Treaty ID: 21100
Document ID: MOC10000929
AUTOMATIC REINSURANCE AGREEMENT
Between
METLIFE INVESTORS INSURANCE COMPANY
and
EXETER REASSURANCE COMPANY, LTD.
TABLE OF CONTENTS
PREAMBLE 1
ARTICLE I. SCOPE OF AGREEMENT 2
ARTICLE II. COMMENCEMENT AND TERMINATION OF LIABILITY 3
ARTICLE III. ERRORS AND OMISSIONS 4
ARTICLE IV. NET AMOUNT AT RISK 5
ARTICLE V. REINSURANCE PREMIUMS 7
ARTICLE VI. REINSURANCE ADMINISTRATION 9
ARTICLE VII. SETTLEMENT OF CLAIMS 11
ARTICLE VIII. RESERVES 12
ARTICLE IX. RECAPTURE PRIVILEGES 13
ARTICLE X. INSPECTION OF RECORDS 14
ARTICLE XI. INSOLVENCY 15
ARTICLE XII. ARBITRATION 17
ARTICLE XIII. RIGHT TO OFFSET BALANCES DUE 20
ARTICLE XIV. CONTRACT AND PROGRAM CHANGES 21
ARTICLE XV. CONFIDENTIALITY 22
ARTICLE XVI. OTHER PROVISIONS 23
ARTICLE XVII. ENTIRE AGREEMENT 26
ARTICLE XVIII. DAC TAX 27
ARTICLE XIX. DURATION OF AGREEMENT 28
ARTICLE XX. NON-ADMITTED REINSURANCE 29
ARTICLE XXI. CEDENT REPRESENTATIONS AND WARRANTIES 32
ARTICLE XXII. REINSURER REPRESENTATIONS AND WARRANTIES 33
SCHEDULE A PLANS OF REINSURANCE 35
SCHEDULE B REINSURANCE PREMIUMS 36
PREAMBLE
THIS REINSURANCE AGREEMENT (the "Agreement") is effective as of January 1, 2012
(the "Effective Date") by and between METLIFE INVESTORS INSURANCE COMPANY
("Cedent"), a Missouri domiciled life insurance company, and EXETER REASSURANCE
COMPANY, LTD., a Cayman Islands domiciled Unrestricted Class B insurance
company ("Reinsurer").
THE BACKGROUND OF THIS AGREEMENT is that the Reinsurer shall assume, as of the
date hereof, a quota share portion, as shown in Schedule A (the "Reinsurer's
Percentage"), of certain liabilities on variable annuity contracts, listed in
the attached Schedule A (the "Reinsured Contract(s)"), issued by the Cedent on
or after the Effective Date.
THIS AGREEMENT provides for the indemnity cession of a portion of the
liabilities of the Cedent with respect to the Reinsured Contracts and binds the
Cedent and the Reinsurer and their successors and permitted assignees,
respectively. This Agreement shall not create any right or legal relation
whatever between the Reinsurer and any insured, owner, annuitant, beneficiary
or other party to any Reinsured Contract.
THEREFORE, in consideration of the promises set forth in this Agreement, the
parties agree as follows:
1
ARTICLE I
SCOPE OF AGREEMENT
A. While this Agreement continues in effect, the Cedent shall cede and the
Reinsurer shall accept, as indemnity cessions hereunder, certain contract
liabilities under Reinsured Contracts that are issued by the Cedent on and
after the Effective Date.
B. This Agreement covers only the Cedent's contractual liability for reinsured
claims paid under variable annuity contracts specified in Schedule A.
C Ceded Liabilities
1. Guaranteed Minimum Death Benefit and Earnings Preservation Benefit
The indemnity cession shall be the Reinsurer's Percentage of the MNAR
(defined in Article IV) under the Guaranteed Minimum Death Benefit
("GMDB") and Earnings Preservation Benefit ("EPB") provisions of the
Reinsured Contracts.
2. Guaranteed Minimum Income Benefit
The indemnity cession shall be the Reinsurer's Percentage of the annuity
payments upon annuitization under the Guaranteed Minimum Income Benefit
(the "Income Program") provisions of the Reinsured Contracts, multiplied
by the IBNARP (defined in Article IV).
D There are no aggregate or individual claim limits applicable to the benefits
ceded.
E Spousal Continuances will be covered under this Agreement to the extent
provided by the insured contract.
2
ARTICLE II
COMMENCEMENT AND TERMINATION OF LIABILITY
A. On liabilities ceded under the terms of this Agreement, the liability of the
Reinsurer shall commence simultaneously with that of the Cedent.
B. The liability of the Reinsurer for all ceded liabilities under this
Agreement may terminate in accordance with:
1. the Duration of Agreement provisions of this Agreement set forth in
Article XIX;
2. the termination provisions set forth within Article VI;
3. the Recapture Privileges set forth in Article IX. or
4. the coverage provided by the contract terminates.
3
ARTICLE III
ERRORS AND OMISSIONS
A. Any inadvertent errors or omissions on the part of one party occurring in
connection with this Agreement or any transaction hereunder shall not
relieve the other party from any liability to the first party that would
have otherwise attached had such error or omission not occurred, provided
that such error or omission is rectified as soon as practicable after
discovery thereof.
B. The Reinsurer assumes no liability under this Agreement for any damages,
fines, penalties, costs or expenses, or portion thereof, levied on or
assessed against the Cedent by any court or regulatory body on the basis of
negligence, oppression, malice, fraud, fault, wrongdoing or bad faith by the
Cedent in connection with any claim or for any act or omission that is not
consistent with the generally accepted practices and standards of the life
insurance industry applicable at the time of such act or omission, unless
the Reinsurer shall have received notice of and concurred with the actions
taken or not taken by the Cedent that led to the levy or assessment, in
which case the Reinsurer shall pay, as its share of such levy or assessment,
the proportional amount determined by the ratio of reinsurance held by the
Reinsurer to the total limit of liability under the Reinsured Contracts.
C. Each party will indemnify and hold the other party, its affiliates,
directors, officers, employees and all other persons and entities acting on
behalf of or under the control of any of them harmless from and against any
and all claims, including reasonable attorneys fees and court costs, that
result from any negligent, dishonest, malicious, fraudulent or criminal act
or omission or arising out of or related to any incorrect representation,
warranty or obligation of this Agreement or any failure or breach of this
Agreement by the indemnifying party, its directors, officers, employees,
other representatives or any other person or entity acting on behalf of or
under the control of any of them.
D. In no event shall any party to this Agreement be liable to any other party
for punitive, indirect or consequential damages arising under this Agreement
for any cause whatsoever, whether or not such party has been advised or
could have foreseen the possibility of such damages.
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ARTICLE IV
NET AMOUNT AT RISK
GMDB AND EPB
------------
A. The MNAR (Mortality Net Amount at Risk) for each variable annuity contract
ceded hereunder shall be equal to the following:
MNAR = VNAR + SCNAR + EEMNAR
in which:
VNAR (Variable Net Amount at Risk) = Maximum (a,b) in which:
a = (Contractual Death Benefit - Account Value) and
b = 0
SCNAR (Surrender Charge Net Amount at Risk) = Surrender Charges
EEMNAR (Earnings Enhancement Mortality Net Amount at Risk) = x% * Maximum
(a,b) where:
x% varies by issue age and is as described in the Reinsurance Contracts
a = (Contractual Death Benefit - Total Purchase Payments Not Withdrawn)
b = 0
B. The death benefit and the surrender charges will be as described in the
variable annuity contracts specified in Schedule A.
GMIB
-----
C. The IBNAR (Income Benefit Net Amount at Risk) for each variable annuity
contract ceded hereunder shall be equal to the following:
(i)The Guaranteed Principal Adjustment as defined in the rider if the
Income Benefit contains a Guaranteed Principal Option and the option
is exercised; or
(ii)IBNAR = Maximum [(IBB * (MAPR/SAPR) - Account Value, 0]
D. The IBNARP (Income Benefit Net Amount at Risk Percentage) for each variable
annuity contract ceded hereunder shall be equal to the following:
5
XXXXXX x XXXXX / [IBB * (MAPR/SAPR)]
where:
IBB equals the INCOME BASE as defined in the rider;
MAPR is the MINIMUM ANNUITY PURCHASE RATE from the GMIB Annuity Table
defined in the rider; and
SAPR is the SETTLEMENT ANNUITY PURCHASE RATE per $1000 which is used at
time of annuitization for reinsurance claims settlement and shall be
equal to the fixed annuity purchase rate that the Cedent would provide
to an annuitant in the same class.
E. Premium taxes will be applied on a consistent basis between the MAPR and
SAPR to calculate the IBNARP and XXXXX.
F. The IBNARP and XXXXX for each variable annuity contract ceded hereunder
shall be calculated as of the last day of each calendar month prior to the
termination of liability contingencies set forth in Article II.
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ARTICLE V
REINSURANCE PREMIUMS
A. The total Reinsurance Premium for the business ceded hereunder is the sum of
the GMDB Reinsurance Premium, the EPB Reinsurance Premium, and the GMIB
Reinsurance Premium, each of which is defined separately in this article.
B. The Reinsurance Premium rates and structure described above are subject to
change in accordance with the criteria described in Article XIV.
C. The annualized Reinsurance Premium rates expressed in terms of basis points
are set forth in Schedule B.
GMDB Reinsurance Premium
-------------------------
D. For Guaranteed Minimum Death Benefits other than Enhanced Death Benefits,
The Cedent shall calculate, for each premium class, the Reinsurer's
Percentage of the average aggregate separate account value for the reporting
month. 1/12/th/ of the annualized GMDB Reinsurance Premium rates for that
premium class shall be applied to this value to determine the monthly
Reinsurance Premium.
The average aggregate separate account value is calculated as the average of
the aggregate separate account value for Reinsured Contracts as of the end
of the previous month and the aggregate separate account value for Reinsured
Contracts as of the end of the current month.
E. For Enhanced Death Benefit Guaranteed Minimum Death Benefits, the Cedent
shall calculate, for each premium class, the Reinsurer's Percentage of the
average aggregate Death Benefit Base for the reporting month. 1/12/th/ of
the annualized GMDB Reinsurance Premium rates for that premium class shall
be applied to this value to determine the monthly Reinsurance Premium.
The average aggregate Death Benefit Base is calculated as the average of the
aggregate Death Benefit Base as defined in the Reinsured Contracts as of the
end of the prior month and the aggregate Death Benefit Base as defined in
the Reinsured Contracts as of the end of the current month.
EPB Reinsurance Premium
-------------------------
F. The Cedent shall calculate the Reinsurer's Percentage of the average
aggregate separate account value for the reporting month. 1/12/th/ of the
annualized EPB Reinsurance Premium rate shall be applied to this value to
determine the monthly Reinsurance Premium.
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The average aggregate separate account value is calculated as the average of
the aggregate separate account value for Reinsured Contracts as of the end
of the previous month and the aggregate separate account value for Reinsured
Contracts as of the end of the current month.
GMIB Reinsurance Premium
-------------------------
G. The Cedent shall calculate, for each premium class, the Reinsurer's
Percentage of the average aggregate IBB value for the reporting month.
1/12/th/ of the annualized GMIB Reinsurance Premium rate for that premium
class shall be applied to this value to determine the monthly Reinsurance
Premium.
The average aggregate IBB value is calculated as the average of the
aggregate IBB value for Reinsured Contracts as of the end of the previous
month and the aggregate IBB value for Reinsured Contracts as of the end of
the current month.
8
ARTICLE VI
REINSURANCE ADMINISTRATION
A. If requested by the Reinsurer, within thirty (30) days after the end of each
calendar month, the Cedent shall provide a seriatim electronic report for
each Reinsured Contract, valued as of the last day of that month, with such
detail that the Reinsurer may reasonably request in order to meet its
business requirements
B. Within thirty (30) days after the end of each calendar month the Cedent
shall furnish the Reinsurer with a separate Summary Statement containing the
following:
1. Reinsurance Premiums due to the Reinsurer summarized separately for each
premium class by GMDB, EPB, and Income Program, as shown in Schedule B;
2. benefit claim recoverables due to the Cedent in total and, if
applicable, broken down by VNAR, SCNAR, and EEMNAR, Income Program; and
3. the month end date for the period covered by the Summary Statement.
C. If the net balance is due to the Reinsurer, the Cedent shall remit the
amount due with the Summary Statement, but no later than thirty (30) days
after the month end date for the period covered by the Summary Statement. If
the net balance is due to the Cedent, the Reinsurer shall remit the amount
due to the Cedent within ten (10) days after receipt of the Summary
Statement.
D. The payment of Reinsurance Premiums is a condition precedent to the
liability of the Reinsurer under this Agreement. In the event that the
Cedent does not pay the Reinsurance Premiums in a timely manner, as defined
below, the Reinsurer may exercise the following rights:
1. The Reinsurer may charge interest if Reinsurance Premiums are not paid
within thirty (30) days of the due date, as defined in Paragraph C of
this Article. Interest will be payable for the number of days from the
due date through the date paid, at an annualized rate equal to the sum
of (i) the one month London Interbank Offered Rate (LIBOR) as published
by Bloomberg at the end of the Accounting Period plus (ii) 200 basis
points.
2. The Reinsurer may terminate this Agreement in the event that Reinsurance
Premium payments are more than sixty (60) days past due after the due
date, as described in Paragraph C of this Article, by giving sixty
(60) day written notice of termination to the Cedent. As of the close of
the last day of this sixty-(60) day notice period, the Reinsurer's
liability with respect to the ceded liabilities shall terminate. If all
Reinsurance Premiums that are the subject of a sixty (60) day
termination notice shall have been received by the Reinsurer within the
time specified, the
9
termination notice shall be deemed vacated and the Agreement shall
remain in effect.
E. The Cedent will provide annually a listing of all portfolios in which the
sub-accounts of the underlying contracts are invested. The listing shall be
provided by May 31 in each calendar year.
10
ARTICLE VII
SETTLEMENT OF CLAIMS
A. The Reinsurer shall indemnify the Cedent under this Agreement only for
benefit claims that the Cedent paid as contractually required under a
Reinsured Contract with respect to claims that occur on or after the
Effective Date.
B. In the event that the Cedent provides satisfactory proof of claim liability
to the Reinsurer, benefit claim settlements made by a Cedent and accepted by
the Reinsurer shall be unconditionally binding on the Reinsurer. The Cedent
shall report all approved benefit claims in bordereau including cause of
death, as available, in such format as may be agreed to from time to time.
C. Within thirty (30) days after the end of each calendar month, the Cedent
shall notify the Reinsurer of the ceded contractual benefit claims paid in
respect of Reinsured Contracts in that month and the Reinsurer shall
reimburse the Cedent as provided in Article VI for the ceded benefit claim
liabilities.
D. In no event will the Reinsurer be liable for expense incurred in connection
with a dispute or contest arising out of conflicting or any other claims of
entitlement to Reinsured Contract proceeds or benefits.
11
ARTICLE VIII
RESERVES
The Reinsurer shall hold and report in its statutory financial statements
reserves (the "RESERVES") with respect to liabilities ceded under this
Agreement in amounts equal to or greater than those required by the state in
which its statement is filed.
12
ARTICLE IX
RECAPTURE PRIVILEGES
Recapture can only be effected in accordance with Article XI paragraph E or
upon mutual consent and upon receiving any required regulatory approvals.
13
ARTICLE X
INSPECTION OF RECORDS
A. The Reinsurer and the Cedent and their employees and authorized
representatives, respectively, may audit, inspect and examine, during
regular business hours, at the home office of the other party, provided that
reasonable advance notice has been given, any and all books, records,
statements, correspondence, reports, and their related documents or other
documents that relate to Reinsured Contracts.
B. The audited, inspected or examined party shall provide a reasonable work
space for such audit, inspection or examination, cooperate fully and
disclose the existence of and produce any and all necessary and reasonable
materials requested by such auditors, investigators or examiners. Each party
will bear its own audit expenses.
C. All such information, including audit, inspection and examination reports
and analyses, shall be kept confidential as provided herein.
14
ARTICLE XI
INSOLVENCY
A. A party to this Agreement will be deemed insolvent when it:
a. applies for or consents to the appointment of a receiver, rehabilitator,
conservator, liquidator or statutory successor of its properties or
assets;
b. is adjudicated as bankrupt or insolvent;
c. files or consents to the filings of a petition in bankruptcy, seeks
reorganization to avoid insolvency or makes formal application for any
bankruptcy, dissolution, liquidation or similar law or statute; or
d. becomes the subject of an order to rehabilitate or an order to liquidate
as defined by the insurance code of the jurisdiction of the party's
domicile.
B. In the event of the insolvency of the Cedent all reinsurance benefits shall
be payable by the Reinsurer directly to the Cedent or to the liquidator,
receiver or statutory successor of the Cedent on the basis of the liability
of the Cedent under the policies reinsured without diminution because of the
insolvency of the Cedent.
C. In the event of the insolvency of the Cedent, the liquidator, receiver, or
statutory successor shall give the Reinsurer written notice of the pendency
of a claim on a reinsured Policy within a reasonable time after such claim
is filed in the insolvency proceeding. During the pendency of any such
claim, the Reinsurer may investigate such claim and interpose in the name of
the Cedent (or 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 that the Reinsurer may deem available to the Cedent or
its liquidator, receiver, or statutory successor.
D. The expense thus incurred by the Reinsurer shall be chargeable, subject to
court approval, against the Cedent as part of the expense of liquidation to
the extent of a proportionate share of the benefit which may accrue to the
Cedent solely as a result of the defense undertaken by the Reinsurer. 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
agreements as though such expense had been incurred by the Cedent.
E. In the event of the insolvency of the Reinsurer, the Cedent may recapture
all of the business reinsured by the Reinsurer under this Agreement. Such
recapture shall be effective as of the date of the insolvency. Such
recapture shall be subject to the payment of a Terminal Accounting and
Settlement as described in Article VIII.
15
F. In the event of the insolvency of either party, the insolvent party must
notify the other party of its insolvency within thirty (30) days.
G. In the event of the insolvency of the Reinsurer, the Cedent must notify the
Reinsurer (or its liquidator, receiver, or statutory successor) whether or
not it is going to recapture the business within sixty (60) days after being
notified of the Reinsurer's insolvency.
16
ARTICLE XII
ARBITRATION
A. All disputes and differences arising from or related to this Agreement
between the Cedent and the Reinsurer shall be decided by arbitration,
regardless of the insolvency of either party, unless the liquidator,
receiver or statutory successor is specifically exempted from an arbitration
proceeding by applicable law.
B. A party may only initiate an arbitration by providing written notification
to the other party that shall expressly set forth (a) a brief statement of
the issue(s); (b) the failure of the parties to reach agreement; (c) the
date of the demand for arbitration and (d) the specific dollar value of the
claim asserted, exclusive of (i) interest, (ii) consequential, special or
punitive damages, and (iii) attorney's fees. In the event that more than one
Reinsurer is involved in the same dispute, all such reinsurers shall act as
one party.
C. Where the dollar amount claimed in the notice of arbitration is equal to or
less than $500,000, the arbitration panel shall consist of a single
disinterested arbitrator who must, at that time, be accredited as an umpire
by XXXXX-US. The Umpire Selection Procedures of XXXXX-US, as in force at
that time, shall be used to select the arbitrator. The arbitration shall be
conducted in accordance with this Article subject to the following
exceptions: (i) There shall be no discovery permitted in cases heard by a
single arbitrator, unless by mutual agreement of the parties; (ii) the
arbitrator's decision shall be based on the submission of briefs, affidavits
and documents, and there shall be no hearing permitted unless requested by
all parties; and (iii) there shall be no ex parte communication with the
arbitrator. In an arbitration presented to a single arbitrator, the
arbitrator shall render his decision within 120 days of his or her
appointment.
Where the dollar amount claimed in the notice of arbitration is in excess of
$500,000, the arbitration panel shall consist of three arbitrators who must
be disinterested and each of whom must, at that time, either be accredited
as an arbitrator by XXXXX-US, attorneys who are neither current nor former
employees of either party to this Agreement or any entity affiliated with
either party to this Agreement, or be an active or former officer of a life
insurance or life reinsurance company other than the parties or their
affiliates.
D. In arbitrations requiring three arbitrators, each party shall select an
arbitrator within thirty (30) days from the date of the demand. If either
party refuses or fails to appoint an arbitrator within the time allowed, the
party that has appointed an arbitrator may notify the other party that, if
it has not appointed its arbitrator within the following ten (10) days, the
arbitrator shall appoint an arbitrator on its behalf. Within thirty
(30) days of the appointment of the second arbitrator the two
(2) arbitrators shall select the third arbitrator, who must also be, at that
time, accredited by XXXXX-US as an umpire. If the two arbitrators fail to
agree on the selection of the third arbitrator within the time allowed, the
Umpire Selection
17
Procedures of XXXXX-US, as in force at that time, shall be used to select
the third arbitrator. The arbitration panel shall hold an organizational
meeting within thirty (30) days of the selection of the last member of the
panel. At the panel's sole discretion, all meetings and hearings before the
arbitrators may be conducted telephonically. There shall be no ex parte
communication with the Umpire.
E. The arbitrator(s) shall interpret this Agreement as both an honorable
engagement and a legal obligation and, in the absence of controlling
language in this Agreement, shall consider equitable principles as well as
industry custom and practice regarding the applicable insurance and
reinsurance business. The arbitrator(s) are released from judicial
formalities and shall not be bound by strict rules of procedure and
evidence, provided, however, that the arbitrator(s) will abide by applicable
laws and precedents concerning evidentiary privileges or doctrines that
restrict a party's obligation to produce evidence, including, but not
limited to, the attorney-client privilege and attorney work product doctrine.
F. After a notice demanding arbitration is received and the arbitrators
appointed, each party to the arbitration shall be required to disclose
within thirty days to the other party all documents in its control and not
protected by the attorney client privilege or otherwise protected from
disclosure by applicable law pertaining to any of the disputes,
controversies or claims contained in the notice demanding arbitration or as
directed by any two of the arbitrators, provided, however, that nothing
herein shall prohibit any party from seeking relief from the arbitrators
with respect to any discovery obligation or request that imposes an undue
burden on a party
Any two of the arbitrators shall be empowered at any time to: (i) compel
disclosure of documents or submissions of interrogatories or depositions and
(ii) determine the relevance or pertinence of any document or person to the
dispute, controversy, or claim submitted for arbitration. The arbitrators
shall have the discretion to decide all disputed issues following the
submissions of briefs and/or affidavits without a formal hearing. If the
arbitrators deem it an appropriate case, the arbitrators shall have the
authority to decide all or any of the issues in dispute on a motion for
summary judgment without need for a formal hearing.
The arbitrators shall adhere to, and require compliance, with the following
timetable: (i) the length of time from the formation of the panel to the
final award rendered by the arbitrators shall be no longer than eight
months; (ii) no longer than ninety days shall transpire for purposes of
document disclosure and, if permitted by the arbitrators, production of
witness interrogatories and depositions; and, if a hearing is required,
(iii) no longer than five days shall transpire for presentation of the case
to the arbitrators, and the arbitrators shall be directed to use their best
efforts to reach their decision and render an award no longer than thirty
days thereafter. Notwithstanding anything to the contrary set forth above,
any award rendered shall not be invalidated or otherwise rendered
ineffective solely as a result of any failure to comply with any component
of the above timetable.
Organizational and other meetings shall be conducted in English and, unless
18
conducted telephonically, be held in New York, New York.
G. The arbitrators shall decide all matters by majority vote. The decisions of
the arbitrator(s) shall be issued in the form of written reasoned opinion
expressly stating the panel's (or the arbitrator's, as the case may be)
specific findings of fact and conclusions of law, and shall be final and
binding on both parties. The arbitrators may, in their discretion, award
costs and expenses, as they deem appropriate, including but not limited to
legal fees and interest. Judgment may be entered upon the final decisions of
the arbitrator(s) in any court of competent jurisdiction. The arbitrator(s)
may not award any exemplary or punitive damages.
H. Unless the arbitrators provide otherwise, each party shall be responsible
for (a) all fees and expenses charged by its respective counsel,
accountants, actuaries and other representatives in connection with the
arbitration and (b) one-half of the expenses of the arbitration, including
the fees of the arbitrators.
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ARTICLE XIII
RIGHT TO OFFSET BALANCES DUE
All moneys due either the Cedent or the Reinsurer under this Agreement shall be
offset against each other, dollar for dollar, regardless of any insolvency of
the other party.
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ARTICLE XIV
CONTRACT AND PROGRAM CHANGES
A. The Cedent shall give the Reinsurer thirty (30) days prior written notice,
unless otherwise agreed to by the Cedent and the Reinsurer, of any changes
to the Reinsured Contracts relating to a Cedent's annuity product design
and/or death benefit design, fees and charges, distribution systems and/or
methods or addition of any riders to any Reinsured Contract forms.
B. The Cedent shall give the Reinsurer thirty (30) days written notice, unless
otherwise agreed to by the Cedent and the Reinsurer, of any changes to
reinsurance premium and Net Amount at Risk, including changes for additional
riders and changes to existing riders. Unless the Reinsurer objects in
writing within thirty (30) days after such written notice is received by the
Reinsurer, the additional riders, changes to premium and/or changes to Net
Amount at Risk will be considered reinsured under the Agreement and included
in Schedule A, Plans of Reinsurance, Schedule B, Reinsurance Premiums, and
Article IV, Net Amount at Risk, respectively. Reinsurance for additional
riders, changes to the reinsurance premium and Net Amount at Risk, including
changes for additional riders and changes to existing riders shall be
effective as of the date specified in the notice from the Cedent. If the
Reinsurer objects in writing within thirty (30) days after such written
notice is received by the Reinsurer, then Reinsurance Premiums and
reimbursements for existing riders will be determined as though no such
change had occurred and additional riders will not be covered under this
Agreement.
C. Upon request, the Cedent shall provide to the Reinsurer a copy of each
general communication that the Cedent sends to contract holders in any state.
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ARTICLE XV
CONFIDENTIALITY
A. Each party shall maintain the confidentiality of all confidential
information, including individually identifiable information regarding
customers, insureds and other persons ("Customer Information"), that is
provided to it by the other party in connection with this Agreement in
accordance with applicable laws and the terms of this Agreement. This
obligation shall include the implementation of physical, administrative and
electronic safeguards designed to ensure the confidentiality, security and
integrity of such confidential information. For these purposes, confidential
information does not include information that is (a) generally available in
the public domain and is derived or received from such public sources;
(b) received, obtained, developed or created independently from the
performance of obligations under this Agreement; or (c) disclosed by or
received from a third party, provided such disclosure was made without any
violation of an independent obligation of confidentiality or Applicable Law.
B. This obligation of confidentiality shall not apply if and to the extent that
disclosure is required by applicable law or any court, governmental agency
or regulatory authority or by subpoena or discovery request in pending
litigation. In the event that either party becomes legally compelled to
disclose any secret or confidential information of the other party, such
party shall give prompt written notice of that fact to the other party so
that such other party may seek an appropriate remedy to prevent such
disclosure; provided, however, that this provision shall not apply to
information that is or otherwise becomes available to the public or that was
previously available on a non-confidential basis. This provision does not
prohibit the sharing of information with Retrocessionaires or other parties
engaged to provide services in connection with this Agreement, to the extent
necessary to provide such services, provided that such Retrocessionaires and
parties shall have agreed to maintain the confidentiality of such
information in accordance with the terms of this Agreement.
C. In the event that the Reinsurer becomes aware of the unauthorized access to
or disclosure of Customer Information to a third party, it shall give prompt
written notice of that fact to the Cedent and shall take reasonable steps
prevent further unauthorized access or disclosure and mitigate damages and
will cooperate with the Cedent to satisfy, at the Reinsurer's expense, all
legal requirements including any required notification to affected
individuals.
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ARTICLE XVI
OTHER PROVISIONS
A. Notice. Written notices under this Agreement shall be effective when
delivered to any party at the address provided herein:
1. If to the Cedent:
Xxxxxxx Xxxxx, Vice President
MetLife Investors Insurance Company
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Email: xxxxxx@xxxxxxx.xxx
2. If to the Reinsurer:
Xxxxxxxxxxx Xxxxxx, Vice President
Exeter Reassurance Company, Ltd.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Email: xxxxxxx@xxxxxxx.xxx
Either party may change its address by giving the other party written notice
of its new address; provided, however, that any notice of a change of
address shall be effective only upon receipt.
B. Administrative Communications and Payment Remittances. Each party shall, by
written notice to the other, designate offices and depositaries for the
receipt of administrative communications and payment remittances.
Administrative communications and payments remittances shall be deemed
delivered only upon actual receipt by the designated office or depositary,
respectively.
C. Amendment and Non Waiver. Any change or modification of this Agreement shall
be null and void unless made by amendment to the Agreement and signed by
both parties. No waiver by either party of any default by the other party in
the performance of any promise, term or condition of this Agreement shall be
construed to be a waiver by such party of any other or subsequent default in
performance of the same or any other promise, term or condition of this
Agreement. No prior transactions or dealings between the parties shall be
deemed to establish any custom or usage waiving or modifying any provision
hereof. The failure of either party to enforce any part of this Agreement
shall not constitute a waiver by such party of its right to do so, nor shall
it be deemed to be an act of ratification or consent.
D. Assignment. This Agreement shall be binding on the parties and their
respective successors and permitted assignees. This Agreement may not be
assigned by either party without the written consent of the other, which
consent shall not be unreasonably withheld.
23
E. Reinsured Contract Assignments. The Cedent may, in its discretion and
without the separate consent of the Reinsurer, accept a substitution of a
majority-owned affiliate of Metropolitan Life Insurance Company in lieu of
any Cedent as to any Reinsured Contract, whether by assumption reinsurance
or otherwise, with the Reinsured Contract continuing in force unchanged,
which substitution shall be binding on the Reinsurer.
F. Severability. In the event that any provision or term of this Agreement
shall be held invalid, illegal or unenforceable, all of the other provisions
and terms shall remain in full force and effect to the extent that their
continuance is practicable and consistent with the original intent of the
parties. In addition, if provisions or terms are held invalid, illegal or
unenforceable, the parties will attempt in good faith to renegotiate the
Agreement to carry out its original intent.
G. Survival. All provisions of this Agreement shall, to the extent necessary to
carry out the purposes of this Agreement or to ascertain and enforce the
parties' rights hereunder, survive its termination.
H. Choice of Law, Forum and Consent to Service. This Agreement is subject to
and is to be interpreted in accordance with the laws of the State of
Missouri without regard to the Missouri choice of law rules. While the
parties contemplate that all disputes will be decide through negotiation or
arbitration as provided herein, in the event of any legal proceedings, the
parties shall submit to the exclusive jurisdiction of courts of the State of
Missouri and the United States of America located in the City of Saint Louis
and shall abide by the final decision of such courts. Each party hereby
designates the Superintendent of Insurance of the State of Missouri as its
true and lawful attorney upon whom may be served any lawful process in any
action, suit or proceeding instituted by or on behalf of the other party
arising out of the Agreement. Process accepted by the Superintendent on
behalf of party shall be forwarded to that party at the address specified
herein.
I. Settlements. Claim settlements made by the Cedent in good faith, including
compromises, shall be unconditionally binding on the Reinsurer.
J. Payments. All reinsurance settlements and other payments will be effected
through off-setting balances, electronic funds transfers or as the parties
may otherwise agree to carry out the purposes of this Agreement.
K. Currency. All financial transactions under this Agreement shall be made in
U. S. dollars.
L. Intermediaries. Each party represents that all negotiations relative to this
Agreement and the transactions contemplated hereby, including any subsequent
Assumption Reinsurance Agreement with respect to the Reinsured Contracts,
have been carried out by the Cedent and the Reinsurer directly and without
the intervention of any person in such manner as to give rise to any valid
claim by any other person for a finder's fee, brokerage commission or
similar payment.
24
M. Construction Rules. Each party represents that its has been represented by
and relied on the advice of counsel of its choice in the negotiation and
drafting of the Agreement. The parties affirm that their respective counsel
have had a substantial role in the drafting and negotiation of this
Agreement and, therefore, the rule of construction that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any Schedule attached hereto.
N. Authority. Each party represents that it has full power and authority to
enter into and to perform this Agreement and that the person signing this
Agreement on its behalf has been properly authorized and empowered to do so.
Each party further acknowledges that it has read this Agreement, understands
it and agrees to be bound by it.
O. Changes. In the event the Cedent's liability to make any payment is changed
due to a modification or cancellation of a Reinsured Contract, Reinsurer's
liability to make any such payment shall also be changed in the same manner
and to the same extent. In the event that the amount of liability provided
by a Reinsured Contract is increased or reduced because of a misstatement of
age or sex, the reinsurance liability of the Reinsurer shall be increased or
reduced by the same amount. Any adjustments for this reason shall be made
without interest.
P. Unreasonable Refusal of Agreement. Neither party, acting unreasonably, will
withhold agreement to any discretionary action for the sole purpose of
terminating this Agreement or otherwise frustrating its purpose.
Q. Independent Contractor. The parties shall be deemed to be independent
contractors, each with full control over its respective business affairs and
operations. This Agreement shall not be construed as a partnership or joint
venture and neither party hereto shall be liable for any obligations
incurred by the other party except as expressly provided herein.
X. Xxxxxxxxx, Exhibits and Captions. Schedules and Exhibits attached hereto are
incorporated into this Agreement. Captions are provided for reference only.
S. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be deemed an original and all of which shall constitute
one and the same instrument.
25
ARTICLE XVII
ENTIRE AGREEMENT
This Agreement, together with Schedules A and B, supercedes all prior
discussions and agreements between the parties and constitutes their sole and
entire agreement with respect to Reinsured Contracts and there are no
understandings between the parties other than as expressed herein.
26
ARTICLE XVIII
DAC TAX
A. The parties will make a joint election, in accordance with Treas. Reg.
1.848-2(g)(8), issued December 28, 1992, under (S) 848 of the Internal
Revenue Code and the party with the net positive consideration under this
Agreement will capitalize specified policy acquisition expenses with respect
to this Agreement without regard to the general deductions limitations of
(S) 848(c)(1) of the Code;
1. the election will take effect on the Effective Date and will remain in
effect for all subsequent years that this Agreement remains in effect;
and
2. each party shall attach a schedule to its federal income tax return for
its first taxable year ending after the election becomes effective that
identifies the agreements (including this Agreement) for which joint
elections have been made under this Regulation.
B. Pursuant to this joint election:
1. each party will exchange information pertaining to the amount of net
consideration under this Agreement to assure consistency or as may
otherwise be required by the Internal Revenue Service;
2. Cedent will submit its calculation of the "net consideration" as defined
under the above referenced regulation to Reinsurer not later than May 1
for each and every tax year for which this Agreement is in effect;
3. Reinsurer may challenge such calculation within ten (10) working days of
receipt of the Cedent's calculation; and
4. the parties will act in good faith to reach agreement as to the correct
amount of net consideration whenever there is disagreement as to the
amount of net consideration as determined under Xxxxx. Reg. 1.848-2(f).
C. Each party represents and warrants that it is subject to U. S. taxation
under Subchapter L of Chapter 1 of the Code.
27
ARTICLE XIX
DURATION OF AGREEMENT
A. Cessions may be made while this Agreement is in force.
B. Except as otherwise provided herein, the Agreement shall be unlimited in
duration but may be reduced or terminated for future cessions.
C. This Agreement shall remain in force as provided herein until the
termination of the Cedent's liability on the Reinsured Contracts.
D. Either the Cedent or the Reinsurer may cancel this Agreement for future
cessions upon ninety (90) days prior written notice or upon such shorter
notice as the parties may mutually agree.
E. In the event that the Cedent shall terminate a Reinsurance Agreement for the
cession of new annuity contract liabilities because, in its discretion,
after a good faith effort, it was unable to obtain regulatory credit for
reinsurance ceded to the Reinsurance Agreement, this Agreement shall
continue in effect, on a run-off basis, for all annuity contract liabilities
ceded by the Cedent prior to the Reinsurance Agreement termination date;
provided, however, that the Cedent has made a good faith effort to obtain
regulatory credit for reinsurance ceded to the Reinsurance Agreement.
F. Either party may terminate this Agreement in the event that the other party
is in material breach of the terms or conditions of this Agreement provided
that the terminating party has notified the other party of the breach and
the other party has not initiated the cure of such breach within thirty
(30) days after such notice to be effectuated as promptly as possible. Upon
termination, the parties shall agree to a recapture according to Article IX.
The Reinsurer shall calculate a recapture value according to the fair value
principles described in the Statement of Financial Accounting Standards
No. 157 and any disagreement with respect to such proposed recapture value
shall be resolved in accordance with Article XII.
28
ARTICLE XX
NON-ADMITTED REINSURANCE
A. Security Requirement. In the event that the Cedent shall, at any time,
--------------------
notify the Reinsurer of its determination that security for reinsurance
recoverables hereunder is or may be necessary for the Cedent to obtain any
associated regulatory statement credit for reinsurance ceded to this
Agreement on account of the Reinsurer being neither admitted or accredited
as a reinsurer, the Reinsurer shall establish a trust ("the Trust") in
accordance with Section B of this Article or the Reinsurer shall provide a
letter of credit (an "LOC") in accordance with Section C of this Article.
B. Trust Agreement.
----------------
1. Except as may be provided in Section C of this Article, the Cedent and
the Reinsurer shall enter in to a Trust Agreement that complies with
regulations of the domiciliary state of the Cedent, establishing a Trust
Account for the benefit of the Cedent to cover the recoverables and/or
Statutory Reserves attributable to the Reinsured Policies. The Trustee
shall be a bank, acceptable to each party, that is organized in the
United States; that is regulated, supervised and examined by federal or
state banking regulatory authorities; and that meets any other
applicable regulatory financial condition standards. The bank shall not
be a parent, subsidiary or affiliate of the Cedent or Reinsurer.
2. This Trust Agreement is intended to secure Annual Statement credit for
reinsurance ceded by the Cedent to the Reinsurer in accordance with
regulations of the domiciliary state of the Cedent and, in the event
that the parties fail to enter into the Trust Agreement and fund the
Trust Account, as provided herein, within five (5) working days after
this Agreement shall have been signed by both parties, this Agreement,
unless the parties otherwise provide, shall be null and void.
3. Assets deposited in the Trust Account shall be valued according to their
current fair market value, as determined under the statutory accounting
rules of the domiciliary state of the Cedent, and shall consist only of
cash (United States legal tender) and such domiciliary state statutorily
permitted investments that are not issued by a parent, subsidiary or
affiliate of either party.
4. Prior to depositing assets with the Trustee, the Reinsurer shall execute
assignments, endorsements in blank or transfer legal title to the
Trustee of all shares, obligations or any other assets requiring
assignment in order that the Cedent or the Trustee, upon direction of
the Cedent, may, whenever, necessary, negotiate any such assets without
consent or signature from the Reinsurer of an other person or entity,
other than the Trustee, in accordance with the terms of the Trust
Agreement.
29
5. Assets in the Trust Account, established hereunder, may be withdrawn by
the Cedent at any time, notwithstanding any other provisions of this
Agreement, and shall be utilized and applied by the Cedent or any
successor of the Company by operation of law, including without
limitation any liquidator, rehabilitator, receiver or conservator of the
Cedent, without diminution because of insolvency on the part of the
Cedent or the Reinsurer, only for the following purposes:
i. to reimburse the Cedent for the Reinsurer's share of premiums
returned to the owners of the Policies on account of cancellations of
such Policies;
xx.xx reimburse the Cedent for the Reinsurer's share of benefits claims
paid by the Cedent under the terms and provisions of the Policies;
xxx.xx fund an account with the Cedent in an amount at least equal to the
ceded reinsurance deduction from the Cedent's Policy liabilities
hereunder, which amount shall include, but not be limited to,
reserves for benefit claims incurred (including benefit claims
incurred but not reported)
xx.xx pay any other amounts that the Cedent claims to be due hereunder
6. With the approval of the Cedent, the Reinsurer may withdraw from the
Trust Account all or any part of the assets contained therein and
transfer such assets to the Reinsurer; provided
i. the Reinsurer shall, at the time of such withdrawal, replace the
withdrawn assets with other qualified assets having a market value
equal to the market value of the assets withdrawn so as to maintain
the Trust Account at the required amount at all times; or
ii.after such withdrawals and transfers, the market value of the Trust
Account is not less than the required amount under applicable law or
regulation.
The Cedent shall be the sole judge as to the application of this
provision, but shall not unreasonably or arbitrarily withhold its
approval.
7. The Cedent will return any amounts withdrawn from the Trust in excess of
the actual amounts required for subparagraphs (i), (ii) and (iv) of
paragraph 5 or, in the case of subparagraph (iii) of paragraph 5, any
amounts that are subsequently determined not to be due. The Cedent will
pay interest on amounts withdrawn in excess of the actual amount
required under subparagraph (iii) of paragraph 5 at a rate equal to the
"Prime Rate" published in The Wall Street Journal (currently the base
rate on corporate loans posted by at least 75% of the nation's 30
largest banks), which rate shall be adjusted on the last day of each
month; and
C. Letters of Credit.
-----------------
1. The Reinsurer will provide an LOC that complies with regulations of the
domiciliary state of the Cedent.
30
2. The Reinsurer shall be the LOC applicant. The Trustee shall be a bank,
acceptable to each party, that is organized in the United States; that
is regulated, supervised and examined by federal or state banking
regulatory authorities; and that meets National Association of Insurance
Commissioners-Securities Valuation Office standards for acceptable LOC
issuance. The bank shall not be a parent, subsidiary or affiliate of the
Cedent or Reinsurer.
3. The LOC may be drawn at any time, notwithstanding any other provisions
herein and may be utilized by the Cedent or any successor by operation
of law, including without limitation any liquidator, rehabilitator or
receiver of the Cedent for the following purposes:
i. to reimburse the Cedent for the Reinsurer's share of Policy premiums
returned on account of cancellations;
xx.xx reimburse the Cedent for the Reinsurer's share of benefit claims
paid by the Cedent under the terms and provisions of the Policies;
xxx.xx fund an account with the Cedent in an amount at least equal to the
ceded reinsurance deduction from the Cedent's Policy liabilities
hereunder, which amount shall include, but not be limited to,
reserves for benefit claims incurred (including benefit claims
incurred but not reported)
xx.xx pay any other amounts that the Cedent claims to be due hereunder
4. The Cedent will return any amounts drawn on the LOC in excess of the
actual amounts required for subparagraphs (i), (ii) and (iv) of this
paragraph or, in the case of subparagraph (iii) of this paragraph, any
amounts that are subsequently determined not to be due. The Cedent will
pay interest on amounts withdrawn in excess of the actual amount
required under subparagraph (iii) at a rate equal to the "Prime Rate"
published in The Wall Street Journal (currently the base rate on
corporate loans posted by at least 75% of the nation's 30 largest
banks), which rate shall be adjusted on the last day of each month; and
D. All of the foregoing provisions are to be applied without diminution because
of insolvency on the part of either party.
31
ARTICLE XXI
CEDENT REPRESENTATIONS AND WARRANTIES
The Cedent represents and warrants, to the best of its knowledge, the following:
A. Corporate Status. The Cedent is duly licensed, qualified or admitted to do
----------------
business and is in good standing in all jurisdictions in which it is
required to be so qualified, licensed or admitted to do business by the laws
thereof.
B. Authority. The Cedent has the full corporate power and authority
---------
to carry out and perform its undertakings and obligations under this
Agreement. This Agreement has been duly and validly signed and delivered by
the Cedent. The Cedent shall maintain in force all such legal and regulatory
authorizations as may be reasonably necessary or appropriate for the
performance of its obligations under this Agreement.
C. Tax Status. The Cedent represents and warrants that it is subject to U. S.
----------
taxation under Subchapter L of Chapter 1 of the Code.
32
ARTICLE XXII
REINSURER REPRESENTATIONS AND WARRANTIES
The Reinsurer represents and warrants, to the best of its knowledge, the
following:
A. Corporate Status. The Reinsurer is duly licensed, qualified or admitted to
-----------------
do business and is in good standing in all jurisdictions in which it is
required to be so qualified, licensed or admitted to do business by the laws
thereof.
B. Authority. The Reinsurer has the full corporate power and authority to carry
----------
out and perform its undertakings and obligations under this Agreement. This
Agreement has been duly and validly signed and delivered by the Reinsurer.
The Reinsurer shall at maintain in force all such legal and regulatory
authorizations as may be reasonably necessary or appropriate for the
performance of its obligations under this Agreement.
C. Tax Status. The Reinsurer represents and warrants that it is subject to
-----------
U. S. taxation under Subchapter L of Chapter 1 of the Code.
33
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the date first above written.
METLIFE INVESTORS INSURANCE COMPANY
By: /s/ Xxxxxxx Xxxxx
-------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
EXETER REASSURANCE COMPANY, LTD.
By: /s/ Xxxxxxxxxxx Xxxxxx
-------------------------
Name: Xxxxxxxxxxx Xxxxxx
Title: Assistant Vice President
and Actuary
Schedule A Plans of Reinsurance
Schedule B Reinsurance Premiums
34
SCHEDULE A
PLANS OF REINSURANCE
A. Reinsurer's Percentage:
100% of the ceded liabilities described in Article I paragraph B, for
the Reinsured Contracts.
B. Reinsured Contracts:
VARIABLE ANNUITY CONTRACTS
--------------------------
A Class Contract (Front-end load, Xxxxxx Xxxxx distribution)
FORM NUMBERS
------------
Guaranteed Minimum Death Benefits and Earnings Preservation Benefits:
---------------------------------------------------------------------
Standard Death Benefit - Principal Protection: Form 7015 (11/00)
Optional Death Benefit - Annual Step-Up: Form 7017 (11/00)
Optional Death Benefit - Greater of Annual Step-Up and 5% Rollup: Form
7016 (11/00)
Additional Death Benefit - Earnings Preservation Benefit (EPB): Form
7019 (11/00)
Enhanced Death Benefit II - Form MLI-640-1 (4/08) & Endorsement MLI-RMD
(7/10)-E
Guaranteed Minimum Income Benefits:
-----------------------------------
Guaranteed Minimum Income Benefit Plus: Form MLI-560-6 (11/10)
Guaranteed Minimum Income Benefit Plus III: Endorsement MLI-RMD (7/10)-E
Guaranteed Minimum Income Benefit Max III: Form MLI-560-4 (4/08),
MLI-560-5 (09/10) MLI-560-9 (12/11) (12/11) & Endorsement MLI-RMD
(7/10)-E
35
SCHEDULE B
REINSURANCE PREMIUMS
A. GMDB PROGRAM
REINSURANCE
PREMIUM
GMDB PROGRAM CONTRACTS COVERED (BASIS POINTS)
------------ ----------------------------- --------------
Principal Protection All Reinsured Contracts 9.00
Annual Step-up All Reinsured Contracts 20.00
Greater of Annual Step-Up and
5% Rollup All Reinsured Contracts 35.00
Earnings Preservation Benefit All Reinsured Contracts 25.00
Enhanced Death Benefit II All Reinsured Contracts Issue
Ages 0-69 60.00
Enhanced Death Benefit II All Reinsured Contracts Issue
Ages 70-75 115.00
B. INCOME PROGRAM
REINSURANCE
PREMIUM
INCOME PROGRAM CONTRACTS COVERED (BASIS POINTS)
-------------- ----------------------------- --------------
GMIB Plus & GMIB Plus III All Reinsured Contracts 100.00
GMIB Xxx XXX All Reinsured Contracts 100.00
36
