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Exhibit 10.15
RESTATEMENT OF THE
AGGREGATE EXCESS OF LOSS
REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
between
METROPOLITAN LIFE INSURANCE COMPANY
Xxx Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(hereinafter referred to as the "Company")
AND
STOCKWOOD REINSURANCE COMPANY LTD.
Xxxxxxxx Xxxxx, Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx
(hereinafter referred to as the "Reinsurer")
TYPE: Aggregate Excess of Loss Reinsurance.
EFFECTIVE DATE: The Effective Date of this Agreement shall be 12:01 a.m.,
New York City Time, December 31, 1998.
TERM: This Agreement shall remain in force and the Term of this
Agreement shall be from the Effective Date of this Agreement
until the earliest of (A) December 31, 2008; (B) the
exhaustion of the Overall Aggregate Limit; or (C) the
Effective Date of Commutation of this Agreement.
COVERAGE: Part A Coverage:
The Reinsurer shall indemnify the Company for Part A Covered
Losses.
Part B Coverage:
The Reinsurer shall indemnify the Company for Part B Covered
Losses.
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BUSINESS
COVERED: Part A Business Covered:
Amounts paid or to be paid by the Company as life insurance
benefits, cash values or otherwise to its life insurance
policyholders and annuity contract holders, or beneficiaries
or proper assignees thereof, where such amounts arise out of
policies or contracts issued by the Company but are in
addition to the amounts anticipated at the time the policies
or contracts were issued; and, where such amounts are
payable pursuant to judgments in, or settlements of,
lawsuits or other proceedings (including without limitation
administrative proceedings) alleging that the Company or its
agents engaged in improper sales practices.
Part B Business Covered:
Except as otherwise provided in this section, Part B
Business Covered shall mean all death benefits for policies
listed in the Company's Notice Business Policy Master File
(NBPMF) that were issued and delivered in the Part B Subject
Territory prior to January 1, 1997, and were in force as of
the Effective Date with a policy account code of: (1)
premium paying (Policy Account Code =1), (2) fully paid up
(Policy Account Code =2), or (3) single premium (Policy
Account Code =9). Policies on (a) the nonforfeiture reduced
paid up option (Policy Account Code =3) as of the Effective
Date or on any other date during the Term of this Agreement
and policies on (b) the nonforfeiture extended term
insurance option (Policy Account Code =5) as of the
Effective Date or on any other date during the Term of this
Agreement are excluded from coverage under this Agreement.
Policy forms identified by the Company's plan code "Estate
Saver" are also excluded from coverage under this Agreement.
All other policy riders and benefits are covered by this
Agreement except for the Accidental Death Benefit (ADB),
Disability Waiver of Premium Benefit (DW), Applicant's
Waiver of Premium Benefit (AWB), and Additional Insurance
(AI).
SUBJECT
TERRITORY: Part A Subject Territory:
The Reinsurer's liability shall be limited to policies or
contracts issued for delivery in the fifty (50) States of
the United States of America, the District of Columbia, or
Canada for losses occurring
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in the fifty (50) States of the United States of America,
the District of Columbia, or Canada.
Part B Subject Territory:
The Reinsurer's liability shall be limited to policies
issued for delivery in the fifty (50) States of the United
States of America and the District of Columbia for losses
occurring in the fifty (50) States of the United States of
America and the District of Columbia.
SUBJECT LOSSES: Part A Subject Losses:
Part A Subject Losses shall mean all Part A Ultimate Net
Loss with Claim Dates on or after the Effective Date of this
Agreement arising from claims made against the Company on or
prior to December 31, 1999 in respect of the Part A Business
Covered hereunder.
Part B Subject Losses:
Part B Subject Losses shall mean all Part B Ultimate Net
Loss paid by the Company on or after the Effective Date of
this Agreement as a result of deaths occurring on or after
the Effective Date and on or prior to December 31, 1999 in
respect of the Part B Business Covered hereunder.
COVERED LOSSES: Part A Covered Losses:
Subject to the Overall Aggregate Limit and the Part A
Aggregate Sublimit, Part A Covered Losses shall mean Fifty
Percent (50%) of Part A Subject Losses in excess of the Part
A Aggregate Retention.
Part B Covered Losses:
Subject to the Overall Aggregate Limit and the Part B
Sublimit, Part B Covered Losses shall mean Fifty Percent
(50%) of Part B Subject Losses in excess of the Part B
Aggregate Retention.
RETENTIONS: Part A Aggregate Retention:
Three Hundred Eighty Five Million Dollars ($385,000,000) in
the aggregate.
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Part B Aggregate Retention:
Five Hundred Six Million Dollars ($506,000,000), plus the
Company's statutory policy reserves released upon death of
an insured or otherwise.
SUBLIMITS: Part A Aggregate Sublimit:
The maximum amount of Part A Covered Losses indemnified
under this Agreement shall be limited to Two Hundred Seventy
Five Million Dollars ($275,000,000).
This Part A Aggregate Sublimit is the maximum amount payable
by the Reinsurer for Part A Covered Losses under this
Agreement. Under no circumstances will the Reinsurer be
obligated to pay more than this amount in respect of Part A
Covered Losses.
Part B Sublimit
The maximum amount of Part B Covered Losses indemnified
under this Agreement shall be limited to Two Million Five
Hundred Thousand Dollars ($2,500,000) for any individual
insured.
OVERALL AGGREGATE
LIMIT: The Overall Aggregate Limit for the sum of Part A Covered
Losses and Part B Covered Losses combined under this
Agreement shall equal Three Hundred Twenty Five Million
Dollars ($325,000,000).
This Overall Aggregate Limit is the maximum amount payable
by the Reinsurer under this Agreement, excluding payments
for commutation under this Agreement.
REINSURANCE
PREMIUM: The Reinsurance Premium shall equal Two Hundred Sixty Four
Million Five Hundred Thousand Dollars ($264,500,000) and
shall be payable in full and without deduction by the
Company on or before December 31, 1998. The date the
Reinsurance Premium is paid shall be referred to as the
"Premium Payment Date". The Reinsurance Premium shall be
payable in cash by federal wire transfer in immediately
available non-reversible United States Federal Funds to an
account specified by the Reinsurer.
The Reinsurance Premium shall be considered fully earned
when received in the account specified by the Reinsurer.
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The Reinsurance Premium is a net amount and includes no
allowance for commissions, brokerage, taxes or any other
costs which may arise in connection with this Agreement or
the Business Covered hereunder. Any such amounts shall
remain the sole responsibility of the Company.
If the Company fails to pay the Reinsurance Premium in full
and in accordance with the terms of this Reinsurance Premium
Section, this Agreement shall not come into effect and shall
not in any way bind the Reinsurer.
SETTLEMENT
DATES: The first Settlement Date shall be the later of April 1,
2000, or if such day is not a Business Day, then the first
Business Day thereafter, or, the thirtieth day after the
Reinsurer's receipt of the Company's Loss Report for the
period from the Effective Date to December 31, 1999. The
Settlement Date for calendar year 2000 and each calendar
year thereafter shall be the later of April 1 of the
following calendar year or if such day is not a Business
Day, then the first Business Day thereafter, or, the
thirtieth day after the Reinsurer's receipt of the Company's
Loss Report for the prior calendar year, or if such day is
not a Business Day, then the first Business Day thereafter.
BUSINESS DAYS: Business Day shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in New York,
New York, or the Islands of Bermuda are authorized or
obligated by law, regulation or executive order to be
closed.
EXPERIENCE
BALANCE: The Reinsurer shall establish and maintain a notional
Experience Balance during the time that this Agreement is in
effect and whose balance shall be determined in accordance
with this Experience Balance section.
The Experience Balance at the Premium Payment Date shall be
equal to Two Hundred Sixty Xxx Xxxxxxx Xxxx Xxxxxxx Xxxxxxxx
Xxxxxx Xxxxxx Dollars ($261,500,000).
The Experience Balance at the first Settlement Date shall be
equal to:
The Experience Balance at the Premium Payment Date
multiplied by (1.0 plus the annual compounded
yield on the one (1) year United States Treasury
Xxxx as of the close of
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business on the Premium Payment Date) raised to
the power of the actual number of days from the
Premium Payment Date to and including the first
Settlement Date divided by the actual number of
days in the current calendar year, multiplied by
(1.0 plus (the Federal Funds rate divided by the
actual number of days in the current calendar
year)) for each day between April 1, 2000 and the
first Settlement Date,
LESS
Covered Losses due from the Reinsurer from and
including the Premium Payment Date (through and
including the Settlement Date).
The Experience Balance at each Settlement Date thereafter
shall be equal to:
The Experience Balance at the end of the prior
Settlement Date multiplied by (1.0 plus the annual
compounded yield on the one (1) year United States
Treasury Xxxx maturing closest to April 1 of the
current calendar year) raised to the power of the
actual number of days from the prior Settlement
Date to April 1 of the current calendar year
divided by the actual number of days in the
current calendar year, multiplied by (1.0 plus
(the Federal Funds rate divided by the actual
number of days in the current calendar year)) for
each day between April 1 of the current calendar
year to and including the Settlement Date divided
by the actual number of days in the current
calendar year,
LESS
Covered Losses due from the Reinsurer from but not
including the prior Settlement Date through and
including the current Settlement Date.
ULTIMATE NET LOSS: (a) Part A Ultimate Net Loss:
Part A Ultimate Net Loss as used herein shall mean
the actual sum of all Claim Amounts with Claim
Dates on or after the Effective Date in settlement
of all losses arising in respect of the Part A
Business Covered after making deductions for all
recoveries, all salvage, and all claims upon other
reinsurances, which inure to the benefit of the
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Reinsurer under this Agreement, whether
collectable or not, and shall include Allocated
Loss Adjustment Expenses paid by the Company.
Part B Ultimate Net Loss:
Part B Ultimate Net Loss as used herein shall mean
the actual sum paid by the Company on or after the
Effective Date in settlement of all death claims
arising in respect of the Part B Business Covered
after making deductions for all recoveries, all
salvage, and all claims upon other reinsurances,
which inure to the benefit of the Reinsurer under
this Agreement, whether collectable or not.
(b) All salvages, recoveries, reinsurance or payments
recovered or received subsequent to a loss
settlement under this Agreement shall be applied
as if recovered or received prior to the aforesaid
settlement and all necessary adjustments shall be
made by the parties hereto.
(c) Nothing in this definition shall be construed to
mean that losses are not recoverable hereunder
until the Part A Ultimate Net Loss and Part B
Ultimate Net Loss of the Company has been
ascertained.
CLAIM AMOUNT: Claim Amount as used herein shall mean for each
claim, the sum of the amount paid by the Company
on the Claim Date plus the amount reserved by the
Company on the Claim Date on the basis of New York
State statutorily prescribed mortality, morbidity
or interest rates, arising in respect of the Part
A Business Covered.
CLAIM DATE: Claim Date as used herein shall mean the date of
judgment in, or settlement of, a lawsuit or other
proceeding (including without limitation
administrative proceedings) arising in respect of
the Part A Business Covered.
CLAIMS HANDLING: (a) The Company shall have the sole and absolute
authority with respect to the administration,
defense, settlement and payment of Part A Covered
Losses, subject to the terms and conditions of
this Agreement.
(b) The Company shall retain the sole and absolute
authority with respect to the administration,
defense, settlement and payment of Part B Covered
Losses.
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(c) In furtherance of the commonality of interest
evidenced by the execution of this Agreement, the
Company agrees that the Company or the Company's
designated counsel shall provide the Reinsurer
with updated information concerning the present
and future handling of the Part A Covered Losses
on a quarterly basis to allow the Reinsurer to
properly reserve and project payments under this
Agreement and as otherwise reasonably required by
the Reinsurer.
ALLOCATED
LOSS ADJUSTMENT
EXPENSES: Allocated Loss Adjustment Expenses as used herein
shall mean all allocated expenses incurred by the
Company on or after the Effective Date in
connection with the investigation, settlement,
defense or mitigation of any claim or loss which
is the subject matter of the Part A Business
Covered, and shall exclude salaries and fees of
adjusters, attorneys or other persons who are
employees of the Company, or its designated claims
adjusters, attorneys on permanent retainer, office
expenses, overhead or other unallocated expenses.
COMMUTATION: This Agreement may be irrevocably commuted by the
Company on (i) December 31, 2008 or, (ii) in the
event that after December 31, 1999 the Experience
Balance exceeds the remaining Part A Aggregate
Sublimit during the calendar year ("Effective Date
of Commutation"), subject to ninety (90) days
prior written notice to the Reinsurer. Within
ninety (90) days of such Effective Date of
Commutation, upon receipt from the Company of a
full release in form and substance reasonably
satisfactory to the Reinsurer, then the Reinsurer
shall pay to the Company a Commutation Settlement
equal to Ninety Nine Percent (99%) multiplied by
the positive Experience Balance, if any, at the
Settlement Date following Commutation, less all
amounts due and payable by the Company to the
Reinsurer, under this or any related agreement and
the Reinsurer and the Company shall be fully and
finally released from all liability and
obligations under or in connection with this
Agreement.
REPORTS AND
REMITTANCES: Within sixty (60) days after the end of each
calendar quarter during the Term of this
Agreement, the Company shall
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provide the Reinsurer with copies of all loss
reports received or prepared by the Company in
connection with the Business Covered during that
calendar quarter. In addition to the above, within
sixty (60) days after the end of each calendar
quarter, the Company shall provide to the
Reinsurer a written Loss Report, providing, in a
format acceptable to the Reinsurer and the
Company, the following information in respect of
the Business Covered hereunder, for Part A
Business Covered:
(1) The amount of Subject Losses paid by the
Company during that calendar quarter.
(2) The net amount of Subject Losses payable
but unpaid by the Company as at the end
of the calendar quarter (the "Net
Subject Loss").
(3) The Company's estimate of reserves for
Net Subject Loss and Allocated Loss
Adjustment Expenses, as at the end of
that calendar quarter.
(4) And such other information as may be
agreed to by the Company and the
Reinsurer.
In addition to the above, within sixty (60) days after the
end of each calendar quarter, the Company shall provide to
the Reinsurer a written Loss Report, providing, in a format
acceptable to the Reinsurer, the following information in
respect of the Business Covered hereunder for Part B
Business Covered:
(1) The face amount of death claims paid
during the calendar quarter.
(2) The face amount of death claims reported
but not paid as of the end of that
calendar quarter.
(3) Statutory reserves released in the
calendar quarter on death claims paid.
(4) Statutory reserves released in the
calendar quarter on death claims
reported but not paid.
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(5) The face amount of death claims during
the calendar quarter ceded to other
reinsurers.
(6) Statutory reserves released in the
calendar quarter on death claims ceded
to other reinsurers.
(7) Policy level detail (as detailed in
items (1) through (6) above) for
individual insureds with Subject Losses
in excess of Five Million Dollars
($5,000,000).
(8) The Company's estimate of IBNR losses as
at the end of that calendar quarter.
Each Loss Report shall provide both the cumulative position
from the Effective Date through the end of that calendar
quarter and the changes within the calendar quarter. The
first such quarterly Loss Report shall be due by June 1,
1999 for the period from the Effective Date through March
31, 1999.
Within sixty (60) days after the end of each calendar year,
the Company shall furnish the Reinsurer with a written
Annual Report, providing, in a format acceptable to the
Reinsurer, the Subject Losses paid by the Company for that
calendar year in respect of the Business Covered hereunder
separately for the Part A Business Covered and Part B
Business Covered.
Covered Losses due from the Reinsurer shall be paid by the
Reinsurer to the Company on the Settlement Date for the
calendar year.
All remittances shall be made by federal wire transfer in
immediately available non-reversible United States Federal
Funds to an account specified by the receiving party.
SECURITY: 1. Security:
Upon the Company's written request and expense, the
Reinsurer shall provide security to the Company adjusted at
each Settlement Date in an amount equal to the Experience
Balance as of such Settlement Date, if any, by providing
access to funds held in Trust or Letters of Credit or any
combination thereof, for the benefit of the Company, in
accordance with the provisions set forth in this SECURITY
Article.
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2. Letter of Credit:
(A) Upon the written request of the Company, the
Reinsurer agrees that it will be the applicant for
and provide the Company with a Letter or Letters
of Credit, adjusted at each Settlement Date, in an
amount no less than the Experience Balance, as of
such Settlement Date if any. The cost of such
Letter(s) of Credit, if any, shall be borne by the
Company.
(B) The Reinsurer and the Company agree that the
Letter(s) of Credit provided by the Reinsurer
pursuant to the provisions of this Agreement may
be drawn upon at any time, notwithstanding any
other provisions in this Agreement, and shall be
utilized by the Company or any successor by
operation of law of the Company including, without
limitation, any liquidator, rehabilitator,
receiver, or conservator of the Company only for
one or more of the following purposes:
(i) to reimburse the Company for the
Reinsurer's share of premiums returned
to the owners of policies reinsured
under this Agreement, on account of
cancellations of such policies;
(ii) to reimburse the Company for the
Reinsurer's share of surrenders and
benefits or losses paid by the Company
under the terms and provisions of the
policies reinsured under this Agreement.
(iii) to fund an account with the Company in
an amount at least equal to the
deduction, for reinsurance ceded, from
the Company's liabilities for
reinsurance ceded under this Agreement.
Such amount shall be limited to the
Experience Balance. Such amount shall
include, but not be limited to, amounts
for policy reserves, reserves for claims
and losses incurred (including losses
incurred but not reported), reserves for
loss adjustment expenses and reserves
for unearned premiums, but shall not
exceed the amount of the obligations of
the Reinsurer under this Agreement; and
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(iv) to pay any other amounts payable to the
Company under this Agreement.
All of the foregoing shall be applied without diminution
because of insolvency on the part of the Company or the
Reinsurer.
(C) Should amounts be held pursuant to (B)(iii) above,
then the Company shall pay interest at the Prime
Rate on such funds as may be held from time to
time.
(D) Should any amounts drawn down on the Letters of
Credit be in excess of the actual amounts required
for (B)(i), (B)(ii), or (B)(iii) above, or should
any amounts subsequently be determined not to be
due under (B)(iv) above, then such excess amounts
and amounts not due shall be returned to the
Reinsurer forthwith and the Company shall pay
interest at the Prime Rate on such funds from the
date they were drawn down to the date they are
returned.
(E) Any interest calculated pursuant to the provisions
of paragraphs (C) and (D) above shall be offset
against any other obligations of the Reinsurer.
3. Trust Funds:
(A) Upon the written request of the Company, the
Reinsurer may at its option provide funds in Trust
for the benefit of the Company, adjusted at each
Settlement Date as an alternative or supplement to
Letter(s) of Credit. The cost of such Trust Funds,
if any, shall be borne by the Company.
(B) The assets deposited in the trust account shall be
valued, according to their current fair market
value, and shall consist only of cash (United
States legal tender), certificates of deposit
(issued by a United States bank and payable in
United States legal tender), and investments of
the types permitted by the Delaware Insurance
Laws, provided that such investments are issued by
an institution that is not the parent, subsidiary,
or affiliate of either the Reinsurer or the
Company.
(C) Prior to depositing assets into the Trust account,
the Reinsurer shall execute assignments,
endorsements in blank, or transfer legal title to
the trustee of all shares, obligations or any
other assets requiring assignments, in order that
the
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Company, or the trustee upon the direction of the
Company, may whenever necessary negotiate any such
assets without consent or signature from the
Reinsurer or any other entity.
(D) All settlements of account between the Company and
the Reinsurer shall be made in cash or its
equivalent.
(E) The Reinsurer and the Company agree that the
assets in the Trust account, established by the
Reinsurer pursuant to the provisions of this
Agreement, may be withdrawn by the Company at any
time, notwithstanding any other provisions in this
Agreement, and shall be utilized and applied by
the Company or any successor by operation of law
of the Company including, without limitation, any
liquidator, rehabilitator, receiver or conservator
of the Company only for one or more of the
following purposes:
(i) to reimburse the Company for the
Reinsurer's share of premiums returned
to the owners of policies reinsured this
Agreement, on account of cancellations
of such policies;
(ii) to reimburse the Company for the
Reinsurer's share of surrenders and
benefits or losses paid by the Company
pursuant to the provisions of the
policies reinsured under this Agreement;
(iii) to fund an account with the Company in
an amount at least equal to the
deduction, for reinsurance ceded, from
the Company's liabilities for
reinsurance ceded under this Agreement.
Such amount shall be limited to the
Experience Balance. Such amount shall
include, but not be limited to, amounts
for policy reserves, reserves for claims
and losses incurred (including losses
incurred but not reported), reserves for
loss adjustment expenses and reserves
for unearned premiums, but shall not
exceed the amount of the obligations of
the Reinsurer under this Agreement; and
(iv) to pay any other amounts payable to the
Company under this Agreement.
All of the foregoing shall be applied without diminution
because of
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insolvency on the part of the Company or the Reinsurer.
(F) The Company shall give the Reinsurer the right to
seek approval from the Company to withdraw from
the aforementioned Trust account all or any part
of the assets contained therein and transfer such
assets to the Reinsurer, provided:
(i) The Reinsurer shall at the time of such
withdrawal, replace the withdrawn assets
with other qualified assets having a
market value equal to the market value
of the assets withdrawn so as to
maintain at all times the deposit equal
to the Experience Balance, or
(ii) after such withdrawal and transfer, the
market value of the Trust account is no
less than one-hundred-two percent (102%)
of the Experience Balance.
(G) Should amounts be held pursuant to (E)(iii) above,
then the Company shall pay interest at the Prime
Rate on such funds as may be held from time to
time.
(H) Should any amounts withdrawn from the Trust
account be in excess of the actual amounts
required for (E)(i), (E)(ii), or (E)(iii) above,
or should any amounts subsequently be determined
not to be due under (E)(iv) above, then such
excess amounts and amounts not due shall be
returned to the Reinsurer forthwith and the
Company shall pay interest at the Prime Rate on
such funds from the date they were drawn down to
the date they are returned.
(I) Any interest calculated pursuant to the provisions
of paragraphs (G) and (H) above shall be offset
against any other obligations of the Reinsurer.
4. Other Forms of Security:
The Reinsurer may, at its option, as an alternative or
supplement to Letter(s) of Credit and Trust Funds, provide
security in any other form that would permit the Company to
take credit for the reinsurance ceded hereunder in the
amount of the Experience Balance.
5. Prime Rates:
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Prime Rates shall be determined for each Business Day in New
York City, and for non-business days shall equal the Prime
Rate as determined for the most recent preceding Business
Day. The BANK PRIME LOAN rates as published in "FEDERAL
RESERVE statistical release H.00(000) XXXXXXXX INTEREST
RATES" and the PRIME RATES as published in The Wall Street
Journal shall be the primary sources for the Prime Rates.
When either or both sources publish such a rate for a
Business Day, the Prime Rate shall be the maximum of such
published rates. If neither source publishes such a rate for
a Business Day, the Prime Rate shall be the maximum of the
rates publicly announced by major banks in New York City as
their "Prime Rates" applicable to such day.
INSOLVENCY: 1. Reinsurer's Obligation:
In the event of the insolvency of the Company, the
reinsurance afforded by this Agreement shall be payable by
the Reinsurer on the basis of the liability of the Company
under the Business Covered, without diminution because of
such insolvency, directly to the Company or its liquidator,
receiver, conservator, or statutory successor, except (a)
where this Agreement specifically provides another payee of
such reinsurance in the event of the insolvency of the
Company and (b) where the Reinsurer, with the consent of the
direct insured or insureds, has assumed such policy
obligations of the Company as direct obligations of the
Reinsurer to the payees under such policies and in
substitution for the obligations of the Company to such
payees.
2. Reinsurer's Notice and Defense of Claims:
The Reinsurer shall be given written notice of the pendency
of each claim or loss which may involve the reinsurance
afforded by this Agreement within a reasonable time after
such claim or loss is filed in the insolvency proceedings.
The Reinsurer shall have the right to investigate each such
claim or loss and interpose at its own expense, in the
proceeding where the claim or loss is to be adjudicated, any
defense which it may deem available to the Company or its
liquidator, receiver, conservator, or statutory successor.
If more than one Reinsurer is involved, they may designate
one Reinsurer to act for all.
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3. Defense Expense:
The expense thus incurred by the Reinsurer shall be
chargeable, subject to court approval, against the insolvent
Company as part of the expense of liquidation to the extent
of a proportionate share of the benefit which may accrue to
the Company solely as a result of the defense undertaken by
the Reinsurer.
4. Offset:
Any debts or credits, liquidated or unliquidated, in favor
of or against either party under this Agreement on the date
of the receivership or liquidation order (except where the
obligation was purchased by or transferred to be used as an
offset) are deemed mutual debts or credits and shall be set
off with the balance only to be allowed or paid. Although
such claim on the part of either party may be unliquidated
or undetermined in amount on the date of the entry of the
receivership or liquidation order, such claim will be
regarded as being in existence as of such date and any
credits or claims then in existence and held by the other
party may be offset against it.
5. Rights of Parties:
Nothing hereinabove set forth in this Insolvency Article
shall in any way change the relationship or status of the
parties hereto, nor enlarge the obligations of either party
to each other except as specifically hereinabove provided,
to wit, to pay the statutory successor on the basis of the
amount of liability determined in the liquidation or
receivership proceeding, rather than on the basis of the
actual amount of loss (dividends) paid by the liquidator,
receiver, conservator, or statutory successor to allowed
claimants. Nor, except as hereinabove specifically provided,
shall anything in this Insolvency Article in any manner
create any obligation or establish any right against the
Reinsurer in favor of any third parties or any other persons
not parties to this Agreement.
ARBITRATION: Except as otherwise agreed upon by the parties:
1. Resolution of Disputes: Any dispute between the
Company and the Reinsurer arising out of the
provisions of this Agreement, or concerning its
interpretation or validity, whether arising before
or after termination of this Agreement, shall be
submitted to arbitration in the manner set forth
in this Article. Either party may initiate
arbitration
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of any such dispute by giving written notice to
the other party, by registered or certified mail,
return receipt requested, of its intention to
arbitrate and of its appointment of an arbitrator
in accordance with subsection (3) of this Article.
2. Composition of Panel: Unless the parties agree
upon a single arbitrator within fifteen (15) days
after the receipt of a notice of intention to
arbitrate, all disputes shall be submitted to an
arbitration panel composed of two arbitrators and
an umpire, chosen in accordance with subsections
(3) and (4) of this Article.
3. Appointment of Arbitrators: The members of the
arbitration panel shall be chosen from
disinterested persons having knowledge of the
insurance, reinsurance and financial issues
relevant to the matters in dispute. The party
requesting arbitration (hereinafter referred to as
the "requesting party") shall appoint an
arbitrator and give written notice thereof, by
registered or certified mail, return receipt
requested, to the other party (hereinafter
referred to as the "respondent") together with its
notice of intention to arbitrate. Unless a single
arbitrator is agreed upon within fifteen (15) days
after the receipt of the notice of intention to
arbitrate, the respondent shall, within thirty
(30) days after receiving such notice, also
appoint an arbitrator and notify the requesting
party thereof in a like manner. Before instituting
a hearing, the two arbitrators so appointed shall
choose an umpire. If, within twenty (20) days
after they are both appointed, the arbitrators
fail to agree upon the appointment of an umpire,
the umpire shall be appointed by the President of
the American Arbitration Association.
4. Failure of Party to Appoint Arbitrator: If the
respondent fails to appoint an arbitrator within
thirty (30) days after receiving a notice of
intention to arbitrate, such arbitrator shall be
appointed by the President of the American
Arbitration Association, and shall then, together
with the arbitrator appointed by the requesting
party, choose an umpire as provided in subsection
(3) of this Article.
5. Involvement of Other Reinsurers:
(a) If more than one Reinsurer of this Agreement
is involved in the same dispute, all such
Reinsurers shall
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constitute and act as one party for purposes of
this Article and communication shall be made by
the Company to each of the Reinsurers constituting
the one party; provided, however, nothing herein
shall impair the right of such Reinsurers to
assert several, rather than joint, defenses or
claims, nor be construed as changing the liability
of the Reinsurers under the terms of this
Agreement from several to joint.
(b) If the Company is involved in a dispute under
the terms of this Agreement and in one or more
separate disputes with one or more other insurers
or reinsurers in which common questions of law or
fact are in issue, the Company or Reinsurer, at
their option, may join with such other insurers or
reinsurers in a common arbitration proceeding
under the terms of this Article. If the Company
and such other insurers or reinsurers have
commenced arbitration, the Reinsurers may at its
option join such proceeding for the determination
of the dispute between the Company and Reinsurer.
6. Choice of Law and Forum: Any arbitration
instituted pursuant to this Article shall be held
in Wilmington, Delaware. Any action to enforce any
arbitration award or to compel arbitration shall
be brought only in the state courts of the State
of Delaware situated in New Castle County, to the
exclusion of all other courts. The substantive
laws of the State of Delaware, without regard to
its conflict of laws rules, shall govern any
action or suit brought to compel any such
arbitration or to enforce any award rendered
pursuant to such arbitration.
7. Submission of Dispute to Panel: Unless otherwise
extended by the arbitration panel, or agreed to by
the parties, each party shall submit its case to
the panel within thirty (30) days after the
selection of an umpire.
8. Procedure Governing Arbitration: All proceedings
before the panel shall be informal and the panel
shall not be bound by the formal rules of
evidence. The panel shall have the power to fix
all procedural rules relating to the arbitration
proceeding. In reaching any decision, the panel
shall give due consideration to the customs and
usage of the insurance, reinsurance and finance
business.
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9. Arbitration Award: The arbitration panel shall
render its decision within sixty (60) days after
conclusion of the hearing, which decision shall be
in writing, stating the reasons therefor. The
decision of the majority of the panel shall be
final and binding on the parties to the
proceeding. Judgment on the award may be entered
in any court of competent jurisdiction, and
execution of any monetary judgment may occur in
any jurisdiction.
10. Cost of Arbitration: Unless otherwise allocated by
the panel, each party shall bear the expense of
its own arbitrator and its own witnesses and shall
jointly and equally bear with the other parties
the expense of the umpire and the arbitration.
11. Limit of Authority of Arbitration Panel: The
arbitration panel does not have the authority to
award punitive, multiplied, or exemplary damages,
other similar damages or any extra contractual
damages of any nature or description whatsoever
except to the extent claimed as Subject Loss under
this Agreement, and each of the Company and the
Reinsurer expressly waives all rights to punitive,
multiplied, or exemplary damages, other similar
damages or any extra contractual damages of any
nature or description whatsoever except to the
extent claimed as a Subject Loss under this
Agreement.
WAIVER OF PUNITIVE
DAMAGES: The Company and the Reinsurer agree that in no
event shall either party be entitled to any award
against the other of punitive, multiplied, or
exemplary damages, other similar damages or any
extra contractual damages of any nature or
description whatsoever, and each of the Company
and the Reinsurer both expressly waives all rights
to punitive, multiplied, or exemplary damages,
other similar damages or any extra contractual
damages of any nature or description whatsoever
except to the extent claimed as a Subject Loss
under this Agreement.
EXCLUSIONS: (A) Ex Gratia Payments: Part B Covered Losses under
this Agreement shall exclude any Ex Gratia
Payments except to the extent consented to by the
Reinsurer. "Ex Gratia Payments" as used herein
means a claim payment not required by the terms of
the underlying insurance policies covered by this
Agreement.
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20
(B) Insolvency Funds: The Reinsurer shall not be
obligated to pay to the Company any share of any
liability of the Company arising, by contract,
operation of law, or otherwise, from participation
or membership of the Company or any of its
affiliates, whether voluntary or involuntary, in
any insolvency fund or from reimbursement of any
person for any such liability. "Insolvency Fund"
includes any guaranty or insolvency fund, plan,
pool, association, or other arrangement howsoever
denominated, established or governed, which
provides for any assessment of or payment or
assumption by any person of part or all of any
claim, debt, charge, fee, or other obligation of
any insurer, or its successors or assigns which
has been declared to be insolvent, or which is
otherwise deemed unable to meet any claim, debt,
charge, fee or other obligation in whole or in
part.
(C) Assessments: This Agreement does not cover
assessments of any nature whatsoever levied
against the Company.
(D) Dividends: The Reinsurer shall not participate in
the determination of, nor reimburse the Company
for, any policyholder or other dividends paid by
the Company.
(E) Assumed Reinsurance: This Agreement does not cover
reinsurance assumed by the Company.
REINSURANCE
INTERMEDIARY: Swiss Re Atrium Corporation, 00 Xxxx 00 Xxxxxx, 00xx Xxxxx,
XxxXxxx, Xxx Xxxx 00000, U.S.A., is hereby recognized as the
Reinsurance Intermediary for all business under this
Agreement.
All communications, including but not limited to notices,
reports, and statements, relating to this Agreement, shall
be transmitted to the Company and the Reinsurer through the
Intermediary.
All payments, including but not limited to premiums, losses,
loss adjustment expenses, and salvages and settlements,
relating to this Agreement shall be made directly between
the Company and the Reinsurer, and not through any
Intermediary.
AMENDMENTS: This Agreement may be amended only by mutual consent of the
parties expressed in a written addendum executed by the
parties with the same formalities as this Agreement, and
such addendum
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shall be deemed to be an integral part of this Agreement and
binding on the parties hereto.
ACCESS TO RECORDS: The Reinsurer shall have the right to examine, at any
reasonable time, all papers, books, accounts, documents and
other records of the Company or any agent or employee of the
Company including any claims adjuster or any other person
acting on behalf of the Company relating to the business
covered hereunder. Upon the Reinsurer's request, the Company
shall supply the Reinsurer, at the Reinsurer's expense, with
copies of the whole or any part of such papers, books,
accounts, documents and other records relating to the
business covered hereunder. The Reinsurer's right of
inspection under this Access to Records section shall
continue to exist after termination of this Agreement as
long as one of the parties hereto has a claim against any
other arising from this Agreement.
CAPTIONS AND
CATCHLINES: Captions and catchlines used in this Agreement are intended
solely as aids to convenient reference. They shall not be
considered part of this Agreement nor limit or otherwise
affect its meaning, and no inference as to the meaning or
intent of any provision of this Agreement may be drawn from
them.
COUNTERPARTS: This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
CURRENCY: All payments hereunder shall be made in United States
Dollars. All monetary amounts herein are in United States
Dollars. All reports and accounts hereunder shall be
rendered in United States Dollars. For the purpose of this
Agreement, where the Company pays amounts in currencies
other than United States Dollars, such amounts shall be
converted into United States Dollars at the actual rate of
exchange at which such amounts are entered in the Company's
books.
DISCLOSURES
AND APPROVALS: The Company represents and warrants with respect to this
Agreement and the transactions hereunder and with respect to
any insurance and reinsurance which is covered by this
Agreement and all transactions thereunder, that all
disclosures, approvals and expiry of waiting periods which
are necessary or appropriate under any applicable law or
regulation have been made or obtained, or will be made or
obtained in a timely manner.
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ERRORS AND
OMISSIONS: Inadvertent errors and omissions of any nature made by
either party shall neither increase nor reduce the liability
of either party from what that liability would have been had
no such error or omission taken place. Upon discovery, the
party committing an error or omission shall correct such
error or supply such omission retroactively to the extent
possible to the time such error or omission occurred, and
advise the other party thereof as soon as possible.
NON
TRANSFERABILITY: This Agreement confers no rights, powers, or obligations on
any person or organization other than the Reinsurer and the
Company. Neither this Agreement nor any of the rights,
powers, or obligations of the Reinsurer or the Company under
this Agreement may be in any way transferred or assigned to
any other person or organization without the express written
consent of the Reinsurer and the Company. The granting of
such consent shall be at the sole and absolute discretion of
each of the parties.
OTHER
REINSURANCES: The existence or collectibility of any other reinsurance of
the Company (past, present, or future) shall in no way cause
any liability of the Reinsurer hereunder to be payable
earlier or to be greater than would have been the case in
the absence of such reinsurance and the risk of
uncollectibility of reinsurance shall be with the Company.
PARTIES TO THIS
AGREEMENT: This is an Agreement for indemnity reinsurance solely
between the Company and the Reinsurer. The acceptance of
reinsurance hereunder shall not create any right or legal
relationship whatsoever between the Reinsurer and the
policyholder, the insured or the beneficiary under any
policy reinsured hereunder. The Company shall be and remain
solely liable to the policyholder, the insured or the
beneficiary under any policy reinsured hereunder.
RIGHT OF OFFSET: Both the Company and the Reinsurer shall have, and may
exercise, at any time the right to offset any balance or
balances due the other. Such offset may only include
balances due under this Agreement and any other agreements
heretofore or hereafter entered into between the Company and
the Reinsurer, regardless of whether such balances are in
respect of premiums, or losses or otherwise, and regardless
of the capacity of any party, whether as reinsurer or
reinsured, under the various agreements involved.
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SALVAGE,
SUBROGATION,
AND OTHER
RECOVERIES: In the event of the payment of any indemnity by the
Reinsurer under this Agreement, the Reinsurer shall be
subrogated, to the extent of such payment, to all of the
rights of the Company against any person or entity legally
responsible for damages for the losses paid by the Company.
The Company agrees to enforce such rights, but in case the
Company refuses or neglects to do so, the Reinsurer is
hereby authorized and empowered to bring any appropriate
action in the name of the Company or the Company's
policyholders or otherwise to enforce such rights. In
determining the amount of salvage, subrogation and other
recoveries, there shall first be deducted from any amount
recovered the expenses incurred in effecting the recovery.
The whole of the balance shall then be applied in reduction
of the original losses paid by the Company and the Covered
Losses and the Experience Balance shall be determined or
redetermined accordingly. Any overpayment made by the
Reinsurer because of the computation of loss before the
application of such a recovery shall be refunded promptly by
the Company but no later than three (3) Business Days after
receipt of notice of such overpayment.
TAXES: The Company shall be liable for all taxes, except income and
profit taxes of the Reinsurer, on amounts paid to the
Reinsurer under the terms of this Agreement, and shall
indemnify and hold the Reinsurer harmless for any taxes
which the Reinsurer may become obligated to pay on the
Company's behalf.
FEDERAL EXCISE
TAX: In the event that any Federal Excise Tax is due with respect
to any amounts due under this Agreement, the Company agrees
to pay such tax in addition to any amounts due under this
Agreement and agrees to remit such tax to the United States
Internal Revenue Service and shall indemnify and hold the
Reinsurer harmless for any such taxes which the Reinsurer
may become obligated to pay.
NO WAIVER: No consent or waiver, express or implied, by any other party
to or of any breach or default by any other party in the
performance of its obligations hereunder shall be construed
to be a consent or waiver to or of any other breach or
default in the performance of obligations by such other
party hereunder. Failure on the part of any party to
complain of any act or failure to act of any other party or
to declare any other party in default, irrespective of how
long
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such failure continues, shall not constitute a waiver by
such first party of its rights hereunder.
GOVERNING LAW: It is agreed that, subject to the express provisions of this
Agreement to the contrary, this Agreement shall be governed
by the substantive laws of the State of Delaware, without
regard to its principles of conflict of laws.
SERVICE OF SUIT: Submission To Jurisdiction: It is agreed that in the event
of the failure of the Reinsurer to pay any amount claimed to
be due under this Agreement, the Reinsurer, at the request
of the Company, will submit to the jurisdiction of any Court
of competent jurisdiction within the United States of
America and will comply with all requirements necessary to
give such Court jurisdiction; and all matters arising
hereunder shall be determined in accordance with the law and
practice of such Court and the Reinsurer will abide by the
final decision of such Court or of any Appellate Court in
the event of an appeal.
Service of Process: It is further agreed that service of
process in any suit instituted against the Reinsurer arising
out of this Agreement, may be made upon Xxxxxx, Xxxxx &
Bockius LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000,
U.S.A., Attention: X. Xxxxxxxx Xxxxxx, and that in such suit
the Reinsurer will abide by the final decision of such Court
or of any Appellate Court in the event of an appeal.
Appearance: Xxxxxx, Xxxxx & Bockius LLP are authorized and
directed to accept service of process on behalf of the
Reinsurer in any such suit and/or upon the request of the
Company to give a written undertaking to the Company that
they will enter a general appearance upon the Reinsurer's
behalf in the event such a suit shall be instituted.
Insurance Official As Attorney For Service of Process:
Further, pursuant to any statute of any State, Territory or
District of the United States of America which makes
provision therefor, the Reinsurer hereby designates the
Superintendent, Commissioner or Director of Insurance or
other officer specified for that purpose in the statute, or
his successor or successors in office, as their true and
lawful attorney upon whom may be served any lawful process
in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of
this Agreement, and hereby designates Xxxxxx, Xxxxx &
Bockius LLP as the party to whom the said officer is
authorized to mail such
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process or a true copy thereof.
REPRESENTATIONS: The Company acknowledges that, at the Reinsurer's request,
it has provided the Reinsurer with the Company Data
described in Schedule 1 prior to the execution of this
Agreement by the Reinsurer. The Company represents that all
factual information contained in the Company Data is
substantially complete and accurate as of the date the
document containing the information was prepared. The
Company further represents that any assumptions made in
preparing the Company Data were based upon informed judgment
and are consistent with sound actuarial principles. The
Company further represents that it is not aware of any
omissions, errors, changes or discrepancies which would
materially affect the Company Data. The Reinsurer has relied
on such data and the foregoing representations in entering
into this Agreement.
WARRANTY: The Company warrants that the Business Covered and all
agreements relating thereto shall not be amended in any
manner whatsoever without the prior and express written
consent of the Reinsurer.
DATES AND TIMES: All dates and times contained in this Agreement, unless
otherwise specified, are New York, New York time.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives in Xxxxxxxx, Bermuda effective as of
December 31, 1998.
METROPOLITAN LIFE INSURANCE COMPANY
BY: ________________________________
Name: ______________________________
Title: _____________________________
STOCKWOOD REINSURANCE COMPANY LTD.
BY: ________________________________
Name: ______________________________
Title: _____________________________
27
SCHEDULE 1
SCHEDULE 1
The Company Data provided to Stockwood Reinsurance Company Ltd. includes the
following information:
(A) The following e-mails and attachments thereto:
December 14, 1998 e-mail from Xxxxxx Xxxx to Xxxx Xxxx, "Re: Revised
Traditional Ordinary Calendar Year Exposure and Paid Death Claims"
December 15, 1998 e-mail from Xxxxxx Xxxxxxx to Xxxx Xxxx, "Trad Ord
Exposure"
December 22, 1998 e-mail from Xxxxxxx Xxxxxxx to Xxxx Xxxx, "Net
amount at risk basis data"
December 23, 1998 e-mail from Xxxxxxx Xxxxxxx to Xxxx Xxxx, "MetLife
Business Definition"
December 23, 1998 e-mail from Xxxxxxx Xxxxxxx to Xxxx Xxxx, "Re:
MetLife Business Definition"
December 23, 1998 e-mail from Xxxxxxx Xxxxxxx to Xxxx Xxxx, "9 mos of
1998, exposure by attained age and sex"
December 28, 1998 e-mail from Xxxxxxx Xxxxxxx to Xxxx Xxxx,
"Metromatic & COLI"
December 28, 1998 e-mail from Xxxxxxx Xxxxxxx to Xxxx Xxxx, "9 mos
1998 exposure and death experience"
(B) The following facsimile transmission:
December 14, 1998 facsimile from Xxxx Xxxxxxxxx to Xxxx Xxxx, "Re
Information on Traditional Ordinary Large-sized Policies
