EXHIBIT (i)
Administrative Agreement
ADMINISTRATIVE SERVICE AGREEMENT
This Administrative Service Agreement (the "Agreement") made and entered into by
and between Ameritas Life Insurance Corp., a Nebraska life insurance corporation
("Ameritas") and Acacia Life Insurance Company, a District of Columbia life
insurance company ("Acacia"), as of this 29th day of December, 1998.
WITNESSETH
WHEREAS, Acacia desires to realize such economies of scale and consolidation as
is possible while still providing its policyholders the best of services,
systems, and people; and
WHEREAS, Acacia has determined that entering into an Administrative Service
Agreement with Ameritas, which provides for Ameritas providing certain
administrative services, will realize such economies of scale;
NOW, THEREFORE, in consideration of the premises and the mutual promises of the
parties hereto, the parties hereby covenant and agree as follows:
I. SERVICES TO BE PROVTDED BY AMERITAS
A. Ameritas will provide Acacia policy administration and other
insurance operation support services, including underwriting,
policy issue, premium processing, customer service, claims
administration, reinsurance processing, product filings, agent
licensing and compensation, and information management
support.
B. Ameritas shall keep accurate, full, and complete Books and
Records showing assets and liabilities, operations,
transactions, and financial condition. All financial
statements shall be accurate in all material respects, shall
present fairly the financial position of Acacia and its
subsidiaries and shall be prepared in accordance with GAAP
and, where required by law, SAP. Except as otherwise
specifically provided, the Chief Executive Officer and/or
President of Acacia and its subsidiaries shall determine the
methods used in the preparation of financial statements and
tax returns. Acacia and its subsidiaries may have access and
inspect the Books and Records of Acacia and its Subsidiaries
at a reasonable time and on reasonable notice.
Ameritas shall make available to Acacia and its subsidiaries
such information and financial statements in addition to the
foregoing and/or at such times as shall be required by either
of them in connection with the preparation of registration
statements, current and periodic reports, proxy statements,
and other, documents required to be filed under federal or
state laws and shall cooperate in the preparation of any such
documents.
C. Said services shall be provided by Ameritas for Acacia at
Ameritas' home office located in Lincoln, Nebraska or- such
other place or places as Ameritas shall determine is the most
efficient location for providing such services.
II. AMERITAS COMPUTER EOUIPMENT
Ameritas will provide or cause to be provided all computer equipment
necessary or reasonably required to render the services to be rendered
to Acacia by Ameritas pursuant to this Agreement. Such computer
equipment shall be provided at no cost to Acacia except as a portion of
the cost provided for in this Administrative Service Agreement.
III. SAFEGUARDING DATA
Ameritas will establish or will cause reasonable safeguards to be
established to protect against the distribution, loss or alteration of
Acacia's data files and other records. Such safeguards shall be no less
rigorous than those Ameritas uses in protecting its own data and as is
necessary to comply with all applicable laws and regulations.
IV. COMPENSATION
Ameritas shall provide to Acacia all management, administrative, and
other services, advice, and other accommodations reasonable necessary
to effectively and efficiently manage, operate, and administer such
business of Acacia as is covered by this Agreement in a manner
consistent with good business practice. The foregoing shall include all
materials, supplies, and other sundry items reasonable necessary to
provide the foregoing.
V. COSTS
Acacia shall pay to Ameritas for such services the fair and reasonable
cost of such services which shall from time to time be agreed upon by
the parties through their respective Boards of Directors and the
Intercompany Transaction Committee of Ameritas Holding Company. Such
amounts are as agreed upon by the parties from time to time shall be
set out in an Exhibit attached to this Agreement. Save and except for
the costs of services to be paid by Acacia to Ameritas as agreed upon
by the parties and as reflected in the attached Exhibit, Ameritas shall
pay all of its own respective personnel and other costs and expenses of
all types necessary or appropriate to render the management,
administrative, and other services, advice, and accommodations provided
for by this Agreement, except as to the following costs which shall
either be paid directly by Acacia or if paid by Ameritas, on behalf of
Acacia, shall promptly be reimbursed by Acacia:
A. All costs and expenses incurred in connection with the
employment of outside legal counsel for policyholder or
customer litigation involving Acacia.
B. All out-of-pocket costs and expenses incurred in connection
with the independent audit of the financial statements and
governmental regulatory examinations of Acacia.
C. All costs and expenses incurred in connection with
extraordinary actuarial, tax accounting systems or other
studies, functions or consultations performed solely for and
at the request of Acacia by independent, professional or
consulting individuals or organizations.
D. All fines and penalties of Acacia, including interest
assessed.
E. Premium taxes of Acacia.
F. Federal taxes, state or other governmental subdivision taxes,
licenses, and fees and interest thereon.
G. Guarantee fund assessments.
VI. QUALITY OF ADMINISTRATIVE SERVICES
A. Ameritas agrees that the services provided hereunder by
Ameritas to Acacia will at all times be timely and accurate
and of at least the equivalent quality to those provided by
Ameritas to itself.
B. Ameritas shall retain the right to contract with any third
party, affiliated or unaffiliated, for the performance of
services or use of facilities upon receipt of the consent of
the Executive Committee of Acacia which shall not be
unreasonably withheld.
C. No facility or system used by Ameritas in performing services
for or subject to use by Acacia shall be deemed to be
transferred, assigned, conveyed, or leased to Acacia by
performance or use pursuant to this Agreement except as
Ameritas and Acacia may otherwise agree in writing.
D. In performing any services hereunder which require the
exercise of judgment, Ameritas will endeavor to perform any
such services in accordance with any reasonable and
appropriate standards and guidelines Acacia develops and
communicates to Ameritas provided such guidelines are in
accord with all relevant laws.
E. The performance or receipt of services or the making available
or use of facilities pursuant to this Agreement shall in no
way impair the absolute control of the business and operations
of each of the parties by its own Board of Directors.
VII. CONFIDENTIALITY, PERFORMANCE AND RELATIONSHIP OF PARTIES
A. RECORDS AND REPORTS: All forms, records, statements, reports
filed, and other data and information prepared, maintained or
collected by Ameritas on behalf of Acacia in the performance
of this Agreement shall become the sole property of Acacia and
shall be delivered to Acacia upon request in the form and
format in which it is maintained; provided, however, that if
such request impedes Ameritas' ability to perform its duties
or obligations under this Agreement then to the extent of such
impediment, such parties shall be relieved of such duty and
obligation without reduction in fees to be paid by Acacia.
Ameritas agrees to preserve for the period prescribed by
applicable regulatory authorities, the books and records of
Acacia maintained by Ameritas pursuant to this Agreement.
B. INSPECTION OF BOOKS AND RECORDS: Ameritas shall keep proper
Books and Records relating to the services performed
hereunder in which full and correct entries and financial
data will be maintained in accordance with generally
accepted accounting practices. Acacia may at its option and
at its expense inspect the Books and Records of Ameritas as
they pertain to this Agreement at the offices of Ameritas in
which said Books and Records are maintained, during normal
business hours, for purposes related to Ameritas'
performance of this Agreement. Such inspection and/or audit
may be on a continuous or periodic basis or both and may be
conducted by employees of Acacia or an affiliate thereof or
an independent auditor retained by such person. Ameritas may
also request that Acacia make such an inspection. The
Executive Committee of Acacia will then determine if it
desires to make such an inspection. If the Executive
Committee does not decide to perform such an inspection,
then the party making such request may conduct such
inspection at its own expense; provided, however, that if
material inaccuracies are found in the course of the
inspection, then Acacia will pay the costs of such
inspection. Unless otherwise agreed, Ameritas shall continue
to provide such financial and statistical reports to Acacia
as they are currently preparing for its own products.
C. PERFORMANCE:
The failure of any party to insist upon strict performance of
any provision of this Agreement shall not constitute a waiver
of the right to insist upon strict performance or the
obligation to strictly perform thereafter.
D. INDEMNIFICATION:
1. Ameritas agrees to indemnify and to hold Acacia
harmless of any and all damages incurred by it or any
of its affiliates as the result of (i) any negligent
or intentional act or omission or violation of
Ameritas (or its respective employees or agents) of
its obligations hereunder, except to the extent such
negligent or intentional act, omission or violation
is caused by Acacia or agents of Acacia who are not
employees or agents of Ameritas; or (ii) any claims
of infringement of any license, patent, trademark or
other right of another person asserted against Acacia
with respect to any system used in providing services
hereunder.
2. Acacia agrees to indemnify and to hold Ameritas and
its respective affiliates harmless from any and all
damages incurred by Ameritas and/or any of its
respective affiliates as the result of or in
connection with claims by third parties in connection
with the performance of duties under this Agreement.
VIII. TERM OF AGREEMENT AND NOTICES
A. TERM OF AGREEMENT: This Agreement shall remain in full force
and effect for a period of five (5) years from the closing
date (the "initial term").
IX. MISCELLANEOUS
A. ENTIRE AGREEMENT: This Agreement contains the entire
understanding of the parties hereto and supersedes all prior
agreements of the parties with respect to the subject matter
contained herein. Any condition to a party's obligation
hereunder may be waived in writing by such party except as
provided herein, in the Joint Venture Agreement or in any
other agreement executed in connection therewith.
B. AMENDMENTS: This Agreement shall not be amended, changed,
modified, terminated or discharged in whole or in part, and
no notice requirements set forth herein shall be waived or
modified, except by an instrument in writing duly executed
by Ameritas and Acacia and all parties hereto, or their
respective successors or assigns.
C. BINDING AGREEMENT: This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their
respective successors and assigns.
D. SEVERABLE PROVISIONS: If any provision of this Agreement shall
be found to be unenforceable by any administrative agency or
court of competent jurisdiction, such findings shall not
affect the remaining provisions of this Agreement and all
other provisions herein shat remain in full force and effect.
E. GOVERNING LAW: This Agreement shall be interpreted and
enforced in accordance with the laws of Nebraska.
F. COUNTERPARTS: This Agreement may be executed in two or more
separate counterparts, each of which shall be deemed to be an
original hereof, but all of which shall constitute one and the
same instrument.
G. THIRD PARTY BENEFICIARIES: The terms and provisions of this
Agreement
are intended solely for the benefit of the parties hereto and
their respective successors and assignors, and it is not the
intention of the parties to confer third party beneficiary
rights upon any other person.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the 29th day of December, 1998.
AMERITAS LIFE INSURANCE CORP.
By: /s/ Xxxxxxx X. Xxxxx
------------------------
President & COO
Attest:
/s/ Xxxxxx X. Xxxxxxx
----------------------
Sr. V.P. & Secretary
ACACIA LIFE INSURANCE COIMPANY
By: /s/
--------------------------
President and COO
Attest:
/s/ Xxxxxxx X. Xxxxxxx
----------------------
VP & Secretary
Cost Methodology
For the purpose of computing fees to be paid to Ameritas Life Insurance Corp. by
Acacia Life Insurance Company and its subsidiaries or to Acacia Life Insurance
Company by Ameritas Life Insurance Corp. and its subsidiaries pursuant to the
Agreement to which this exhibit is attached, the following cost concepts shall
be employed. Identified services include accounting, actuarial, client service,
human resources, information services, legal, product development, publishing
services and underwriting services for all insurance subsidiaries are expected
to be borne primarily by Ameritas Life Insurance Corp. and Acacia Life Insurance
Company. These costs, regardless of where they originated, if not allocable
directly to a company will be aggregated and allocated under a activity based
cost allocation agreement.
Costs which are directly attributable to any company will be charged to that
company. Examples of costs which are directly attributable to a company would be
commission expense, state taxes on premiums, federal income and other taxes,
professional fees, insurance, bank service charges, contributions, examination
expenses, postage for specific mailings and other miscellaneous charges which
can directly be associated with a company.
Costs which are directly attributable to Acacia Life and its subsidiaries
included but not limited to legal, product development, and publishing services
will be charged based upon usage. The primary methods used for such charges are
time and bids and estimates.
Indirect costs such as accounting, actuarial, client service, human resources,
information services and underwriting will be charged on agreed upon cost
allocation methodology. This agreed upon cost allocation methodology will be
based upon cost profiles established by each division or sub- division (example
accounting - division; accounts payable - subdivision) to determine the costs
allocable to various business lines (example individual, group, pensions). Once
identified by line of business, individual costs will be charged to all
companies within the controlled group on identified cost drivers. Table A shows
the current Cost Allocation Drivers utilized within Ameritas Life & its
subsidiaries. Examples of these cost drivers include:
Staff counts or time logs
Leased resources
Life policies in force and/or issued
Annuity policies in force and/or issued
Premium
CPU time and/or no. of personal computers or local area networks
Sales Production
Exhibit A page 2
Each year the Plan for the year will be costed utilizing the above approach,
approved by Acacia management and will be submitted for the review of the
Intercompany transaction committee. Quarterly actual expenditures will be
allocated. If a companies charges vary by more than 10% high or low from the
approved estimates of such expenditures, then a report will be made to the
Intercompany Transaction Committee explaining and approving such deviations.
Approved: Acacia Ameritas
-------------------------- --------------------------
Table A
Cost Allocation Drivers
Line of Business/Functional Rate Calculation
======================================== ====================================== ======================================
Cost Area Description Allocation Manager
======================================== ====================================== ======================================
Accounting & Finance CFO and Controller Supervised expenditures
---------------------------------------- -------------------------------------- --------------------------------------
Accounting & Finance Investment Accounting Managed assets
---------------------------------------- -------------------------------------- --------------------------------------
Accounting & Finance Financial reporting Time profile
---------------------------------------- -------------------------------------- --------------------------------------
Accounting & Finance Payroll Staff counts
---------------------------------------- -------------------------------------- --------------------------------------
Accounting & Finance Accounts Payable Expenses/checks written
---------------------------------------- -------------------------------------- --------------------------------------
Accounting & Finance Treasury Transactions/time profile
---------------------------------------- -------------------------------------- --------------------------------------
Actuarial Actuarial costs Time profile
---------------------------------------- -------------------------------------- --------------------------------------
Human Resources Employment, benefits, training Staff counts
---------------------------------------- -------------------------------------- --------------------------------------
Information Services Programming & Data Center Programming hours, CPU time, No.Of
computers, LANs and supervised
expenditures
---------------------------------------- -------------------------------------- --------------------------------------
Service Center Issue & Underwriting Policies underwritten & issued
---------------------------------------- -------------------------------------- --------------------------------------
Service Center Licensing Appointments
---------------------------------------- -------------------------------------- --------------------------------------
Service Center Reinsurance Policies reinsured
---------------------------------------- -------------------------------------- --------------------------------------
Service Center Claims No. Of life/annuity claims pd.
---------------------------------------- -------------------------------------- --------------------------------------
Service Center Product development Time profile
---------------------------------------- -------------------------------------- --------------------------------------
Service Center Customer Service Policies administered
======================================== ====================================== ======================================
