Yearly Renewable Term
Reinsurance Agreement
between
AMERICAN NATIONAL
INSURANCE COMPANY
One Xxxxx XxxxxXxxxxxxxx,
Xxxxx 00000
(hereinafter referred to as the "Ceding Company")
and
Transamerica
Occidental Life Insurance Company
Cedar Rapids, Iowa
(hereinafter referred
to as the “Reinsurer”)
Effective: November 1,
1997
Treaty #: J&LS
Table of Contents
ARTICLES
1 Preamble
2 Automatic Reinsurance
3 Facultative Reinsurance
4 Commencement of Liability
5 Reinsured Risk Amount
6 Premium Accounting
7 Reductions, Terminations and Changes
8 Conversions, Exchanges and Replacements
9 Claims
10 Credit for Reserves
11 Retention Limit Changes
12 Recapture
13 General Provision
14 DAC Tax
15 Offset
16 Insolvency
17 Error and Omissions
18 Dispute Resolution
19 Arbitration
20 Confidentiality
21 Duration of Agreement
22 Execution
EXHIBITS
A - Retention Limits of the Ceding Company
B - Plans Covered and Binding Limits
C - Forms, Manuals, and Issue Rules
D - Application for Facultative Reinsurance Form
E - Reinsurance Premiums
F- Self-Administered Reporting
SCHEDULES
A- Premium Rates
ARTICLE 1. PREAMBLE
1.1 PARTIES TO THE
AGREEMENT
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This
is a YRT agreement for indemnity reinsurance (the “Agreement”) solely between
(the “Ceding Company”), and (the “Reinsurer”), collectively referred
to as the “parties”. |
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The
acceptance of risks under this Agreement will create no right or legal relationship
between the Reinsurer and the insured, owner or beneficiary of any insurance policy or
other contract of the Ceding Company. |
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The
Agreement will be binding upon the Ceding Company and the Reinsurer and their respective
successors and assigns. |
1.2 COMPLIANCE
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This
Agreement applies only to the issuance of insurance by the Ceding Company in a
jurisdiction in which it is properly licensed. |
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The
Ceding Company represents that, to the best of its knowledge, it is in compliance with all
state and federal laws applicable to the business reinsured under this Agreement. In the
event that the Ceding Company is found to be in non-compliance with any law material to
this Agreement, the Agreement will remain in effect and the Ceding Company will indemnify
the Reinsurer for any direct loss the Reinsurer suffers as a result of the non-compliance,
and will seek to remedy the non-compliance. |
1.3 CONSTRUCTION
This
Agreement will be construed in accordance with the laws of the state of Texas.
1.4 ENTIRE AGREEMENT
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This
Agreement constitutes the entire agreement between the parties with respect to the
business reinsured hereunder. There are no understandings between the parties other than
as expressed in this Agreement. Any change or modification to this Agreement will be null
and void unless made by amendment to this Agreement and signed by both parties. |
1.5 SEVERABILITY
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If
any provision of this Agreement is determined to be invalid or unenforceable, such
determination will not impair or affect the validity or the enforceability of the
remaining provisions of this Agreement. |
ARTICLE 2. AUTOMATIC
REINSURANCE
2.1 GENERAL CONDITIONS
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On
and after the effective date of this Agreement, the Ceding Company will automatically cede
to the Reinsurer a portion of the life insurance policies, supplementary benefits, and
riders listed in Exhibit B. The insured, at the time of the application, must be a
permanent resident of the United States or Canada. |
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The
Reinsurer will automatically accept its share of the above-referenced policies up to the
limits shown in Exhibit B, provided that: |
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a. |
the Ceding Company keeps its full retention, as specified in Exhibit A, or
otherwise holds its full retention on a life under previously issued inforce
policies, |
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b. |
the Ceding Company applies its normal underwriting guidelines. Any risk falling
into the category of special underwriting programs shall be excluded from this
Agreement. Any proposed changes to the Ceding Company’s standard
underwriting practices or guidelines shall be submitted to the Reinsurer for
written approval prior to implementation, (changes since when?) |
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c. |
the total of the new ultimate amount of reinsurance required including
contractual increases, and the amount already reinsured on that life under this
Agreement and all other agreements between the Reinsurer and the Ceding Company,
does not exceed the Automatic Binding Limits set out in Exhibit B, |
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d. |
the amount of life insurance in force in all companies, including any coverage
to be replaced plus the amount currently applied for on that life in all
companies, does not exceed the Jumbo Limit stated in Exhibit B, |
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e. |
the application is on a life that has not been submitted facultatively to the
Reinsurer or any other reinsurer within the last two (2) years, unless the
reason for any prior facultative submission was solely for capacity that may now
be accommodated within the terms of this Agreement, |
f.
The issue age on any risk must not exceed the limit stated in Exhibit B, and
g.
The mortality rating on each individual risk must not exceed the limit stated in
Exhibit B.
2.2 RETAINED AMOUNTS
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The
Ceding Company may not reinsure the amount it has retained on the business covered under
this Agreement, on any basis, without prior notification to the Reinsurer. |
ARTICLE 3. FACULTATIVE
REINSURANCE
|
3.1 |
The Ceding Company may submit any application on a plan or rider identified in Exhibit B
to the Reinsurer for its consideration on a facultative basis. |
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The
Ceding Company will apply for reinsurance on a facultative basis by sending to the
Reinsurer an Application for Facultative Reinsurance, providing the information outlined
in Exhibit D. Accompanying this Application will be copies of all underwriting evidence
that is available for risk assessment including, but not limited to, copies of the
application for insurance, medical examiners’ reports, attending physicians’
statements, inspection reports, and any other information bearing on the insurability of
the risk. The Ceding Company also will notify the Reinsurer of any outstanding
underwriting requirements at the time of the facultative submission. Any subsequent
information received by the Ceding Company that is pertinent to the risk assessment will
be immediately transmitted to the Reinsurer. |
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After
consideration of the Application for Facultative Reinsurance and related information, the
Reinsurer will promptly inform the Ceding Company of its underwriting decision. The
Reinsurer’s offer will expire at the end of one hundred twenty (120) days, unless
otherwise specified by the Reinsurer. |
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If
the underwriting decision is acceptable, the Ceding Company will notify the Reinsurer in
writing of its acceptance of the offer. The relevant terms and conditions of this
Agreement will apply to those facultative offers made by the Reinsurer and accepted by the
Ceding Company. |
ARTICLE 4. COMMENCEMENT
OF LIABILITY
4.1 AUTOMATIC REINSURANCE
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For
automatic reinsurance, the Reinsurer’s liability will commence at the same time as
the Ceding Company’s liability. |
4.2 FACULTATIVE
REINSURANCE
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For
facultative reinsurance, the Reinsurer’s liability will commence at the same time as
the Ceding Company’s liability, provided that the Reinsurer has made a written
facultative offer and that offer was accepted, in accordance with the terms of this
Agreement. |
4.3 CONDITIONAL RECEIPT
OR TEMPORARY INSURANCE
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Reinsurance
coverage under a conditional receipt or temporary insurance provision is limited to the
Reinsurer’s share of amounts within the Conditional Receipt or Temporary Insurance
Limits specified in Exhibit B. The Reinsurer will accept liability provided that the
Ceding Company has followed its normal cash-with-application procedures for such coverage. |
ARTICLE 5. REINSURED
RISK AMOUNT
5.1 LIFE
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For
option A policies, the net amount at risk of the policy is defined as the policy face
amount less the account value. For option B policies, the net amount at risk of the policy
is defined as the policy face amount. The reinsured net amount at risk for automatic
policies is determined by multiplying the total net amount at risk on the policy by the
Reinsurer’s share as defined in Exhibit B. For option A policies, the net amount at
risk is calculated using the account value in effect at the beginning of the reinsurance
billing period. The Ceding Company will maintain a quota share retention on each policy,
up to the maximum limits of its retention per life for the insured’s issue age and
rating, as shown in Exhibit A. Risk amounts above that limit will be reinsured under the
terms of this Agreement on an excess basis. |
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The
net amount at risk and the reinsured net amount at risk for policies resulting from
exercise of the Policy Split Option will be determined in the same manner. |
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The
Ceding Company’s retention on the policy will remain constant. Any change in the net
amount at risk due to changes in the policy’s cash value or account value will be
allocated to the reinsured amount. |
5.2 WAIVER OF PREMIUM
RIDER
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The
reinsured proportion of Disability Waiver of Premium will not be greater than the
proportion reinsured on the corresponding life insurance benefit. |
5.3 AUTOMATIC INCREASE
RIDER
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The
amount of insurance placed into effect under the Automatic Increase Option will be
combined with the net amount at risk defined in section 5.1 and the reinsured net amount
at risk will be calculated using the formula specified in section 5.1. |
5.4 Contemplation of death rider
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The
reinsured proportion of the Contemplation of Death Rider will be determined by multiplying
the net amount at risk on the rider by the Reinsurer’s share as defined in Exhibit B,
subject to the Company’s maximum retention limit as shown in Exhibit A. |
ARTICLE 6. PREMIUM
ACCOUNTING
6.1 PREMIUMS
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Reinsurance
premium rates for life insurance and other benefits reinsured under this Agreement are
shown in Exhibit E and Schedule A. The rates will be applied to the reinsured net amount
at risk. |
The
Ceding Company will reduce the reinsurance premiums by the allowances shown in Exhibit E.
6.2 PAYMENT OF PREMIUMS
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Reinsurance
premiums are payable annually and in advance. The Ceding Company will calculate the amount
of reinsurance premium due and, within thirty (30) days after the end of the month, will
send the Reinsurer an electronic statement that contains the information shown in Exhibit
F, showing reinsurance premiums due for that period. If an amount is due the Reinsurer,
the Ceding Company will remit that amount by the Remittance Date. If an amount is due the
Ceding Company, the Reinsurer will remit such amount within thirty (30) days of receipt of
the statement. |
6.3 DELAYED PAYMENT
The
Remittance Date is defined as thirty (30) days after the end of the reporting period.
6.4 FAILURE TO PAY
PREMIUMS
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The
payment of reinsurance premiums is a condition precedent to the liability of the Reinsurer
for reinsurance covered by this Agreement. In the event that reinsurance premiums are not
paid within thirty (30) days of the Remittance Date, the Reinsurer will have the right to
terminate the reinsurance under all policies having reinsurance premiums in arrears. If
the Reinsurer elects to exercise its right of termination, it will give the Ceding Company
thirty (30) days written notice of its intention. Such notice will be sent by certified
mail. |
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If
all reinsurance premiums in arrears, including any that become in arrears during the
thirty (30) day notice period, are not paid before the expiration of the notice period,
the Reinsurer will be relieved of all liability under those policies as of the last date
to which premiums have been paid for each. Reinsurance on policies on which reinsurance
premiums subsequently fall due will automatically terminate as of the last date to which
premiums have been paid for each policy, unless reinsurance premiums on those policies are
paid on or before their Remittance Dates. |
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Terminated
reinsurance may be reinstated, subject to approval by the Reinsurer, within thirty (30)
days of the date of termination, and upon payment of all reinsurance premiums in arrears
including any interest accrued thereon. The Reinsurer will have no liability for any
claims incurred between the date of termination and the date of the reinstatement of the
reinsurance. The right to terminate reinsurance will not prejudice the Reinsurer’s
right to collect premiums for the period during which reinsurance was in force prior to
the expiration of the thirty(30) day notice. |
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The
Ceding Company will not force termination under the provisions of this Article solely to
avoid the provisions regarding recapture in Article 12, or to transfer the reinsured
policies to another reinsurer. |
6.5 PREMIUM RATE GUARANTEE
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If
the Ceding Company raises its cost-of-insurance charges due to mortality deterioration on
the block of inforce business reinsured under this Agreement, the Reinsurer may increase
its premium rates (or reduce its allowances) on that block of business by a corresponding
amount. The Ceding Company will provide the Reinsurer sixty (60) days notice of any such
increase. The increase in reinsurance premiums (or reduction in coinsurance allowances)
will become effective on individual policy anniversary dates beginning no sooner than
thirty (30) days after the Reinsurer has provided notice of its intent to increase
premiums and no sooner than the increase in retail premiums or cost-of-insurance charges
becomes effective. |
ARTICLE 7. REDUCTIONS,
TERMINATIONS AND CHANGES
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Whenever
a change is made in the status, plan, amount or other material feature of a policy
reinsured under this Agreement, the Reinsurer will, upon receipt of notification of the
change, provide adjusted reinsurance coverage in accordance with the provisions of this
Agreement. The Ceding Company will notify the Reinsurer of any such change within sixty
(60) days of its effective date. |
7.1 REDUCTIONS AND
TERMINATIONS
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In
the event of the reduction, lapse, or termination of a policy or policies reinsured under
this Agreement or any other agreement, the Ceding Company will reduce or terminate
reinsurance on that life. The reinsured amount on the life with all reinsurers will be
reduced, effective on the same date, by the amount required such that the Ceding Company
maintains its retention as defined under this Agreement. |
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The
reinsurance reduction will apply first to the policy or policies being reduced and then,
on a chronological basis, to other reinsured policies on the life, beginning with the
oldest policy. If a fully retained policy on a life that is reinsured under this Agreement
is terminated or reduced, the Ceding Company will reduce the existing reinsurance on that
life by a corresponding amount, with the reinsurance on the oldest policy being reduced
first. If the amount of reduction exceeds the risk amount reinsured, the reinsurance on
the policy or policies will be terminated. |
The
Reinsurer will refund any unearned reinsurance premiums net of allowances.
7.2 INCREASES
a.
Non-contractual Increases
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If
the amount of insurance is increased as a result of a non-contractual change, the increase
will be underwritten by the Ceding Company in accordance with its customary standards and
procedures and will be considered new reinsurance under this Agreement. The
Reinsurer’s approval is required if the original policy was reinsured on a
facultative basis or if the new amount will cause the reinsured amount on the life to
exceed either the Automatic Binding Limits or the Jumbo Limits shown in Exhibit B. |
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The
Ceding Company and the Reinsurer will share the increased amount proportionately. Once the
Ceding Company’s maximum retention has been reached, the remaining amount will be
reinsured on an excess basis. |
Premiums
for the additional reinsurance will be at the new-issue rate from the point of increase.
b.
Contractual Increases
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For
policies reinsured on an automatic basis, reinsurance of increases in amount resulting
from contractual policy provisions will be accepted only up to the Automatic Binding
Limits shown in Exhibit B. |
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For
policies reinsured on a facultative basis, reinsurance will be limited to the ultimate
amount shown in the Reinsurer’s facultative offer. Reinsurance premiums for
contractual increases will be on a point-in-scale basis from the original issue age of the
policy. |
7.3 RISK CLASSIFICATION
CHANGES
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If
the policyholder requests a Table Rating reduction or removal of a Flat Extra, such change
will be underwritten according to the Ceding Company’s normal underwriting practices.
Risk classification changes on facultative policies will be subject to the
Reinsurer’s approval. |
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The
Ceding Company’s current practice is to remove a substandard rating after twenty (20)
years or age 65, whichever comes later. If the Ceding Company reduces the insured’s
premium by the amount of the substandard rating, the reinsurance premium will also be
reduced. |
7.4 REINSTATEMENT
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If
a policy reinsured on an automatic basis is reinstated in accordance with its terms and in
accordance with Ceding Company rules and procedures, the Reinsurer will, upon notification
of reinstatement, reinstate the reinsurance coverage. If a policy reinsured on a
facultative basis is reinstated, the Reinsurer will reinstate the reinsurance coverage
upon notification of reinstatement in accordance with Ceding Company rules and procedures. |
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Upon
reinstatement of the reinsurance coverage, the Ceding Company will pay the contractual
reinsurance premiums plus accrued interest for the period on the same basis and at the
same interest rate as the Ceding Company collected from its policyholder for the
reinstatement. |
ARTICLE 8. CONVERSIONS,
EXCHANGES AND REPLACEMENTS
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If
a policy reinsured under this Agreement is converted, exchanged or replaced, the Ceding
Company will promptly notify the Reinsurer. Unless mutually agreed otherwise, policies
that are not reinsured with the Reinsurer and that exchange or convert to a plan covered
under this Agreement will not be reinsured hereunder. |
8.1 CONVERSIONS
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The
Reinsurer will continue to reinsure policies resulting from the contractual conversion of
any policy reinsured under this Agreement, in an amount not to exceed the original amount
reinsured hereunder. If the plan to which the original policy is converting is reinsured
by the Reinsurer, either under this Agreement or under a different Agreement, reinsurance
premium rates for the resulting converted policy will be those contained in the Agreement
that covers the plan to which the original policy is converting. If the new plan is not
reinsured by the Reinsurer, reinsurance premiums for a policy resulting from a contractual
conversion will continue to use the rates shown in Exhibit E. Reinsurance premiums and any
allowances for conversions will be on a point-in-scale basis from the original issue age
of the policy. |
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If
the conversion results in an increase in the risk amount, the increase will be
underwritten by the Ceding Company in accordance with its customary standards and
procedures. The Reinsurer will accept its share of such increases, subject to the new
business provisions of this Agreement. Reinsurance premiums and any allowances for
increased risk amounts will be first-year premiums at the agreed-upon premium rate. |
8.2 EXCHANGES AND
REPLACEMENTS
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A
policy resulting from an internal exchange or replacement will be underwritten by the
Ceding Company in accordance with its underwriting guidelines, standards and procedures
for exchanges and replacements. If the Ceding Company’s guidelines treat the policy
as new business, then the reinsurance will also be considered new business. For purposes
of this Article, new business is defined as those policies on which: |
a.
the Ceding Company has obtained complete and current underwriting evidence on
the full amount; and
b.
the full normal commissions are paid for the new plan; and
c.
the Suicide and Contestable provisions apply as if the policy were newly issued.
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The
Reinsurer’s approval to exchange or replace the policy will be required if the
original policy was reinsured on a facultative basis. |
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If
the Ceding Company’s guidelines do not treat the policy as new business, the exchange
or replacement will continue to be ceded to the Reinsurer. The rates will be based on the
original issue age, underwriting class and duration since the issuance of the original
policy. |
8.3 POLICY SPLIT OPTION
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Reinsurance
premiums for single life policies, which result from the Policy Split Option having been
exercised, will reflect the original issue age and underwriting class of the insured, as
well as the duration since issuance of the original policy. The original policy will be
split so that no more than 50% of the original policy’s surrender value, death
benefits, and policy debt are allocated to either of the resulting policies. Surrender
value, death benefits, and policy debt will be split among the new policies proportionally
to each other. The Policy Split Option will terminate at the earlier of the eldest
insured’s attained age of 80, and the base policy’s termination. The reinsurance
premiums for policies resulting from the Policy Split Option are shown in Section 2.b of
Schedule E. |
8.4 De-Arbitrage on Policies sold by stp
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If
a policy sold by the STP marketing group is de-arbitraged, the Ceding Company will issue a
new policy dated as of the date of de-arbitrage. If both insureds are alive, the new
policy would be a survivorship policy. If one insured is dead, the new policy will be a
single life UL. Policy loads and COI’s would be a continuation of the original scale.
Reinsurance premiums would also continue on a point-in-scale basis. The reinsurance
premiums would continue to be from Section 1.a of Exhibit E if a survivor policy and from
Section 1.c of Exhibit E if a single life UL. |
ARTICLE 9. CLAIMS
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Claims
covered under this Agreement include only death claims, and any additional benefits
specified in Exhibit B, which are provided by the underlying policy and are reinsured
under this Agreement. If the policy is a survivorship policy, the claim is payable upon
the deaths of both insureds on a policy reinsured under this Agreement. |
9.1 NOTICE
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The
Ceding Company will notify the Reinsurer, as soon as reasonably possible, after it
receives a claim on a policy reinsured under this Agreement. |
9.2 PROOFS
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The
Ceding Company will promptly provide the Reinsurer with proper claim proofs, including a
copy of the proof of payment by the Ceding Company, and copies of the death certificates
for both insureds, where applicable. In addition, for contestable claims, the Ceding
Company will send to the Reinsurer a copy of all papers in connection with the claim. |
9.3 AMOUNT AND PAYMENT OF
REINSURANCE BENEFITS
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As
soon as the Reinsurer receives proper claim notice and proof of the claim, the Reinsurer
will promptly pay the reinsurance benefits due the Ceding Company. The Ceding
Company’s contractual liability for policies reinsured under this Agreement is
binding on the Reinsurer. However, for claims incurred during the contestable period, if
the amount of reinsurance ceded to the Reinsurer is greater than 50% of the total net
amount at risk on the policy, the Ceding Company will consult with the Reinsurer before
conceding liability or making settlement to the claimant. The Ceding Company will wait at
least ten (10) days for the Reinsurer’s recommendation. |
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The
total reinsurance recoverable from all companies will not exceed the Ceding Company’s
total contractual liability on the policy, less the amount retained. The maximum
reinsurance death benefit payable to the Ceding Company under this Agreement is the risk
amount specifically reinsured with the Reinsurer. The Reinsurer will also pay its
proportionate share of the interest that the Ceding Company pays on the death proceeds
until the date of settlement. |
Life
benefit payments will be made in a single sum, regardless of the Ceding Company’s
settlement options.
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The
reinsurance benefit for an approved waiver of premium claim will be the Reinsurer’s
proportionate share of the monthly deduction or stipulated premium waived on the policy.
The Ceding Company will continue to pay the life reinsurance premium; however, it will not
pay the reinsurance premium for the waiver benefit for the duration of the waiver claim
period. The Reinsurer will pay waiver benefits annually. |
9.4 CONTESTABLE CLAIMS
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The
Ceding Company will promptly notify the Reinsurer of its intention to contest, compromise,
or litigate a claim involving a reinsured policy. The Ceding Company will also promptly
and fully disclose all information relating to the claim. Once notified, the Reinsurer
will have ten (10) days to notify the Ceding Company in writing of its decision to accept
participation in the contest, compromise, or litigation. If the Reinsurer has accepted
participation, the Ceding Company will promptly advise the Reinsurer of all significant
developments in the claim investigation, including notification of any legal proceedings
against it in response to denial of the claim. |
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If
the Reinsurer does not accept participation, the Reinsurer will then fulfill its
obligation by paying the Ceding Company its full share of the reinsurance amount, and will
not share in any subsequent reduction or increase in liability. |
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If
the Reinsurer accepts participation and the Ceding Company’s contest, compromise, or
litigation results in a reduction or increase in liability, the Reinsurer will share in
any such reduction or increase in proportion to its share of the risk on the contested
policy. |
9.5 CLAIM EXPENSES
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The
Reinsurer will pay its share of reasonable claim investigation and legal expenses
connected with the litigation or settlement of contractual liability claims unless the
Reinsurer has discharged its liability pursuant to Section 9.4 above. If the Reinsurer has
so discharged its liability, the Reinsurer will not participate in any expenses incurred
thereafter. |
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The
Reinsurer will not reimburse the Ceding Company for routine claim and administration
expenses, including but not limited to the Ceding Company’s home office expenses,
compensation of salaried officers and employees, and any legal expenses other than third
party expenses incurred by the Ceding Company. Claim investigation expenses do not include
expenses incurred by the Ceding Company as a result of a dispute or contest arising out of
conflicting claims of entitlement to policy proceeds or benefits. |
9.6 MISREPRESENTATION OR
SUICIDE
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If
the Ceding Company returns premium to the policyowner or beneficiary as a result of
misrepresentation or suicide of the insured, the Reinsurer will refund net reinsurance
premiums received on that policy without interest to the Ceding Company in lieu of any
other form of reinsurance benefit payable under this Agreement. |
9.7 MISSTATEMENT OF AGE
OR SEX
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In
the event of a change in the amount of the Ceding Company’s liability on a reinsured
policy due to a misstatement of age or sex, the Reinsurer’s liability will change
proportionately. According to the policy form, the death benefit shall be that which could
have been purchased by the most recent Cost of Insurance deduction at the correct age or
sex. |
9.8 EXTRA-CONTRACTUAL
DAMAGES
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The
Reinsurer will not participate in punitive or compensatory damages that are awarded
against the Ceding Company as a result of an act, omission, or course of conduct committed
solely by the Ceding Company, its agents, or representatives in connection with claims
covered under this Agreement. The Reinsurer will, however, pay its share of statutory
penalties awarded against the Ceding Company in connection with claims covered under this
Agreement if the Reinsurer elected in writing to join in the contest of the coverage in
question. |
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The
parties recognize that circumstances may arise in which equity would require the
Reinsurer, to the extent permitted by law, to share proportionately in punitive and
compensatory damages. Such circumstances are difficult to define in advance, but would
generally be those situations in which the Reinsurer was an active party and, in writing,
recommended, consented to, or ratified the act or course of conduct of the Ceding Company
that ultimately resulted in the assessment of the extra-contractual damages. In such
situations, the Reinsurer and the Ceding Company will share such damages so assessed, in
an amount equal to the Reinsurer’s proportionate share of the net amount at risk
under the policy. |
For
purposes of this Article, the following definitions will apply.
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“Punitive
Damages” are those damages awarded as a penalty, the amount of which is neither
governed nor fixed by statute. |
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“Compensatory
Damages” are those amounts awarded to compensate for the actual damages sustained,
and are not awarded as a penalty, nor fixed in amount by statute. |
“Statutory
Penalties” are those amounts awarded as a penalty, but are fixed in amount by
statute.
ARTICLE 10. CREDIT FOR
RESERVES
10.1 RESERVE METHODOLOGY
AND REPORTING
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The
parties intend that the Ceding Company will receive full statutory reserve credit in its
state of domicile for the insurance risks ceded to the Reinsurer. The parties agree to
make all reasonable efforts to ensure that this is accomplished. |
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The
Ceding Company will provide a reserve summary for business reinsured under this agreement
to the Reinsurer on an annual basis, along with a detailed description of its reserving
assumptions and any changes in these assumptions applicable to each statement date. |
ARTICLE 11. RETENTION
LIMIT CHANGES
|
11.1 |
If the Ceding Company changes its maximum retention limits as shown in Exhibit A, it will
provide the Reinsurer with written notice of the intended changes thirty (30) days in
advance of their effective date. |
| |
A
change to the Ceding Company’s maximum retention limits will not affect the reinsured
policies in force except as specifically provided elsewhere in this Agreement.
Furthermore, unless agreed between the parties, an increase in the Ceding Company’s
retention schedule will not effect an increase in the total risk amount that it may
automatically cede to the Reinsurer. |
ARTICLE 12. RECAPTURE
|
12.1 |
Recapture is not available until the end of the tenth (10th) policy year and
then must be in conjunction with an increase in the Ceding Company’s maximum schedule
of retention. The amount eligible for recapture will be the difference between the amount
originally retained and the amount the Ceding Company would have retained on the same
quota share basis had the new retention schedule been in effect at the time of issue. If
the Ceding Company has maintained its maximum stated retention (not a special retention
limit) for the plan and the insured’s issue age, sex, and mortality classification,
it may apply its increased retention limits to reduce the amount of reinsurance in force
as follows. |
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a. |
The Ceding Company must give the Reinsurer ninety (90) days written notice prior
to its intended date to commence recapture. |
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b. |
The reduction of reinsurance on affected policies will become effective on the
policy anniversary date immediately following the notice of election to
recapture; however, no reduction will be made until a policy has been in force
for at least ten (10) years. |
| |
c. |
If any reinsured policy is recaptured, all reinsured policies eligible for
recapture under the provisions of this Article must be recaptured up to the
Ceding Company’s new maximum retention limits in a consistent manner and
the Ceding Company must increase its total amount of insurance on each reinsured
life. The Ceding Company may not revoke its election to recapture for policies
becoming eligible at future anniversaries. |
| |
If
portions of the reinsured policy have been ceded to more than one reinsurer, the Ceding
Company must allocate the reduction in reinsurance so that the amount reinsured by each
reinsurer after the reduction is proportionately the same as if the new maximum dollar
retention limits had been in effect at the time of issue. |
| |
The
amount of reinsurance eligible for recapture is based on the current amount at risk as of
the date of recapture. For a policy issued as a result of exchange, conversion, or
re-entry, the recapture terms of the reinsurance agreement covering the original policy
will apply, and the duration period for the purpose of recapture will be measured from the
effective date of the reinsurance on the original policy. |
| |
If
there is a reinsured waiver of premium claim in effect when recapture takes place, the
Reinsurer will continue to pay its share of the waiver claim until it terminates. The
Reinsurer will not be liable for any other benefits, including the basic life risk, that
are eligible for recapture. All such eligible benefits will be recaptured as if there were
no waiver claim in effect. |
| |
After
the effective date of recapture, the Reinsurer will not be liable for any reinsured
policies or portions of such reinsured policies eligible for recapture that the Ceding
Company has overlooked. The acceptance by the Reinsurer of reinsurance premiums under
these circumstances shall not constitute a liability on the part of the Reinsurer for such
reinsurance. The Reinsurer shall be liable only for a refund of premiums. |
| |
The
terms and conditions for the Ceding Company to recapture reinsured policies, as made
necessary by the insolvency of the Reinsurer, are set forth in Article 16.2. |
| |
No
recapture will be permitted if the Ceding Company has either obtained or increased stop
loss reinsurance coverage as justification for the increase in retention limits. |
ARTICLE 13. GENERAL
PROVISION
13.1 CURRENCY
All
payments and reporting by both parties under this Agreement will be made in United States
dollars.
13.2 Premium Tax
The
Reinsurer will not reimburse the Ceding Company for premium taxes.
13.3 MINIMUM CESSION
| |
The
Ceding Company will not cede a policy to the Reinsurer unless the amount to be reinsured
at issue exceeds the Initial Minimum Cession amount shown in Exhibit B. |
| |
Reinsurance
will be cancelled on any policy when its reinsured net amount at risk falls below the
Trivial Amount limit shown in Exhibit B. |
13.4 INSPECTION OF RECORDS
| |
The
Reinsurer and the Ceding Company, or their duly authorized representatives, will have the
right to inspect original papers, records, and all documents relating to the business
reinsured under this Agreement including underwriting, claims processing, and
administration. Such access will be provided during regular business hours at the office
of the inspected party. |
13.5 FORMS, MANUALS &
ISSUE RULES
| |
The
Ceding Company affirms that its retention schedule, underwriting guidelines, issue rules,
premium rates and policy forms applicable to the Reinsured Policies and in use as of the
effective date, have been supplied to the Reinsurer. |
| |
The
Ceding Company will promptly notify the Reinsurer of any proposed material changes in its
underwriting guidelines. This Agreement will not extend to policies issued pursuant to
such changes unless the Reinsurer has consented in writing to accept policies subject to
such changes. |
| |
It
is the Ceding Company’s responsibility to ensure that its practice and applicable
forms are in compliance with current Medical Information Bureau (MIB) guidelines. |
ARTICLE 14. DAC TAX
14.1 The parties to this Agreement agree to the following provisions pursuant to Section 1.848-2(g)(8) of the Income Tax
Regulations effective December 29, 1992, under Section 848 of the Internal Revenue Code of 1986, as amended:
a. The term `party' refers to either the Ceding Company or the Reinsurer, as appropriate.
b. The terms used in this Article are defined by reference to Regulation Section 1.848-2, effective
December
29, 1992.
| |
c. |
The party with the net positive consideration for this Agreement for each
taxable year will capitalize specified policy acquisition expenses with respect
to this Agreement without regard to the general deductions limitation of Section
848(c)(1). |
| |
d. |
Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency, or as
otherwise required by the Internal Revenue Service. |
| |
e. |
The Ceding Company will submit a schedule to the Reinsurer by June 30th of each
year with its calculation of the net consideration for the preceding calendar
year. This schedule of calculations will be accompanied by a statement signed by
an officer of the Ceding Company stating that the Ceding Company will report
such net consideration in its tax return for the preceding calendar year. The
Reinsurer may contest such calculation by providing an alternative calculation
to the Ceding Company in writing within fifteen (15) days of the
Reinsurer’s receipt of the Ceding Company’s calculation. If the
Reinsurer does not so notify the Ceding Company within the required timeframe,
the Reinsurer will report the net consideration as determined by the Ceding
Company in the Reinsurer’s tax return for the previous calendar year. |
| |
f. |
If the Reinsurer contests the Ceding Company’s calculation of the net
consideration, the parties will act in good faith to reach an agreement as to
the correct amount within fifteen (15) 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 will report the agreed
upon amount in its tax return for the previous calendar year. |
| |
g. |
Both the Ceding Company and the Reinsurer represent and warrant that they are
subject to United States taxation under either Subchapter L or Subpart F of Part
III of Subchapter N of the Internal Revenue Code of 1986, as amended. |
ARTICLE 15. OFFSET
15.1 All monies due either company
under this Agreement may be offset against each other, dollar for dollar, regardless of
any insolvency of either party unless otherwise prohibited by law. If the Reinsurer
advances payment through offset of any claim it is contesting and prevails in the contest,
the Ceding Company shall return such payment.
ARTICLE 16. INSOLVENCY
|
16.1 |
INSOLVENCY OF A PARTY TO THIS AGREEMENT 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; or |
| |
b. |
is adjudicated as bankrupt or insolvent; or |
| |
c. |
files or consents to the filing 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. |
16.2 INSOLVENCY OF THE
CEDING COMPANY
| |
In
the event of the insolvency of the Ceding Company, all reinsurance payments due under this
Agreement will be payable directly to the liquidator, rehabilitator, receiver, or
statutory successor of the Ceding Company, without diminution because of the insolvency,
for those claims allowed against the Ceding Company by any court of competent jurisdiction
or by the liquidator, rehabilitator, receiver or statutory successor having authority to
allow such claims. |
| |
In
the event of insolvency of the Ceding Company, the liquidator, rehabilitator, receiver, or
statutory successor will give written notice to the Reinsurer of all pending claims
against the Ceding Company on any policies reinsured within a reasonable time after such
claim is filed in the insolvency proceeding. While a claim is pending, the Reinsurer may
investigate and interpose, at its own expense, in the proceeding where the claim is
adjudicated, any defense or defenses that it may deem available to the Ceding Company or
its liquidator, rehabilitator, receiver, or statutory successor. |
| |
The
expense incurred by the Reinsurer will be chargeable, subject to court approval, against
the Ceding Company as part of the expense of liquidation to the extent of a proportionate
share of the benefit that 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 will be apportioned in accordance with the terms of this Agreement as
though such expense had been incurred by the Ceding Company. |
| |
The
Reinsurer will be liable only for the amounts reinsured and will not be or become liable
for any amounts or reserves to be held by the Ceding Company on policies reinsured under
this Agreement. |
16.3 INSOLVENCY OF THE
REINSURER
| |
In
the event of the Reinsurer’s insolvency or the Reinsurer’s RBC ratio falls below
250% of the authorized control level, the Ceding Company may cancel the Agreement for
future new business and will notify the Reinsurer in writing of its intent. The parties
agree to waive the notification period for this cancellation, and the effective date will
be no earlier than the effective date of the Reinsurer’s insolvency or the date on
which the Reinsurer releases information indicating its RBC ratio has fallen below the
stated threshold, if applicable. |
| |
Upon
giving written notice to the Reinsurer, the Ceding Company may also recapture all of the
inforce business reinsured by the Reinsurer under this Agreement. |
ARTICLE 17. ERRORS AND
OMISSIONS
|
17.1 |
Unintentional errors, omissions, or misunderstandings in the administration of this
Agreement by either the Ceding Company or the Reinsurer shall not invalidate the
reinsurance hereunder provided the error, omission or misunderstanding is corrected
promptly after discovery. Both companies shall be restored, to the extent possible, to the
position they would have occupied had the error, omission or misunderstanding not
occurred, but the liability of the Reinsurer under this Agreement shall in no event exceed
the limits specified herein. |
ARTICLE 18. DISPUTE
RESOLUTION
|
18.1 |
In the event of a dispute arising out of or relating to this agreement, the parties agree
to the following process of dispute resolution. Within fifteen (15) days after the
Reinsurer or the Ceding Company has first given the other party written notification of a
specific dispute, each party will appoint a designated company officer to attempt to
resolve the dispute. The officers will meet at a mutually agreeable location as soon as
possible and as often as necessary, in order to gather and furnish the other with all
appropriate and relevant information concerning the dispute. The officers will discuss the
problem and will negotiate in good faith without the necessity of any formal arbitration
proceedings. During the negotiation process, all reasonable requests made by one officer
to the other for information will be honored. The designated officers will decide the
specific format for such discussions. |
| |
If
the officers cannot resolve the dispute within thirty (30) days of their first meeting,
the dispute will be submitted to formal arbitration, unless the parties agree in writing
to extend the negotiation period for an additional thirty (30) days. |
ARTICLE 19. ARBITRATION
|
19.1 |
It is the intention of the Reinsurer and the Ceding Company that the customs and practices
of the life insurance and reinsurance industry will be given full effect in the operation
and interpretation of this Agreement. The parties agree to act in all matters with the
highest good faith. However, if the Reinsurer and the Ceding Company cannot mutually
resolve a dispute that arises out of or relates to this Agreement, and the dispute cannot
be resolved through the dispute resolution process described in Article 18, the dispute
will be decided through arbitration as a precedent to any right of action hereunder. |
| |
To
initiate arbitration, either the Ceding Company or the Reinsurer will notify the other
party in writing of its desire to arbitrate, stating the nature of its dispute and the
remedy sought. The party to which the notice is sent will respond to the notification in
writing within fifteen (15) days of its receipt. |
| |
There
will be three arbitrators who will be current or former disinterested officers of life
insurance or life reinsurance companies other than the parties to this Agreement, their
affiliates or subsidiaries. Each of the parties will appoint one of the arbitrators and
these two arbitrators will select the umpire. If either party refuses or neglects to
appoint an arbitrator within sixty (60) days of the initiation of the arbitration, the
other party may appoint the second arbitrator. If the two arbitrators do not agree on an
umpire within thirty (30) days of the appointment of the second arbitrator, each of the
two arbitrators shall nominate three individuals. Each arbitrator shall then decline two
of the nominations presented by the other arbitrator. The umpire shall be chosen from the
remaining two nominations by drawing lots. |
| |
Once
chosen, the arbitrators are empowered to select the site of the arbitration and decide all
substantive and procedural issues by a majority of votes. The arbitration proceedings will
be held in Galveston, Texas. As soon as possible, the arbitrators will establish
arbitration procedures as warranted by the facts and issues of the particular case. The
arbitrators will have the power to determine all procedural rules of the arbitration,
including but not limited to inspection of documents, examination of witnesses and any
other matter relating to the conduct of the arbitration. The arbitrators may consider any
relevant evidence; they will weigh the evidence and consider any objections. Each party
may examine any witnesses who testify at the arbitration hearing. |
| |
The
arbitrators will base their decision on the terms and conditions of this Agreement and the
customs and practices of the life insurance and reinsurance industries rather than on
strict interpretation of the law. The decision of the arbitrators will be made by majority
rule and will be submitted in writing. The decision will be final and binding on both
parties and there will be no appeal from the decision. Either party to the arbitration may
petition any court having jurisdiction over the parties to reduce the decision to
judgment. |
| |
Unless
the arbitrators decide otherwise, each party will bear the expense of its own arbitration
activities, including its appointed arbitrator and any outside attorney and witness fees.
The parties will jointly and equally bear the expense of the third arbitrator and other
costs of the arbitration. |
This
Article will survive termination of this Agreement.
ARTICLE 20.
CONFIDENTIALITY
|
20.1 |
Reinsurer hereby acknowledges that from time to time in the performance of its duties and
obligations under the Agreement, Reinsurer may receive certain information about
policyholders or certificate holders of Insurer that may be characterized as
“Nonpublic Personal Information” under Title V of the federal Xxxxx-Xxxxx-Xxxxxx
Act and/or state insurance laws and/or regulations enacted and/or promulgated in
accordance therewith (collectively the “Privacy Act”). “Nonpublic Personal
Information” includes any personally identifiable financial and/or health information
about Insurer’s customers, and any list, description or other grouping of customers
that is derived using any personally identifiable information that is not publicly
available. |
| |
Reinsurer
and Insurer hereby acknowledge and agree that they are “nonaffiliated third
parties” with respect to one another for purposes of the Privacy Act. Reinsurer and
Insurer further acknowledge and agree that Insurer’s disclosure of nonpublic personal
information to Reinsurer under this Agreement is made under one or more exceptions to the
Privacy Act’s opt-out or opt-in requirements. Reinsurer agrees not to disclose the
nonpublic personal information received from Insurer to any other person or to use the
nonpublic personal information received pursuant to this Agreement except: (1) as
necessary in the ordinary course of business in order to carry out Reinsurer’s
obligations under this Agreement; or (2) as allowed under a recognized exception or
permitted redisclosure under the Privacy Act. This provision will remain in force for as
long as there is reinsurance in force under this Agreement. |
|
20.2 |
The Ceding Company and the Reinsurer agree that Customer and Proprietary Information will
be treated as confidential. Customer Information includes, but is not limited to, medical,
financial, and other personal information about proposed, current, and former
policyowners, insureds, applicants, and beneficiaries of policies issued by the Ceding
Company. Proprietary Information includes, but is not limited to, business plans and trade
secrets, mortality and lapse studies, underwriting manuals and guidelines, applications
and contract forms, and the specific terms and conditions of this Agreement. Customer and
Proprietary Information will not include information that: |
| a. |
is or becomes available to the general public through no fault of the party
receiving the Customer or Proprietary Information (the “Recipient”);
b. is independently developed by the Recipient; c. is acquired by the Recipient
from a third party not covered by a confidentiality agreement; or d. is
disclosed under a court order, law or regulation. |
| |
The
parties will not disclose such information to any other parties unless agreed to in
writing, except as necessary for retrocession purposes, as requested by external auditors,
as required by court order, or as required or allowed by law or regulation. |
| |
The
Ceding Company acknowledges that the Reinsurer can aggregate data with other companies
reinsured with the Reinsurer as long as the data cannot be identified as belonging to the
Ceding Company. |
ARTICLE 21. DURATION OF
AGREEMENT
|
21.1 |
This Agreement is indefinite as to its duration. The Ceding Company or the Reinsurer may
terminate this Agreement with respect to the reinsurance of new business by giving ninety
(90) days written notice of termination to the other party, sent by certified mail. The
first day of the notice period is deemed to be the date the document is postmarked. |
| |
During
the notification period, the Ceding Company will continue to cede and the Reinsurer will
continue to accept policies covered under the terms of this Agreement. Reinsurance
coverage on all reinsured policies will remain in force until the termination or expiry of
the policies or until the contractual termination of reinsurance under the terms of this
Agreement, whichever occurs first. |
ARTICLE 22. EXECUTION
|
22.1 |
This Agreement is effective as of November 1, 1997, and applies to all eligible policies
with issue dates on or after such date, not withstanding that such policies may have been
backdated for up to six (6) months to save age. This Agreement has been made in duplicate
and is hereby executed by both parties. |
American National Insurance Company Transamerica Occidental Life Insurance Company
By: ____________________________ By: ____________________________
(signature) (signature)
____________________________ ____________________________
(print or type name) (print or type name)
Title: Title:
Date: Date:
Location: Galveston, Texas Location:
Attest: Attest:
___________________________ ____________________________
(signature) (signature)
Title: Title:
EXHIBIT A. RETENTION
LIMITS OF THE CEDING COMPANY
A.1
(a) Life Insurance - Maximum Limits of Retention
----------------------- -----------------------------------
Issue Age Standard - Table 16
----------------------- -----------------------------------
All 700,000*
----------------------- -----------------------------------
*However, prior to September 1, 2003, if
the amount issued and applied for in all companies equals or exceeds $10,000,000, the
Ceding Company’s retention will be $350,000.
(b)
First Dollar Quota Share – Ceding Company’s Quota Share Percentage The
Ceding Company will retain 50.0% of each policy up to the above maximum dollar
retention limits.
A.2 WAIVER OF PREMIUM
DISABILITY BENEFITS
Same as Life Insurance
EXHIBIT B. PLANS COVERED
AND BINDING LIMITS
B.1 PLANS, RIDERS AND
BENEFITS
Policies issued on plans with
effective dates within the applicable period shown below may qualify for automatic
reinsurance under the terms of this Agreement.
Commencement
Plan Identification Form Date
Joint and Last Survivor UL USLIP November 1, 1997
Joint and Last Survivor VUL SVUL November 1, 1999
Automatic Increase Rider USAIR November 1, 1997
Contemplation of Death Rider USLIPCD November 1, 1997
Disability Premium Waiver USLIPDW November 1, 1997
B.2 BASIS
The Reinsurer’s share will be
5.0% of the net amount at risk up to the Ceding Company’s maximum dollar retention
limit and 10% of the net amount at risk above the Ceding Company’s maximum dollar
retention limit. This amount will not exceed the Reinsurer’s share of the maximum
Automatic Binding Limits specified in Exhibit B.3.
B.3 AUTOMATIC BINDING
LIMITS
(a) Life
----------------------- -----------------------------------
Issue Ages Maximum
Standard - Table 16
----------------------- -----------------------------------
20-85 $10,000,000
----------------------- -----------------------------------
The maximum auto-bind amounts above
exclude the Ceding Company’s retention.
The mortality rating of both insureds
combined will not exceed 20 tables. However, in the event the healthier life is a Table 8
or better, then the life with the less favorable mortality rating may be any table rating,
including uninsurable.
(b)
Waiver of Premium Disability Benefits: Same as for Life Insurance
B.4 JUMBO LIMITS
The Ceding Company will not cede any
risk automatically if, according to information available to the Ceding Company, the total
amount in force and applied for on the life with all insurance companies, including any
amount to be replaced, exceeds the applicable amounts shown below.
(a)
Life: $25,000,000
(b)
Waiver of Premium Disability Benefits: Same as for Life Insurance
B.5 CONDITIONAL RECEIPT
OR TEMPORARY INSURANCE AGREEMENT
The amount of such coverage provided
by the Reinsurer will be limited to its share of the following amounts provided by the
Ceding Company’s Conditional Receipt or Temporary Insurance Agreement.
Age Maximum Amount
----------------------- ----------------------------------------------------------------------------------------------
All The lesser of (1) Automatic Binding Limit in Exhibit B.3 and (2) the amount of insurance
provided by the Ceding Company's Conditional Receipt less the Ceding Company's retention in
Exhibit A
----------------------- ----------------------------------------------------------------------------------------------
B.6 CESSION LIMITS
(a)
Minimum Initial Cession: $5,000
(b)
Trivial Amount: $2,500
EXHIBIT C. FORMS,
MANUALS AND ISSUE RULES
Materials have been supplied to
Reinsurer.
EXHIBIT D. APPLICATION
FOR FACULTATIVE REINSURANCE
EXHIBIT E. REINSURANCE PREMIUMS
E.1 LIFE
a. Joint
and Last Survivor Universal Life Plan:
| |
Standard
annual reinsurance premiums per $1000 reinsured are determined using the 1980 CSO Table,
attached as Schedule A—I, Frasierized using the Frasierization calculation, attached
as Schedule A—II, multiplied by the appropriate American National COI Factor*,
attached as Schedule A—III, as determined by the Joint Equal Age Calculation,
attached as Schedule A—IV, less the following allowances: |
================================================== ========================================
First Year 100%
-------------------------------------------------- ----------------------------------------
Renewal Years 45%
================================================== ========================================
| |
*American
National COI Factors from Schedule A—III are further subject to minimums of .25 for
two non-smokers, .325 for one non-smoker and one smoker, and .40 for two smokers. |
b.
Joint and Last Survivor Variable Universal Life Plan:
| |
Standard
annual reinsurance premiums per $1000 reinsured for the above listed plan are the
Survivorship Variable Universal Life Current Cost of Insurance rates attached as Schedule
A—V, Frasierized using the Frasierization calculation, attached as Schedule
A—II, less the following allowances: |
================================================== ========================================
First Year 100%
-------------------------------------------------- ----------------------------------------
Renewal Years 45%
================================================== ========================================
c.
De-Arbitraged Single Life Universal Life Plan:
| |
Standard
annual reinsurance premiums per $1000 reinsured for the above listed plan are determined
using the 75-80 SOA ALB Table, attached as Schedule A—VI, multiplied by a Single Life
Discount Factor, attached as Schedule A—VII. |
| d. |
Table rated substandard reinsurance premiums are the appropriate multiple of the
standard reinsurance premiums (25% per table) less the allowances shown under
Section 1 of this exhibit. |
| e. |
Flat Extra reinsurance premiums are the following percentages of such premiums
charged the insured: |
===========================================================================================
Permanent flat extra premiums (for more than 5 years duration)
-------------------------------------------------- ----------------------------------------
First Year 25%
-------------------------------------------------- ----------------------------------------
Renewal Years 90%
================================================== ========================================
===========================================================================================
Temporary flat extra premiums (for 5 years or less duration)
-------------------------------------------------- ----------------------------------------
All Years 90%
================================================== ========================================
E.2 RIDERS
a.
DISABILITY WAIVER OF PREMIUM:
| |
Disability
Waiver of Premium Benefit reinsurance premiums are such premiums or Cost of Insurance
Rates charged the insured for the reinsured portion of the policy, less the following
allowances: |
================================================== ========================================
Year Allowance
-------------------------------------------------- ----------------------------------------
1 100%
-------------------------------------------------- ----------------------------------------
2+ 45%
================================================== ========================================
b.
POLICY SPLIT OPTION:
| |
When
the Policy Split Option is exercised, the reinsurance premium rates for the resulting
single life policies will be the single life reinsurance premium rates (75-80 SOA ALB
Table) attached as Schedule A—VI, applied on a point-in-scale basis, for the
reinsured portion of the policy, multiplied by a Single Life Discount Factor, attached as
Schedule A—VII. |
c.
CONTEMPLATION OF DEATH RIDER:
| |
Contemplation
of Death Rider reinsurance premiums are such premiums charged the insured for the
reinsured portion of the policy, less the following allowances: |
================================================== ========================================
First Year 100%
-------------------------------------------------- ----------------------------------------
Renewal Years 45%
================================================== ========================================
d.
AUTOMATIC INCREASE RIDER:
| |
Automatic
Increase reinsurance premiums are 90% of such premiums or Cost of Insurance Rates charged
the insured for the for the reinsured portion of the policy, less the following
allowances: |
================================================== ========================================
First Year 100%
-------------------------------------------------- ----------------------------------------
Renewal Years 45%
================================================== ========================================
E.3 AGE BASIS
Age Last
E.4 POLICY FEES
The Reinsurer will not participate in
any policy fees.
E.5 RECAPTURE PERIOD
Number of years: 10
EXHIBIT F.
SELF-ADMINISTERED REPORTING
The Ceding Company will
self-administer all reinsurance reporting using the TAI system. The Ceding Company will
send the Reinsurer the reports listed below at the frequency specified.
Transaction Reports
Monthly
1. New Business
2. First Year –
Other than New Business3.
Renewal Year4.
Changes and Terminations5.
Accounting
Information
Periodic Reports
Quarterly
6. Statutory Reserve
Information7.
Policy Exhibit Information8.
Inforce
A brief description of the data
requirements follows below.
Transaction Reports
1. New Business
This report will include new issues
only, the first time the policy is reported to the Reinsurer. Automatic and Facultative
business will be identified separately.
2. First Year –
Other than New Business
This report will include policies
previously reported on the new business detail and still in their first duration, or
policies involved in first year premium adjustments.
3. Renewal Year
All policies with renewal dates
within the Accounting Period will be listed.
4. Changes and
Terminations
Policies affected by a change during
the current reporting period will be included in this report. Type of change or
termination activity must be clearly identified for each policy.
The Ceding Company will identify the
following transactions either by separate listing or unique transaction codes:
Terminations, Reinstatements, Changes, Conversions, and Replacements. For Conversions and
Replacements, the Ceding Company will report the original policy date, as well as the
current policy date.
5. Accounting Information
Premiums and allowances will be
summarized for Life coverages, Benefits, and Riders by the following categories: Automatic
and Facultative, First Year and Renewals.
Periodic Reports
6. Statutory Reserve
Information
Statutory reserves will be summarized
for Life coverages, Benefits and Riders. The Ceding Company will specify the reserve basis
used.
7. Policy Exhibit
Information
This is a summary of transactions
during the current period and on a year-to-date basis, reporting the number of policies
and reinsured amount.
8. Inforce
This is a detailed report of each
policy in force.
