AUTOMATIC REINSURANCE AGREEMENT
between
GENERAL AMERICAN INSURANCE COMPANY, St. Louis, Missouri
(hereinafter called the CEDING COMPANY)
and
GENERAL AMERICAN LIFE INSURANCE COMPANY, St. Louis, Missouri
(hereinafter called GENERAL AMERICAN)
This Agreement is Effective January 1, 1987
ARTICLE I AUTOMATIC COVERAGE
A. All automatic reinsurance required by the CEDING COMPANY on the Group
Universal Life and Individual Employee Sponsored Mass Marketing policies
sold by the CEDING COMPANY including the Individual Children's Plan for
employees of Xxxxxxx Purina and its subsidiary companies will be assumed
by GENERAL AMERICAN as described in the terms of this Agreement.
B. On each risk ceded under this Agreement, the CEDING COMPANY shall
retain 70% of amounts up to the first $71,500 on a life and shall cede 30%
to GENERAL AMERICAN until the CEDING COMPANY has retained its full
retention of $50,000 on a life. All excess coverage will then be ceded to
GENERAL AMERICAN, subject to the terms of this Agreement.
C. Whenever the CEDING COMPANY is already on the risk for its maximum
retention under policies previously issued, the CEDING COMPANY may
automatically cede additional amounts to GENERAL AMERICAN, subject to the
terms of this Agreement.
D. The CEDING COMPANY agrees not to automatically bind GENERAL AMERICAN
when:
1. The amount to be ceded automatically exceeds $500,000.
2. The risk is a jumbo risk defined as one on which the sum of
insurance already in force and the amount currently applied for in
the CEDING COMPANY and in all other companies exceeds $10,000,000.
E. The CEDING COMPANY may automatically cede 100% of the Accidental Death
Benefit reinsurance in amounts not to exceed the amount applicable to the
amount of Life insurance issued.
F. The CEDING COMPANY may automatically cede 100% of Child Term Rider
reinsurance to GENERAL AMERICAN when the policy to which this Rider is
attached is being reinsured under this agreement.
G. When the Spouse Term Rider is attached to coverage being ceded under
this Agreement, the CEDING COMPANY shall retain 50% of amounts up to the
first $100,000 on a life and shall cede 50% to GENERAL AMERICAN until the
CEDING COMPANY has retained its full retention of $50,000 on a life. All
excess coverage will then be ceded to GENERAL AMERICAN, subject to the
terms of this Agreement.
ARTICLE II REINSURANCE PREMIUMS
A. Life Policy
Premiums for Life reinsurance will be based on 98% of the rates
shown in Exhibit II.
B. Accidental Death Benefits
The premium to be paid to GENERAL AMERICAN for Accidental Death
Benefit reinsurance will be the premium charged the insured on the
amount reinsured, less total allowances of 25% in all years.
C. Child Term Rider
Reinsurance premiums for this coverage shall be based on the amount
charged the policyowner on the amount reinsured, less an allowance of 25%
in all years.
D. Spouse Term Rider
Reinsurance premiums for this coverage will be based on the amount
charged the policyowner on the amount reinsured, less an allowance of 25%
in all years.
E. Premiums paid to GENERAL AMERICAN by the CEDING COMPANY shall not be
subject to any state premium tax reimbursement.
F. Guarantee of Rates
For technical reasons the Life reinsurance rates cannot be
guaranteed for more than one year. On all reinsurance ceded at these
rates, however, GENERAL AMERICAN anticipates continuing to accept
premiums on the basis of the rates shown in Exhibit II. Reinsurance rates
will not exceed 100% of the 1980 Commissioners Standard Ordinary rates.
ARTICLE III PAYMENT OF REINSURANCE PREMIUMS
A. The CEDING COMPANY shall self-administer the records for the coverage
ceded to GENERAL AMERICAN and shall furnish GENERAL AMERICAN with monthly
reports including pertinent data relative to those cessions covered under
the terms of this Agreement.
B. The reports shall be furnished to GENERAL AMERICAN as soon as possible
following the close of each month, and will be accompanied by payment of
any net amount due GENERAL AMERICAN as shown on the monthly report.
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C. Any money due the CEDING COMPANY on adjustments and refunds because of
terminations, reinstatements and reissues will be paid immediately by
GENERAL AMERICAN.
D. Reinsurance premiums on cessions which terminate or are reissued to
reduce the amount will be based on the exact number of days of coverage
during the policy year in which termination or reductions takes place.
Premiums on cessions which are reinstated after coverage has ceased will
be based on the exact number of days of coverage. Interest will not be
taken into account in these calculations.
ARTICLE IV ERRORS AND OMISSIONS
A. GENERAL AMERICAN shall be bound as the CEDING COMPANY is bound, and it
is expressly understood and agreed that if nonpayment of premium within
the time specified or failure to comply with any terms of this agreement
is hereby shown to be unintentional or the result of misunderstanding or
oversight on the part of either the CEDING COMPANY or GENERAL AMERICAN,
both the CEDING COMPANY and GENERAL AMERICAN shall be restored to the
position they would have occupied had no such error or oversight
occurred.
ARTICLE V EXPENSE OF ORIGINAL POLICY
A. The CEDING COMPANY shall bear the expense of all medical examinations,
inspection fees and other charges incurred in connection with the
original policy.
ARTICLE VI RECAPTURE PRIVAILEGE AND REDUCTIONS
A. In case the CEDING COMPANY shall increase its maximum limit of
retention of policies issued on either a standard or substandard basis as
shown in Exhibit I, after such policies have been in force ten years
measured from date of issue, a corresponding reduction may be made at the
option of the CEDING COMPANY in the reinsurance then in force under this
agreement.
B. No reinsurance is eligible for recapture unless the CEDING COMPANY
retains its maximum retention in effect at the time the policy is issued.
C. If there is reinsurance in other companies on such risks, the
necessary reduction is to be applied to the reinsurance in each company
in proportion to the reinsurance in that company to the total outstanding
reinsurance on the risk involved.
D. Any policy termination or partial reduction on a wholly reinsured
policy shall not affect other reinsurance in force.
E. Any policy termination or reduction on a partially reinsured policy
shall first cause a reduction in the reinsurance only on the partially
reinsured policy. If other reinsurance needs to be reduced to fill the
CEDING COMPANY'S retention, such reduction in reinsurance shall be
proportionate among companies, in proportion to the amount of reinsurance
in each company to the total outstanding reinsurance on the risk
involved.
F. Any policy termination or reduction on a wholly retained case shall
cause a proportionate reduction by the CEDING COMPANY in other existing
reinsurance.
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ARTICLE VI CLAIMS
A. The liability of GENERAL AMERICAN on any reinsurance under this
agreement shall commence simultaneously with that of the CEDING COMPANY.
B. In every case of loss, copies of the proofs obtained by the CEDING
COMPANY together with a statement showing the amount paid on such claim
by the CEDING COMPANY shall be furnished to GENERAL AMERICAN when
requesting payment of its share of the claim. GENERAL AMERICAN agrees,
however, to abide the claim as settled by the CEDING COMPANY.
C. The CEDING COMPANY shall notify GENERAL AMERICAN of its intention to
contest, compromise, or litigate a claim, and GENERAL AMERICAN shall pay
its share of any settlement up to the maximum that would have been
payable under the specific policy had there been no controversy plus
specific expenses involved, unless it declines to be a party to 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 and any
extra-contractual damages including punitive and exemplary damages, shall
not be included in GENERAL AMERICAN'S share of the specific expense and
final settlement.
D. For waiver of premium benefit claims, GENERAL AMERICAN shall pay the
CEDING COMPANY premiums at the rate applicable to the original policy for
life and supplemental benefits, based on the amount of waiver of premium
benefit reinsured.
ARTICLE VIII REINSTATEMENT
A. Any policy originally reinsured in accordance with the terms and
conditions of this agreement by the CEDING COMPANY may be automatically
reinstated with GENERAL AMERICAN so long as the principal policy is
reinstated in accordance with the terms and rules of the CEDING COMPANY.
ARTICLE IX ARBITRATION
A. Both the CEDING COMPANY and GENERAL AMERICAN shall consider this
agreement from the standpoint of a "gentlemen's agreement" and not merely
as a legal obligation. It may be amended from time to time by written
agreement between the CEDING COMPANY and GENERAL AMERICAN. The
terminology used herein as well as any procedure, either expressed or
implied, shall be construed according to the custom and usage in the
business.
B. Any disagreement between the CEDING COMPANY and GENERAL AMERICAN shall
be settled by arbitration. Each party shall appoint one arbitrator, and
the third is to be selected by these two representatives. Should the two
arbitrators not be able to agree on the choice of the third, such
appointment shall be left to the President of the American Council of
Life Insurance or its successor organization. It is agreed that all three
arbitrators must be officers of life insurance companies other than the
two parties to this agreement. The written decision of the arbitrators
shall be binding on both the CEDING COMPANY and GENERAL AMERICAN. The
cost of arbitration shall be borne by the losing party unless the
arbitrators decide otherwise.
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ARTICLE X INSOLVENCY
A. In the event of the insolvency of the CEDING COMPANY, all reinsurance
shall be payable directly to the liquidator, receiver, or statutory
successor of the CEDING COMPANY without diminution because of the
insolvency of the CEDING COMPANY.
B. In the event of insolvency of the CEDING COMPANY, the liquidator,
receiver, or statutory successor shall give GENERAL AMERICAN written
notice of the pendency of a claim on a policy reinsured within a
reasonable time after such claim is filed in the insolvency proceeding.
During the pendency of any such claim, GENERAL AMERICAN may investigate
such claim and interpose in the name of the CEDING COMPANY (its
liquidator, receiver, or statutory successor), but at its own expense, in
the proceeding where such claim is to be adjudicated any defense or
defenses which GENERAL AMERICAN may deem available to the CEDING COMPANY
or its liquidator, receiver, or statutory successor.
C. The expense thus incurred by GENERAL AMERICAN 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 GENERAL AMERICAN. Where two or more reinsurers are
participating in the same claim and a majority in interest elect to
interpose a defense or defenses to any such claim, the expense shall be
apportioned in accordance with the terms of the reinsurance agreement as
though such expense had been incurred by the CEDING COMPANY.
ARTICLE XI RIGHT TO INSPECT
A. GENERAL AMERICAN may at all reasonable times inspect in the CEDING
COMPANY'S offices the original papers, records, books, files, etc.,
referring to the business under this agreement.
ARTICLE XII TERMINATION OF AGREEMENT
A. This agreement may be terminated at any time by either party giving
three months' notice of termination in writing.
B. The CEDING COMPANY shall continue to submit and GENERAL AMERICAN shall
continue to accept cases for the three months following the date of
written notice of termination.
C. For business previously reinsured and in force, the provisions of this
agreement shall continue to apply.
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IN WITNESS WHEREOF, this agreement shall be effective as of 12:01 AM. January 1,
1987, and is hereby executed in good faith between GENERAL AMERICAN INSURANCE
COMPANY, St. Louis, Missouri, referred to as the CEDING COMPANY, and GENERAL
AMERICAN LIFE INSURANCE COMPANY, St. Louis, Missouri, referred to as GENERAL
AMERICAN, and duly signed by both parties' respective officers as follows:
GENERAL AMERICAN INSURANCE
COMPANY
Attest by: Xxxxxxxx X. Xxxxxx By: Xxxx X. Xxxxxxxx
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Title: Executive Secretary Title: President
Date: 11-16-87
-----------------------------
GENERAL AMERICAN LIFE INSURANCE
COMPANY
Attest by: Xxxxxxx Xxxxxx By: Xxxx Xxxxxxxx
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Title: Reinsurance Treaty Specialist Title: Vice President
Date: September 24, 1987
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