FORM OF
FACULTATIVE YRT
SELF-ADMINISTERED
REINSURANCE AGREEMENT
Effective
January 1, 1992
between
CENTURY LIFE OF AMERICA
Waverly, Iowa
and
FRANKONA AMERICA LIFE REASSURANCE COMPANY
Kansas City, Missouri
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CLIENT: CENTURY LIFE XX XXXXXXX
Xxxxxxxx Xxx
Xxxxxxx, Xxxx 00000
000-000-0000
TREATY TYPE: FACULTATIVE YRT
SELF-ADMINISTERED
EFFECTIVE DATE: January 1, 1992
PLANS COVERED: Flexible Premium Adjustable Life (UL2000)
and (UL2000EB)
Flexible Premium Variable Adjustable Life
(VUL2000) and (UL2000EB)
RIDERS COVERED: Disability Waiver of Premium
Accidental Death Benefit
Guaranteed Purchase Option
Automatic Increase Rider
CONTACT PERSON(S): Xxxx Xxxxxx
Reinsurance Administrator
ACCOUNT REPRESENTATIVE: X. X. Xxxxxxxxx
Vice President
Sales/Marketing
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PARTIES TO THE AGREEMENT
This agreement is solely between CENTURY LIFE OF AMERICA, hereafter
referred to as CENTURY LIFE, and FRANKONA AMERICA LIFE REASSURANCE
COMPANY, hereafter referred to as FRANKONA AMERICA. Performance of the
obligations of each party under this agreement shall be rendered solely
to the other party. In no instance shall anyone other than CENTURY LIFE
or FRANKONA AMERICA have any rights under this agreement.
APPLICATION OF AGREEMENT
Reinsurance under this agreement will apply to individual life
insurance issued by CENTURY LIFE on or after January 1, 1992, on the
plans shown in Schedule C, and to all continuations, conversions,
exchanges, changes and modifications of these issues as provided by
this agreement.
SCHEDULES
All schedules referred to in this agreement are attached to and part of
the agreement.
CONDITIONS OF REINSURANCE
Reinsurance under this agreement will be subject to all the applicable
provisions contained in the respective policies of CENTURY LIFE.
CENTURY LIFE will not call on FRANKONA AMERICA to participate in policy
loans on any policies reinsured under this agreement.
CENTURY LIFE will furnish FRANKONA AMERICA with specimen copies of all
of its applications, policy and rider forms and tables of rates and
values which may be required for the proper administration of the
business reinsured under this agreement. CENTURY LIFE will advise
FRANKONA AMERICA of all subsequent modifications of these forms and of
new forms under which reinsurance may be effected. In addition, CENTURY
LIFE will notify FRANKONA AMERICA promptly of any noncontractual
modifications to its policy forms and to any systematic revision of
available benefits.
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Reinsurance under this agreement will be subject to any applicable
general privileges regarding travel, flight, residence, occupation, and
military or naval service, and to any applicable general conditions,
limitations, exceptions or restrictions contained in the respective
policies of CENTURY LIFE, excluding the loan and cash surrender
values.
EXCHANGES
CENTURY LIFE will inform FRANKONA AMERICA of company exchange programs
and policy improvement programs on currently reinsured inforce policies
or on policies applicable for reinsurance under this agreement, so that
good faith negotiations can be undertaken to continue coverage.
CONVERSIONS
If a policy reinsured under this agreement is converted to any other
plan of insurance not covered under this agreement, the conversion will
be reinsured on a Yearly Renewable Term basis using YRT reinsurance
rates shown in Schedule C. Such conversion will be treated as a
continuation of the original issue for the purpose of determining the
duration and appropriate premium thereon. Any riders or supplementary
benefits that are eligible to be converted along with the basic life
insurance coverage will be reinsured using renewal rates based on the
duration since original issue of the rider or supplementary benefit.
REDUCTIONS, CANCELLATIONS
Whenever a policy reinsured under this agreement is reduced or
terminated, or whenever all or part of the insurance which was in force
at the date reinsurance was effected and not covered by previous
reinsurance is reduced or terminated, the reinsurance will be reduced
by a like amount as of the date of the reduction or termination.
If reinsurance has been effected in more than one company, the
reduction in the reinsurance in FRANKONA AMERICA will be that portion
of the total of the reduction which the reinsurance in FRANKONA AMERICA
is of the total amount reinsured.
If there is more than one policy on the life, the reduction will apply
first to any reinsurance on the policy being reduced and then, on a
first-in first-out basis, to any reinsurance on the other inforce
policies on the life.
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CLAIM PROCEDURES
CENTURY LIFE will notify FRANKONA AMERICA of each claim promptly after
it receives information of the claim. FRANKONA AMERICA will abide the
issue as settled between CENTURY LIFE and its claimant, whether or not
CENTURY LIFE contests the claim. The claim proofs accepted by CENTURY
LIFE will also be accepted by FRANKONA AMERICA. However, in any case
where the amount of life or other reinsurance carried by CENTURY LIFE
in FRANKONA AMERICA and in force at the time of claim is greater than
the amount of coverage retained by CENTURY LIFE, CENTURY LIFE will
obtain FRANKONA AMERICA's recommendation before conceding any liability
to or making any settlement with its claimant.
CENTURY LIFE will furnish FRANKONA AMERICA with copies of the claim
proofs, the original application, the medical examiner's reports, any
inspection reports and all other underwriting evidence obtained at the
time the policy was originally or most recently underwritten. CENTURY
LIFE will notify FRANKONA AMERICA of its payment of the claim, and
FRANKONA AMERICA will then pay its portion of the claim to CENTURY
LIFE.
CLAIM PAYMENTS
In settlement of any death claim, FRANKONA AMERICA will pay one sum
regardless of the method of settlement under the original policy. In
settlement of any Disability Waiver of Premium claim, FRANKONA AMERICA
will pay CENTURY LIFE the reinsured portion of each gross premium
waived.
CONTESTED CLAIMS
If CENTURY LIFE determines that a claim for contract benefits reinsured
under this agreement should be denied, contested, compromised, or
litigated, it will notify FRANKONA AMERICA and will make available all
of the information it possesses regarding the claim for FRANKONA
AMERICA's review. After such review and before any indication of denial
or contest to the claimant, if FRANKONA AMERICA agrees in writing that
the claim should be denied or contested, FRANKONA AMERICA will
participate in its share of any and all damages, fees and expenses
resulting from a judgment arising out of a claim against CENTURY LIFE
in connection with the denial or contest provided, however, that
FRANKONA AMERICA will share only such damages, or portion thereof,
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which are assessed solely as a result of the decision to deny or
contest the claim and for no other reason. If FRANKONA AMERICA does not
agree in writing that a claim should be denied or contested, then it
will pay the full amount of the reinsurance to CENTURY LIFE.
In no event will FRANKONA AMERICA participate in any damages, fees, or
expenses, or portion thereof, which have been assessed by a court of
competent jurisdiction on the basis of negligence, oppression, malice,
fraud, fault, wrongdoing, or bad faith by CENTURY LIFE, nor any act or
omission not consistent with the generally accepted practices and
standards of the life insurance industry applicable at the time of such
act or omission. The language of this paragraph shall be deemed
effective only as and to the extent permitted by the law of any
applicable jurisdiction.
FRANKONA AMERICA's "share" of any payment, expenses, damages and fees,
as described above, will be the proportional amount of these items
determined by the ratio of reinsurance held by FRANKONA AMERICA to the
total amount of the polices involved in the litigation.
MISSTATEMENT OF AGE OR SEX
In the event of an increase or reduction in the amount of the original
insurance under any policy reinsured under this agreement because of a
misstatement of age or sex established after the death of the insured,
CENTURY LIFE and FRANKONA AMERICA will share in the increase or
reduction in proportion to their respective net liabilities on the
policy immediately before the adjustment.
RECAPTURES
If CENTURY LIFE increases its maximum limit of retention for new
business, it may make a corresponding reduction, at its own option, in
the reinsurance in force under this agreement. However, the reduction
may not be made before the end of the tenth (10th) policy year of any
given cession. Such a reduction can and will be made only on those
lives on which CENTURY LIFE has maintained its maximum limit of
retention for the plan, age and mortality classification of the risk,
as shown in schedule A, at the time of issue. Special reduced limits
for specific underwriting hazards or impairment will not be considered
to be maximum limits of retention.
CENTURY LIFE will notify FRANKONA AMERICA of its intention to exercise
its option to recapture eligible risks, and the effective date such
recapture is to begin, within ninety days after the effective date of
its
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increase in retention for new issues. Reinsurance in force will then be
reduced, as herein provided, on the respective anniversary date next
following, or the tenth anniversary date when applicable. If CENTURY
LIFE elects to recapture as provided above, then it must recapture all
reinsurance that is eligible for recapture. Recapture will begin with
the effective date established by CENTURY LIFE and will continue
uninterrupted by CENTURY LIFE until all eligible policies have been
recaptured.
Notwithstanding the above, whenever reinsurance is issued under this
agreement on the conversion of a policy originally reinsured under this
agreement or any other agreement between CENTURY LIFE and FRANKONA
AMERICA, the recapture provisions applicable to the original
reinsurance will continue to apply to the reinsurance of the new
policy.
The reduction in each risk will be an amount that will increase CENTURY
LIFE's share in the risk to its new maximum limit of retention for the
age, plan and risk classification at the time of issue. If reinsurance
is in force with other companies on a given life, the reduction will be
effected in such a way that FRANKONA AMERICA's share of the total
amount of reinsurance after the reduction will be the same as FRANKONA
AMERICA's share of the total reinsurance amount before the reduction
(e.g., if FRANKONA AMERICA held 30% of the total reinsurance before the
reduction, it will hold 30% of the total reinsurance after the
reduction).
If at the time of recapture the risk is on active claim for Disability
Waiver of Premium, the Life risk will still be considered eligible for
recapture. However, the Disability reinsurance, if applicable, will
remain in force until the claim is terminated, at which time the
Disability risk will be recaptured. If the Disability Waiver of Premium
claim is resumed within two years of this recapture, due to an
extension of the initial disablement, FRANKONA AMERICA will be liable
for payment of FRANKONA AMERICA's share of premiums waived by CENTURY
LIFE, subject to collection of the Disability premiums on FRANKONA
AMERICA's share of the risk for the period following the recapture of
the Disability risk.
CENTURY LIFE will have the option of recapturing reinsurance cessions
issued in amounts of less than $2,500, on their respective third policy
anniversaries. CENTURY LIFE will notify FRANKONA AMERICA before the end
of each calendar year of its intention to exercise this option. If this
option is elected, then each such cession will be recaptured on its
respective third anniversary date next following, provided that if any
such cession is so recaptured, then every such cession reaching its
respective third policy anniversary during the same calendar year will
be so recaptured.
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EXPERIENCE REFUNDS
Life reinsurance accepted under this agreement will not be eligible for
experience refunds.
RIGHT TO INSPECT
At all reasonable times FRANKONA AMERICA may inspect the original
papers, records, books, files, and other documents referring to the
business under this agreement in the offices of CENTURY LIFE.
OVERSIGHTS
If nonpayment of premium within the time specified, or failure to
comply with any terms of this agreement, is shown to be unintentional
and the result of misunderstanding or oversight on the part of either
party, the agreement will not be deemed abrogated by such an oversight.
Both parties will be restored to the positions they would have occupied
had not such oversight or misunderstanding occurred.
If seven years have elapsed since the oversight occurred, there will
not be rectification as above, unless both CENTURY LIFE and FRANKONA
AMERICA agree to such rectification.
CURRENCY
All payments by either FRANKONA AMERICA or CENTURY LIFE in connection
with business transacted under this agreement will be made in United
States currency.
ARBITRATION
Should a disagreement arise between the two companies regarding the
rights or liabilities of either company under any transaction under
this agreement, the disagreement will be referred to arbitrators, one
to be chosen by each company from among the officers of other life
insurance companies and a third to be chosen by the said two
arbitrators before entering upon arbitration. In the event that either
party should fail to choose an arbitrator within thirty days following
a written request by the other party to do so, the requesting party may
choose two arbitrators who
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shall in turn choose an umpire before entering upon arbitration. If the
two arbitrators are unable to agree upon the selection of an umpire
within thirty days following their appointment, each arbitrator shall
nominate three candidates within ten days thereafter. Then, each
arbitrator will veto two of the other arbitrator's choices. Finally,
one of the two remaining names will be chosen by drawing lots.
The arbitrators will regard this document as an honorable agreement and
not merely as a legal obligation. Their decision will be final and
binding upon both companies; from it there shall be no appeal.
The place of meeting of the arbitrators will be decided by a majority
vote of the arbitrators. All expenses and fees of the arbitrators will
be borne equally by CENTURY LIFE and FRANKONA AMERICA, unless decreed
otherwise by the arbitrators.
INSOLVENCY OF CEDING COMPANY
All reinsurance under this agreement will be payable by FRANKONA
AMERICA directly to CENTURY LIFE, its liquidator, receiver or statutory
successor, on the basis of the liability of CENTURY LIFE under the
policy or policies reinsured and without diminution because of the
insolvency of CENTURY LIFE. However, in the event of such insolvency,
the liquidator, receiver or statutory successor of CENTURY LIFE will
give written notice of a pending claim against CENTURY LIFE on the
reinsured policy. It will do so within a reasonable time after the
claim is filed in the insolvency proceedings. During the pendency of
such a claim, FRANKONA AMERICA may investigate the claim and may, at
its own expense, interpose any defense or defenses which it may deem
available to CENTURY LIFE, its liquidator, receiver or statutory
successor, in the proceedings where the claim is to be adjudicated.
The expense thus incurred by FRANKONA AMERICA will be chargeable
against CENTURY LIFE, subject to court approval, as part of the expense
of liquidation to the extent of a proportionate share of the benefit
which may accrue to CENTURY LIFE solely as a result of the defense
undertaken by FRANKONA AMERICA.
Where two or more reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to the claim, the
expense will be apportioned in accord with the terms of the reinsurance
agreement as though the expense had been incurred by CENTURY LIFE.
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INSOLVENCY OF FRANKONA AMERICA
In the event of insolvency of FRANKONA AMERICA as determined by the
Department of Insurance responsible for such determination, CENTURY
LIFE may immediately and completely recapture all reinsurance ceded
under this agreement, without penalty to CENTURY LIFE.
FACULTATIVE REINSURANCE
Whenever CENTURY LIFE requires reinsurance on a risk, it may apply to
FRANKONA AMERICA for facultative reinsurance.
PROCEDURE FOR FACULTATIVE REINSURANCE
Whenever CENTURY LIFE applies to FRANKONA AMERICA for facultative life
reinsurance, it will forward FRANKONA AMERICA an application form in
substantial accord with Schedule B Part 1, together with copies of the
original application, medical examiners' reports, inspection reports,
and all other commonly accepted underwriting evidence bearing on the
insurability of the risk. FRANKONA AMERICA will examine the evidence
immediately upon receipt of the application and will notify CENTURY
LIFE of its decision as soon as possible.
When a policy on which facultative reinsurance has been obtained in
FRANKONA AMERICA is paid for, CENTURY LIFE will forward FRANKONA
AMERICA a reinsurance cession form in substantial accord with Schedule
B.
FRANKONA AMERICA will send CENTURY LIFE a completed cession card in
accord with Schedule B Part 2, as evidence of the reinsurance.
NEW LIMITS OF RETENTION
If CENTURY LIFE changes its limits of retention affecting reinsurance,
it will give FRANKONA AMERICA fourteen days' written notice of the
change.
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CHANGES
Whenever a change is made in the plan of a policy reinsured under this
agreement, a corresponding change will be made in the reinsurance.
Whenever a change is made in the underwriting classification of a
policy reinsured under this agreement, a corresponding change will be
made in the reinsurance, provided that FRANKONA AMERICA has given prior
approval to the change.
REINSTATEMENTS
If a policy reinsured under this agreement either lapses or is
continued on a Paid-up or Extended Term insurance basis, and if
subsequently it is approved for reinstatement by CENTURY LIFE and
FRANKONA AMERICA in accord with the underwriting standards of each,
CENTURY LIFE will keep the retention limit it originally kept on the
policy and FRANKONA AMERICA will reinstate automatically the excess
over the original retention limit, but not an amount more than was
originally reinsured in FRANKONA AMERICA on the policy.
CENTURY LIFE will obtain FRANKONA AMERICA's prior approval before
reinstating the reinsurance.
CENTURY LIFE will notify FRANKONA AMERICA of the reinstatement
promptly, and the reinsurance so reinstated will become effective as of
the date of CENTURY LIFE's and FRANKONA AMERICA's underwriting approval
of reinstatement.
CENTURY LIFE will pay FRANKONA AMERICA the proportionate part of the
reinsurance premium based on the premium payable for the year of
reinstatement. This applies to the period from the date of
reinstatement to policy anniversary date next following. Thereafter,
reinsurance premiums will be payable in accord with Premium Rates,
Premium Payment Basis, and the Accounting Statements and Premium
Payments provisions.
YEARLY RENEWABLE TERM
Life reinsurance under this agreement will be on the Yearly Renewable
Term plan for the amounts at risk on the portion of the original policy
reinsured in FRANKONA AMERICA.
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AMOUNT AT RISK
For Universal Life plans the amount at risk each year will be taken as:
OPTION A: The specified amount of insurance reinsured.
OPTION B: The specified amount of insurance reinsured less the
accumulated value thereon.
For all other plans the amount at risk each year will be taken as the
difference between the face amount of life reinsurance and the terminal
reserve thereon by the reserve tables of CENTURY LIFE. However, the
terminal reserves will be disregarded when the original policy is
issued on a level term plan for twenty years or less, or on a reducing
term plan for any period of years, or when the life reinsurance is
issued for a face amount of less than $2,500.
When the life reinsurance portion of a risk ceded under this agreement
is issued for a face amount of less than $2,500, the amounts at risk
will remain level in all years at the initial face amount of such
reinsurance.
The above method of calculating amounts at risk may be inappropriate
for reinsurance of certain types of plans. For such cases, CENTURY LIFE
and FRANKONA AMERICA may mutually agree upon alternative methods of
calculation.
PREMIUM RATES
Premiums for reinsurance will be computed on the basis of the amount at
risk at the rates shown in Schedule C. The renewal rates guaranteed for
life reinsurance are also those shown in Schedule C. However, where
such rates are less than the 1980 CSO net premiums at 4.5% for the
applicable rating, the latter net premium rates are the guaranteed
rates.
Reinsurance of the Disability Waiver of Premium Benefit, if applicable,
will be on a YRT basis. Reinsurance premium will be computed using
rates shown in Schedule C.
PREMIUM PAYMENT BASIS
Reinsurance premiums will be payable on an annual basis and in accord
with the Accounting Statements And Premium Payments provision. Whenever
reinsurance under this agreement is reduced or terminated, FRANKONA
AMERICA will refund the unearned reinsurance premium,
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except for the annual fee, if any. The annual fee will not be subject
to refund for any reason.
Whenever reinsurance under this agreement is reinstated, CENTURY LIFE
will pay FRANKONA AMERICA the proportionate part of the reinsurance
premium, based on the premiums payable for the year of reinstatement,
for the period from the date of reinstatement to the policy anniversary
date next following. Thereafter, reinsurance premiums will be payable
in accord with the Premium Payment Basis, and the Accounting Statements
And Premium Payments provisions.
In the event of Disability, CENTURY LIFE will continue to pay FRANKONA
AMERICA the Schedule C premiums for all coverages which continue during
disability, notwithstanding any payments made by FRANKONA AMERICA to
CENTURY LIFE under the Claim Payments provision.
PROCEDURES FOR SELF-ADMINISTRATION OF AUTOMATIC REINSURANCE
CENTURY LIFE will maintain adequate records to administer the
reinsurance accounts and will cede reinsurance under this agreement on
a bordereau self-administration basis. CENTURY LIFE will provide
FRANKONA AMERICA with a monthly activity listing of self-administered
business which includes the following information:
a) Description of activity (new business, termination,
adjustments, renewals, etc.)
b) Date
c) Insured's name
d) Sex
e) Date of birth
f) Age
g) Plan name (or code)
h) Policy number
i) Effective date
j) Face amount
k) Reinsurance amount (and allowances, where appropriate)
l) Reinsurance premium (Life, DWP, Flat Extras)
m) Table rating
n) Smoker/Non-smoker status
o) Indication of Automatic or Facultative
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SUPPLEMENTARY BENEFITS
Reinsurance under this provision may include the following
supplementary benefits, provided CENTURY LIFE is retaining its maximum
limit of retention for such benefits as shown in Schedule A:
1) The disability waiver of premium benefit for an amount not
greater than that corresponding to the accompanying life
reinsurance. In no event will the amount of the disability
waiver of premium benefit be greater than an amount
corresponding to $3,000,000 of life reinsurance.
2) The accidental death benefit, provided that the total amount
of such benefit in force and applied for in all companies
does not exceed $350,000.
EXCLUSIONS
Payor Benefits, Group Coverages, Group Conversions, and Guaranteed
Issue Insurance are excluded from this agreement.
PREMIUM TAX REIMBURSEMENTS
By mutual agreement between CENTURY LIFE and FRANKONA AMERICA, premium
taxes will not be reimbursed.
DURATION OF AGREEMENT
This agreement is not limited in duration, but may be amended at any
time by mutual consent of the two companies and may be terminated for
further new reinsurance at any time by either company giving ninety
days notice by registered letter. Such termination for new reinsurance
will not affect existing reinsurance, which will remain in force until
the termination or expiration of each individual reinsurance in accord
with the terms and conditions of this agreement. However, FRANKONA
AMERICA will not be liable under this agreement for any claims or
premium refunds which are not reported to FRANKONA AMERICA within 180
days following the termination or expiry of all reinsurance reinsured
under this agreement.
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LIABILITY
The liability of FRANKONA AMERICA on any reinsurance under this
agreement will begin simultaneously with that of CENTURY LIFE, provided
that FRANKONA AMERICA has given unconditional approval on the
application for facultative reinsurance, and provided that CENTURY LIFE
has notified FRANKONA AMERICA of its acceptance of the offer. Subject
to the provisions entitled Changes, Exchanges, Conversions, Reductions,
Cancellations, Reinstatements, Recaptures, and Duration of Agreement,
and subject to the payment of reinsurance premiums as provided by the
Premium Rates, Premium Payment Basis, and Accounting Statements and
Premium Payments provisions of this agreement, such reinsurance will
be continued in force as long as CENTURY LIFE is liable under its
respective policy. The reinsurance will cease when the liability of
CENTURY LIFE terminates.
OFFSET
CENTURY LIFE or FRANKONA AMERICA may offset any balance(s), whether on
account of premiums, claims, adjustment, expense, or any other
amount(s) due from one party to the other under this agreement. It is
agreed that claims will not be offset until the claim procedures
outlined in the Claim Procedures provision have been followed. The
language of this provision shall be deemed effective only as and to the
extent permitted by the law of any applicable jurisdiction.
ACCOUNTING STATEMENTS AND PREMIUM PAYMENTS
Each processing period CENTURY LIFE will send FRANKONA AMERICA an
itemized statement, together with a remittance for the balance due
FRANKONA AMERICA as shown therein. The statement will cover the
following:
a) First year premiums due on new reinsurance.
b) Renewal premiums due on existing reinsurance with renewal
anniversaries during the current month.
c) Premium adjustments outstanding on changes in reinsurance and
previous accounting statement entries.
If the balance is due CENTURY LIFE, FRANKONA AMERICA will remit the
amount of the balance due to CENTURY LIFE promptly.
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Any balance of net amount due FRANKONA AMERICA which remains unpaid for
more than thirty days after receipt of the billing statement, will
incur interest charges of 1.25% per month calculated from the date such
balance was first due.
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To witness our agreement we sign in duplicate on the dates indicated at the home
office of each company.
CENTURY LIFE OF AMERICA
Waverly, Iowa
Date:
-------------------------
By: Attest:
--------------------------- -----------------------------
Title: Title:
------------------------- -----------------------------
FRANKONA AMERICA LIFE REASSURANCE COMPANY
Kansas City, Missouri
Date:
-------------------------
By: Attest:
------------------------- -----------------------------
Title: Title:
------------------------- -----------------------------
FORM OF
FACULTATIVE AGREEMENT
between
CENTURY LIFE OF AMERICA
Waverly, Iowa
(hereinafter called the CEDING COMPANY)
and
GENERAL AMERICAN LIFE INSURANCE COMPANY
St. Louis, Missouri
This Agreement is Effective September 1, 1991
TABLE OF CONTENTS
ARTICLE PAGE
------- ----
I FACULTATIVE COVERAGE 1
II FACULTATIVE PROVISIONS 2
III PREMIUMS 3
IV PREMIUM ADMINISTRATION 4
V CONVERSIONS 5
VI ERRORS AND OMISSIONS 6
VII EXPENSE OF ORIGINAL POLICY 7
VIII CHANGES IN RETENTION AND 8
RECAPTURE PRIVILEGES
IX TERMINATIONS AND REDUCTIONS 9
X REINSTATEMENT, CONTINUATIONS, 10
EXTENDED TERM AND REDUCED PAID-UP
INSURANCE
XI LIABILITY 11
XII CLAIMS 12
XIII ARBITRATION 13
XIV INSOLVENCY 15
XV RIGHT TO INSPECT 16
XVI DURATION OF AGREEMENT 17
XVII EXECUTION OF AGREEMENT 18
EXHIBIT
-------
A RETENTION SCHEDULE
B POLICY PLANS REINSURED
C PREMIUMS AND ALLOWANCES
ARTICLE I
FACULTATIVE COVERAGE
A. Reinsurance required by the CEDING COMPANY will be assumed by GENERAL
AMERICAN on a facultative basis as described in the terms of this
Agreement. GENERAL AMERICAN will have the option of accepting, rejecting,
or rating any application for reinsurance.
B. GENERAL AMERICAN will promptly notify the CEDING COMPANY of its
underwriting action after all evidence of insurability has been examined.
C. The CEDING COMPANY is not bound to submit any particular risks to GENERAL
AMERICAN and will have the option of accepting or rejecting any reinsurance
offer of GENERAL AMERICAN.
Page 1
ARTICLE II
FACULTATIVE PROVISIONS
A. 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.
B. The CEDING COMPANY will also notify GENERAL AMERICAN 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 GENERAL AMERICAN of the initial and ultimate
risk amounts for which reinsurance is being requested.
C. On a timely basis, GENERAL AMERICAN will submit a written decision. In no
case will GENERAL AMERICAN'S offer on facultative submissions be open after
120 days have elapsed from the date of GENERAL AMERICAN'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 120 days of
the final reinsurance offer. Unless GENERAL AMERICAN explicitly states in
writing that the final offer is extended, the offer will be automatically
withdrawn at the end of day 120.
D. GENERAL AMERICAN 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 2
ARTICLE III
YEARLY RENEWABLE TERM PREMIUMS
A. Plans of insurance listed in Exhibit B will be reinsured on the yearly
renewable term basis for the net amount at risk on that portion of the
policy which is reinsured with GENERAL AMERICAN.
B. Premiums for Life reinsurance and reinsurance of supplemental benefits will
be based on the rates and allowances described in Exhibit C.
C. Where flat extra premiums are charged by the CEDING COMPANY to an insured,
such flat extra premium shall be ceded to GENERAL AMERICAN in the same
proportion as that applicable to the face amount reinsured in accordance
with Exhibit A.
D. There will be no premium tax reimbursement.
E. The Life Reinsurance rates contained in this Agreement are guaranteed for
one year, and GENERAL AMERICAN anticipates continuing to accept premiums on
the basis of these rates indefinitely. If GENERAL AMERICAN deems it
necessary to increase rates, such increased rates cannot be higher than the
valuation net premiums for annually renewable term insurance calculated
using the minimum statutory mortality rates and maximum statutory interest
rate for each year of issue.
Page 3
ARTICLE IV
PREMIUM ADMINISTRATION
A. Each month, GENERAL AMERICAN will send the CEDING COMPANY a statement
showing the premiums due for all new cessions processed during the month
and for renewing cessions with anniversaries in that month. Any premium
adjustments due to terminations, reinstatements, reissues or other changes
dated earlier than sixty (60) days before the billing period will also be
listed. The CEDING COMPANY will remit within thirty (30) days of the
billing date the net amount shown as due GENERAL AMERICAN. All premiums not
paid within thirty (30) days of the due date shown on the statement will be
in default.
B. GENERAL AMERICAN reserves the right to charge interest at an annual rate of
8% when:
1. Renewal premiums are not paid within sixty (60) days of the due
date shown on the statement.
2. Premiums for new business are not paid within one-hundred twenty
(120) days of the effective date of the policy.
C. It is understood that GENERAL AMERICAN'S account statements call for
payment of premiums due for the forthcoming year of coverage. Unearned
premiums resulting from lapses, terminations and deaths will be returned to
the CEDING COMPANY based on the number of days coverage was not provided,
without interest.
D. GENERAL AMERICAN will have the right to terminate this 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, GENERAL AMERICAN'S liability for all risks
reinsured under this agreement will terminate. The first day of the ninety
(90) day notice of termination under Section B 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
Agreement will remain in effect.
E. Payments between the CEDING COMPANY and GENERAL AMERICAN may be paid net of
any amount due and unpaid under all reinsurance agreements between both
parties.
Page 4
ARTICLE V
CONVERSIONS
Existing CEDING COMPANY term plans may be converted to a permanent plan covered
by this Agreement. Premiums will be based on a point-in-scale transfer to the
premium basis covered in Article III and Exhibit C of this Agreement, based on
the original issue date of the term plan being converted.
Page 5
ARTICLE VI
ERRORS AND OMISSIONS
If either the CEDING COMPANY or GENERAL AMERICAN fails to perform an obligation
that affects this Agreement and such failure results in an error on the part of
the CEDING COMPANY or GENERAL AMERICAN, the error will be corrected by restoring
both the CEDING COMPANY and GENERAL AMERICAN to the positions they would have
occupied had no such error occurred.
Page 6
ARTICLE VII
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 subject
to GENERAL AMERICAN'S responsibility under Article XII for the reinsured
percentage of certain types of expenses.
Page 7
ARTICLE VIII
CHANGES IN RETENTION AND RECAPTURE PRIVILEGES
A. The CEDING COMPANY has the right to increase or decrease its retention
limits. 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 GENERAL AMERICAN.
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. No recapture will be made unless reinsurance has been in force
ten (10) years.
2. Recapture will become effective on the policy anniversary date
following notification of the company's intent to recapture.
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.
5. If there is reinsurance in other companies on risks eligible for
recapture, the necessary reduction is to be applied to each
company in proportion to the total outstanding reinsurance.
Page 8
ARTICLE IX
TERMINATIONS & REDUCTIONS
Terminations or reductions of Net Amount at Risk on the existing Reinsured Life
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 of a partially reinsured policy will reduce
or eliminate the reinsurance of this policy. If reinsurance is
eliminated on this policy, then the automatic reinsurance of
subsequently issued policies will be reduced or eliminated to restore
the CEDING COMPANY'S level of retention. The oldest of the
subsequently issued policies will be 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.
Page 9
ARTICLE X
REINSTATEMENT, CONTINUATIONS, EXTENDED TERM
AND REDUCED PAID-UP INSURANCE
A. Any policy originally reinsured in accordance with the terms and conditions
of this Agreement by the CEDING COMPANY may be automatically reinstated
with GENERAL AMERICAN so long as the policy is reinstated in accordance
with the terms and rules of the CEDING COMPANY. Any policy originally
reinsured with GENERAL AMERICAN 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 GENERAL AMERICAN before it is
reinstated. The CEDING COMPANY will pay GENERAL AMERICAN its share of
amounts collected or charged for the reinstatement of such policy.
B. A continuation is a new policy replacing a policy issued earlier by the
CEDING COMPANY or a change in an existing policy that is issued or made
either:
1. Under the terms of the original policy, or
2. Without the same new underwriting information the CEDING COMPANY
would obtain in the absence of the original policy, or
3. Without a suicide exclusion period or contestable period of equal
duration to those contained in new issues by the CEDING COMPANY,
or
4. Without the payment of the same commissions in the first year
that the CEDING COMPANY would have paid in the absence of the
original policy.
C. Continuations will be reinsured under this Agreement only if the original
policy was reinsured with GENERAL AMERICAN; the amount of reinsurance under
this Agreement will not exceed the amount of the reinsurance of the
original policy with GENERAL AMERICAN immediately prior to the
continuation.
D. Changes as a result of extended term or reduced paid-up insurance will be
handled like reductions.
Page 10
ARTICLE XI
LIABILITY
A. This is an Agreement solely between GENERAL AMERICAN and the CEDING
COMPANY. In no instance will anyone other than GENERAL AMERICAN 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. GENERAL AMERICAN will not be liable for proceeds paid under the CEDING
COMPANY'S conditional receipt or temporary insurance agreement.
C. Liability for all reinsurance submitted facultatively to GENERAL AMERICAN
will commence when all of the following conditions have been met:
1. GENERAL AMERICAN'S offer has been accepted in writing 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 then one-hundred twenty (120) days have elapsed from the
date of GENERAL AMERICAN'S final offer unless GENERAL AMERICAN
explicitly states in writing that the final offer is extended for
some further period of time.
D. The liability of GENERAL AMERICAN 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 11
ARTICLE XII
CLAIMS
A. Prompt notice of a claim must be given to GENERAL AMERICAN. In every case
of loss, copies of the proofs obtained by the CEDING COMPANY will be taken
by GENERAL AMERICAN as sufficient. Copies thereof, together with proof of
the amount paid on such claim by the CEDING COMPANY will be furnished to
GENERAL AMERICAN when requesting its share of the claim. However, if the
amount reinsured with GENERAL AMERICAN is more than the amount retained by
the CEDING COMPANY and the claim is contestable, all papers in connection
with such claim, including all underwriting and investigation papers, must
be submitted to GENERAL AMERICAN for its recommendation before admission of
any liability on the part of the CEDING COMPANY.
B. The CEDING COMPANY will notify GENERAL AMERICAN of its intention to deny a
claim ("Notice of Denial"). The CEDING COMPANY shall in all cases retain
the right, in the exercise of its sole discretion, to deny, settle or
litigate a claim. GENERAL AMERICAN shall be bound by the result of any
settlement or, in the case of litigation, any settlement or judgment, and
shall reinsure the amount of such settlement or judgment up to the maximum
amount payable under this Agreement.
Following the Notice of Denial of a claim, all expenses in regard to
investigation, negotiation, mediation, arbitration, dispute resolution,
litigation, settlement and compromise, including all costs and attorneys
fees, thereafter incurred by the CEDING COMPANY or awarded to the claimant,
shall be divided pro-rata between the CEDING COMPANY and GENERAL AMERICAN
in accordance with the reinsured percentage applicable to such claim.
However, GENERAL AMERICAN may avoid responsibility for all such expenses if
it notifies the CEDING COMPANY within thirty (30) days after receipt of the
Notice of Denial that it intends to pay the CEDING COMPANY, without regard
to whether the CEDING COMPANY is ultimately determined to be liable for any
amount whatsoever under the policy, the reinsured portion of the sum
claimed to be due under the policy, subject to the maximum amount payable
under the policy. In the event, GENERAL AMERICAN shall promptly make
payment to the CEDING COMPANY of the reinsured share of the claim.
The following categories of expenses or liabilities will not be reimbursed:
1. Salaries of employees or other internal expenses of the CEDING
COMPANY or the original issuing company.
2. Extra contractual damages, including punitive and exemplary
damages;
3. Routine investigative or administrative expenses, except as
provided above; or
Page 12
4. Expenses incurred in connection with a dispute or contest between
or among two or more beneficiaries or claimants to policy
proceeds or benefits the amount of which is not disputed and is
conceded by CEDING COMPANY to be due and payable to one or more
of the beneficiaries or claimants.
C. If the amount of insurance changes because of a misstatement of rate
classification, GENERAL AMERICAN'S share of reinsurance liability will
change proportionately.
D. For approved Waiver of Premium benefit claims, GENERAL AMERICAN will pay
the CEDING COMPANY its portion of the amount of gross premiums waived by
the CEDING COMPANY.
Page 12a
ARTICLE XIII
ARBITRATION
A. It is the intention of GENERAL AMERICAN 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 Agreement.
The parties agree to act in all things with the highest good faith. If
GENERAL AMERICAN or the CEDING COMPANY cannot mutually resolve a dispute
which arises out of or relates to this Agreement, however, the dispute will
be decided through arbitration. The arbitrators will base their decision on
the terms and conditions of this 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 GENERAL AMERICAN will
notify the other party in writing of its desire to arbitrate, stating the
nature of its dispute and the remedy sought. The party to which the notice
is sent will 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 or their
affiliates. 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 days, the
other party may appoint the second arbitrator. If the two arbitrators do
not agree on a third arbitrator within sixty 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 GENERAL AMERICAN 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 GENERAL AMERICAN 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.
Page 13
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 pre-arbitration 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 hearing.
F. Each party shall bear its own costs incurred in connection with the
arbitration, including the fee charged by the arbitrator it has selected.
The fee charged by the third arbitrator shall be divided equally between
the parties.
Page 14
ARTICLE XIV
INSOLVENCY
A. In the event of the insolvency of the CEDING COMPANY, all reinsurance will
be payable directly to the liquidator, receiver, or statutory successor of
the CEDING COMPANY without diminution because of the insolvency of the
CEDING COMPANY.
B. In the event of insolvency of the CEDING COMPANY, the liquidator, receiver
or statutory successor will immediately give written notice to GENERAL
AMERICAN of all pending claims against the CEDING COMPANY on any policies
reinsured. While a claim is pending, GENERAL AMERICAN may investigate and
interpose, at its own expense, in the proceedings where the claim is
adjudicated, any defense or defenses which it may deem available to the
CEDING COMPANY or its liquidator, receiver or statutory successor. The
expense incurred by GENERAL AMERICAN will be chargeable, subject to court
approval, against the CEDING COMPANY as part of the expense of liquidation
to the extent of a proportionate share of the benefit which may accrue to
the CEDING COMPANY solely as a result of the defense undertaken by GENERAL
AMERICAN. Where two or more reinsurers are participating in the same claim
and a majority in interest elect to interpose a defense or defenses to any
such claim, the expense will be apportioned in accordance with the terms of
the reinsurance agreement as though such expense had been incurred by the
CEDING COMPANY.
C. Any debts or credits, matured or unmatured, liquidated or unliquidated, in
favor of or against either GENERAL AMERICAN or the CEDING COMPANY with
respect to this 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 15
FORM OF
REINSURANCE AGREEMENT
BETWEEN THE
CENTURY LIFE XX XXXXXXX
XX
XXXXXXX, XXXX
0000-x referred to in this agreement as the Company
and
GENERAL REASSURANCE CORPORATION
FINANCIAL CENTRE
STAMFORD, CONNECTICUT
referred to in this agreement as GRA
The Company and GRA mutually agree to reinsure on the terms and conditions set
out below. This agreement is solely between the Company and GRA, and performance
of the obligations of each party under this agreement shall be rendered solely
to the other party. In no instance shall anyone other than the Company or GRA
have any rights under this agreement.
ARTICLE I
AUTOMATIC REINSURANCE
1. Insurance. The Company will cede and GRA will accept reinsurance coverage
from the Company on citizens of the United States or Canada domiciled in the
United States or Canada at the time of policy issue, whose surnames begin with
the letters shown in Schedule A attached. Where the Company has more than one
agreement with GRA, the total amount per life automatically ceded to GRA, under
all agreements combined, shall not exceed the automatic binding limits available
to the Company under the agreement with the highest binding authority. However,
under this agreement GRA will accept automatically, on a bulk basis, reinsurance
in amounts per life, up to those shown in Schedule A, not to exceed $999,999.
Reinsurance amounts with GRA of $1,000,000 and
ARTICLE I CONTINUES ...
I. 1.
greater per life shall be ceded on an individual cession basis in accordance
with the provisions of Article II and III, Any case causing the combined amount
reinsured per life with GRA to exceed $999,999 shall be ceded, in it's entirety,
on an individual basis in accordance with the provisions of Articles II and III.
In no instance may a policy reinsured with GRA be split between bulk reporting
and individual reporting. When the Company retains its maximum limit of
retention, as shown in Part I of Schedule A, attached, the Company will cede and
GRA will accept automatically reinsurance in amounts not exceeding the amounts
per life in Part II of Schedule A attached. When the Company already has for its
own account its maximum limit of retention on the life and for this reason alone
is not retaining any portion of the insurance applied for on a current
application, and when in the Company's opinion there has been no adverse change
in the insurance status of the risk since the Company's last acceptance for its
own retention, GRA will accept automatically reinsurance within the limits
specified above, A risk as defined in the following categories is not eligible
for reinsurance under this paragraph:
a) A jumbo risk as defined in paragraph 3 below.
b) A risk which has been sent to GRA or any other reinsurer for facultative
underwriting consideration.
ARTICLE I CONTINUES ...
I. 2.
2. Coverages. Life insurance, waiver of premium disability for an amount not
greater than the corresponding life insurance, additional indemnity insurance
for accidental death and death by accidental means, and benefits under
associated riders are exclusively the coverages or risk reinsured automatically
under paragraph 1, to the extent that limits per life are specified in Schedule
A attached. The life insurance includes both basic policies and term riders
providing life insurance protection. Life insurance resulting from a group
conversion, where full evidence of insurability has not been secured, will not
be included under this treaty.
3. Jumbo Risk. A jumbo risk is one where the papers of the Company, including
all papers that are part of the current application, indicate that the person to
be insured has or will have total insurance in force in all companies greater
than
Life Accidental Death
---- ----------------
All Ages $3,000,000 $300,000
4. Waiver of Premium Acceptance and Participation Limits. GRA's maximum
acceptance limit for Waiver of Premium for disability benefits shall be
$2,000,000 per life, and the
ARTICLE I CONTINUES ...
I. 3.
maximum participation limit for such benefits shall be $3,000,000 per life.
5. Regular Limits of Retention. The Company may modify its regular limits of
retention, detailed in Schedule A, by giving thirty days' written notice to GRA.
The amount of reinsurance to be ceded and accepted automatically after the new
limits take effect will be determined by mutual agreement.
... END OF ARTICLE I
I. 4.
ARTICLE II
FACULTATIVE REINSURANCE
1. Insurance. When reinsurance is not available as Automatic Reinsurance under
Article I, the Company may submit for consideration by GRA a request for any
amount of reinsurance for the coverages in Article I. 2 that the Company may
require. Even though reinsurance is available as Automatic Reinsurance under
Article I, the Company may choose to submit for consideration by GRA a request
for any amount of reinsurance of the coverages in Article I. 2 that the Company
may require.
2. Facultative Submissions. When the Company desires facultative reinsurance,
the application will be made by Form 1002-Part 1 - Preliminary Notification,
shown in Schedule D - Part II. It will send to GRA any and all information it
has about the risk, including specifically but not limited to copies of the
application, medical examiners' reports, attending physicians' statements,
inspection reports, and other papers bearing on the insurability of the risk.
Upon receipt of the application, GRA will analyze the risk promptly and as soon
as possible notify the Company of its decision and its classification of the
risk. After the
ARTICLE II CONTINUES ...
II. 1.
Company's policy has been paid for and delivered, the Company will complete and
send to GRA Form 1002 - Parts 2 and 3 - Formal Notification, shown in Schedule D
- Part III within ninety days of GRA's decision to accept the case. The Company
will retain Part 4, Form 1002 for its records. A Reinsurance Record Card with
paper copy will be returned to the Company on each formal cession received. If
any change is made in the Company's policy that affects the amount of
reinsurance, such as changes in face amount or form of policy, after Parts 2 and
3 have been sent, the Company will complete Form 1015 (Rev. 10/80) - Change
Notification.
... END OF ARTICLE II
II. 2.
ARTICLE III
AUTOMATIC AMOUNTS PER LIFE EXCEEDING $999,999
After the Company's policy has been paid for and delivered, the Company will
complete and send to GRA Form 2002-Part 1 - Automatic Notification, shown in
Schedule D - Part I. The Company will retain Part 2, Form 2002 for its records.
A Reinsurance Record Card with paper copy will be returned to the Company on
each formal cession received. Included in this category is any case which causes
the total amount per life reinsured with GRA to exceed $999,999, all treaties
combined. The entire amount of such a case, reinsured with GRA, shall be ceded
to GRA on an individual basis as outlined above.
... END OF ARTICLE III
III. 1.
ARTICLE IV
LIABILITY
1. Automatic Reinsurance Liability. The liability of GRA on any automatic
reinsurance under this agreement begins and ends at the same time as that of the
Company provided that such an automatic application shall not have been
submitted to any reinsurer for facultative underwriting consideration.
2. Facultative Reinsurance Liability. The liability of GRA on any facultative
reinsurance under this agreement begins, subject to:
a) GRA's having given the Company an unconditional approval on the application
for reinsurance, and
b) the Company having notified GRA of its acceptance of such offer.
The liability of GRA ends at the same time as that of the Company.
... END OF ARTICLE IV
IV. 1.
TABLE OF CONTENTS
I. Automatic Reinsurance
II. Facultative Reinsurance
III. Amounts Exceeding $999,999
IV. Liability
V. Plan and Amount of Insurance
VI. Premiums
VII. Claims
VIII. General Provisions
IX. Recapture
X. Arbitration
XI. Duration of Agreement
XII. Execution
Schedule A - Retention and Reinsurance Limits
Schedule B - Reinsurance Statement
Schedule C - Commissions and Allowances
Schedule D - Individual Reinsurance Forms
Schedule E - Accidental Indemnity Premiums
Schedule F - Premiums
Schedule G - Guaranteed Insurability Rider
AUTOMATIC COINSURANCE BULK
ARTICLE V
PLAN AND AMOUNT OF INSURANCE
1. Plan. Reinsurance under this agreement for life insurance and waiver of
premium benefits is on the coinsurance plan in accordance with the original
forms issued by the Company for the plans listed in Schedule C. Premiums for the
Accidental Death Benefit, when this coverage is included, are given in Schedule
E.
2. Amounts. The amount of reinsurance is the face amount ceded to GRA as
automatic or facultative reinsurance. GRA will not contribute to dividends paid
by the Company unless noted otherwise in Schedule C.
3. Reductions and Terminations. Reinsurance amounts are calculated in terms of
coverages on the life of a person. If any of the Company's policies or riders on
the person are reduced or terminated, any automatic reinsurance in force will be
reduced by the corresponding amount. The reduction will not be applied to
facultative reinsurance or to force the Company to reassume more than its
regular retention limit at the time of the reduction for the age at issue,
mortality rating and form of the policy or policies for which
ARTICLE V CONTINUES ...
V. 1.
reinsurance is being terminated. If reinsurance has been ceded to more than one
reinsurer, the reduction in GRA's reinsurance will be in proportion to the
reduction in the total. After the proportion has been determined, the rules
above will be used.
4. Reinstatement:
a) Automatic Reinsurance. A policy of the Company, ceded to GRA on an
automatic basis, that was reduced, terminated or lapsed, if reinstated by
the Company under its regular rules, will be reinstated automatically to
the amount that would be in force had the policy not been reduced,
terminated, or lapsed.
b) Facultative Reinsurance. A policy of the Company that was reduced,
terminated or lapsed, if ceded to GRA on a facultative basis, will require
approval by GRA prior to reinstatement of such a policy, if the Company has
retained less than 50% of the risk. Upon such approval, reinsurance for the
policy will be for the amount that would be in force had the policy not
been reduced, terminated or lapsed.
In connection with all such reinstatements the Company shall pay GRA all
reinsurance premiums in arrears with interest
ARTICLE V CONTINUES ...
V. 2.
at the same rate and in like manner as the Company has received under its
policy.
5. Nonforfeiture Benefits. GRA is liable for the same form and term of
nonforfeiture benefit as provided for in the policy issued by the Company for an
amount corresponding to the amount reinsured.
6. Policy Loans. GRA will not make policy loans on policies reinsured under this
agreement.
7. Minimum Amounts. Amounts of reinsurance less than $5,000 will not be ceded
under this contract.
... END OF ARTICLE V
V. 3.
ARTICLE VI
PREMIUMS
1. Reinsurance Premium. The premium to be paid to GRA by the Company for life
insurance and waiver of premium disability benefits will be the premium the
Company charges, exclusive of policy fees, on an annual basis, for the amounts
and coverages reinsured under this agreement. GRA will pay or grant to the
Company the commission and expense allowances given in Schedule C. Premiums for
accidental death benefit, when this coverage is included, are given in Schedule
E.
2. Preliminary Term Insurance. If the Company issues a policy with preliminary
term insurance, the reinsurance premium for the preliminary term period will be
paid to GRA at the same rate the Company charges for the policies on which
reinsurance in GRA is based less commissions at the percentage paid by the
Company. This rule applies to all benefits under the preliminary term insurance.
For the first policy year after the preliminary term period, the premiums and
allowances for all benefits will be computed at first year rates.
ARTICLE VI CONTINUES ...
VI. 1.
3. Payments. Premiums are payable annually in advance. If reinsurance is
reduced, terminated, or increased by reinstatement during the year, pro-rata
adjustment will be made by GRA and the Company.
4. Procedure.
a) Bulk Reported Amounts per life up to $999,999. Within ten days following
the close of the calendar month, the Company will forward to GRA a
statement of premiums due, reserves, and policy data as exhibited in
Schedule B. The statement will show the premium due on new reinsurance
effected in the preceding month and on existing reinsurance with
anniversaries in the preceding month and the pro-rata adjustments for
changes in reinsurance, less the commission and expense allowances granted
on these premiums, less cash surrender values and annual dividends paid
during the preceding month by the Company on its policies for the amount
reinsured by GRA, and less the policy indebtedness for the amount reinsured
on policies going under nonforfeiture benefits during the preceding month.
The Company will remit a check for the balance indicated to GRA along with
the statement of reinsurance. If a balance is due the Company, it will be
remitted by GRA promptly.
ARTICLE VI CONTINUES ...
VI. 2.
b) Individual Reporting Treatment. When a policy on a given life is
individually reported, all current and future cessions on that life, will
be reported to GRA on an individual cession basis.
c) Individual Billing Procedures. Individually reported business, as described
in Articles II and III, shall be billed by GRA on a monthly basis. Each
calendar month, GRA will send to the Company two copies of a statement of
reinsurance due. The statement will show the premium due on new reinsurance
effected in the preceding month and on existing reinsurance with
anniversaries in the current month and the pro-rata adjustments for changes
in reinsurances. The Company will examine the statement and will return one
copy with a check for the balance indicated to GRA within a reasonable
time. If a balance is due the Company, it will be remitted by GRA along
with the monthly statement of reinsurance. The Company will note to GRA any
discrepancies and proper adjustment will be made.
5. Nonpayment of Reinsurance Premiums. Except as provided in Article VIII. 4.,
the payment of reinsurance premiums
ARTICLE VI CONTINUES ...
VI. 3.
shall be a condition precedent to the liability of GRA under reinsurance covered
by this agreement. In the event of nonpayment of reinsurance premiums as
provided in this Article, GRA shall have the right to terminate the reinsurance
under all policies having reinsurance premiums in arrears.
6. Age Adjustment. If the amount of any of the Company's policies reinsured
under this agreement is changed because of a misstatement of age, GRA will share
in the change in the ratio of the amount reinsured to the total face amount of
the policy reinsured. If the reinsured is still alive, GRA will share in the
future payments in the same ratio, or if the original face amount is to be
restored, GRA will share proportionately with the Company in all adjustments.
7. Year End Reports. Within thirty days of the end of each calendar year, the
Company will forward to GRA a listing to support the reserve and in force
portions of the bulk report.
... END OF ARTICLE VI
VI. 4.
ARTICLE VII
CLAIMS
1. Notice. The Company shall notify GRA promptly after receipt of any
information on a claim where reinsurance is involved, and it shall furnish to
GRA as soon as possible the completed reinsurance claim form and copies of all
claim papers and proofs.
2. Authorization for Payment.
a) Automatic Reinsurance. GRA shall follow the decision of the Company on
payment of a claim arising from a policy ceded to GRA on an automatic basis.
b) Facultative Reinsurance. With respect to any claim arising from a policy
ceded to GRA on a facultative basis, (1) where the Company has retained less
than 50% of the insurance and the claim is within the contestable period of the
policy, the Company shall confer with GRA before settlement, and (2) in other
cases GRA shall follow the decision of the Company on payment of the claim.
3. Payment. For life and additional indemnity claims, GRA shall pay its share in
a lump sum to the Company, without regard to the form of claim settlement of the
Company.
ARTICLE VII CONTINUES ...
VII. 1.
For a waiver of premium disability claim, the Company shall continue to pay
premiums for reinsurance except the premium for disability reinsurance. GRA
shall pay its proportionate share of the disability benefits on the original
policy, including its share of the premiums for benefits that remain in effect
during disability.
4. Expenses. GRA shall share in the claim expense of any contest or compromise
of a claim in the same proportion that the net amount at risk reinsured
hereunder bears to the total net risk of the Company on all policies being
contested by the Company, and it shall share in the total amount of any
reduction in liability in the same proportion. Claim expense shall include, but
not be limited to, cost of investigation, legal fees court costs, and interest
charges. Compensation of salaried officers and employees and any possible
extra-contractual damages shall not be considered covered expenses.
5. Misstatements. In the event of an increase or reduction in the amount of the
Company's insurance on any policy reinsured hereunder because of an
overstatement or understatement of age or misstatement of sex, established after
the death of the
ARTICLE VII CONTINUES ...
VII. 2.
insured, the Company and GRA shall share in such increase or reduction in
proportion to their respective net amounts at risk under that policy.
6. Contested Claims. Whenever the Company has formed a preliminary opinion that
a claim might be denied or contested, and prior to any final action by it
indicating to the claimant that the claim is being denied or contested, it shall
give GRA the opportunity to review the complete claim file. GRA shall review
this file promptly and, at its option, (1) pay its full share as if the claim
was not contested, in full discharge of its obligation to the Company for that
claim, or (2), after consultation with the Company, join in the contest, or
ratify the denial, in which case GRA shall communicate to the latter in writing
GRA's decision to share in the fortunes of the Company with respect to that
claim.
7. Assistance and Advice. At the request of the Company, GRA shall advise on any
claim concerning business reinsured hereunder and, when such a claim appears to
be of doubtful validity, it shall assist the Company in its determination of
liability and in the best procedure to follow with respect to the claim.
... END OF ARTICLE VII
VII. 3.
ARTICLE VIII
GENERAL PROVISIONS
1. Policy Forms and Rates. The Company will furnish GRA with a copy of its
application forms, policy and rider forms, premium, dividend and nonforfeiture
value manuals, reserve tables and any other forms or tables needed for proper
handling of reinsurance under this agreement. It will advise GRA promptly of any
changes or new forms it may adopt from time to time.
2. Reinsurance Conditions. The reinsurance is subject to the same limitations
and conditions as the insurance under the policy or policies written by the
Company on which the reinsurance is based.
3. Expenses. The Company will bear the expense of all medical examinations,
inspection fees, and other charges in connection with original policy.
4. Errors and Omissions. It is expressly understood and agreed that if
nonpayment of premiums, within the time specified or failure to comply with any
terms of this agreement is shown to be unintentional and the result of
ARTICLE VIII CONTINUES ...
VIII. 1.
misunderstanding or oversight on the part of either the Company or GRA, both the
Company and GRA shall be restored to the positions they would have occupied had
no such error or oversight occurred.
5. Inspection. At any reasonable time, GRA may inspect the original papers and
any and all other books or documents at the Home Office of the Company relating
to or affecting reinsurance under this agreement.
6. Premium Taxes. GRA shall not reimburse the Company for state premium taxes on
reinsurance premiums received from the Company.
7. Insolvency. All reinsurance under this agreement will be paid by GRA directly
to the Company, its liquidator, receiver, or statutory successor, on the basis
of the liability of the Company under the policy or policies reinsured without
diminution because of the insolvency of the Company. In the event of the
insolvency of the Company, the liquidator receiver or statutory successor of
the Company will give written notice of a pending claim against the Company on
any policy reinsured within a reasonable time after the claim is filed in the
insolvency proceedings.
ARTICLE VIII CONTINUES ...
VIII. 2.
While the claim is pending, GRA may investigate and interpose, at its own
expense, in the proceedings where the claim is to be adjudicated, any defenses
which it may deem available to the Company or its liquidator, receiver or
statutory successor. The expense incurred by GRA will be charged, subject to
court approval, against the Company as an expense of liquidation to the extent
of a proportionate share of the benefit that accrues to the Company as a result
of the defenses by GRA. Where two or more reinsurers are involved and a majority
in interest elect to defend a claim, the expense will be apportioned in
accordance with the terms of the reinsurance agreement as if the expense had
been incurred by the Company.
... END OF ARTICLE VIII
VIII. 3.
ARTICLE IX
RECAPTURE
1. Recapture. If the Company increases its limits of retention, it may make a
corresponding reduction in the reinsurance in force under this agreement on all
persons where the Company has maintained its maximum limit of retention as
detailed in Schedule A. No reinsurance, however shall be reduced under this
provision before the end of the 10th policy year of the Company's policy, and no
reinsurance may be recaptured where the Company retained less than its maximum
retention in effect at the time the policy was issued. On any reinsurance
terminated under this provision, GRA will allow to the Company the cash value at
the date of termination.
2. Method of Recapture. If the Company elects to recapture, it will notify GRA
in writing within 90 days from the effective date of its increase in retention.
At the next anniversary (or the 10th anniversary, if later) of the Company's
policy, the reinsurance will be reduced to increase the total retained by the
Company to its new maximum. Recapture is allowed on only one retention increase
during any twelve month period and the amount of increase subject
ARTICLE IX CONTINUES ...
IX. 1.
to recovery shall not exceed 100 percent of the previous retention detailed in
Schedule A. If reinsurance on any policy for any person is reduced under this
provision, all must be reduced. If two or more reinsurers have reinsurance on
the same person, GRA's share of the reduction will be in proportion to its share
of the total reinsurance on the person.
... END OF ARTICLE IX
IX. 2.
ARTICLE X
ARBITRATION
1. Agreement. Any unresolved difference of opinion between GRA and the Company
shall be submitted to arbitration by three arbitrators. One arbitrator shall be
chosen by GRA and one shall be chosen by the Company. The third arbitrator shall
be chosen by the other two arbitrators within ten (10) days after they have been
appointed. If the two arbitrators cannot agree upon a third, the third
arbitrator shall then be chosen by the President of the American Council of Life
Insurance or its successor. If either party fails to choose an arbitrator within
thirty (30) days after receiving the written request of the other party to do
so, the latter shall choose both arbitrators, who shall choose the third
arbitrator. The arbitrators shall be impartial and shall be present or former
officers of life insurance or life reinsurance companies.
2. Method. The party requesting arbitration (the "Petitioner") shall submit its
brief to the arbitrators within thirty (30) days after notice of the selection
of the third arbitrator. Upon receipt of the Petitioner's brief, the other party
(the "Respondent") shall have thirty (30)
ARTICLE X CONTINUES ...
X. 1.
days to file a reply brief. On receipt of the Respondent's brief, the Petitioner
shall have twenty (20) days to file a rebuttal brief. Respondent shall have
twenty (20) days from the receipt of Petitioner's rebuttal brief to file its
rebuttal brief. The arbitrators may extend the time for filing of briefs at the
request of either party.
3. Effect. The arbitrators are relieved from judicial formalities and, in
addition to considering the rules of law and the customs and practices of the
insurance and reinsurance business, shall make their award with a view to
effecting the intent of this Agreement. The decision of the majority shall be
final and binding upon the parties. The costs of arbitration, including the fees
of the arbitrators, shall be shared equally unless the arbitrators decide
otherwise, The arbitration shall be held at the times and places agreed upon by
the arbitrators.
4. Award. The arbitration award shall be in writing and shall be signed by at
least a majority of the arbitrators. The award shall be made promptly by the
arbitrators and, unless otherwise agreed by the parties, shall be delivered to
the parties either personally or by mail not later than thirty (30) days from
the date of the close of the arbitration proceedings.
... END OF ARTICLE X
X. 2.
ARTICLE XI
DURATION OF AGREEMENT
1. Duration of Agreement. This agreement will be effective on and after the
effective date stated in Article XII. It is unlimited in duration but may be
amended by mutual consent of the Company and GRA. It may be terminated as to new
reinsurance by either party by giving 90 days' written notice to the other.
Termination as to new reinsurance does not affect existing reinsurance. That
reinsurance will remain in force until termination of the Company's policy or
policies on which the reinsurance is based in accordance with the terms of this
agreement.
... END OF ARTICLES XX
XX. 1.
ARTICLE XII
EXECUTION
In witness of the above, this agreement is signed in duplicate at the dates and
places indicated with an effective date of January 22, 1986 and shall apply to
eligible policies applied for on and after such date and eligible policies
applied for on and after such date which were backdated for up to six (6) months
to save age.
Date: CENTURY LIFE OF AMERICA
---------------------------------
Place: Waverly, IA By:
-------------------------------- -----------------------------
Witness: Title:
------------------------------ --------------------------
Date: GENERAL REASSURANCE CORPORATION
---------------------------------
Place: Stamford, CT By: /s/ X X Xxxxxxx
-------------------------------- -----------------------------
Witness: Title: V.P.
------------------------------ --------------------------
ADDENDUM TO REINSURANCE AGREEMENT #5356-l
Replacement Policy
Policies reinsured under this agreement shall be subject to the following
rules concerning the replacement of one policy by another. These rules apply
to internal replacements within the same Company, both contractual and
non-contractual, as well as external replacements, the replacement of policies
written by another company and replaced with the policy of the ceding Company.
For the purpose of this agreement, Universal Life products will be considered
to be permanent products. Policy forms commonly referred to as "Graded Premium
Whole Life", "Increasing Premium Whole Life", et al shall be considered to be
term products.
The ceding Company agrees that if a severe replacement record has been
established on the applied for policy, it will exercise its right to decline
issue.
I. INTERNAL REPLACEMENTS
Internal replacements shall be defined as an existing policy being rewritten
to a new plan of insurance within the same primary (ceding) Company.
If a replacement is a contractual replacement of a term product by a permanent
contract without an increase in face amount, normal conversion rules apply
and no evidence of insurability shall be required. Any reinsurance on the new
policy shall remain with the reinsurer of the original policy.
If the above contractual replacement results in an increase in the face
amount, the amount of increase shall be treated as a new issue, and may or
may not be ceded to the original reinsurer.
If the amount of increase is to be reinsured with GRA, normal underwriting
evidence shall be required for the amount of increase only. In addition, a
new suicide and incontestability clause shall be effective for the amount of
increase only.
If a reinsurer other than GRA has the reinsurance on the original policy
involved in a non-contractual internal replacement, GRA will not consider
accepting the reinsurance on the new policy without a written release from the
reinsurer of the original policy. Otherwise, for all non-contractual internal
replacements, the rules above for contractual replacements shall apply.
Replacement Policy, Pg, 2
II. EXTERNAL REPLACEMENTS
External replacements shall be defined as the termination of an existing policy
in one primary company and the replacement of it with a new policy in another
primary company.
For this type of replacement, the ceding Company shall regard the applied for
policy as a completely new application subject to the ceding Company's full
underwriting rules for the age and amount involved. If the new policy replaces
a policy issued during the prior 25 months, or if there have been two
replacements during the prior 5 years, this policy should be considered a lapse
risk and the ceding Company will notify GRA, which reserves the right to accept
or decline participation in the risk.
III. REINSURANCE RATES
New policies resulting from a replacement will be reinsured at the alternate
rates or renewal allowances specified in the treaty depending on whether the
reinsurance agreement is YRT or Coinsurance, respectively.
Addendum
Interest Sensitive Products
Whenever an Interest Sensitive Product is reinsured hereunder, the following
modifications to the agreement shall apply.
I. Coverages
The term Waiver of Premium for Disability, when used in this agreement I
shall be understood to mean Waiver of Mortality Risk Premium.
II. Net Amount at Risk
a) Bulk Reported Business
The net amount at risk shall be defined as the difference between the
face amount of the policy and the cash value of the policy determined on
a monthly basis.
b) Individually Reported Business
A level net amount at risk shall be estimated by the Company and
submitted to GRA for the first five years. If there is a change in the
policy of $10,000 or more, the Company shall send to GRA amended net
amounts at risk. The same procedure shall be used for each subsequent five
year period. The estimated net amount at risk shall be determined according
to a method mutually agreeable to the Company and GRA.
III. Payment
a) Bulk Reported Business
Payment shall be monthly in arrears.
b) Individually Reported Business
As indicated in agreement.
Addendum, Interest Sensitive Products, pg 2
IV. Reports
a) Bulk Reported Business
In addition to the reporting information required in this agreement, the
information shown on the attached Exhibit I must be provided to GRA within
ten days following the close of the calendar month.
b) Individually Reported Business
As indicated in agreement.
V. Claims
a) Bulk Reported Business
As indicated in agreement.
b) Individually Reported Business
Claims payments shall be the estimated net amount at risk as provided by
the Company, errors and omissions notwithstanding. Adjustment may be
made for misstatements as defined in the CLAIMS article of this agreement.
VI. Replacements
Item II - External Replacements, of the Replacement Addendum, shall not
apply to Interest Sensitive products.
Form of
L I F E, D I S A B I L I T Y A N D A C C I D E N T A L D E A T H
A U T O M A T I C
R E I N S U R A N C E A G R E E M E N T
No. 1258-04
between
CENTURY LIFE OF AMERICA
of Waverly, Iowa
and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
of Los Angeles, California
Effective February 1, 1986
TABLE OF CONTENTS
Articles
I Basis Of Reinsurance
II Liability
III Notification Of Reinsurance
IV Plans Of Reinsurance
V Reinsurance Premiums
VI Premium Accounting
VII Oversights
VIII Reductions, Terminations And Changes
IX Increase In Retention
X Reinstatement
XI Expenses
XII Claims
XIII Inspection Of Records
XIV Insolvency
XV Arbitration
XVI Parties To Agreement
XVII Guaranteed Insurability Benefit
XVIII Duration Of Agreement
Exhibits
I Preliminary Application for Reinsurance
II The Reinsured's Retention Limits
III The Reinsured's Plans Of Insurance
IV Monthly Renewable Term Reinsurance Premiums -
Non-Experience Refund Schedule
This Agreement, effective February 1, 1986, is made by and between CENTURY LIFE
OF AMERICA, hereinafter called the Reinsured, and TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY, hereinafter called the Reinsurer, as follows:
ARTICLE I
BASIS OF REINSURANCE
1. The word "insurance" as used in this Agreement, refers to insurance on an
individual risk under a contract issued directly by the Reinsured.
2. The Reinsured shall reinsure on the automatic basis all of its excess life,
disability waiver of premium and accidental death insurance issued under a
plan of insurance listed in Exhibit III, provided each one of the following
conditions first is satisfied:
A. The risk shall be a resident of the United States or Canada.
B. The risk shall be classified and insured by the Reinsured in
accordance with its then existing regular new risk underwriting rules.
C. The face amount of life insurance then applied for in all companies
including the Reinsured on the life, when added to the face amount of
life insurance then in force in all companies including the Reinsured
on the life, shall not exceed $5,000,000.
ARTICLE I CONTINUES ...
D. The amount of accidental death insurance then applied for in all
companies including the Reinsured on the life, when added to the
amount of accidental death insurance then in force in all companies
including the Reinsured on the life, shall not exceed the Reinsurer's
existing participation limit in the case of excess accidental death
insurance.
E. The Reinsured shall not have submitted to the Reinsurer an application
for facultative reinsurance on the risk.
F. The Reinsured shall retain on the life the amounts of life, disability
waiver of premium and accidental death insurance equal to the limits
as stated in Exhibit II.
G. The mortality rating on a risk shall not be in excess of Table
Sixteen (P) - 500%.
H. The amounts of life and disability waiver of premium insurance to be
reinsured on the life shall not exceed the amounts equal to four times
the amounts the Reinsured shall retain on the life.
I. The amount of accidental death insurance to be reinsured on the life
shall not exceed $100,000.
The Reinsurer shall deliver to the Reinsured a copy of the schedule of the
Reinsurer's accidental death participation limits and promptly shall inform
the Reinsured of any change therein.
ARTICLE I CONTINUES ...
3. If the Reinsured's excess life, disability waiver of premium and accidental
death insurance issued under a plan of insurance listed in Exhibit III,
A. Shall satisfy each one of the conditions for automatic reinsurance
listed in Section 2. of this Article, however, the Reinsured in its
own discretion prefers to apply for such reinsurance on the
facultative basis, the Reinsured shall submit to the Reinsurer an
application for facultative reinsurance.
B. Shall not satisfy each one of the conditions for automatic reinsurance
listed in Section 2. of this Article, the Reinsured shall submit to
the Reinsurer an application for facultative reinsurance.
An application for facultative reinsurance may include life insurance with
or without either disability waiver of premium or accidental death or both.
An application for accidental death reinsurance may be submitted without an
application for life reinsurance.
An application for facultative reinsurance shall be made by submitting to
the Reinsurer a "Preliminary Application for Reinsurance", Exhibit I,
together with copies of all papers
ARTICLE I CONTINUES ...
pertaining to the insurability of the risk. The Reinsurer shall have the
option of accepting or rejecting or rating any application for facultative
reinsurance. The Reinsurer promptly shall notify the Reinsured of its
underwriting action after the Reinsurer has examined the evidence of
insurability submitted.
4. The initial minimum amount of life reinsurance under each reinsurance
cession shall be at least $10,000.
... END OF ARTICLE I.
ARTICLE II
LIABILITY
1. The Reinsurer's liability under this Agreement for automatic reinsurance
shall commence simultaneously with the beginning of the Reinsured's
liability under its corresponding insurance.
2. If the Reinsurer shall have accepted an application for facultative
reinsurance, the Reinsurer's liability under this Agreement for the
reinsurance accepted shall commence simultaneously with the beginning of
the Reinsured's liability under its corresponding insurance. In no event
shall the Reinsurer's liability for facultative reinsurance on a risk
commence before the Reinsurer has accepted the application for reinsurance.
3. In no event shall the Reinsurer's liability for reinsurance continue after
termination of the Reinsured's liability under its corresponding insurance.
4. The receipt by the Reinsurer of the initial reinsurance premium and of each
subsequent reinsurance premium, in accordance with the provisions of the
PREMIUM ACCOUNTING Article of this Agreement for the reinsurance under a
given cession, shall be a condition to the Reinsurer's continuing liability
for reinsurance under the cession.
... END OF ARTICLE II.
ARTICLE III
NOTIFICATION OF REINSURANCE
1. In the case of reinsurance of a plan of insurance listed in Exhibit III,
the Reinsured shall inform the Reinsurer of such reinsurance by means of
the monthly accounting report as described in Article VI.
... END OF ARTICLE III.
ARTICLE IV
PLANS OF REINSURANCE
1. Life Reinsurance.
Life reinsurance shall be on the yearly renewable term basis for the net
amount at risk.
A. Level Term Plans (Duration Twenty Years or Less).
If the life insurance reinsured is issued as a level term plan
(duration twenty years or less), the Reinsurer's net amount at risk
shall be the difference between (i) the face amount of the life
insurance reinsured and (ii) the Reinsured's retained amount of such
life insurance.
B. Reducing Term Plans.
If the life insurance reinsured is issued as a reducing term plan,
(1) The Reinsurer's net amount at risk for the first policy year
shall be the difference between (i) the face amount of the life
insurance reinsured and (ii) the Reinsured's retained amount of
such life insurance.
ARTICLE IV CONTINUES ...
After the first policy year, the Reinsurer's net amount at risk
for each of the policy years two through ten, inclusive, shall be
the prior policy year's net amount at risk, less, however, an
amount equal to one-ninth of the difference between (i) the face
amount of the life insurance reinsured as of the beginning of the
first policy year, and (ii) the face amount of the life insurance
reinsured as of the beginning of the tenth policy year.
(2) The Reinsurer's net amount at risk for each policy year, during
any ten policy year period after the first ten policy years,
shall be the prior policy year's net amount at risk, less,
however, an amount equal to one-tenth of the difference between
(i) the face amount of the life insurance reinsured as of the
beginning of the policy year immediately preceding the period
involved, and (ii) the face amount of the life insurance
reinsured as of the beginning of the last policy year of the
period involved.
(3) The Reinsurer's net amount at risk for each policy year shall be
the difference between (i) the face amount of the life insurance
reinsured and (ii) the Reinsured's retained amount of such life
insurance, if the period of policy years involved shall be less
than
ARTICLE IV CONTINUES ...
ten policy years, or if during any ten policy year period the
face amount of life insurance upon which the life reinsurance is
based remains level for two or more policy years.
C. Plans other than Level Term Plans (Duration Twenty Years or Less) or
Reducing Term Plans.
If the life insurance reinsured is issued as a plan other than a level
term plan (duration twenty years or less) or a reducing term plan,
(1) The Reinsurer's net amount at risk for the first policy year
shall be the difference between (i) the face amount of the life
insurance reinsured and (ii) the Reinsured's retained amount of
such life insurance. After the first policy year, the Reinsurer's
net amount at risk for each of the policy year's two through ten,
inclusive, shall be the prior policy year's net amount at risk,
less, however, an amount equal to one-ninth of the cash value of
the life insurance reinsured as of the end of the tenth policy
year.
(2) The Reinsurer's net amount at risk for each policy year, during
any ten policy year period after the first ten policy years,
shall be the prior policy year's net amount at risk, less,
however, an amount equal to one-tenth of
ARTICLE IV CONTINUES ...
the difference between (i) the cash value of the life insurance
reinsured as of the end of the last policy year of the period
involved, and (ii) the cash value of the life insurance reinsured
as of the end of the policy year immediately preceding the period
involved.
(3) The Reinsurer's net amount at risk for each policy year shall
equal the difference between (i) the face amount of the life
insurance reinsured and (ii) the Reinsured's retained amount of
such life insurance, less, however, the cash value of the life
insurance for the policy involved for each policy year in the
period involved if the period of policy years involved shall be
less than ten policy years.
D. The Reinsurer's net amount at risk shall remain constant throughout
each policy year involved.
E. If the risk is reinsured by more than one reinsurer, the proportion
that the Reinsurer's net amount at risk shall bear to the Reinsurer
initial face amount of life insurance reinsured shall be in the same
proportion that the total net amount at risk, calculated as prescribed
for the Reinsurer in Subsections 1.B. or 1.C. of this Article, as the
case may be, shall bear to the total initial face amount of life
insurance reinsured.
ARTICLE IV CONTINUES ...
Due to certain variables in the plans of insurance which the Reinsured may
issue, which include but are not limited to special options, structure of
tables of amounts, rate of accumulation of cash surrender values and
provisions guaranteeing an increase in the face amount under a given plan
of insurance, the methods of calculating the Reinsurer's net amount at
risk, as described herein, may not be appropriate. In such a case, the
Reinsurer's net amount at risk shall be determined by a method mutually
agreeable to the parties hereto.
2. Disability Waiver of Premium Reinsurance.
Disability waiver of premium reinsurance shall be on the coinsurance
basis.
3. Accidental Death Reinsurance.
Accidental death reinsurance shall be on the yearly renewable term basis.
4. The Reinsured upon request shall furnish the Reinsurer with a copy of each
policy, rider, ratebook and cash value table applicable to the life
insurance reinsured.
... END OF ARTICLE IV.
ARTICLE V
REINSURANCE PREMIUMS
1. Life Reinsurance Premiums.
A. If life insurance without a flat extra premium is reinsured, the life
reinsurance premium for a given cession shall be determined from the
schedule of rates in Exhibit IV.
The Reinsurer anticipates that the premium rates in Exhibit IV will be
continued indefinitely for all of the life reinsurance cessions to
which such rates shall apply. However, because of technical questions
in some states regarding deficiency reserves, if any one or more of
such premium rates for any policy year or years after the first shall
be less than the net premium rate or rates based on the 1958 CSO Table
at 2 l/2% interest for the applicable mortality rating, then, in that
event, only the latter rate or rates shall be guaranteed by the
Reinsurer.
B. If life insurance with a flat extra premium is reinsured, the
reinsurance premium for a given cession shall be the sum of
(1) The reinsurance premium as provided in Subsection 1.A. of this
Article, and
ARTICLE V CONTINUES ...
(2) An extra reinsurance premium computed for each policy year in accordance
with the following formula:
a = b X d, where
---
c
a = Extra reinsurance premium.
b = The Reinsurer's life reinsurance net amount at risk.
c = Net amount at risk, calculated as prescribed for the Reinsurer of the
life insurance on which such life reinsurance is based.
d = Amount of the annual flat extra premium which the Reinsured shall apply
to the life insurance on which such life reinsurance is based,
less, however, an allowance at the following rate computed on the amount
produced by such formula:
Term of Reinsured's Allowance
Flat Extra Premium Rates
------------------- ---------
First Renewal
Year Years
----- -------
More than 5 years 85% 15%
5 years or less 15% 15%
2. Disability Waiver of Premium Reinsurance Premiums.
The reinsurance premium for a given cession shall be an amount equal to the
annual premium which the Reinsured shall charge
ARTICLE V CONTINUES ...
its insured on that amount of the benefit reinsured under the cession
involved, less, however, an allowance at the following rate computed on the
amount of the reinsurance premium:
First Year Renewal Years
---------- -------------
85% 15%
3. Accidental Death Reinsurance Premiums.
A. The reinsurance premium per $1,000 of accidental death reinsurance
without common carrier coverage shall be determined from the following
schedule:
Classification First Year Renewal Years
-------------- ---------- -------------
Standard (1) $ .20 $ .85
Medium (1 l/2) .35 1.20
Special (2) .45 1.55
B. The reinsurance premium per $1,000 of accidental death reinsurance
with common carrier coverage shall be determined from the following
schedule:
Classification First Year Renewal Years
-------------- ---------- -------------
Standard (1) $ .25 $ .90
Medium (1 l/2) .40 1.25
Special (2) .50 1.60
ARTICLE V CONTINUES ...
4. The Reinsurer shall reimburse the Reinsured for the amount of any premium
taxes which the Reinsurer is not required to pay on the reinsurance
premiums payable under this Agreement and which the Reinsured shall be
required to pay.
... END OF ARTICLE V.
ARTICLE VI
PREMIUM ACCOUNTING
1. The reinsurance premiums required under this Agreement shall be payable
to the Reinsurer on the annual basis regardless of how insurance premiums
are payable to the Reinsured.
2. Each month the Reinsured shall prepare and submit to the Reinsurer a
statement listing first year and renewal reinsurance premiums less refunds
and allowances and pertinent data mutually agreed upon by the parties
hereto for the life, disability waiver of premium and accidental death
insurance reinsured under this Agreement which became due during the
current month.
3. If a statement shows that a net reinsurance premium balance is payable to
the Reinsurer, the Reinsured shall include with the statement its payment
for the amount of the net balance due the Reinsurer. If payment for the
full amount of the net balance due the Reinsurer is not included with the
statement, the reinsurance premiums for all of the risks listed on the
statement shall be in default. If a statement shall not be received by the
Reinsurer within thirty days, the reinsurance premiums for all of the risks
that would have been listed on such statement shall be in default.
ARTICLE VI CONTINUES ...
If a statement shows that a net balance is payable to the Reinsured, the
Reinsurer shall pay to the Reinsured the amount of the net balance within
thirty-days after the day on which the Reinsurer received the monthly
statement from the Reinsured.
4. The Reinsurer shall have the right to terminate the reinsurance on risks
for which reinsurance premiums are in default by giving thirty days written
notice of termination to the Reinsured. As of the close of the last day of
this thirty-day notice period, all of the Reinsurer's liability for the
following reinsurance shall terminate:
A. Reinsurance on risks which are the subject of the termination notice
and, in addition,
B. Reinsurance on risks the reinsurance premiums for which went into
default during the thirty-day notice period.
Notwithstanding termination of reinsurance as provided by this Section, the
Reinsured shall continue to be liable to the Reinsurer for all unpaid
reinsurance premiums earned by the Reinsurer under this Agreement.
5. Subject to the exception stated in the third paragraph of this Section,
reinsurance terminated under Section 4. of this Article may be reinstated
by the Reinsured.
ARTICLE VI CONTINUES ...
The Reinsured may reinstate such terminated reinsurance if, within sixty
days after the effective date of its termination, the Reinsured shall pay
in full all of the unpaid reinsurance premiums for the reinsurance which
was in force prior to its termination. The effective date of reinstatement
shall be the day the Reinsurer shall have received all of the required
premiums.
There shall be no reinstatement of reinsurance on a risk with respect to
which the Reinsured incurred a claim for insurance after the reinsurance
terminated notwithstanding the fact that payment of the unpaid reinsurance
premiums for such a risk is required before there can be any reinstatement
under this Section.
6. The first day of the thirty-day notice of termination under Section 4. of
this Article, shall be the day that the notice shall be deposited in the
mail addressed to the Reinsured's Home Office, or, if the mail is not used,
the day it is delivered to the Reinsured's Home Office or to an Officer of
the Reinsured.
7. Within sixty days following the close of each calendar year the Reinsured
shall prepare and submit to the Reinsurer an in force listing of all risks
reinsured under this Agreement setting forth pertinent data mutually agreed
upon by the parties hereto.
ARTICLE VI CONTINUES ...
8. The reinsurance premiums and the reinsurance benefits payable under this
Agreement shall be payable in the lawful money of the United States;
except, however, they shall be payable in the lawful money of Canada if the
Reinsured's insurance is based on Canadian currency.
... END OF ARTICLE VI.
ARTICLE VII
OVERSIGHTS
1. Either the Reinsured or the Reinsurer may correct its failure to comply
with a requirement of this Agreement if the failure was unintentional and
caused by clerical oversight or a misunderstanding. In such event, both
companies shall be restored to the position they would have occupied had
the failure not occurred, provided the failure is rectified within a
reasonable time after discovery.
... END OF ARTICLE VII.
ARTICLE VIII
REDUCTIONS, TERMINATIONS AND CHANGES
1. If insurance reinsured under this Agreement is reduced, the reinsurance for
the risk involved shall be reduced by a like amount on the effective date
of the reduction of the insurance.
If a risk is reinsured by more than one reinsurer, the reduction of the
reinsurance shall be in the same proportion as the amount of the initial
reinsurance on the risk under this Agreement bore to the amount of initial
reinsurance on the risk carried by all reinsurers including the Reinsurer.
2. If insurance reinsured under this Agreement is terminated, the reinsurance
for the risk involved shall terminate on the effective date of the
termination of the insurance.
3. If there shall be a reduction or termination of any portion of the
aggregate amount of insurance which has been retained by the Reinsured on a
given life, then, any reinsurance under this Agreement based on the same
life shall be reduced by a like amount on the effective date of the
termination of the retained insurance. The Reinsured shall reduce such
reinsurance in accordance with the retention limits which were in effect as
of the policy date of each reinsured policy involved. Therefore, in no
event shall the Reinsured be required to assume an amount in
ARTICLE VIII CONTINUES ...
excess of its regular retention limit for the age at issue, mortality
rating and risk classification for any policy on which reinsurance is being
reduced.
The Reinsured first shall apply the reduction to the reinsurance of
insurance which has the same mortality rating as the terminated insurance.
If further reduction in reinsurance is required, the reinsurance to be
terminated or reduced shall be determined by the chronological order in
which they were effected, the first effected being the first terminated or
reduced.
If a risk is reinsured by more than one reinsurer, the reduction of the
reinsurance shall be in the same proportion as the amount of the initial
reinsurance on the risk under this Agreement bore to the amount of initial
reinsurance on the risk carried by all reinsurers including the Reinsurer.
4. If the Reinsured wishes to
A. Reduce the mortality rating, or
B. Effect a change which would result in an increase in the amount of the
Reinsurer's liability
on a risk reinsured under the facultative provisions as set forth in the
BASIS OF REINSURANCE Article of this Agreement, such a reduction or change
shall be governed by those same facultative provisions.
ARTICLE VIII CONTINUES...
5. If there is a change in insurance which is reinsured under this Agreement,
a corresponding change shall be made in the applicable reinsurance.
6. If the net amount of life reinsurance at risk for a given reinsurance risk
falls below $1,000, all of the life reinsurance for the risk involved shall
terminate as of the effective date the net amount of life reinsurance at
risk falls below $1,000. The life reinsurance for the risk involved shall
terminate, as provided in the preceding sentence of this Section,
notwithstanding the fact reinsurance on the same life under some other risk
shall continue in force under this Agreement.
7. When reinsurance is reduced or changed, the Reinsured shall report such
reduction or change on the monthly accounting statement.
8. The Reinsurer shall refund to the Reinsured all unearned reinsurance
premiums not including policy fees, less applicable allowances. arising
from reductions, terminations and changes as described in this Article.
. . . END OF ARTICLE VIII.
ARTICLE IX
INCREASE IN RETENTION
1. If, at any time, both before and after termination of this Agreement, the
Reinsured should increase its retention limits as shown in Exhibit II,
written notice of the increase promptly shall be given to the Reinsurer,
2. The Reinsured shall have the option of reducing the reinsurance under this
Agreement if it shall increase its retention limits. The Reinsured shall
exercise its option to recapture by giving written notice to the Reinsurer
within 90 days after the effective date of the increase in its retention
limits.
3. If the Reinsured shall exercise its option to recapture, then
A. The Reinsured shall reduce the reinsurance on each life for which the
Reinsured retained its maximum retention limit for age and mortality
rating in effect at the time the reinsurance was ceded to the Reinsurer.
No reduction shall be made in the reinsurance on a given life if (a)
the Reinsured retained a special retention limit less than its maximum
retention limit for the age and mortality rating in effect at the time
the reinsurance was ceded to the Reinsurer, or if (b) the Reinsured
retained no insurance on the life.
ARTICLE IX CONTINUES...
B. The Reinsured shall reduce the reinsurance by that amount which will
increase the total amount of insurance to be retained by the Reinsured
at its own risk to its new retention limit. If a life is reinsured by
more than one reinsurer, the reduction of the reinsurance shall be in
the same proportion as the amount of the reinsurance on the life under
this Agreement shall bear to the amount of reinsurance on the life
carried by all reinsurers including the Reinsurer.
C. The reduction of reinsurance shall become effective on the last to occur
of the following two dates:
(1) The cession's anniversary date next following the effective date of
the increase in the Reinsured's retention limits.
(2) The end of ten full years starting with the 'policy date' for the
risk involved.
. . . END OF ARTICLE IX.
ARTICLE X
REINSTATEMENT
1. If insurance shall lapse for nonpayment of premium and if it is reinstated
in accordance with its terms and the rules of the Reinsured, the applicable
reinsurance shall be reinstated by the Reinsurer subject to the condition
that the Reinsured shall pay to the Reinsurer all reinsurance premiums in
arrears.
. . . END OF ARTICLE X.
ARTICLE XI
EXPENSES
1. The Reinsured shall bear the expense of all medical examinations,
inspection fees and other charges incurred in connection with the issuance
of the insurance.
. . . END OF ARTICLE XI.
ARTICLE XII
CLAIMS
1. The Reinsurer shall be liable to the Reinsured for the insurance benefits
reinsured under this Agreement as the Reinsured shall be liable for such
benefits. All reinsurance claim settlements shall be subject to the terms
and conditions of the particular form of contract under which the Reinsured
is liable.
2. When the Reinsured is advised of a claim, it promptly shall notify the
Reinsurer.
3. If a claim is made under incontestable insurance reinsured under this
Agreement and if the Reinsured retained fifty percent or more of the
insurance at the time of issue, the Reinsurer shall consider the claim to
be a claim by the Reinsured for reinsurance. The Reinsurer shall abide the
issue as it is settled by the Reinsured. The Reinsured, when it shall
request payment of the reinsurance proceeds, shall deliver to the
Reinsurer a copy of the proof of death and the claimant's statement.
4. If a claim is made under either (a) incontestable insurance reinsured under
this Agreement and if the Reinsured retained less than fifty percent of
the insurance, or (b) contestable insurance reinsured under this Agreement,
the Reinsured shall submit to the Reinsurer a copy of each paper connected
with the claim. The
ARTICLE XII CONTINUES...
Reinsurer, after reviewing all claim papers, shall give its opinion as to
how it would have handled the claim had it been a claim of the Reinsurer.
The Reinsurer shall give its opinion within fifteen working days after the
Reinsurer shall have received a copy of each paper connected with the
claim. If no response is received with this fifteen-day period, it will be
presumed the Reinsurer is agreeable to payment of the claim. However, the
Reinsured, given its relationship with its claimant, shall not be obligated
to follow the Reinsurer's opinion.
5. Payment of reinsurance proceeds shall be made in a single sum regardless
of the Reinsured's mode of settlement.
6. The Reinsured promptly shall notify the Reinsurer of its intention to
contest insurance reinsured under this Agreement or to assert defenses to a
claim for such insurance. If the Reinsured's contest of such insurance
results in the reduction of its liability, the Reinsurer shall share in
this reduction. This reduction shall be in the same proportion that the
amount of reinsurance on the life under this Agreement relates to the sum
of the retained net amount at risk of the Reinsured and the net amount of
risk of all reinsurers including the Reinsurer on the date of the death of
the insured.
In the case of a claim described under Section 4. of this Article, if the
Reinsurer should decline to participate in the contest or assertion of
defenses, the Reinsurer then shall
ARTICLE XII CONTINUES...
discharge all of its liability by the payment of the full amount of
reinsurance to the Reinsured and the Reinsurer shall not share in any
subsequent reduction in liability.
7. In the event the amount of insurance provided by the policy or policies
reinsured under this Agreement is increased or reduced because of a
misstatement of age or sex established after the death of the insured, the
Reinsured and the Reinsurer shall share in such increase or reduction in
the proportion that the net liability of the Reinsurer relates to the total
net liability of the Reinsured and the net liability of other reinsurers
immediately prior to such increase or reduction. In the case of reinsurance
on the yearly renewable term basis, the Reinsurer's reinsurance shall be
calculated from the inception date on the adjusted amounts using the
premiums and reserves applicable to the correct age or sex. Any adjustment
in reinsurance premiums shall be made without interest.
8. If a claim is approved for disability waiver of premium on insurance
reinsured under this Agreement, the Reinsured shall continue to pay the
reinsurance premiums to the Reinsurer. The Reinsurer shall reimburse the
Reinsured for its share of the annual liability waived by the Reinsured.
9. The Reinsured alone shall pay the routine expenses incurred in connection
with settling claims. These expenses may include
ARTICLE XII CONTINUES...
compensation of agents and employees and the cost of routine
investigations.
10. The Reinsurer shall share with the Reinsured all expenses which are not
routine. Expenses which are not routine shall be those directly incurred in
connection either with the contest of insurance or the assertion of
defenses to insurance or with the possibility of a contest or assertion of
defenses. These expenses shall be shared in proportion to the net sum at
risk of the Reinsurer and the Reinsured. However, if the Reinsurer has
discharged its liability under Section 6. of this Article, the Reinsurer
shall not share in any expenses incurred after the date it has discharged
its liability.
11. In the case of a claim described under Section 3. of this Article, in no
event shall the Reinsurer have any liability for any Extra-Contractual
Damages which are awarded against the Reinsured as a result of acts,
omissions or course of conduct committed by the Reinsured in connection
with the insurance reinsured under this Agreement.
In the case of a claim described under Section 4. of this Article and if
the Reinsured followed the opinion of the Reinsurer, the Reinsurer does
recognize that circumstances may arise under which the Reinsurer, in
equity, should share, to the extent permitted by law, in paying certain
assessed damages. Such circumstances are difficult to define in advance,
but involve those situations
ARTICLE XII CONTINUES...
in which the Reinsurer was an active party in the act, omission or course
of conduct which ultimately results in the assessment of such damages. The
extent of such sharing is dependent on good faith assessment of culpability
in each case, but all factors being equal, the division of any such
assessment would be in the proportion of total risk accepted by each party
for the plan of insurance involved.
. . . END OF ARTICLE XII.
ARTICLE XIII
INSPECTION OF RECORDS
1. The Reinsurer shall have the right, at any reasonable time, to inspect the
Reinsured's books and documents which relate to reinsurance under this
Agreement.
. . . END OF ARTICLE XIII.
ARTICLE XIV
INSOLVENCY
1. In the event of the insolvency of the Reinsured, all reinsurance shall be
payable directly to its liquidator, receiver or statutory successor,
without diminution because of the insolvency of the Reinsured or because
such liquidator, receiver or statutory successor has failed to pay all or a
portion of any claim.
2. In the event of the insolvency of the Reinsured, the liquidator, receiver
or statutory successor shall give the Reinsurer written notice of the
pendency of a claim against the Reinsured for insurance reinsured under
this Agreement within a reasonable time after the claim is filed in the
insolvency proceeding. During the pendency of a claim, the Reinsurer may
investigate the claim and interpose in the name of the Reinsured, its
liquidator, receiver or statutory successor, but at its own expense, in the
proceeding where the claim is to be adjudicated, any defense or defenses
which the Reinsurer may deem available to the Reinsured or its liquidator,
receiver or statutory successor.
3. The expense thus incurred by the Reinsurer shall be chargeable, subject to
court approval, against the Reinsured as part of the expense of liquidation
to the extent of a proportionate share of the benefit which may accrue to
the Reinsured solely as a result
ARTICLE XIV CONTINUES...
of the defense undertaken by the Reinsurer. Where two or more reinsurers
are involved in the same claim and a majority in interest elect to
interpose a defense or defenses to such claim, the expense shall be
apportioned as though such expense had been incurred by the Reinsured.
. . . END OF ARTICLE XIV.
ARTICLE XV
ARBITRATION
1. Any controversy or claim, arising out of or relating to this Agreement or
the breach thereof or the coverage of this arbitration provision, shall be
settled by arbitration.
2. There shall be three arbitrators who shall be officers of life insurance
companies other than the contracting companies. Each of the contracting
companies shall appoint one of the arbitrators and these two arbitrators
shall select the third. If either contracting company shall fail to appoint
an arbitrator within thirty days after the other contracting company has
given notice of its appointment of an arbitrator, the appointment of the
arbitrator for the contracting company which has so failed to appoint an
arbitrator shall be left to the President of the American Council of Life
Insurance. Should the two arbitrators appointed by or for the contracting
companies be unable to agree on the choice of the third, then the
appointment of said third arbitrator shall be left to the President of the
American Council of Life Insurance.
3. Arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association which
shall be in effect on the date of delivery of demand for
ARTICLE XV CONTINUES...
arbitration; except, however, arbitrators shall be appointed in accordance
with the provisions of Section 2. of this Article.
4. Each contracting company shall pay that part of the expenses of arbitration
which shall be apportioned to it by the arbitrators.
5. The award rendered by the arbitrators shall be final, and judgment may be
entered upon it in any court having jurisdiction thereof.
. . . END OF ARTICLE XV.
ARTICLE XVI
PARTIES TO AGREEMENT
1. This is an Agreement solely between the Reinsured and the Reinsurer. There
shall be no legal relationship between the Reinsurer and any person having
an interest of any kind in any of the Reinsured's insurance.
. . . END OF ARTICLE XVI.
ARTICLE XVII
GUARANTEED INSURABILITY BENEFIT
1. If a life insurance increase, granted in accordance with the Reinsured's
Guaranteed Insurability Benefit (GIB), is qualified under Article I of this
Agreement for automatic reinsurance at the time GIB is exercised, or if the
basic policy was reinsured under the facultative provisions of Article I of
this Agreement, then the face amount of such increase shall be reinsured
under this Agreement on the automatic basis. In such a case, the Reinsured
shall send to the Reinsurer a "Formal Reinsurance Cession" and the
Reinsured shall indicate on the cession that the life insurance involved
was issued by reason of the operation of GIB.
2. The first year and renewal year reinsurance premium for the reinsurance
provided under Section 1. of this Article shall be the life reinsurance
premium as determined under Article V and shall be considered as a
continuation of the original insurance for the purpose of calculating such
premiums.
. . . END OF ARTICLE XVII.
ARTICLE XVIII
DURATION OF AGREEMENT
1. This Agreement may be terminated at any time by either party giving ninety
days written notice of termination. The day the notice is deposited in the
mail addressed 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, as the case may be, shall be the first day of
the ninety day period.
2. During the ninety day period, this Agreement shall continue to operate in
accordance with its terms.
3. The Reinsurer and the Reinsured shall remain liable after termination, in
accordance with the terms and conditions of this Agreement, with respect to
all automatic reinsurance which shall become effective prior to termination
of this Agreement and also with respect to all facultative reinsurance
approved by the
ARTICLE XVIII CONTINUES . . .
Reinsurer based upon an application received by the Reinsurer prior to
termination of this Agreement.
Executed in duplicate by Executed in duplicate by
CENTURY LIFE TRANSAMERICA OCCIDENTAL
OF AMERICA LIFE INSURANCE COMPANY
at Waverly, Iowa at Los Angeles, California,
on __________________, 19__. on March 4, 1986.
By By
--------------------- ------------------------
By By
--------------------- ------------------------
12584 - No. 31
FORM OF
REINSURANCE
AGREEMENT
Between
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
TABLE OF CONTENTS
Page
Reinsurance Coverage 1
Automatic and Facultative Reinsurance 3
Placing Reinsurance in Effect 4
Computation of Reinsurance Premiums 5
Payment of Reinsurance Premiums 6
Settlement of Claims 7
Experience Refunds 8
Premium Tax Reimbursement 9
Policy Changes 9
Reinstatements 9
Expenses 9
Reductions 10
Inspection of Records 10
Increase in Limit of Retention 11
Oversights 12
Arbitration 13
Insolvency 14
Parties to Agreement 15
Execution and Duration of Agreement 16
Guaranteed Purchase Option Addendum
Policy Forms Subject to Reinsurance Hereunder Appendix I
Retention Limits of the REINSURED Schedule A
Maximum Amounts which the REINSURED may cede
Automatically Schedule B
Administration Forms Schedule C
Policy Detail Report Schedule C, Part I
Summary Premium Report Schedule C, Part II
Policy Exhibit Schedule C, Part III
Quarterly Reserve Report Schedule C, Part IV
Reinsurance Premium Rates Schedule D
Guaranteed Purchase Option Rates Schedule E
REINSURANCE AGREEMENT
between
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
of
Waverly, Iowa,
hereinafter referred to as the "REINSURED," and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
of
Fort Xxxxx, Indiana,
hereinafter referred to as the "LINCOLN."
REINSURANCE COVERAGE
1. On the basis hereinafter stated, the REINSURED'S excess of
individual ordinary Life, Waiver of Premium Disability, and Accidental Death
insurance issued directly by the REINSURED on the policy forms listed in
Appendix I on lives having surnames which commence with letters of the alphabet
from A to K, inclusive, shall be reinsured with the LINCOLN automatically in
accordance with the REINSURED'S individual ordinary underwriting rules or shall
be submitted to the LINCOLN on a facultative basis.
2. Subject to the prior approval of the LINCOLN in the case of
facultative reinsurance, the liability of the LINCOLN shall begin simultaneously
with that of the REINSURED. In no event shall the reinsurance be in force and
binding unless the insurance issued directly by the REINSURED is in force and
unless the issuance and delivery of such insurance constituted the doing of
business in a jurisdiction in which the REINSURED was properly licensed.
3. Life reinsurance under this agreement shall be term insurance for
the amount at risk on the portion of the insurance which is reinsured with the
LINCOLN. The amount of reinsurance shall be the death benefit provided by the
portion of the insurance which is reinsured with the
-1-
LINCOLN. The amount at risk on a policy shall be the face amount of the policy
less the cash value under the policy. The portion reinsured shall be the amount
at risk on the policy less the REINSURED'S retention on the policy.
4. If the face amount of the policy changes, the portion reinsured
hereunder shall continue to be determined as described in paragraph 3 of this
article. If the face amount increases subject to the approval of the REINSURED,
provisions of the "AUTOMATIC AND FACULTATIVE REINSURANCE" article hereof shall
apply to the increase in reinsurance hereunder. If the face amount increases and
such increase is not subject to the REINSURED'S approval, the LINCOLN shall
accept automatically increases in reinsurance arising from such increases in the
face amount.
5. Reinsurance of Disability and Accidental Death insurance shall
follow the original forms of the REINSURED.
6. Accidental Death reinsurance in amounts less than $2,500 or Life
reinsurance in amounts less than the amount at risk upon $5,000 of insurance
shall not be placed in effect under this agreement.
7. Life and Disability reinsurance under any one policy shall be
terminated at the end of the year preceding the first year for which the amount
at risk on the policy is less than $5,000, provided that the reinsurance has
been in force for at least five years before it is so terminated; Accidental
Death reinsurance shall not be so terminated. The amount of reinsurance under
this agreement shall otherwise be maintained in force without reduction so long
as the amount of insurance carried by the REINSURED on the life remains in
force without reduction, except as provided in the "PAYMENT OF REINSURANCE
PREMIUMS" and "INCREASE IN LIMIT OF RETENTION" articles.
-2-
AUTOMATIC AND FACULTATIVE REINSURANCE
1. When the REINSURED retains its limit of retention, as shown in
Schedule A, it may cede and the LINCOLN shall accept automatically reinsurance
of Life, Disability, and Accidental Death insurance in amounts not to exceed
those shown in Schedule B.
2. If the following conditions are met, reinsurance may be ceded
automatically hereunder.
(a) The REINSURED shall retain its limit of retention.
(b) The sum of the amount of insurance already in force on that life
in the REINSURED and the amount applied for from the REINSURED
on the current application shall not exceed the sum of the
appropriate automatic limit shown in Schedule B and the
REINSURED'S maximum limit of retention for the mortality class,
plan of insurance, and age at issue on the current application.
(c) The sum of the amount of insurance already in force on the life
and the amount applied for currently, in all companies, shall
not exceed the following amounts.
Life Insurance Accidental
Ages Waiver of Premium Death
---- ----------------- -----
0-65 $2,000,000 $200,000
66-70 2,000,000 None
(d) The REINSURED has not made facultative application for
reinsurance of the current application.
3. Reinsurance on a risk specified in paragraph 1 of the "REINSURANCE
COVERAGE" article which may not be ceded automatically under the terms of this
agreement or which the REINSURED prefers not to cede automatically shall be
submitted upon a facultative basis. Reinsurance on a risk not specified in
paragraph 1 of that article may be submitted upon a facultative basis.
4. Unless additional coverage is provided in Schedule B, the LINCOLN
shall have no liability under facultative applications for reinsurance unless
the LINCOLN has given its final approval of the submission.
-3-
PLACING REINSURANCE IN EFFECT
1. To effect reinsurance, the REINSURED shall, within fifteen working
days after the end of each month mail to the LINCOLN a report in substantial
accord with Schedule C, Parts I, II, and III.
2. The REINSURED shall send to the LINCOLN within seven working days
after the end of each quarter reports in substantial accord with Schedule C,
Part IV.
3. When the REINSURED submits a risk to the LINCOLN for reinsurance
upon a facultative basis, a facultative application for such reinsurance shall
be made on a form in substantial accord with Schedule C. Copies of the original
applications, all medical examinations, microscopical reports, inspection
reports I, and all other information which the REINSURED may have pertaining to
the insurability of the risk shall accompany the application. Upon receipt of
such application, the LINCOLN shall immediately examine the papers and shall
notify the REINSURED of its underwriting action as soon as possible.
4. All offers of reinsurance made by the LINCOLN under this agreement
shall I, unless otherwise terminated by the LINCOLN, automatically terminate on
the earliest of (a) the date the LINCOLN receives notice from the REINSURED of
its acceptance of the offer, (b) the date the LINCOLN receives notice from the
REINSURED of its withdrawal of its application, and (c) the later of (i) the
date 120 days after the date the offer was made by the LINCOLN and (ii) the date
specified in the LINCOLN'S approval of a written request from the REINSURED to
grant an extension of the offer.
-4-
COMPUTATION OF REINSURANCE PREMIUMS
1. The premium to be paid to the LINCOLN for Life reinsurance shall be
the sum of:
(a) the appropriate premium rate from the schedule of premiums in
Schedule D applied to the appropriate amount at risk reinsured;
plus
(b) any flat extra premium charged the insured on the face amount
initially reinsured less total allowances in the amount of 75%
of any first year permanent flat extra premium and 10% of any
renewal flat extra premium.
2. The portions of the reinsurance premiums described in the above
subparagraphs of the preceding paragraph shall hereinafter be referred to as the
basic premium.
3. The premium charged the REINSURED for increases in reinsurance
hereunder described in paragraph 4 of the "REINSURANCE COVERAGE" article hereof
shall be computed using the age and date of issue of the policy if the increase
in face amount is not subject to approval of the REINSURED and using the age at
and date of the increase if the increase in face amount is subject to the
REINSURED'S approval.
4. For technical reasons relating to the uncertain status of
deficiency reserve requirements by the various state insurance departments, the
Life reinsurance rates cannot be guaranteed for more than one year. On all
reinsurance ceded at these rates, however, the LINCOLN anticipates continuing to
accept premiums on the basis of the rates shown in Schedule D.
5. The premium to be paid the LINCOLN for reinsurance of Supplemental
Benefits shall be as shown in Schedule D.
-5-
PAYMENT OF REINSURANCE PREMIUMS
1. The REINSURED shall remit with the report specified as Schedule C,
Part II, the premiums due the LINCOLN. Premiums for reinsurance hereunder are
payable at the Home Office of the LINCOLN and shall be paid on an annual basis
without regard to the manner of payment stipulated in the policy issued by the
REINSURED.
2. The payment of reinsurance premiums in accordance with the
provisions of the preceding paragraph shall be a condition precedent to the
liability of the LINCOLN under reinsurance covered by this agreement. In the
event that reinsurance premiums are not paid as provided in the preceding
paragraph, the LINCOLN shall have the right to terminate the reinsurance under
all policies having reinsurance premiums in arrears. If the LINCOLN elects to
exercise its right of termination, it shall give the REINSURED thirty days
notice of its intention to terminate such reinsurance. If all reinsurance
premiums in arrears, including any which may become in arrears during the
thirty-day period, are not paid before the expiration of such period, the
LINCOLN shall thereupon be relieved of future liability under all reinsurance
for which premiums remain unpaid. Policies on which reinsurance premiums
subsequently fall due will automatically terminate if reinsurance premiums are
not paid when due as provided in paragraph 1 of this article. The reinsurance
so terminated may be reinstated at any time within sixty days of the date of
termination upon payment of all reinsurance premiums in arrears; but, in the
event of such reinstatement, the LINCOLN shall have no liability in connection
with any claims incurred between the date of termination and the date of
reinstatement of the reinsurance. The LINCOLN'S right to terminate reinsurance
as herein provided shall be without prejudice to its right to collect premiums
for the period reinsurance was in force prior to the expiration of the
thirty-day notice period.
-6-
SETTLEMENT OF CLAIMS
1. The REINSURED shall give the LINCOLN prompt notice of any claim
submitted on a policy reinsured hereunder and prompt notice of the instigation
of any legal proceedings in connection therewith. Copies of proofs or other
documents bearing on such claim or proceeding shall be furnished to the LINCOLN
when requested.
2. The LINCOLN shall accept the good faith decision of the REINSURED
in settling any claim or suit and shall pay, at its Home Office, its share of
net reinsurance liability upon receiving proper evidence of the REINSURED'S
having settled with the claimant. Payment of net reinsurance liability on
account of death shall be made in one lump sum.
3. If the REINSURED should contest or compromise any claim or
proceeding and the amount of net liability thereby be reduced, the LINCOLN'S
reinsurance liability shall be reduced in the proportion that the net liability
of the LINCOLN bore to the sum of the retained net liability of the REINSURED
and the net liability of other reinsurers existing as of the occurrence of the
claim.
4. Any unusual expenses incurred by the REINSURED 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 LINCOLN in the same
proportion as described in paragraph 3, above.
5. 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:"
(a) routine investigative or administrative expenses;
(b) expenses incurred in connection with a dispute or contest
arising out of conflicting claims of entitlement to policy
proceeds or benefits which the REINSURED admits are payable;
-7-
(c) expenses, fees, settlements, or judgments arising out of or in
connection with claims against the REINSURED for punitive or
exemplary damages;
(d) expenses, fees, settlements, or judgments arising out of or in
connection with claims made against the REINSURED and based on
alleged or actual bad faith, failure to exercise good faith, or
tortious conduct.
6. For purposes of this agreement, penalties, attorney's fees, and
interest imposed automatically by statute against the REINSURED and arising
solely out of a judgment being rendered against the REINSURED in a suit for
policy benefits reinsured hereunder shall be considered "unusual expenses."
7. 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 LINCOLN shall increase or reduce in the proportion that the
net reinsurance liability of the LINCOLN bore to the sum of the net retained
liability of the REINSURED and the net liability of other reinsurers
immediately prior to the discovery of such misstatement of age or sex.
Reinsurance policies in force with the LINCOLN 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 made without interest.
8. The LINCOLN shall refund to the REINSURED any reinsurance premiums,
without interest, unearned as of the date of death of the life reinsured
hereunder.
EXPERIENCE REFUNDS
Reinsurance hereunder shall not be considered for experience refunds.
-8-
PREMIUM TAX REIMBURSEMENT
When the LINCOLN is not required to pay state premium taxes upon
reinsurance premiums received from the REINSURED, it shall reimburse the
REINSURED for any such taxes the latter may be required to pay with respect to
that part of the premiums received under the REINSURED'S original policies which
is remitted to the LINCOLN as reinsurance premiums.
POLICY CHANGES
If a change is made in the policy issued by the REINSURED to the
insured which affects reinsurance hereunder, the REINSURED shall immediately
notify the LINCOLN of such change.
REINSTATEMENTS
If a policy reinsured hereunder lapses for nonpayment of premium and is
reinstated in accordance with its terms and the rules of the REINSURED, the
LINCOLN shall automatically reinstate its reinsurance under such policy. The
REINSURED shall pay the LINCOLN all reinsurance premiums in arrears in
connection with the reinstatement with interest at the same rate and in the same
manner as the REINSURED received under its policy.
EXPENSES
The REINSURED shall bear the expense of all medical examinations,
inspection fees, and other charges incurred in connection with the original
policy.
-9-
REDUCTIONS
1. Except as otherwise provided in paragraph 3 of the "REINSURANCE
COVERAGE" article hereof, if a portion of the insurance issued by the REINSURED
on a life reinsured hereunder is terminated, reinsurance on that life hereunder
shall be reduced as hereinafter provided to restore, as far as possible, the
retention level of the REINSURED on the risk, provided, however, that the
REINSURED shall not assume on any policy being adjusted as provided in this
article an amount of insurance in excess of the higher of, for the retention
category of that policy, (a) its retention limit at the time of issue of that
policy and (b) the retention limit of that policy as already adjusted by the
provisions of the "INCREASE IN LIMIT OF RETENTION" article. The reduction in
reinsurance shall first be applied to the reinsurance, if any, of the specific
policy under which insurance terminated. The reinsurance of the LINCOLN shall be
reduced by an amount which is the same proportion of the amount of reduction so
applied as the reinsurance of the LINCOLN on the policy bore to the total
reinsurance of the policy. The balance, if any, of the reduction shall be
applied to reinsurance of other policies on the life, the further reduction, if
any, in the reinsurance of the LINCOLN again being determined on a proportional
basis.
2. The LINCOLN shall return to the REINSURED any basic life
reinsurance premiums and any reinsurance premiums for Supplemental benefits,
without interest thereon, paid to the LINCOLN for any period beyond the date of
reduction of reinsurance hereunder.
INSPECTION OF RECORDS
The LINCOLN shall have the right at any reasonable time to inspect, at
the office of the REINSURED, all books and documents relating to the reinsurance
under this agreement.
-10-
INCREASE IN LIMIT OF RETENTION
1. The REINSURED may increase its limit of retention and may elect,
subject to the other provisions of this article, to: (a) continue unchanged
reinsurance then in force under this agreement; (b) make reductions in both
standard and substandard reinsurance then in force under this agreement; or (c)
make reductions in standard reinsurance then in force under this agreement. The
increased limit of retention shall be effective with respect to new reinsurance
on the date specified by the REINSURED subsequent to written notice to the
LINCOLN. Such written notice shall specify the new limit of retention, the
effective date thereof, and the election permitted by the first sentence of this
paragraph. If the REINSURED makes election (b) or (c), the amount of
reinsurance shall be reduced, except as hereinafter provided, to the excess, if
any, over the REINSURED'S new limit of retention.
2. No reduction shall be made in the amount of any reinsurance policy
unless the REINSURED retained its maximum limit of retention for the plan, age,
and mortality classification at the time the policy was issued, nor shall
reductions be made unless held by the REINSURED at its own risk without benefit
of any proportional or nonproportional reinsurance other than catastrophe
accident reinsurance. In the case of Life and Disability reinsurance, no
reduction shall be made in any class of reinsurance fully reinsured; Accidental
Death Benefits fully reinsured because the REINSURED retains Life insurance
first and then Accidental Death Benefits may be reinsured as herein provided,
but other fully reinsured Accidental Death Benefits may not. No reduction shall
be made in any Supplemental Benefits reinsured on a Life reinsurance cession
unless the LINCOLN reinsurance is also being reduced as described hereunder. The
plan, age, and mortality classification
-11-
at issue shall be used to determine the REINSURED'S new retention on any life on
which reinsurance policies are reduced in accordance with the provisions of this
article.
3. The reduction in each reinsurance policy shall be effective upon
the reinsurance renewal date of that policy first following the effective date
of the increased limit of retention or upon the twentieth reinsurance renewal
date of the reinsurance policy, if later. If there is reinsurance in other
reinsurers on a life on whom a reinsurance policy will be reduced hereunder, the
LINCOLN shall share in the reduction in the proportion that the amount of
reinsurance of the LINCOLN on the life bore to the amount of reinsurance of
other reinsurers on the life.
4. In the event the REINSURED overlooks any reduction in the amount of
a reinsurance policy which should have been made on account of an increase in
the REINSURED'S limit of retention, the acceptance by the LINCOLN of
reinsurance premiums under such circumstances and after the effective date of
the reduction shall not constitute or determine a liability on the part of the
LINCOLN for such reinsurance. The LINCOLN shall .be liable only for a refund of
premiums so received, without interest.
OVERSIGHTS
It is understood and agreed that, if failure to comply with any terms
of this agreement is shown to be unintentional and the result of
misunderstanding or oversight on the part of either the REINSURED or the
LINCOLN, both the REINSURED and the LINCOLN shall be restored to the positions
they would have occupied had no such misunderstanding or oversight occurred.
-12-
ARBITRATION
1. It is the intention of the REINSURED and the LINCOLN that the
customs and practices of the life insurance and life reinsurance industry shall
be given full effect in the operation and interpretation of this agreement. The
parties agree to act in all things with the highest good faith. If the REINSURED
or the LINCOLN cannot mutually resolve a dispute which arises out of or relates
to this agreement, however, the dispute shall be decided through arbitration.
The arbitrators shall reach their decision from the standpoint of equity and the
customs and practices of the life insurance and life reinsurance industry rather
than solely from the standpoint of a strict interpretation of the applicable
substantive and procedural law.
2. To initiate arbitration, either the REINSURED or the LINCOLN shall
notify the other party in writing of its desire to arbitrate, stating the nature
of its dispute and the remedy sought. The party to which the notice is sent
shall respond to the notification in writing within ten (10) days of its
receipt. At that time, the party also shall assert any dispute it may have which
arises out of or relates to this agreement.
3. The arbitration hearing shall be before a panel of three
arbitrators, each of whom must be present or former officers of life insurance
or life reinsurance companies other than the REINSURED or the LINCOLN or
either's affiliates. The REINSURED and the LINCOLN shall each appoint one
arbitrator by written notification to the other party within twenty-five (25)
days of the date of the mailing of the notification initiating the arbitration.
These two arbitrators shall then select the third arbitrator within fourteen
(14) additional days of the date of the mailing of the notification initiating
the arbitration. Should either the REINSURED or the LINCOLN fail to appoint an
arbitrator, or should the two arbitrators be unable to agree upon the choice
-13-
of a third arbitrator, such appointment shall be left to the president of the
American Council of Life Insurance or of its successor organization. Once
chosen, the arbitrators are empowered to decide all substantive and procedural
issues by a majority of votes.
4. The arbitration hearing shall be held on the date fixed by the
arbitrators in the city in which the responding party's home office is located.
In no event shall this date be later than six months after the appointment of
the third arbitrator. The arbitrators shall 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 shall 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 shall give the evidence such weight as they deem it entitled to
after consideration of any objections raised concerning it. The party initiating
the arbitration shall have the burden of proving its case by a preponderance of
the evidence. Each party may examine any witnesses who testify at the
arbitration hearing. Within twenty (20) days after the end of the arbitration
hearing, the arbitrators shall issue a written decision, from which there shall
be no appeal and which any court having jurisdiction of the subject matter and
the parties may reduce to judgment. In their decision, the arbitrators shall
apportion the costs of arbitration, which shall include but not be limited to
their own fees and expenses, as they deem appropriate.
INSOLVENCY
1. In the event of the insolvency of the REINSURED, all reinsurance
shall be payable directly to the liquidator, receiver, or statutory successor of
said REINSURED, without diminution because of the insolvency of the REINSURED.
-14-
2. In the event of insolvency of the REINSURED, the liquidator,
receiver I or statutory successor shall give the LINCOLN written notice of the
pendency of a claim on a policy reinsured within a reasonable time after such
claim is filed in the insolvency proceeding. During the pendency of any such
claim, the LINCOLN may investigate such claim and interpose, in the name of the
REINSURED (its liquidator, receiver, or statutory successor), but at its own
expense, in the proceeding where such claim is to be adjudicated, any defense or
defenses which the LINCOLN may deem available to the REINSURED or its
liquidator, receiver, or statutory successor.
3. The expense thus incurred by the LINCOLN shall be chargeable,
subject to court approval, against the REINSURED as part of the expense of
liquidation to the extent of a proportionate share of the benefit which may
accrue to the REINSURED solely as a result of the defense undertaken by the
LINCOLN. Where two or more reinsurers are participating in the same claim and a
majority in interest elect to interpose a defense or defenses to any such claim,
the expense shall be apportioned in accordance with the terms of the reinsurance
agreement as though such expense had been incurred by the REINSURED.
PARTIES TO AGREEMENT
This is an agreement for indemnity reinsurance solely between the
REINSURED and the LINCOLN. The acceptance of reinsurance hereunder shall not
create any right or legal relation whatever between the LINCOLN and the insured
or the beneficiary under any policy reinsured hereunder.
-15-
EXECUTION AND DURATION OF AGREEMENT
The provisions of this reinsurance agreement shall apply with respect
to policies issued by the REINSURED on and after the first day of September,
1983, but in no event shall this agreement become effective unless and until it
has been duly executed by two officers of the LINCOLN at its Home Office in Fort
Xxxxx, Indiana. This agreement shall be unlimited as to its duration but may be
terminated at any time, insofar as it pertains to the handling of new
reinsurance, thereafter, by either party giving three months' notice of
termination in writing. The LINCOLN shall continue to accept reinsurance during
the three months aforesaid and shall remain liable on all reinsurance granted
under this agreement until the termination or expiry of the insurance
reinsured.
-16-
IN WITNESS WHEREOF the said
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
of
Waverly, Iowa,
and the said
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
of
Fort Xxxxx, Indiana,
have by their respective officers executed and delivered these presents in
duplicate on the dates shown below.
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
By By
----------------------------
-----------------------------
Date Date
---------------------------- -----------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By By
---------------------------- -----------------------------
Date Date
---------------------------- -----------------------------
-17-
GUARANTEED PURCHASE OPTION ADDENDUM
to the Risk Premium Reinsurance Agreement between
LUTHERAN MUTUAL LIFE INSURANCE COMPANY of Waverly, Iowa,
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY of Fort Xxxxx, Indiana.
1. On and after the date hereof, when the amount of life insurance in
force in the REINSURED exceeds, as the result of the exercise of a Guaranteed
Purchase Option, the REINSURED'S then current standard limit of retention for
the age at issue as shown on the opted policy, the REINSURED shall cede and the
LINCOLN shall accept automatically reinsurance of such excess without evidence
of insurability.
2. The consideration to be paid the LINCOLN on reinsurance hereunder
shall be as provided in the agreement in effect on the effective date of the
opted policy plus a single extra premium determined by applying to the face
amount of the opted policy reinsured the appropriate single extra premium rate
shown in the schedule attached hereto and marked Schedule E.
3. No portion of the single premium shall be returned to the REINSURED
in the event of termination of reinsurance hereunder.
4. Copies of the REINSURED'S Guaranteed Purchase Option riders shall be
furnished to the LINCOLN and the REINSURED shall inform the LINCOLN of changes
therein.
5. It is mutually understood and agreed that the LINCOLN shall accept
reinsurance of policies issued as a result of the exercise of Guaranteed
Purchase Options only: (1) when such reinsurance would otherwise come within the
automatic provisions of the reinsurance agreement in effect between
the REINSURED and the LINCOLN on the effective date of the policy which is
issued as a result of the exercise of a Guaranteed Purchase Option and which
gives rise to such reinsurance; (2) when the original policy to which the rider
providing Guaranteed Purchase Options is attached was issued on a standard basis
with no extra premiums or exclusion riders of any kind; and (3) when, in an
underwriting opinion given on a facultative submission at the time of issue of
the rider providing Guaranteed Purchase Options, the LINCOLN has not stated that
the risk was not eligible for such a rider or had not stated that the case
should be rated or issued with an exclusion rider of any kind.
6. This addendum shall be effective as of the first day of September,
19 83, and it is expressly understood and agreed that the reinsurance hereunder
shall be subject to all the terms and conditions of the reinsurance agreement of
which this is a part which do not conflict with the terms hereof.
IN WITNESS WHEREOF the parties hereto have caused this addendum to be
executed in duplicate on the dates shown below.
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
By By
----------------------------
-----------------------------
Date Date
-------------------------- ---------------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By By
---------------------------- -----------------------------
Date Date
-------------------------- ---------------------------
APPENDIX I
Policy Forms Subject to Reinsurance Hereunder
Universal Life Plan
FORM OF AMENDMENT
to the Risk Premium Reinsurance Agreement between the
LUTHERAN MUTUAL LIFE INSURANCE COMPANY of Waverly, Iowa,
hereinafter referred to as the "REINSURED,"
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY of Fort Xxxxx, Indiana,
hereinafter referred to as the "LINCOLN,"
effective September 1, 1983.
1. Under the above-mentioned reinsurance agreement the REINSURED'S
excess of individual ordinary Life, Waiver of Premium Disability, and Accidental
Death insurance issued directly by the REINSURED on the policy forms listed in
Appendix I on lives having surnames which commence with letters of the alphabet
from A to K, inclusive, shall be reinsured with the LINCOLN automatically or
shall be submitted to the LINCOLN on a facultative basis or shall be reinsured
with the LINCOLN as continuations; a continuation is a new policy replacing a
policy issued earlier by the REINSURED ("original policy") or a change in an
existing policy issued or made either (a) in compliance with the terms of the
original policy or (b) without the same new underwriting information the
REINSURED would obtain in the absence of the original policy, without a suicide
exclusion period or contestable period as long as those contained in new issues
by the REINSURED, or without the payment of the same commissions in the first
year that the REINSURED would have paid in the absence of the original policy.
Revision No. 1
2. If the REINSURED issues a policy as a continuation of a policy
reinsured under the above-mentioned reinsurance agreement, reinsurance of the
continuation shall continue with the LINCOLN as described below:
a. Continuations to Issues Reinsured Hereunder
The premium rates for new policies reinsured under
the above-mentioned reinsurance agreement as
continuations and issued in compliance with the terms
of the original policy shall be determined by using
the original issue age and attained duration, unless
the agreement governing the original policy specifies
otherwise. For purposes of calculating the
reinsurance premium for other policies reinsured
under the above-mentioned reinsurance agreement as
continuations, the date of issue of the continuation
policy shall be considered the date of the original
policy.
b. Continuations from Issues Reinsured Hereunder
The reinsurance premium shall be as described in the
agreement which covers the new policy based on the
original issue age and attained duration. If no such
agreement is in effect between the LINCOLN and the
REINSURED, reinsurance shall continue hereunder using
the premium rates described in Schedule D, Part III.
3. The REINSURED'S plans to be reinsured under the above-mentioned
reinsurance agreement on and after the first day of May, 1984, shall be those
specified in the Appendix I attached hereto.
4. The reinsurance percentages for the REINSURED'S cost of insurance
rates shall be as described in Schedule D, Part II, attached hereto, and shall
apply to reinsurance of the REINSURED'S Univers-All Life II plan ceded under the
above-mentioned reinsurance agreement on and after the first day of May, 1984,
but in no event shall such percentages apply to amounts of reinsurance in excess
of $5,000,000 on any one life ceded by the REINSURED to the LINCOLN.
5. On and after the first day of May, 1984, the premium rates labeled
"F5H3, NONSMOKERS," "H3, SMOKERS," and "H4, SUBSTANDARD," under the Risk Premium
Reinsurance Agreement between the REINSURED and the LINCOLN, effective January
1, 1982, shall be applied to reinsurance for the excess over $5,000,000 per
life. Such reinsurance shall not be so terminated as described in the "INCREASE
IN LIMIT OF RETENTION" article thereof until it has been in force for at least
five years.
It is expressly understood and agreed that the provisions of this
amendment shall be subject to all the terms and conditions of the reinsurance
agreement of which this amendment is a part which do not conflict with the terms
hereof.
IN WITNESS WHEREOF the parties hereto have caused this amendment to
be executed in duplicate on the dates shown below.
LUTHERAN MUTUAL LIFE INSURANCE COMPANY
By By
------------------------ -------------------------
Date Date
----------------------- -----------------------
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By By
------------------------ -------------------------
Date Date
----------------------- ------------------------
