REINSURANCE AGREEMENT
BETWEEN
LINCOLN BENEFIT LIFE COMPANY, LINCOLN NEBRASKA
(HEREINAFTER "LBL")
AND
ALLSTATE LIFE INSURANCE COMPANY, NORTHBROOK, ILLINOIS
(HEREINAFTER, "ALLSTATE")
ARTICLE I
BASIS OF REINSURANCE
--------------------
1. ALLSTATE will indemnify and LBL will automatically reinsure with ALLSTATE,
according to the terms and conditions hereof, the net liability for
applications received and contracts issued subsequent to the Effective Date
by LBL on the contracts listed in Schedule A.
2. The indemnity reinsurance provided hereunder shall be on a modified
coinsurance basis. LBL shall retain, maintain, and own all assets held in
relation to the Reserve, as defined in Article II of this Agreement.
3. In no event will reinsurance on an application or a policy under this
Agreement be in force unless the corresponding application is pending with
LBL or policy issued by LBL, or the reinsurance accepted by LBL as the case
may be, is in force.
ARTICLE II
LIABILITY OF ALLSTATE
----------------------
1. The liability of ALLSTATE with respect to any contract reinsured hereunder
will begin simultaneously with that of LBL. ALLSTATE'S liability with
respect to any contract reinsured hereunder will terminate on the date
LBL'S liability on such contract terminates or the date this Agreement is
terminated, whichever is earlier. However, termination of this Agreement
will not terminate ALLSTATE'S liability for benefit payments incurred prior
to the date of termination.
2. For the purpose of his Agreement, the term "Reserve" will be the "Total
Liabilities" of LBL'S Variable Annuity Separate Accounts (corresponding to
amounts shown on page 3, line 17 of the 1992 Separate Accounts Statutory
Statements).
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ARTICLE III
MONTHLY SETTLEMENTS
-------------------
1. While this Agreement is in effect, LBL shall pay to ALLSTATE on a daily
basis, with respect to eligible policies under this Agreement, a
reinsurance premium equal to the sum of Items (a) and (b) below, less the
sum of Items (c) and (d) below.
(a) Gross premiums (direct and reinsurance assumed) collected by LBL.
(b) Reserves transferred from the LBL General Account to an LBL Separate
Account.
(c) Gross premiums refunded by LBL to policyholders.
(d) Reserves transferred from an LBL Separate Account to the LBL General
Account.
2. While this Agreement is in effect, ALLSTATE shall pay to LBL on a daily
basis a benefit and expense allowance equal to the sum of Items (a), (b),
(c) and (d) below.
(a) Net benefits (as defined in Paragraph 3 of this Article III) paid by
LBL with respect to the contracts reinsured under this Agreement.
(b) Commissions and other sales compensation incurred by LBL with
respect to the contracts reinsured under this Agreement.
(c) General insurance expenses incurred by LBL with respect to the
contracts reinsured under this Agreement.
(d) Insurance taxes, licenses and fees (excluding Federal Income Tax)
incurred by LBL with respect to the contracts reinsured under this
Agreement.
3. Net Benefits are defined as follows:
(a) For a contract issued directly by LBL and reinsured under this
Agreement, net benefits are the actual amounts payable by LBL to the
contractholder, less any amounts payable to LBL by another reinsurer
with respect to the contract. These payments include death
benefits, endowment benefits, annuity benefits, disability benefits,
benefits under A & H policies, withdrawals, surrender benefits and
payments on supplementary contracts with and without life
contingencies.
(b) For contracts reinsured by LBL and retroceded under this Agreement,
net benefits and commission and expense allowances are the actual
amounts
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payable by LBL to the ceding company with respect to the contract
reinsured by LBL.
4. ALLSTATE shall pay to LBL, no less frequently than annually, any taxes
incurred by LBL as a result of Section 848 of the Internal Revenue Code
which concerns capitalization of policy acquisition costs.
ARTICLE IV
DAILY RESERVE ADJUSTMENTS
-------------------------
While this Agreement is in effect, on a daily basis a reserve adjustment
equal to the amount defined below shall be paid.
Let:
RC = The Reserve change in LBL'S Variable Life Separate
Accounts from the end of the prior accounting period to
the end of the current accounting period for the reinsured
contracts (corresponding to the sum of the amounts on page
4, lines 10,11,12 and 13 of 1992 Separate Account
Statutory Statements).
NII = The net investment income in LBL'S Variable Life Separate
Accounts (corresponding to the sum of the amounts on page
4, line 2 of 1992 Separate Account Statutory Statements),
minus interest income on LBL'S capital investment in the
Separate Accounts.
If RC is greater than NII then a reserve adjustment of RC-NII is
payable by ALLSTATE to LBL.
If NII is greater than RC, then a reserve adjustment of NII-RC is
payable by LBL to ALLSTATE.
ARTICLE V
OVERSIGHTS
----------
ALLSTATE shall be bound as LBL is bound, and it is expressly understood and
agreed that if failure to reinsure or failure to comply with any terms of this
Agreement is shown to be unintentional and the result of misunderstanding or
oversight on the part of either LBL or ALLSTATE, both LBL and ALLSTATE shall be
restored to the positions they would have occupied had such error or oversight
not occurred.
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ARTICLE VI
INSPECTION OF RECORDS
---------------------
LBL and ALLSTATE shall have the right, at any reasonable time, to examine at the
office of the other, any books, documents, reports or records which pertain in
any way to the contracts reinsured under Agreement.
ARTICLE VII
INSOLVENCY
----------
1. In the event of the insolvency of LBL, reinsurance hereunder is payable by
ALLSTATE on the basis of its liability hereunder without diminution because
of the insolvency of LBL.
2. Further, in the event of the insolvency of LBL, the liquidator, receiver or
statutory successor of the insolvent LBL shall give written notice to
ALLSTATE of the pendency of any obligation of the insolvent LBL on any
policy reinsured, whereupon ALLSTATE may investigate such claim and
interpose at its own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses which it may deem available to LBL or
its liquidator or statutory successor. The expense thus incurred by
ALLSTATE shall be chargeable, subject to court approval, against the
insolvent LBL as part of the expenses of liquidation to the extent of a
proportionate share of the benefit which may accrue to LBL solely as a
result of the defense undertaken by ALLSTATE.
3. All moneys due LBL or ALLSTATE under this agreement shall be offset against
each other, dollar for dollar, regardless of any insolvency of either
party.
ARTICLE VII
ARBITRATION
-----------
Any dispute arising with respect to this Agreement which is not settled by
mutual agreement of the parties shall be referred to arbitration. Within twenty
(20) days from receipt of written notice from one party that an arbitrator has
been appointed, the other party shall also name an arbitrator. The two
arbitrators shall choose a third arbitrator and shall forthwith notify the
contracting parties of such choice. Each arbitrator shall be a present or
former officer of a life insurance company and should have no present or past
affiliation with this Agreement or with either party. The arbitrators shall
consider this Agreement as an honorable engagement rather than merely as a legal
obligation, and shall be relieved of all judicial formalities. The decision of
the arbitrators shall be final and binding upon the parties hereto. Each party
shall bear the expenses of its own arbitrator and shall jointly and equally bear
the expenses of the third arbitrator and of the arbitration. Any such
arbitration shall take place at the Home Office of LBL, unless some other
location is mutually agreed upon.
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ARTICLE IX
PARTIES TO AGREEMENT
--------------------
This Agreement is solely between LBL and ALLSTATE. The acceptance of
reinsurance hereunder shall not create any right or legal relation whatever
between ALLSTATE and any party in interest under any contract of LBL reinsured
hereunder. LBL shall be and remain solely liable to any insured, contract
owner, or beneficiary under any contract reinsured hereunder.
ARTICLE X
DURATION OF AGREEMENT
---------------------
This Agreement will be effective as of January 1, 1994, and will be unlimited as
to its duration; provided, however, it may be terminated with respect to the
reinsurance of new business by either party giving the other party sixty (60)
days prior written notice of termination.
ARTICLE XI
ENTIRE AGREEMENT
----------------
This Agreement constitutes the entire contract between ALLSTATE and LBL. No
variation, modification or changes to this Agreement shall be binding unless in
writing and signed by an officer of each party.
IN WITNESS HEREOF, the parties to this Agreement have caused it to be duly
executed in duplicate by their respective officers on the dates shown below.
LINCOLN BENEFIT LIFE COMPANY OF LINCOLN, NEBRASKA
By /s/ Xxxxxx Xxxx
------------------------------------------
Title Vice President & Actuary
------------------------------------------
Date January 3, 1994
------------------------------------------
ALLSTATE LIFE INSURANCE COMPANY OF NORTHBROOK, ILLINOIS
By /s/ C. Xxxxxx Xxxxx
------------------------------------------
Title Assistant Vice President
------------------------------------------
Date January 10, 1994
------------------------------------------
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SCHEDULE A
CONTRACTS SUBJECT TO REINSURANCE
--------------------------------
Any annuity contract whose reserve is invested, in whole or in part, in any
account designated as a Lincoln Benefit Variable Annuity Separate Account shall
be reinsured under this Agreement; provided, however, that the portion of any
such contract which is not so invested is not covered under this Agreement.
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AMENDMENT #1 TO THE
REINSURANCE AGREEMENT
BETWEEN
LINCOLN BENEFIT LIFE COMPANY, LINCOLN, NEBRASKA
(HEREINAFTER "LBL")
AND
ALLSTATE LIFE INSURANCE COMPANY, NORTHBROOK, ILLINOIS
(HEREINAFTER "ALLSTATE")
WHEREAS, LBL and Allstate entered into a Reinsurance Agreement regarding
variable annuity contracts issued by LBL (hereinafter "Agreement") having an
effective date of January 1, 1994; and
WHEREAS, LBL and Allstate desire to amend the Agreement as stated below.
NOW THEREFORE, the Agreement is hereby amended as follows:
1.) Article IV, "DAILY RESERVE ADJUSTMENTS", is hereby amended by adding
the following sentence to the definition of RC:
"Accounting period for purposes of this paragraph is one day".
2.) Article VII, "INSOLVENCY", is hereby amended by deleting said
Article in its entirety, and replacing it with the following new Article VII:
ARTICLE VII
-----------
INSOLVENCY
----------
1. The portion of any risk or obligation assumed by Allstate, when
such portion is ascertained, shall be payable on demand of LBL,
at the same time as LBL shall pay its net retained portion of
such risk or obligation, with reasonable provision for
verification before payment, and the reinsurance shall be
payable by Allstate, on the basis of the liability of LBL under
the contract or contracts reinsured without diminution because
of the insolvency of LBL.
2. In the event of the insolvency and the appointment of a
conservator, liquidator or statutory successor of LBL, such
portion shall be payable to such conservator, liquidator or
statutory successor immediately upon demand, with reasonable
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provision for verification, on the basis of claims allowed against
LBL by any court of competent jurisdiction or by any conservator,
liquidator or statutory successor of LBL to allow such claims,
without diminution because of such insolvency or because such
conservator, liquidator, or statutory successor has failed to pay
all or a portion of any claims.
3.) Article VIII, "ARBITRATION", shall be amended to include the
following language at the end of that article:
The decision of the Arbitrators shall be handed down
within 45 days of the date on which the arbitration is
concluded.
4.) Article X, "DURATION OF AGREEMENT", shall be deleted in its entirety
and shall be replaced with the following language:
This Agreement will be effective as of January 1, 1994,
and will be unlimited as to its duration; provided,
however, it may be terminated with respect to the
reinsurance of new business by either party giving the
other party ninety (90) days prior written notice of
termination.
5.) In addition, a new Article XII is added to the Agreement, as follows:
ARTICLE XII
-----------
OFFSET
------
Any debts or credits, liquidated or unliquidated, in favor of or
against either Allstate of LBL with respect to this Agreement only
shall be set-off and only the balance shall be allowed or paid.
Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
LINCOLN BENEFIT LIFE COMPANY ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxxx
------------------------- ------------------------------
Title: Senior Vice President Title: Vice President
------------------------- ------------------------------
Date: March 21, 1995 Date: March 24, 1995
------------------------- ------------------------------
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AMENDMENT #2
TO THE REINSURANCE AGREEMENT
EFFECTIVE JANUARY 1, 1994
BETWEEN
LINCOLN BENEFIT LIFE COMPANY
(HEREINAFTER CALLED "LBL")
AND
ALLSTATE LIFE INSURANCE COMPANY
(HEREINAFTER CALLED "ALLSTATE")
IT IS HEREBY AGREED, that the Reinsurance Agreement effective January 1, 1994,
between LBL and ALLSTATE (hereinafter "Agreement"), is amended as provided
below.
Effective January 1, 1994, Article III is hereby amended by adding the following
new paragraph:
ALLSTATE and LBL agree to an election under Treasury Regulations 1-848-2(g)(8)
as follows:
(a) For each taxable year under this Agreement, the party with net
positive consideration, as defined in the regulations promulgated
under Treasury Code Section 848, will capitalize specified policy
acquisition expenses with respect to this Agreement without regard
to the general deductions limitation of Section 848(c)(1);
(b) LBL and ALLSTATE agree to exchange information pertaining to the
amount of net consideration for all reinsurance agreements in force
between them to ensure consistency for purposes of computing
specified policy acquisition expenses. LBL and ALLSTATE shall agree
on the amount of such net consideration for each taxable year no
later than the May 1 following the end of such year.
(c) This election shall be effective for 1994 and for all subsequent
taxable years for which this Agreement remains in effect.
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Except as amended hereby, the Agreement shall remain unchanged.
IN WITNESS HEREOF, the parties to the Agreement have caused this Amendment to be
duly executed in duplicate by their respective officers on the dates shown
below.
LINCOLN BENEFIT LIFE COMPANY
By: /s/ Xxxxxx Xxxx
------------------------------------------------------------
Title: Senior Vice President, Chief Actuary & Treasurer
------------------------------------------------------------
Date: August 10, 1995
------------------------------------------------------------
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ C. Xxxxxx Xxxxx
------------------------------------------------------------
Title: Assistant Vice President
------------------------------------------------------------
Date: August 10, 1995
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