EXHIBIT (g)
Note: Using this form of agreement, New England Life Insurance Company has
entered into separate agreements with each of following reinsurers: Employers
Reassurance Corp., Munich American Reassurance Co., Security Life of Denver
Insurance Co., Swiss Re Life and Health America Inc.
AUTOMATIC AND FACULTATIVE YRT AGREEMENT
BETWEEN
NEW ENGLAND LIFE INSURANCE COMPANY
BOSTON, MASSACHUSETTS
(THE CEDING COMPANY)
AND
MASTER AGREEMENT
CITY, STATE
(THE REINSURER)
EFFECTIVE MONTH, DAY, YEAR
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INDEX
Article Name Article Number Page Number
------- ---- ------- ------ ---- ------
Preamble 3
Automatic Cessions I 4
Facultative Cessions II 5
Reinsurance Premiums III 6
Reinsurer's Liability IV 7
Claims V 8
Administration and Accounting VI 9
DAC Tax VII 11
Conversions and Exchanges VIII 12
Terminations, Reductions/Increases
and Changes IX 13
Recapture and Retention Changes X 14
Reinstatements and
Reduced Paid-Up Insurance XI 15
Insolvency XII 16
Arbitration XIII 17
Duration of Agreement XIV 19
Miscellaneous XV 20
A. Choice of Law
B. Severability
C. Reserve Credit
D. Assignment
E. Confidentiality
F. Inspection of Records
G. Damages
H. Errors and Omissions
I. Indemnification and Limitation of Liability
J. Entire Agreement
K. Modifications to Agreement
L. Survival
M. Currency
N. Independent Contractor
O. Agents, Intermediaries, and Representatives
P. Construction Rules
Q. Written Notices
R. Representation of Authority and Acknowledgement of Understanding
S. Representation of Valid Signature
T. Counterparts
Execution XVI 25
Exhibit Name Exhibit Number
------- ---- ------- ------
Limits I
The Ceding Company Retention Limits II
Policy Plans Reinsured III
Premium Rates IV
Monthly Statements V
2
PREAMBLE
This Reinsurance Agreement (the "Agreement") is effective April 1,
2000, between New England Life Insurance Company, 000 Xxxxxxxx Xxxxxx,
Xxxxxx XX 00000, a Massachusetts domiciled life insurance corporation
(the "Ceding Company") and ABC Reinsurance Company, "address", a "name
state" domiciled life insurance corporation (the "Reinsurer").
The background of this Agreement is that the Ceding Company cedes and
the Reinsurer accepts, on a yearly renewable term ("YRT") basis, the
quota share of the mortality risk associated with Universal
Survivorship Life Policies and Variable Survivorship Life Policies
("the Policies") and associated Riders that the Ceding Company may
issue during the term of this Agreement.
In consideration of the mutual promises set forth herein, the parties
agree as follows:
3
ARTICLE I
AUTOMATIC CESSIONS
The Ceding Company shall cede and the Reinsurer shall accept as
indemnity reinsurance, on a YRT basis, in accordance with the terms and
conditions hereof, the portions of the Ceding Company's risk on all
Policies that are not in excess of the Automatic Binding Limit, as
provided in Exhibit I, with respect to each Policy and the Ceding
Company shall retain for its own account the portions of the risk on
each Policy as provided in Exhibit II not to exceed its per life
retention, provided that:
A. the Ceding Company shall have retained the specified portion
of the risk on each ceded Policy as described above;
B. the amount ceded to the Reinsurer does not exceed the
Automatic Binding Limit as shown in Exhibit I;
C. the sum of the amount of insurance already in force and
applied for on that life according to information available to
the Ceding Company, does not exceed the Jumbo Limit as shown
in Exhibit I;
D. the Ceding Company has not applied for facultative coverage on
the current application;
E. the Policy is issued in accordance with the Ceding Company's
normal individual ordinary life underwriting rules and
practices;
F. the Policy is listed in Exhibit III.
4
ARTICLE II
FACULTATIVE CESSIONS
The Ceding Company has the option to, in accordance with the provisions
of this Article, facultatively submit to the Reinsurer any Policy that
is not obligatorily ceded under the provisions of Article I; provided
that:
A. the Ceding Company shall have provided to the Reinsurer copies
of the original Policy application, medical reports,
inspection reports, attending physician statements and any
additional information that is pertinent to the insurability
of the risk;
B. the Ceding Company shall have notified the Reinsurer of any
outstanding underwriting requirements at the time of the
facultative submission;
C. the Reinsurer shall, within 30 days after receipt of all
required information, advise the Ceding Company of the portion
that it would facultatively accept and the terms and
conditions of such acceptance;
D. the Ceding Company shall have notified the Reinsurer of its
acceptance of the Reinsurer's proposed terms and conditions
for the facultative cession within 120 days of receipt or the
termination date specified in the Reinsurer's offer unless the
Reinsurer in writing expressly extends the period for the
Ceding Company's acceptance or rejection; and
E. the facultative cessions shall not be limited to those
Policies that are listed in Exhibit III.
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ARTICLE III
REINSURANCE PREMIUMS
A. Life reinsurance shall be on the yearly renewable term basis
for the net amount at risk (death benefit less reserve or fund
value) on that portion of the policy which is reinsured by the
Reinsurer. Premiums and allowances shall be based on the rates
specified in Exhibit IV.
B. The Reinsurer shall not indemnify the Ceding Company for
premium taxes or guaranty fund assessments.
C. The Ceding Company shall report and pay reinsurance premiums
on an annual basis in advance without regard to the Policy
mode of premium payment.
D. For technical reasons relating to statutory reserve
requirements, the YRT rates described in Exhibit IV cannot be
guaranteed for more than one year. The Reinsurer anticipates
continuing to accept premiums on the basis of the YRT rates
described in Exhibit IV. The guaranteed reinsurance premium
for each age and duration shall be the higher of the premium
based on the reinsurance rates shown in Exhibit IV and the
premium based on the statutory minimum valuation mortality
table and the statutory maximum valuation interest rate
permitted for the underlying Policy under the National
Association of Insurance Commissioners' Standard Valuation
Law.
E. In no event shall the Reinsurer increase the reinsurance rates
on inforce business ceded under this Agreement unless it also
concurrently increases the reinsurance rates for all of its
YRT reinsurance assumed individual life insurance business.
F. Reinsurance premiums on Policies that terminate, reduce or
change shall be based on the exact number of days of coverage,
on a 360-day year basis. The Reinsurer shall refund any
unearned reinsurance premium.
G. For Policies that are reinstated after coverage has ceased,
the Ceding Company shall pay to the Reinsurer reinsurance
premiums for the period for which the Ceding Company received
Policy premiums in arrears.
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ARTICLE IV
REINSURER'S LIABILITY
A. The Reinsurer's liability for cessions under Article I of this
Agreement shall commence simultaneously with that of the
Ceding Company.
B. The Reinsurer shall have no liability for Policy proceeds paid
under the Ceding Company's temporary term insurance agreement
("TIA") unless conditions for automatic cessions under Article
I of this Agreement are met.
C. The Reinsurer's liability for facultatively accepted cessions
shall commence when all of the conditions specified in Article
II for facultative acceptances shall have been met.
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ARTICLE V
CLAIMS
A. The Ceding Company shall give prompt notice of Policy claims
to the Reinsurer in such form and detail as the parties may,
from time to time, agree. The Ceding Company shall, at the
Reinsurer's request, provide copies of Policy claim
documentation to the Reinsurer. The Reinsurer shall, in all
cases, accept copies of Policy claim documentation provided by
the Ceding Company as sufficient. The Ceding Company's
decision, in good faith, to pay a Policy claim without
contest, compromise or litigation shall be unconditionally
binding on the Reinsurer.
B. Upon Ceding Company notice to the Reinsurer that the Ceding
Company intends to contest, compromise or litigate a Policy
claim, the Reinsurer shall pay its share of any settlement up
to the maximum that would have been payable under the Policy
had there been no controversy together with the Reinsurer's
share of specific expenses involved unless it declines to
endorse the contest, compromise or litigation, in which case
it shall pay the full amount of its share of the claim to the
Ceding Company. Compensation of salaried officers and
employees of the Ceding Company shall not be included in the
Reinsurer's share of the specific expenses and/or final
settlement.
C. In the event that the amount of insurance provided by a Policy
or Policies reinsured hereunder shall be increased or reduced
because of a misstatement of age or sex established after the
death of the insured, the Reinsurer shall share in the
increase or reduction in the proportion that the net liability
that the Reinsurer bore to the total net liability under the
Policy immediately prior to such increase or reduction. The
Policy or Policies shall be restated in accordance with the
terms and rules of the Ceding Company. Any adjustment for the
difference in reinsurance premiums shall be made without
interest.
D. The Reinsurer shall pay interest on its share of any Policy
claim settlement calculated at the same rate and for the same
period of time as that used by the Ceding Company.
E. The parties may, from time to time, establish informal claims
guidelines for ease of administration and processing.
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ARTICLE VI
ADMINISTRATION AND ACCOUNTING
A. The Ceding Company shall administer the Policies, establish
and maintain necessary and appropriate Policy records in
accordance with its general standards and practices and shall
furnish monthly statements for the month just past to the
Reinsurer in a form substantially similar to that shown in
Exhibit V within thirty (30) days following the close of each
month showing the net amount of reinsurance premium or return
of reinsurance premium due to or from the Reinsurer.
B. The Ceding Company shall include with each monthly statement
payment of the net amount of reinsurance premium, if any, due
to the Reinsurer as shown on the monthly statement.
Reinsurance premiums that have not been paid within thirty
(30) days following the close of each month shall be in
default. The Reinsurer shall pay to the Ceding Company any
amounts due to the Ceding Company as shown on the monthly
statement within thirty days after the Reinsurer receives the
monthly statement from the Ceding Company. Any amounts due to
the Ceding Company that have not been paid within thirty (30)
days after the due date shall be in default.
C. Subject to the provisions of Article XV.H, the Reinsurer may
terminate the reinsurance on risks for which reinsurance
premiums are in default by giving thirty (30) days written
notice of termination to the Ceding Company; provided,
however, that the Ceding Company may cure the default as
provided herein. Except to the extent the default shall have
been cured, as of the close of the last day of this thirty
(30) day period, the Reinsurer's liability for the following
reinsurance shall terminate with respect to risks that are the
subject of the termination notice and risks for which the
reinsurance premiums went into default during the thirty (30)
day notice period.
D. Notwithstanding termination of reinsurance as provided in this
Section, the Ceding Company shall continue to be liable to the
Reinsurer for all unpaid reinsurance premiums earned by the
Reinsurer under this Agreement.
E. Reinsurance terminated under Section C of this Article may be
reinstated by the Ceding Company if, within sixty (60) days
after the effective date of its termination, the Ceding
Company pays in full all of the unpaid reinsurance premiums
for the reinsurance that was in force prior to its
termination. The effective date of reinstatement shall be the
day on which the Reinsurer receives all of the required
reinsurance premiums. The Reinsurer shall have no liability in
connection with any claims incurred between the date of
termination of reinsurance applicable to a Policy and the date
of reinstatement of reinsurance of that Policy.
F. The first day of the thirty (30) day notice of termination
under Section C of this Article shall be the day on which the
Ceding Company receives the termination notice. If all
premiums in default are received by the Reinsurer
9
within the thirty (30) day notice period, the reinsurance
shall remain in effect.
G. The Ceding Company shall bear the expense of all medical
examinations, inspection fees and other charges incurred in
connection with Policy issuance.
10
ARTICLE VII
DAC TAX
A. The Parties are making a joint election under Treas.
Reg. Section 1.848-2(g)(8) under which:
(1) The Party with the net positive consideration
under this Agreement is required to capitalize
specified policy acquisition expenses with respect to
such Agreement without regard to the general
deductions limitation of Section 848(c)(1) of the
Internal Revenue Code.
(2) This election shall be effective with the
effective date of this Agreement.
(3) Each party shall attach a schedule to its federal
income tax return for its first taxable year ending
after the election becomes effective which identifies
the Agreement for which this joint election under
Treas. Reg. Section 1.848-2(g)(8) has been made.
B. The Parties agree to exchange information pertaining to the
amount of net consideration as determined under Treas. Reg.
Section 1.848-2(f) for this Agreement to insure consistency as
to amount and timing or as is otherwise required by the
Internal Revenue Service.
C. The exchange of information described in section B above shall
follow the procedures set forth below:
(1) the Ceding Company shall submit its calculation
of the "net consideration" as defined under the above
referenced regulation to the Reinsurer not later than
April 1 for each and every tax year for which this
Agreement is in effect;
(2) the Reinsurer may challenge such calculation
within thirty (30) calendar days of receipt of the
Ceding Company's calculation; and
(3) If the Reinsurer contests the Ceding Company's
calculation of the net consideration, the parties
shall act in good faith to reach an agreement as to
the correct amount within thirty (30) days of the
date the Reinsurer submits its alternative
calculation. If the Ceding Company and the Reinsurer
reach an agreement on an amount of net consideration,
each party shall report the agreed upon amount in
their respective tax returns for the preceding
taxable year.
D. The Parties represent and warrant that they are subject to
U.S. taxation under Subchapter L of Chapter 1 of the Internal
Revenue Code or Subpart F of Part III of Subchapter N of
chapter 1 of the Internal Revenue Code.
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ARTICLE VIII
CONVERSIONS AND EXCHANGES
A. If any policy ceded pursuant to Article I of this Agreement is
exchanged for, or converted to another policy that is listed
in Exhibit III, the new policy shall be reinsured on the basis
described in Article I based upon the policy date, age and
underwriting classification of the new policy.
B. If any policy covered automatically under this Agreement is
exchanged for, or converted to, a policy bearing a series,
class or plan code that is not shown in Exhibit III, the
Ceding Company shall recapture reinsurance under this
Agreement up to its retention limit as shown in Exhibit II. At
the Ceding Company's option, the Reinsurer shall reinsure its
proportionate share of the excess above the Ceding Company's
retention, up to its automatic binding limit shown in Exhibit
I. Reinsurance premiums shall be those shown in Exhibit IV,
based upon policy date, age and underwriting classification of
the original policy.
C. If any policy ceded facultatively under this Agreement is
exchanged for, or converted to, another policy, at the Ceding
Company's option reinsurance shall continue based upon the
policy date, age and underwriting classification of the
original policy.
D. If existing business that was not ceded under this Agreement
is exchanged for, or converted to a policy of the type
described in Exhibit III, it shall not be considered reinsured
under this Agreement.
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ARTICLE IX
TERMINATIONS, REDUCTIONS/INCREASES AND CHANGES
A. If a policy that was ceded pursuant to Article I, is reduced
or terminated, the reinsurance ceded to the Reinsurer shall be
reduced by the Reinsurer's share of the reduction shown in
Exhibit I.
B. If a policy that was ceded on the excess retention basis, or
if another policy of the Ceding Company on the same life, is
reduced or terminated, reinsurance of the policy on that life
shall be reduced, to restore, as far as possible, the Ceding
Company's retention on the risk such that the amount retained
shall not be greater than the retention limit at the time of
issue of the policy or the retention limit as adjusted in
accordance with recapture as provided in Article X. If there
is more than one insurance policy on the life, the reduction
shall apply first to any reinsurance on the policy being
reduced, and then, to any reinsurance on other policies on the
life on a chronological basis with the last policies reinsured
being reduced first. If the reinsurance on any policy has been
ceded to more than one reinsurer, the reduction in reinsurance
with the Reinsurer on such policy shall be the same fraction
of the total reinsurance on that policy immediately before the
reduction.
C. If a policy reinsured on the quota share basis pursuant to
Article I, is increased, subject to the normal rules and
practices of the Ceding Company, the Ceding Company shall cede
automatically the Reinsurer's share of the increase to the
Reinsurer if the policy continues to meet the conditions of
Article I.
D. If a policy that was ceded on the excess retention basis is
increased, subject to the normal rules and practices to the
Ceding Company, the Ceding Company shall cede automatically
the increase to the Reinsurer if the policy continues to meet
the conditions of Article I.
E. For policies ceded pursuant to Article I, reduction or removal
of table ratings and flat extras and changes in smoking
classification shall be underwritten according to the Ceding
Company's normal rules and practices and the Reinsurer shall
be bound automatically. Risk classification changes on
facultative policies shall be subject to the Reinsurer's
approval.
F. For plans of insurance with a variable death benefit that are
reinsured under this Agreement, the Reinsurer shall share
proportionately in any contractual increase or decrease in the
amount at risk.
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ARTICLE X
RECAPTURE AND RETENTION CHANGES
A. The Ceding Company shall promptly notify the Reinsurer of
changes in its retention limits.
B. For Policies ceded pursuant to this Agreement subject to
excess retention limits,
(1) The Ceding Company may recapture business to
reflect changes in its retention limits, provided
that ten (10) years have elapsed since the issue date
of the original policy. For policies issued as a
result of exchange or conversion, the duration for
recapture eligibility shall be based on the date used
for premium calculations.
(2) Recapture shall become effective on the policy
anniversary date following notification to the
Reinsurer of the Ceding Company's intent to
recapture.
(3) If any reinsurance is recaptured under the
provisions of this Section, all reinsurance eligible
for recapture under the provisions of this Article
must be recaptured.
(4) If the reinsurance on the policy has been ceded
to more than one reinsurer, the reduction in
reinsurance with the Reinsurer on such policy shall
be the same fraction of the total recapture on that
policy as the Reinsurer held of the total reinsurance
on that policy immediately before the recapture.
C. Policies ceded on a quota share basis shall not be eligible
for recapture except as otherwise provided for by this
Agreement.
D. If the Reinsurer increases reinsurance premiums on inforce
business as described in Article III, the Ceding Company may
recapture all inforce cessions or amounts thereof up to its
retention limit.
14
ARTICLE XI
REINSTATEMENT AND PAID-UP INSURANCE
A. Reinsurance of any lapsed Policy that was ceded in accordance
with the terms and conditions of this Agreement may be
automatically reinstated so long as the policy is reinstated
in accordance with terms and rules of the Ceding Company. The
Ceding Company shall pay the Reinsurer reinsurance premiums
for the period for which the Ceding Company received premiums
in arrears from the policyholders.
B. Policy changes that are the result of extended term insurance
or reduced paid-up insurance (nonforfeiture options) shall
continue to be reinsured proportionately and shall be handled
in accordance with Article III.
15
ARTICLE XII
INSOLVENCY
A. In the event of the insolvency of the Ceding Company, all
reinsurance benefits shall be payable directly to the Ceding
Company or 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 the insolvency of the Ceding Company, 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 Ceding Company (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 Ceding Company or its liquidator,
receiver, or statutory successor.
C. The expense thus incurred by the Reinsurer shall 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
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 Ceding Company.
D. In the event of the insolvency of the Reinsurer, the Ceding
Company 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.
E. In the event of the insolvency of either party, the insolvent
party must notify the other party of its insolvency within
thirty (30) days.
F. In the event of the insolvency of the Reinsurer, the Ceding
Company 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 XIII
ARBITRATION
A. All disputes and differences between the Ceding Company 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. Either party may initiate arbitration by providing written
notification to the other party that sets forth (a) a brief
statement of the issue(s); (b) the failure of the parties to
reach agreement; and (c) the date of the demand for
arbitration.
C. The arbitration panel shall consist of three arbitrators who
must be impartial and reach of whom must, at that time, either
be accredited as an arbitrator XXXXX-US or be an active or
former officer of a life insurance or reinsurance company
other than the parties or their affiliates.
D. 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
Procedures of XXXXX-US, as in force at that time, shall be
used to select the third arbitrator.
E. The arbitrators shall interpret this Agreement as an honorable
engagement rather than merely as a legal obligation and shall
consider equitable principles as well as industry custom and
practice regarding the applicable insurance and reinsurance
business. The arbitrators are released from judicial
formalities and shall not be bound by strict rules of
procedure and evidence.
F. The arbitrators shall determine all arbitration schedules and
procedural rules and may, in their discretion, use applicable
XXXXX-US forms and procedures. Organizational and other
meetings shall be held in Boston, MA, unless the arbitrators
otherwise provide. The arbitrators shall decide all matters by
majority vote.
G. The decisions of the arbitrators 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 arbitrators in any
court of competent jurisdiction. The arbitrators may not award
any exemplary or punitive damages.
17
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.
18
ARTICLE XIV
DURATION OF AGREEMENT
A. Except as otherwise provided herein or as the parties may
otherwise agree, the Agreement shall be unlimited in duration.
Either party may terminate this Agreement with respect to new
business at any time upon ninety (90) days prior written
notice to the other party. The first day of the notice period
shall be deemed to be the date on which notice is received by
the other party.
B. During the ninety (90) day period following delivery of a
notice of termination, this Agreement shall continue in force
in accordance with its terms.
C. Except as the parties may otherwise agree, this Agreement
shall continue to apply, after the date of termination, to
cessions that became effective prior to the termination of
this Agreement.
D. The parties shall cooperate in seeking to obtain any required
regulatory approvals for this Agreement and, in the event that
any required regulatory approval cannot be obtained after
reasonable effort, the Agreement and any cessions previously
effected hereunder shall be deemed void as of the inception
and the parties shall be restored to the position they would
have been in had this Agreement never become effective.
- 19 -
ARTICLE XV
MISCELLANEOUS
A. Choice of Law: This Agreement is subject to and is to be
interpreted in accordance with the laws of the Commonwealth of
Massachusetts without regard to the Massachusetts choice of
law rules.
B. Severability: In the event that any provision or term of this
Agreement is 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 shall attempt in good faith to
renegotiate the Agreement to carry out its original intent.
C. Reserve Credit: The Reinsurer shall establish and maintain
reserves with respect to ceded Policy liabilities that equal
or exceed the Reinsurer's proportionate share of the reserve
credit taken by the Ceding Company. The Ceding Company shall
on an annual basis provide the Reinsurer with a reserve
summary for ceded Policy liabilities hereunder. This annual
reserve summary shall include the opinion of the Ceding
Company's actuary applicable to such Policy liabilities.
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. In no instance shall anyone other than
the Ceding Company and the Reinsurer have any rights hereunder
and, except as otherwise herein provided, the Ceding Company
shall be and remain solely liable to any insured, owner or
beneficiary under any Policy.
E. Confidentiality: Each party shall maintain the confidentiality
of all information, including legally protected consumer
privacy information, that is provided to it by the other party
in connection with this Agreement; provided, however, that
this obligation of confidentiality shall not apply (a) 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; (b) if
the information is or becomes available from public
information (other than as a result of prior unauthorized
disclosure by the disclosing party); (c) if the information is
or was received from a third party not known by the disclosing
party to be under a confidentiality obligation with regard to
such information; or (d) if the information was in the
possession of the disclosing party (having received such
information on a non-confidential basis) other than by reason
of the services performed pursuant to this Agreement. In the
event that either party becomes legally compelled to disclose
any secret or confidential information, 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
20
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.
F. Inspection of Records: Each party and its employees and
authorized representatives, respectively, may audit, 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 other documents that relate to a Policy. The audited party
agrees to provide a reasonable work space for such audit, to
cooperate fully and to disclose the existence of and to
produce any and all necessary and reasonable materials
requested by such auditors. Each party shall bear its own
audit expenses. All such information, including audit reports
and analyses, shall be kept confidential.
G. Damages: The Reinsurer assumes no liability under this
Agreement
(1) for any damages, fines, penalties, costs or
expenses, or portion thereof, levied on or assessed
against the Ceding Company by any court or regulatory
body on the basis of negligence, oppression, malice,
fraud, fault, wrong doing or bad faith by the Ceding
Company in connection with any Policy 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 in writing with the actions
taken or not taken by the Ceding Company that led to
the levy or assessment, in which case the Reinsurer
shall pay a proportional share of such levy or
assessment; or
(2) for any payment by the Ceding Company in excess
of the Policy amount because of negligence,
oppression, malice, fault, wrongdoing or bad faith of
the Ceding Company in connection with any Policy or
for 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, unless the Reinsurer shall have
received notice of and concurred in writing with the
actions taken or not taken by the Ceding Company that
led to the excess payment, in which case the
Reinsurer shall pay a proportional share of such
excess payment.
H. Errors and Omissions: If either the Ceding Company or the
Reinsurer commits an unintentional error, oversight or
misunderstanding (collectively referred to as "errors") in
administering this Agreement, the error shall be corrected by
restoring both parties to the positions they would have
occupied had the error not occurred. If it is not possible to
restore each party to the position it would have occupied had
the error not
21
occurred, the parties shall endeavor in good faith to fashion
a resolution to the situation created by the error that is
fair and reasonable and most closely approximates the intent
of the parties as evidenced by this Agreement.
I. Indemnification and Limitation of Liability: Each party shall
indemnify and hold the other, 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 legal
expenses, 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. In no
event shall any party to this Agreement be liable to the other
party for punitive, indirect or consequential damages arising
under this Agreement for any clause whatsoever, whether or not
such party has been advised or could have foreseen the
possibility of such damages.
J. Entire Agreement: This Agreement supersedes all prior
discussions and agreements between the parties and constitutes
their sole and entire agreement with respect to its subject
matter and there are no understandings between the parties
with respect thereto other than as expressed in the Agreement.
K. Modifications to Agreement: 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.
L. Survival: All of the provisions of this Agreement, to the
extent necessary to carry out the purposes of this Agreement
or to ascertain and enforce the parties' rights hereunder,
shall survive the termination of this Agreement.
M. Currency: All monies due either the Reinsured or the Reinsurer
under this Agreement shall be offset against each other,
dollar for dollar, regardless of any insolvency of either
party. All payments shall be effected through offsetting
balances, electronic funds transfers or as the parties may
otherwise agree in order to carry out the purposes of this
Agreement. All financial transactions under this Agreement
shall be paid in the lawful currency of the United States.
22
N. 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.
O. Agents, Intermediaries, and Representatives: Each party
represents that all negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out
by the parties 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.
P. Construction Rules: Each party represents that it has had
sufficient opportunity to review and negotiate the terms of
this Agreement and is fully aware of all the obligations and
responsibilities created hereunder. Therefore, the parties
agree that 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
Exhibit attached hereto. Exhibits attached hereto are
incorporated into this Agreement. Captions are provided for
reference only.
Q. Written Notices: Written notices under this Agreement shall be
effective when delivered to any party at the address provided
herein:
(1) If to the Ceding Company:
Xxxxxxx X. Xxxxxx
Vice President & Actuary
New England Life Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(2) If to the Reinsurer:
ABC Reinsurance Company
(3) Either party may change its address by giving the
other party written notice of its new address;
provided, however, that any notice of change of
address shall be effective only upon receipt.
R. Representation of Authority and Acknowledgement of
Understanding: 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.
S. Representation of Valid Signature: Each party represents and
warrants that this Agreement has been duly and validly signed
on its behalf; that it
23
has the full corporate power and authority necessary to
perform its obligations hereunder; and that it shall maintain
in force all necessary legal and regulatory authorizations.
T. 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.
24
ARTICLE XVI
EXECUTION OF AGREEMENT
In witness of the above,
New England Life Insurance Company
of
Boston, Massachusetts
and
ABC Reinsurance Company
of
City, State
have by their respective officers executed and delivered this
Agreement, effective Month, Day, Year.
NEW ENGLAND LIFE INSURANCE COMPANY
By: ______________________________ By: ____________________________
Title: _____________________________ Title: _________________________
ABC REINSURANCE COMPANY
By: _______________________________ By: ____________________________
Title: ______________________________ Title: _________________________
25
EXHIBIT I
LIMITS
REINSURER'S SHARE:
AUTOMATIC BINDING LIMIT
The Ceding Company may not cede Policy amounts pursuant to Article I
when the face amount of the Policy exceeds the following:
26
JUMBO LIMIT
The Ceding Company may cede Policy amounts pursuant to Article I only
if, according to the information available to the Ceding Company, the
total amount of life insurance in force and applied for on the life
with all insurance companies, including any amount to be replaced, does
not exceed $.
27
EXHIBIT II
CEDING COMPANY RETENTION LIMITS
CEDING COMPANY SHARE: x% of the Policy face amount, not to exceed the
following retention limits per life.
SINGLE LIFE
SURVIVORSHIP
SPECIAL LIMITS
28
EXHIBIT III
POLICIES AND RIDERS
The Policies and Riders described below may be ceded hereunder:
29
EXHIBIT IV
REINSURANCE RATES
There shall be no policy fees.
Premium rates shall be the same for automatic and facultative
reinsurance.
JOINT LIFE COVERAGES (BASE PLAN AND RIDERS)
Life premiums shall be equal to the following percentages of the joint
mortality rates, calculated using the attached Exact Age Formula and
the attached single life mortality tables. There shall be a minimum
premium of $x per thousand. Percentages:
Single life substandard table ratings shall increase the single life
mortality rates by 25% per table.
Single life flat extra premium amounts per thousand shall be divided by
1000 and then added to the single life mortality rates after the
application of the substandard factor.
SINGLE LIFE COVERAGES (RIDERS AND SPLIT OPTION COVERAGE)
Life premiums shall be the following percentages of the attached single
life mortality tables, for all underwriting classes.
Substandard table ratings shall increase the single life mortality
rates by 25% per table.
The premiums shall be increased by any flat extra premium charged the
insured less allowances
Split Option Rider: Any single life policy issued as the result of an
exercise of the Split Option Rider would be reinsured at the above
rates on a point-in-scale basis.
EXACT AGE FORMULA
Joint Mortality Rate Formula
30
EXHIBIT V
MONTHLY REPORTS
The Ceding Company shall provide the Reinsurer reports each month in substantial
accord with those shown in this Exhibit.
31
PAGE 1
COMPANY_NAME_05/31/2001
NELICO MONTHLY BILLING SUMMARY
05/31/01
PRODUCT CHANNEL FIRST FIRST RENEWAL RENEWAL TOTAL TOTAL TOTAL
LINE CODE PREMIUM WAIVER PREMIUM WAIVER LIFE WAIVER PREMIUM
- 32 -
PAGE 1
COMPANY NAME_5/1/2001
NELICO MONTHLY DEATH CLAIM SUMMARY
05/31/01
PRODUCT CHANNEL DEATH INTEREST
LINE CODE CLAIMS ON CLAIMS TOTAL
33
PAGE 1
NELICO COMPANY NAME_1/1/2001
TOTAL
STATUTORY VALUATION SUMMARY
05 / 31 / 01
STANDARD TABLE FLAT TOTAL STANDARD TABLE FLAT TOTAL
VALUATION VALUATION VALUATION VALUATION UNEARNED UNEARNED UNEARNED UNEARNED
STATUTORY NUMBER OF REINSURANCE NET NET NET NET NP NP NP NP
RESERVE POLICIES NET AMT OF RISK PREMIUM PREMIUM PREMIUM PREMIUM RESERVE RESERVE RESERVE RESERVE
34
PAGE 1
NELICO COMPANY_NAME_05/31/2001
TOTAL
TAX VALUATION SUMMARY
05 / 31 / 01
STANDARD TABLE FLAT TOTAL STANDARD TABLE FLAT TOTAL
VALUATION VALUATION VALUATION VALUATION UNEARNED UNEARNED UNEARNED UNEARNED
TAX NUMBER OF REINSURANCE NET NET NET NET NP NP NP NP
RESERVE POLICIES NET AMT OF RISK PREMIUM PREMIUM PREMIUM PREMIUM RESERVE RESERVE RESERVE RESERVE
35
PAGE 1
NELICO COMPANY_NAME_8/30/1996
AAA MONTHLY POLICY EXHIBIT
05 / 31 / 01
REINSURANCE
POLICY NET AMOUNT
COUNT AT RISK
(+) BALANCE, BEGINNING OF MONTH
(+) NEW BUSINESS
(+) REINSTATEMENTS
(+) REINSTATEMENTS FROM DEATHS
(+) NEW REINSURANCE
(+) INCREASE
(+) CHANGES - ON
(+) DECREASE IN RISK - ON
TOTAL INCREASES
(-) DEATH
(-) SURRENDER
(-) CONVERSION
(-) LAPSE WITH VALUE
(-) LAPSE NO VALUE
(-) MATURITY
(-) EXPIRY
(-) CANCELLATION
(-) CHANGES - OFF
(-) DECREASE IN RISK -OFF
(-) DECREASES
TOTAL DECREASES
(=) BALANCE, END OF MONTH
36
PAGE 1
NELICO COMPANY NAME_05/31/2001
MONTHLY BILLING DETAIL REPORT
05 / 31 /01
NAME S L F
TRANS TRANS PRO POLICY SUB OF POLICY SER/CLASS ISSUE / O MAN PROD CH / NET AMT
TYPE DATE DYS NUMBER ID INSURED DATE PLAN/SUFF AGE N B INP CD CD R OF RISK
SUBST SUBST
STANDARD POL TABLE FLAT WAIVER TOTAL
PREMIUM FEE PREMIUM PREMIUM PREMIUM PREMIUM
DETAIL REPORT TOTALS
POLICY COUNT
NET AMOUNT OF RISK
STANDARD PREMIUM
POLICY FEE
SUB STANDARD TABLE PREMIUM
SUB STANDARD FLAT PREMIUM
WAIVER PREMIUM
TOTAL PREMIUM
37
PAGE 1
NELICO COMPANY_NAME_05/31/2001
MONTHLY NEW BUSINESS REPORT
05 / 31 / 01
M I
NAME U L S S A FLAT POLICY REINSURANCE REINSURANCE
POLICY SUB OF POLICY SER/CLASS DOB DOB L O MAN E / G TBL FLAT EXPIRY ISSUE ISSUE NET AMT
NUMBER ID INSURED DATE PLAN/SUFF #1 #2 T B INP X N E RTG PER/M YEAR AMOUNT AMOUNT AT RISK
NEW BUSINESS REPORT TOTALS
POLICY COUNT
POLICY ISSUE AMOUNT
REINS ISSUE AMOUNT
REINS NET AMOUNT AT RISK
38
PAGE 1
NELICO COMPANY NAME_05/31/2001
MONTHLY DEATH NOTIFY REPORT
05 / 31 / 01
I
NAME S A DATE DATE CAUSE POLICY
POLICY SUB OF POLICY SER/CLASS LEGAL E G LOB PROD CHAN DATE OF OF OF CLAIM
NUMBER ID INSURED DATE PLAN/SUFF STATE X E CODE CODE CODE INCURRED BIRTH DEATH DEATH STATUS
POLICY REINSURANCE REINSURANCE
ISSUE NET AMT INTEREST
AMOUNT AT RISK AMOUNT
DEATH NOTIFY REPORT TOTALS
POLICY COUNT
REINS NET AMOUNT AT RISK
REINS INTEREST AMOUNT
39
PAGE 1
NELICO COMPANY NAME_05/31/2001
MONTHLY DEATH REVERSAL REPORT
05 / 31 / 01
I
NAME S A DATE DATE CAUSE POLICY
POLICY SUB OF POLICY SER/CLASS LEGAL E G LOB PROD CHAN DATE OF OF OF CLAIM
NUMBER ID INSURED DATE PLAN/SUFF STATE X E CODE CODE CODE INCURRED BIRTH DEATH DEATH STATUS
POLICY REINSURANCE REINSURANCE
ISSUE NET AMT INTEREST
AMOUNT AT RISK AMOUNT
DEATH NOTIFY REPORT TOTALS
POLICY COUNT
REINS NET AMOUNT AT RISK
REINS INTEREST AMOUNT
40
PAGE 1
NELICO COMPANY_NAME_05/31/2001
MONTHLY DEATH PAID REPORT
05 / 31 / 01
I
NAME S A DATE DATE CAUSE
POLICY SUB OF POLICY SER/CLASS LEGAL E G LOB PAR PROD CHAN DATE OF OF OF DISBURSE
NUMBER ID INSURED DATE PLAN/SUFF STATE X E CODE CODE CODE CODE PAID BIRTH DEATH DEATH DATE
POLICY POLICY REINSURANCE REINSURANCE
CLAIM ISSUE NET AMT INTEREST
STATUS AMOUNT AT RISK AMOUNT
DEATH PAID REPORT TOTALS
POLICY COUNT
REINS NET AMOUNT AT RISK
REINS INTEREST AMOUNT
41
PAGE 1
NELICO COMPANY NAME_05/31/2001
MONTHLY IN FORCE REPORT
05 / 31 / 01
M I
NAME S S U L A REINS
POLICY SUB OF POLICY SER/CLASS E / L O MAN PROD CH G UND TB FLAT NET AMT
NUMBER ID INSURED DATE PLAN/SUFF X N T B INP CD CD E DYS RT PER/M RISK
STAT STAT TAX TAX TOTAL TOTAL
NET UNEARN NET UNEARN REINS EXP
PREM NP RESV PREM NP RESV PREMIUM MORT
INFORCE REPORT TOTALS
POLICY COUNT
REINS NET AMOUNT AT RISK
STAT NET PREMIUM
STAT UNEARNED NET PREM RESV
TAX NET PREMIUM
TAX UNEARNED NET PREM RESV
TOTAL PREMIUM
EXPECTED MORTALITY
42
