
the first to die. No additional premiums over and above
the applicable single life reinsurance premiums will be
charged for this benefit
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
THE COLOGNE LIFE REINSURANCE STATE MUTUAL LIFE ASSURANCE COMPANY
COMPANY
BY: /s/ BY: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------- ----------------------------------
TITLE: Senior Vice Pres. TITLE: AVP & Actuary
-------------------------- -------------------------------
DATE: 5/24/95 DATE: August 2, 1995
--------------------------- --------------------------------
ATTEST: /s/ ATTEST: /s/
------------------------- ------------------------------
Vice President
5/24/95
The Cologne Life Re
ADDENDUM TO TREATY #S145-101-000 DATED JANUARY 1, 1993
CEDING COMPANY: ALLMERICA FINANCIAL LIFE INSURANCE CO.
Worcester, MA
REINSURANCE COMPANY: THE COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ACCOUNT NUMBER (S): 2385
EFFECTIVE DATE: February 1, 1997
AMENDMENT NUMBER: S145-102-004
TYPE OF BUSINESS: Automatic w/Facultative Option
SPECIAL PROVISIONS: On the new single premium variable life product, the
definition of net amount of risk is amended to include
the impact of the single premium on the first year
reinsurance net amount at risk.
The first year net amount at risk must equal or exceed
$50,001 for reinsurance to be ceded.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
THE COLOGNE LIFE REINSURANCE STATE MUTUAL LIFE ASSURANCE COMPANY
COMPANY
BY: /s/ BY: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------- ----------------------------------
TITLE: 2nd Vice President TITLE: AVP & Actuary
-------------------------- -------------------------------
DATE: 31 Jan 97 DATE: 2/6/97
--------------------------- --------------------------------
ATTEST: /s/ ATTEST: /s/
------------------------- ------------------------------
Letter To Xx. Xxxx X. Xxxxxxx
Cologne Life Reinsurance Company
Date: November 27, 1996
Omitted 2 Pages
The Cologne Life Re
ADDENDUM TO TREATY #S145-101-000 DATED JANUARY 1, 1993
CEDING COMPANY: STATE MUTUAL LIFE ASSURANCE COMPANY
Worcester, MA
REINSURANCE COMPANY: THE COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ACCOUNT NUMBER (S): 2360
EFFECTIVE DATE: October 11, 1995
AMENDMENT NUMBER: S145-101-006
TYPE OF BUSINESS: Facultative
SPECIAL PROVISIONS: Effective OCTOBER 11, 1995 the name of State Mutual Life
Insurance Company is changed to:
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
THE COLOGNE LIFE REINSURANCE FIRST ALLMERICA FINANCIAL LIFE
COMPANY INSURANCE COMPANY
BY: /s/ BY: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------- ----------------------------------
TITLE: 2nd Vice President TITLE: AVP & Actuary
-------------------------- -------------------------------
DATE: 9 Oct. 96 DATE: October 15, 1996
--------------------------- -------------------------------
ATTEST: /s/ ATTEST: /s/
------------------------- ----------------------------
