REINSURANCE AGREEMENT
SPECIFICATIONS PAGE
CEDING COMPANY: STATE MUTUAL LIFE ASSURANCE COMPANY
Worcester, Massachusetts 855
COLOGNE: COLOGNE LIFE REINSURANCE COMPANY
Stamford, Connecticut
EFFECTIVE DATE: Exceptional Life Issues of August 1, 1983 or later.
TYPE OF BUSINESS: Facultative Only.
BINDING: Subject agreement with COLOGNE underwriters.
REPORTING: Monthly Bulk listing in advance.
PLAN OF REINSURANCE: Risk-Premium.
PREMIUMS: See Exhibit C.
LIMIT PER LIFE: No limit.
JUMBO LIMIT: Not applicable.
MINIMUM CASE: See Exhibit D.
RECAPTURE: After 10 policy years.
IN WITNESS OF THE AGREEMENT which is detailed in the attached General
Provisions, Special Provisions and Exhibits, the PARTIES have had their
respective officers execute it in duplicate below.
STATE MUTUAL LIFE ASSURANCE COMPANY
Attest: /s/ Xxxxxx X. Xxxxx, Xx. By: /s/
------------------------------ --------------------------------
Title: Assistant Vice President Title: Vice President and Actuary
& Associate Actuary -----------------------------
-------------------------------
COLOGNE LIFE REINSURANCE COMPANY
Attest: /s/ By: /s/
------------------------------ --------------------------------
Title: Title: (illegible)
------------------------------- -----------------------------
THIS OFFER, IF NOT ACCEPTED, WILL EXPIRE ON: 06/12/84
CONTENTS
PAGE
----
Specifications Page 1
Contents 2
General Provisions
Parties to the Agreement 3
Benefits to the Ceding Company
Reinsurance Coverage 3
Effect of Policy Changes 3
Effect of Reinstatement 4
Changes in Retention and Recapture 4
Settlement of Claims 5
Premium Tax Credits 6
Insolvency 6
Conditions of the Reinsurance Coverage
Company Data 7
Oversights 7
Inspection of Records 7
Payment of Premiums 7
Arbitration 7
Duration of Agreement 7
Special Provisions
Basis of Reinsurance 8
Mode of Reinsurance 8
Plan of Reinsurance 9
Premium Accounting 9
Exhibits
Ceding Company Retention Limits at Inception A
Cession Form B
Reinsurance Premiums C
Reinsurance Benefit Amounts D
2
GENERAL PROVISIONS
PARTIES TO THE AGREEMENT: Ceding Company and Cologne.
The Agreement is solely between the Ceding Company and Cologne. The acceptance
of risks under this Agreement shall create no right or legal relation whatever
between Cologne and the insured, owner or beneficiary of any insurance policy or
other contract of the Ceding Company.
BENEFITS TO THE CEDING COMPANY:
REINSURANCE COVERAGE. The liability of Cologne under the Agreement shall follow
the conditions of liability of the Ceding Company under the policy or contract
reinsured and shall be subject to those conditions to the extent of the
reinsurance effected.
The liability of Cologne shall begin and end with the liability of the Ceding
Company; however, Cologne's liability shall be subject in the case of
facultative reinsurance to explicit acceptance of the risk by Cologne.
Reinsurance shall be inforce and binding on Cologne as long as the issuance of
insurance by the Ceding Company constituted the doing of business in a
jurisdiction in which the Ceding Company was properly licensed and the
reinsurance premiums continue to be paid when due while the insurance remains in
force.
EFFECT OF POLICY CHANGES. Whenever a change is made in the status, plan, amount
or other material feature of the policy issued by the Ceding Company to the
Insured, Cologne shall, upon notification of the change, provide appropriately
adjusted reinsurance coverage.
If the amount of insurance is reduced, the amount of reinsurance shall be
reduced proportionately and any unearned premiums associated with the reduction
returned to the Ceding Company.
If the amount of insurance is increased, the Ceding Company will have the
increase considered as new reinsurance under this Agreement.
If the original policy lapses and extended term insurance or reduced paid-up
insurance is granted under the terms of the policy, Cologne shall be obligated
to honor the adjusted amount of reinsurance and to accept appropriately adjusted
reinsurance premiums calculated in the same manner as on the original case.
However, Cologne shall not be obliged to provide coverage for extended term
insurance on policies issued at substandard rating greater than 150% of standard
or the equivalent in flat extra premium unless Cologne specifically agrees in
advance to do so.
See Exhibit D for more details regarding policy changes.
3
EFFECT OF RESTATEMENT. If a reinsured policy which has lapsed for non-payment of
premium is reinstated in accordance with its terms and with Ceding Company
rules, Cologne shall be obligated, upon notification of policy reinstatement to
reinstate the pre-existing reinsurance coverage. Upon reinstatement of the
reinsurance coverage, the Ceding Company shall pay the reinsurance premiums in
arrears with interest at the same rate as the Ceding Company receives under its
policy.
CHANGES IN RETENTION AND RECAPTURE. Whenever the Ceding Company changes its
limits of retention, it shall promptly inform Cologne and Cologne shall be
obliged to accept the notice and make it part of this Agreement. At the
effective date of this Agreement, the retention limits of the Ceding Company are
as shown in Exhibit A. If the Ceding Company increases its retention limits, it
shall have the option of applying the increase in retention limits to existing
reinsurance and reducing the reinsurance inforce in accordance with the
following rules.
(a) The Ceding Company shall give Cologne written notice of its intention
to apply the new limits of retention to existing business.
(b) The reduction in reinsurance shall be made on the next anniversary of
each case affected. However, no reduction shall be made until a case
has been in force for the minimum period necessary to qualify for
recapture, which is given on the Specifications Page of this
Agreement.
(c) No reduction shall be made in the reinsurance on any life unless the
Ceding Company retained its maximum retention limit for the plan, age
and mortality ratings at the time the policy was issued. If any
reinsurance is recaptured following a retention increase, all
reinsurance which is subject to recapture under these provisions must
be similarly recaptured. If there is reinsurance in other companies on
risks eligible for recapture, the necessary reduction is to be applied
pro rata to the total outstanding reinsurance.
In the event the Ceding Company overlooks any reductions or cancellations of
reinsurance which should be made on account of an increase in its retention
limits, the acceptance by Cologne of reinsurance premiums after the effective
dates of the reductions or cancellations shall not constitute or determine a
liability on the part of Cologne for such reinsurance, and Cologne shall be
liable only for a credit of the premiums so received, without interest.
4
SETTLEMENT OF CLAIMS. Cologne's liability to the Ceding Company for reinsurance
benefits shall follow the Ceding Company's liability for such benefits under the
terms of its policies. However, Cologne shall pay death claims in one lump sum
regardless of the mode of settlement provided in the policy, and Cologne may pay
disability waiver of premium claims in one payment per year regardless of the
mode of premium payment specified in the policy.
Whenever a claim is made under a policy of the Ceding Company, Cologne shall
consider the claim to be for the amount of reinsurance on the risk. Cologne
shall abide the issue as it is settled by the Ceding Company and shall pay the
amount of reinsurance in effect when the Ceding Company settles with the
claimant, including any required interest from date of death to date of payment,
subject only to the limitations set forth in paragraphs 1 through 3 below:
1. In every case of loss, copies of proofs obtained by the Ceding Company
shall be taken as sufficient. Both copies of proofs of loss and a statement
showing the amount paid on the claim by the Ceding Company shall be
furnished to Cologne before or with a request for payment of Cologne's
share.
2. The Ceding Company shall consult with Cologne before making admission of
liability for a claim on any case where Cologne carries at least 50% of the
risk.
3. Any suit or claim may be contested or compromised by the Ceding Company.
Cologne may choose not to participate in contesting a claim, and if it so
chooses, it shall pay the full amount of the reinsurance at once. If
Cologne joins the Ceding Company in a contest or compromise, which results
in a reduced claim settlements, then the Ceding Company and Cologne shall
participate in proportion to their respective net liabilities before the
reduction. If Cologne has given written consent to participate in defending
or investigating a claim or in taking up or rescinding a policy reinsured
under this Agreement, any unusual expenses incurred by the Ceding Company
(aside from routine investigations and other incidental claims settlement
expenses) shall be shared in the same proportion.
In the event of an increase or decrease in the amount of the Ceding Company's
insurance on any policy reinsured hereunder because of a misstatement of age or
sex which is established after the death of the Insured, the Ceding Company and
Cologne shall share in the change in amount in proportion to their risk and the
reinsurance premium for the policy year of death shall be recalculated on the
basis of the adjusted face amount using premiums and reserves at the correct age
and sex, and the adjustment for the difference in reinsurance premiums shall be
made without interest.
5
PREMIUM TAX CREDITS. Cologne shall reimburse the Ceding Company for premium
taxes on reinsurance premiums to the extent that Cologne is not itself required
to pay the taxes directly.
INSOLVENCY. In the event of insolvency of the Ceding Company, all payments
normally made to it by Cologne shall be payable directly to the liquidator,
receiver or statutory successor of the Ceding Company on the basis of the
liability of the Ceding Company under the contract or contracts reinsured
without diminution because of insolvency of the Ceding Company.
In the event of insolvency of the Ceding Company, the liquidator, receiver or
statutory successor shall give Cologne written notice of the pendency of a claim
on a policy reinsured within a reasonable time after the claim is filed in the
solvency proceeding. During the pendency of the claim Cologne may investigate
the claim, and in a proceeding where the claim is to be adjudicated, Cologne
may, at Cologne's own expense, interpose in the name of the Ceding Company (its
liquidator, receiver or statutory successor) any defense or defenses which
Cologne may deem available to the Ceding Company or its liquidator, receiver or
statutory successor.
The expense thus incurred by Cologne shall be chargeable, subject to court
approval, against the Ceding Company as part of the expense of liquidation to
the extent of a proportionate share of the benefit which may accrue to the
Ceding Company solely as a result of the defense undertaken by Cologne. Where
two or more reinsurers participate in the same claim and a majority in interest
elect to interpose a defense to the claim, the expense shall be apportioned in
accordance with the terms of the
reinsurance agreements as though the expense
had been incurred by the Ceding Company.
6
CONDITIONS OF THE REINSURANCE COVERAGE:
COMPANY DATA. The Ceding Company agrees to keep Cologne informed of the identity
and terms of its policies, riders and contracts reinsured under this Agreement
by furnishing Cologne with copies of its application forms, policy forms,
supplementary agreements, rate books, plan codes and other materials relevant to
the coverages reinsured.
OVERSIGHTS. Errors and omissions of an accidental or unintentional nature shall
be corrected and both parties shall be restored to the positions they would have
occupied had no such errors or omissions occurred.
INSPECTION OF RECORDS. Cologne shall have the right at any reasonable time to
inspect, at the office of the Ceding Company, all books and documents relating
to any reinsurance under this Agreement.
PAYMENT OF PREMIUMS. In the event of non-payment of any reinsurance premiums
when due, Cologne's liability shall continue. However, Cologne shall have the
right to terminate reinsurance coverage for inforce business, but only after it
has given three months' notice in writing of its intention to terminate coverage
and only if reinsurance premiums remain unpaid.
ARBITRATION. All disputes and differences between the two contracting parties on
which an amicable understanding cannot be reached shall be decided by
arbitration at the Home Office of the Ceding Company. The following procedure
shall apply.
1. There shall be three arbitrators who must be officers of life insurance
companies other than the parties to this Agreement. One of the arbitrators
is to be appointed by the Ceding Company, the second by Cologne and the
third is to be selected by the these two arbitrators before the start of
arbitration. Should one of the parties decline to appoint an arbitrator or
should the two arbitrators be unable to agree upon the choice of a third,
the appointment shall be left to the chief executive officer of the
American Council of Life Insurance or its successor organization.
2. The arbitrators shall not be required to observe formal rules of procedure
and evidence, and shall view this Agreement from the standpoint of equity
and practical business ethics rather than from that of strict law. They
shall decide by majority vote. The cost of arbitration, including the fees
of the arbitrators, shall be borne by the losing party unless the
arbitrators decide otherwise.
DURATION OF AGREEMENT. This Agreement shall have the effective date shown on the
Specifications Page and shall be unlimited in duration. It may be terminated at
any time, insofar as it pertains to the handling of subsequent new business, by
either party given three months' notice of termination in writing. Cologne shall
continue to accept new business during the three month period and shall continue
to be liable on all inforce reinsurance granted under this Agreement until the
termination or expiry of the insurance reinsured.
7
SPECIAL PROVISIONS
FACULTATIVE
BASIS OF REINSURANCE. The Ceding Company may request facultative consideration
of any risk by sending Cologne a Reinsurance Application form as shown in
Exhibit B showing details of the risk together with any medical examination
reports, electrocardiograms, inspection reports and other information which the
Ceding Company has pertaining to the insurability of the risk. Cologne shall
give the Reinsurance Application immediate consideration and shall promptly
notify the Ceding Company of its decision.
If Cologne accepts the risk and the Ceding Company accepts and acts in
accordance with Cologne's decision, Cologne shall become liable for its share of
the risk, its liability commencing with that of the Ceding Company.
Unless specifically agreed to the contrary, Cologne shall hold its file on a
pending case open for 120 days, after which time Cologne shall, in the absence
of notification of case status, routinely close its file.
MODE OF CEDING - BULK LISTING. As soon as possible after a reinsured policy is
placed in force, the Ceding Company shall send Cologne a New Business and
Inforce Bulk listing for amounts up to and including $1,000,000 and a similar
list for amounts greater than $1,000,000. All the different types of monthly
reports will use this $1,000,000 differentiation.
8
SPECIAL PROVISIONS
RISK PREMIUM
PLAN OF REINSURANCE. Unless otherwise agreed, Life reinsurance shall be on the
Risk Premium basis at the premium rates shown in Exhibit C to provide the
reinsurance benefits described in Exhibit D.
Supplementary policy benefits covering Accidental Death, Disability Waiver of
Premium, and Payor Death or Disability may be reinsured on the basis described
in Exhibit C.
PREMIUM ACCOUNTING - MONTHLY BILLING. Reinsurance premiums shall be paid by the
Ceding Company to Cologne monthly in advance for each case reinsured.
Each month the Ceding Company shall send Cologne a statement showing reinsurance
premiums falling due within that month, together with a remittance for the
premiums due Cologne and a list of adjustments made necessary by changes in
reinsurance during the month.
9
EXHIBIT A
Maximum Limits of Retention of the America Group
(For All Plans at Ages Where Issued)
INDIVIDUAL LIFE INSURANCE
STANDARD RISKS,
SPECIAL CLASSES SPECIAL CLASSES SPECIAL CLASSES
A, B, C, & D AND E, F, & H AND J, L, & P AND
FLAT EXTRAS OF FLAT EXTRAS OF FLAT EXTRAS OF
AGES $10.00 OR LESS (a) (b) $10.01 - $20.00 (c) $20.01 AND OVER
---- ---------------------- ------------------- ---------------
0 $ 400,000 $ 200,000 $ 100,000
1 - 17 800,000 600,000 200,000
18 - 60 1,000,000 700,000 400,000
61 - 70 700,000 500,000 200,000
71 - 75 300,000 200,000 100,000
76 - 80 200,000 100,000 50,000
(a) Youth Insurance Builder retention limit in terms of Ultimate Sum
Unsured - available for standard risks only.
(b) Spouse's Insurance Rider not available above Class D.
(c) Term policies and riders not available above Class H.
Notes: (1) The above maximum limits are also the maximums on any one life
for all plans combined, including the initial commuted value of
Family Income Riders and the total extra liability for
Supplemental Level Term and Payor Riders.
(2) There are conditions where the retention may be limited, such as
in aviation, Armed Forces personnel, certain avocations and
medical classifications.
1
CORONARY HISTORY
Combined Table and Flat Extra Rating
AGES RETENTION
---- ---------
60 and Under $ 250,000
61 - 70 100,000
71 - 80 50,000
CIVILIAN AVIATION
PASSENGERS UNDERWRITING ACTION RETENTION
---------- ------------------- ---------
Company Owned Planes
To 200 hours annually Standard $ 1,000,000
Over 200 hours annually Individual Consideration* 500,000
Charter Flying
To 100 hours annually Standard $ 500,000
Over 100 hours annually Individual Consideration 300,000
Private Business or Pleasure
To 100 hours annually Standard $ 500,000
Over 100 hours annually Individual Consideration 300,000
Pilots and Crew Members $ 300,000
* Required complete details of type of planes and equipment, flying terrain and
qualification of pilots.
DISABILITY WAIVER OF PREMIUM BENEFIT
Amount corresponding to life insurance retained
ACCIDENTAL DEATH BENEFITS
AGES RETENTION
---- ---------
5 - 15 $ 25,000
16 - 19 50,000
20 - 29 100,000
30 - 65 200,000
2
REINSURANCE CESSIONS FORMS
Omitted 2 Pages
3
EXHIBIT C
REINSURANCE PREMIUMS
LIFE. For amounts up to and including $2,000,000 the annual reinsurance premiums
for the life risk including riders shall be based on 75% of the cost of the
mortality rates attached in all years for the insured's attained age and table
rating, if any. In the event that a risk is accepted and ceded with a flat extra
premium, such premiums shall be at the percentages specified below, multiplied
by the face reinsurance:
TYPE OF FLAT EXTRA PREMIUM FIRST YEAR RENEWAL
-------------------------- ---------- -------
Temporary flat extra payable 1 - 5 years 90% 90%
Permanent flat extra payable 6 or more years 25% 90%
SUPPLEMENTAL COVERAGES. Annual reinsurance premiums for Guaranteed Insurability
Options, Payor Benefits, Disability Waiver of Premium Benefits and Accidental
Death Benefits (ADB, etc., participation limits $250,000) shall be based on 25%
of the annual premiums of the CEDING COMPANY in the first policy year and 90% of
those premiums in renewal years. Other insured riders will receive the same
rates as the base policy.
PRELIMINARY OR SHORT TERM. Preliminary Term or Short Term coverage shall be
reinsured on the basis specified on the face page of the applicable rate scale;
or if no basis is specified, at 90% of the premium of the CEDING COMPANY.
RATE GUARANTEE. While Cologne anticipates continuing to accept premiums on the
basis of the attached rates, Cologne can only guarantee that the life
reinsurance premium rates payable under this Agreement shall not exceed the
one-year term net premium computed on the 1958 CSO Mortality Table using 3%
interest and continuous functions.
EXCESSES. Excess amounts over $2,000,000 will be covered by the Facultative YRT
reinsurance agreement between the CEDING COMPANY and Cologne dated April 15,
1983.
EXCHANGES. Exchanges from policies reinsured by Cologne to Exceptional Life will
be reinsured under this
reinsurance agreement using point-in-scale mortality
rates. When more than one such policies are being exchanged for a single
Exceptional Life policy, the point-in-scale rates will be based on the most
recent policy under which the CEDING COMPANY underwrote the insured.
SMA LIFE ASSURANCE COMPANY
COST OF INSURANCE - SELECT AND ULTIMATE YEARLY RATES
Omitted 21 Pages
2
EXHIBIT D
REINSURANCE BENEFIT AMOUNTS
1. In the year of issue the net amount at risk is defined to be the amount of
insurance reinsured. In all subsequent policy years, the net amount at risk
is defined to be the amount of insurance reinsured less the accumulated
policy value on the entire policy at the end of the prior year.
2. FIFO (First In, First Out) will be used for processing reductions and
recapturers. Off-anniversary terminations, including deaths, will have
pro-rata reinsurance premium adjustments but not any insurance amount
adjustments. Terminations on the anniversary will not have any reinsurance
premium or insurance amount adjustments.
3. Minimums size life case will be $25,000. Minimum size ADB case will be
$10,000.
4. Reinsurance on a life or ADB case will be automatically cancelled when the
case drops below $10,000.
5. The reinsurance will be non-experience rated and there will be no
production bonus.
3
ADDENDUM #1 TO TREATY DATED August 1, 1983 WITH COLOGNE LIFE RE
CEDING COMPANY: State Mutual Life Assurance Company
Worcester, Massachusetts #855
EFFECTIVE DATE: Exceptional Retirement Life Issues dated
May 14, 1984 and later
TYPE OF BUSINESS: Facultative Only.
PERCENTAGE OF PREMIUMS TO COLOGNE:
POLICY YEAR NON SMOKER SMOKER
----------- ---------- ------
1 83% 83%
2+ 83% 83%
STANDARD PREMIUMS: Based on current mortality costs attached.
Please see attached Exhibit C.
SUBSTANDARD RATINGS: Premium appropriately increased.
PLAN OF REINSURANCE: Yearly Renewal Term.
REINSURANCE BENEFITS AMOUNT: Please see attached Exhibit A.
PREMIUM TAXES: Reimbursed to extent COLOGNE not required to pay directly.
LIMIT PER LIFE: See Exhibit C.
RECAPTURE: After 10 policy years.
REPORTING: Monthly bulk listings in advance.
EXCHANGES: Exchanges from policies reinsured by Cologne to Exceptional
Retirement Lifewill be reinsured under this
reinsurance
agreement using point-in-scale mortality rates. When more than
one such policies are being exchanged for a single Exceptional
Retirement Life policy, the point-in scale rates will be based
on the most recent policy under which the Ceding Company
underwrite the insured.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
Acceptable and Agreed:
COLOGNE LIFE REINSURANCE COMPANY STATE MUTUAL LIFE ASSURANCE COMPANY
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx, Xx.
Senior Vice President, Underwriting ---------------------------
Title: Assistant Vice President &
---------------------------
Associate Actuary
---------------------------
Date: October 12, 1984 Date: November 13, 1984
----------------------------- ---------------------------
THIS OFFER, IF NOT ACCEPTED, WILL EXPIRE ON: January 11, 1985
MBG/jlt
4
EXHIBIT A
REINSURANCE BENEFIT AMOUNTS
1. In the year of issue the net amount at risk is defined to be the amount of
insurance reinsured. In all subsequent policy years, the net amount at risk
is defined to be the amount of insurance reinsured less the accumulated
policy value on the entire policy at the end of the prior year.
2. FIFO (First In, First Out) will be used for processing reductions and
recaptures. Off-anniversary terminations, including deaths, will have
pro-rata reinsurance premium adjustments but not any insurance amount
adjustments. Termination on the anniversary will not have any reinsurance
premium or insurance amount adjustments.
3. Minimum size life case will be $25,000. Minimum size ADB case will be
$10,000.
4. Reinsurance on a life or ADB case will be automatically cancelled when the
case drops below $10,000.
5. The reinsurance will be non-experience rated and there will be no
production bonus.
5
EXHIBIT C
REINSURANCE PREMIUMS
LIFE. Annual reinsurance premiums for amounts up to and including $2,000,000 for
the life risk including reinsured mortality rates attached for the insured's
attained age and table rating, if any. In the event that a risk is accepted and
ceded with a flat extra premium, such premiums shall be at the percentages
specified below, multiplied by the face reinsurance:
TYPE OF FLAT EXTRA PREMIUM FIRST YEAR RENEWAL
-------------------------- ---------- -------
Temporary flat extra payable 1 - 5 years 90% 90%
Permanent flat extra payable 6 or more years 25% 90%
SUPPLEMENTAL COVERAGE. Annual reinsurance premiums for Guaranteed Insurability
Options, Payor Benefits, Disability Waiver of Premium Benefits and Accidental
Death Benefits (ADB, etc., participation limits $250,000) shall be based on 25%
of the annual premiums of the CEDING COMPANY in the first policy year and 90% of
those premiums in renewal years. Other insured riders will receive the same
rates as the base policy.
PRELIMINARY OR SHORT TERM. Preliminary Term or Short Term coverage shall be
reinsured on the basis specified on the face page of the applicable rate scale;
or, if no basis is specified, at 90% of the premium of the CEDING COMPANY.
RATE GUARANTEE. While Cologne anticipates continuing to accept premiums on the
basis of the attached rates, Cologne can only guarantee that the life
reinsurance premium rates payable under this Agreement shall not exceed the
one-year term net premiums computed on the 1958 CSO Mortality Table using 3%
interest and continuous functions.
EXCESSES. Excess amounts over $2,000,000 will be covered by the Facultative YRT
reinsurance agreement between the CEDING COMPANY and Cologne dated April 15,
1983.
EXCHANGES. Exchanges from policies reinsured by Cologne to Exceptional Life will
be reinsured under this
reinsurance agreement using point-in-scale mortality
rates. When more than one such policies are being exchanged for a single
Exceptional Life policy, the point-in-scale rates will be based on the most
recent policy under which the CEDING COMPANY underwrote the insured.
INCREASE IN AMOUNTS. For any increase in benefit amounts for which the Ceding
Company has obtained full evidence on insurability, the premiums mentioned above
will apply at the attained age of the increase.
6
ADDENDUM #2 TO TREATY DATED August 1, 1983 WITH COLOGNE LIFE RE
CEDING COMPANY: State Mutual Life Assurance Company
Worcester, Massachusetts #855
EFFECTIVE DATE: Non-Pension Exceptional Life Issues dated September 1, 1984
and later.
TYPE OF BUSINESS: Facultative Only.
PERCENTAGE OF PREMIUMS TO COLOGNE:
POLICY YEAR NON SMOKER SMOKER
----------- ---------- ------
1 88% 88%
2+ 88% 88%
STANDARD PREMIUMS: Based on current mortality costs attached.
Please see attached Exhibit C.
SUBSTANDARD RATINGS: Premium appropriately increased.
PLAN OF REINSURANCE: Yearly Renewal Term.
REINSURANCE BENEFITS AMOUNTS: Please see attached Exhibit A.
PREMIUM TAXES: Reimbursed to extent COLOGNE not required to pay directly.
LIMIT PER LIFE: See Exhibit C.
RECAPTURE: After 10 policy years.
REPORTING: Monthly bulk listings in advance.
EXCHANGES: Exchanges from policies reinsured by Cologne to Exceptional
Life will be reinsured under this
reinsurance agreement
using point-in-scale mortality rates. When more than one
such policies are being exchanged for a single Exceptional
Life policy, the point-in scale rates will be based on the
most recent policy under which the Ceding Company
underwrite the insured.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
Acceptable and Agreed:
COLOGNE LIFE REINSURANCE COMPANY STATE MUTUAL LIFE ASSURANCE COMPANY
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx, Xx.
Senior Vice President, Underwriting ---------------------------
Title: Assistant Vice President &
---------------------------
Associate Actuary
---------------------------
Date: October 12, 1984 Date: November 13, 1984
----------------------------- ----------------------------
THIS OFFER, IF NOT ACCEPTED, WILL EXPIRE ON: January 11, 1985
MBG/jlt
7
EXHIBIT A
REINSURANCE BENEFIT AMOUNTS
1. In the year of issue the net amount at risk is defined to be the amount of
insurance reinsured. In all subsequent policy years, the net amount at risk
is defined to be the amount of insurance reinsured less the accumulated
policy value on the entire policy at the end of the prior year.
2. FIFO (First In, First Out) will be used for processing reductions and
recaptures. Off-anniversary terminations, including deaths, will have
pro-rata reinsurance premium adjustments but not any insurance amount
adjustments. Termination on the anniversary will not have any reinsurance
premium or insurance amount adjustments.
3. Minimum size life case will be $25,000. Minimum size ADB case will be
$10,000.
4. Reinsurance on a life or ADB case will be automatically cancelled when the
case drops below $10,000.
5. The reinsurance will be non-experience rated and there will be no
production bonus.
8
EXHIBIT C
REINSURANCE PREMIUMS
LIFE. Annual reinsurance premiums for amounts up to and including $2,000,000 for
the life risk including reinsured mortality rates attached for the insured's
attained age and table rating, if any. In the event that a risk is accepted and
ceded with a flat extra premium, such premiums shall be at the percentages
specified below, multiplied by the face reinsurance:
TYPE OF FLAT EXTRA PREMIUM FIRST YEAR RENEWAL
-------------------------- ---------- -------
Temporary flat extra payable 1 - 5 years 90% 90%
Permanent flat extra payable 6 or more years 25% 90%
SUPPLEMENTAL COVERAGES. Annual reinsurance premiums for Guaranteed Insurability
Options, Payor Benefits, Disability Waiver of Premium Benefits and Accidental
Death Benefits (ADB, etc., participation limits $250,000) shall be based on 25%
of the annual premiums of the CEDING COMPANY in the first policy year and 90% of
those premiums in renewal years. Other insured riders will receive the same
rates as the base policy.
PRELIMINARY OR SHORT TERM. Preliminary Term or Short Term coverage shall be
reinsured on the basis specified on the face page of the applicable rate scale;
or, if no basis is specified, at 90% of the premium of the CEDING COMPANY.
RATE GUARANTEE. While Cologne anticipates continuing to accept premiums on the
basis of the attached rates, Cologne can only guarantee that the life
reinsurance premium rates payable under this Agreement shall not exceed the
one-year term net premiums computed on the 1958 CSO Mortality Table using 3%
interest and continuous functions.
EXCESSES. Excess amounts over $2,000,000 will be covered by the Facultative YRT
reinsurance agreement between the CEDING COMPANY and Cologne dated April 15,
1983.
EXCHANGES. Exchanges from policies reinsured by Cologne to Exceptional Life will
be reinsured under this
reinsurance agreement using point-in-scale mortality
rates. When more than one such policies are being exchanged for a single
Exceptional Life policy, the point-in-scale rates will be based on the most
recent policy under which the CEDING COMPANY underwrote the insured.
INCREASE IN AMOUNTS. For any increase in benefit amounts for which the Ceding
Company has obtained full evidence on insurability, the premiums mentioned above
will apply at the attained age of the increase.
9
Omitted 3 Pages
10
ADDENDUM TO TREATY DATED August 1, 1983 WITH COLOGNE LIFE RE
Cologne Life Reinsurance Company (Cologne) hereby agrees to allow State Mutual
Life Assurance Company of America and its subsidiary SMA Life Assurance Company,
to recapture all waiver of premium and accidental death benefit reinsurance
reinsured with Cologne.
The recaptures shall commence with policy anniversary dates of January 1,
1987 and later.
STATE MUTUAL LIFE ASSURANCE CO. OF AMERICA
Attested By:
/s/ Xxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------------- ---------------------------------
Title: Assistant Vice President & Title: Vice President and Actuary
Associate Actuary ------------------------------
------------------------------
Date: August 28, 1987 Date: August 28, 1987
------------------------------- -------------------------------
COLOGNE LIFE REINSURANCE COMPANY
Attested By:
/s/ By: /s/
------------------------------------- ---------------------------------
Title: (illegible) Title: Sr. V. P. - Individual Life
------------------------------ -----------------------------
Date: (illegible) Date: 8/6/87
------------------------------ -----------------------------
11
ADDENDUM TO TREATY DATED August 1, 1983 WITH COLOGNE LIFE RE
CEDING COMPANY: State Mutual Life Assurance Company of America
ACCOUNT NUMBER(S): 2012.
TREATY NUMBER: S145-100-100.
EFFECTIVE DATE: Exceptional Life II and Exceptional Retirement Life II
(Universal Life) Issues Dated July 1, 1986 and later.
TYPE OF BUSINESS: Facultative.
PERCENTAGE OF PREMIUMS TO COLOGNE:
POLICY YEAR NON SMOKER SMOKER
----------- ---------- ------
1 45% 90%
2+ 95% 90%
STANDARD PREMIUMS: Based on current mortality costs attached.
Please see attached Exhibit C.
SUBSTANDARD RATINGS: Premium appropriately increased.
PLAN OF REINSURANCE: Yearly Renewal Term.
REINSURANCE BENEFITS AMOUNTS: As in basic treaty and other applicable addenda.
PREMIUM TAXES: Reimbursed to extent COLOGNE not required to pay directly.
COINSURANCE LIMIT PER LIFE: $2,000,000.
JUMBO LIMIT: No limit.
EXCESSES: May need ceded at current YRT rates.
RECAPTURE: After 10 policy years.
REPORTING: Monthly bulk listings in advance.
MINIMUM SUBMISSION: $25,000.
REPLACEMENTS AND CONVERSIONS: Please see attached Exhibit E.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
Acceptable and Agreed:
COLOGNE LIFE REINSURANCE COMPANY STATE MUTUAL LIFE ASSURANCE COMPANY
OF AMERICA
X. Xxxxxx Xxxx, FSA /s/ Xxxxxx X. Xxxxx, Xx.
Senior Vice President, -----------------------------------------
Individual Life Reinsurance Title: Assistant Vice President & Associate Actuary
---------------------------------------------
Date: November 16, 1987 Date: November 18, 1987
------------------------------ ----------------------------
12
EXHIBIT C
REINSURANCE PREMIUMS
LIFE. For amounts up to and including $2,000,000 the annual reinsurance premium
for the life risk including riders shall be the appropriate percentages of the
cost of the mortality rates attached in all years for the insured's attained age
and table rating, if any. In the event that a risk is accepted and ceded with a
flat extra premium, such premiums shall be at the percentages specified below,
multiplied by the face reinsurance:
TYPE OF FLAT EXTRA PREMIUM FIRST YEAR RENEWAL
-------------------------- ---------- -------
Temporary flat extra payable 1 - 5 years 90% 90%
Permanent flat extra payable 6 or more years 25% 90%
SUPPLEMENTAL COVERAGES. Annual reinsurance premiums for Guaranteed Insurability
Options, Payor Benefits, Disability Waiver of Premium Benefits and Accidental
Death Benefits (ADB, etc., participation limits $250,000) shall be based on 25%
of the annual premiums of the CEDING COMPANY in the first policy year and 90% of
those premiums in renewal years. Other insured riders will receive the same
rates as the base policy.
PRELIMINARY OR SHORT TERM. Preliminary Term or Short Term coverage shall be
reinsured on the basis specified on the face page of the applicable rate scale;
or, if no basis is specified, at 90% of the premium of the CEDING COMPANY.
RATE GUARANTEE. While Cologne anticipates continuing to accept premiums on the
basis of the attached rates, Cologne can only guarantee that the life
reinsurance premium rates payable under this Agreement shall not exceed the
one-year term net premiums computed on the 1958 CSO Mortality Table using 3%
interest and continuous functions.
EXCESSES. Excess amounts over $2,000,000 will be covered by the Facultative YRT
reinsurance agreement between the CEDING COMPANY and Cologne dated May 1, 1983.
EXCHANGES. Exchanges from policies reinsured by Cologne to Exceptional Life will
be reinsured under this reinsurance agreement using point-in-scale mortality
rates. When more than one such policies are being exchanged for a single
Exceptional Life policy, the point-in-scale rates will be based on the most
recent policy under which the CEDING COMPANY underwrote the insured.
13
Tables
Omitted 6 Pages
14
EXHIBIT E
REPLACEMENT AND CONVERSIONS
CONDITIONS OF ACCEPTANCE:
CLR will consider replacements or conversions to the plans listed on the
addendum, provided the following conditions are met:
1. The original policy was issued by the Ceding Company.
2. Cologne was the reinsurer on the original policy or the Ceding Company has
received a release from the original reinsurer.
ALLOWANCE UPON ACCEPTANCE:
First year allowance will apply to any policy on which the Ceding Company has
obtained satisfactory (to Cologne) evidence of insurability on the full face
amount.
Point-in-scale mortality rates will apply in all other cases, for amounts up to
the reinsured portion of the original policy.
Any increase in a policy for which the CEDING COMPANY obtained satisfactory (to
COLOGNE) evidence of insurability on the increased face amount would be paid for
using first year allowances on the increase only. The suicide and contestability
clauses would apply from the date of the increase for the increase only.
15
ADDENDUM
TO BASIC TREATY DATED August 1, 1983 WITH COLOGNE LIFE RE
CEDING COMPANY: STATE MUTUAL LIFE ASSURANCE COMPANY; Worcester, Massachusetts
ACCOUNT NUMBER(S): 855.
TREATY NUMBER: S145-100-101.
EFFECTIVE DATE: Vari-Exceptional Life issues of August 1, 1987 and later.
TYPE OF BUSINESS: Facultative Only.
PERCENTAGE OF PREMIUMS TO COLOGNE: As in basic treaty and other applicable
addenda.
PLAN OF REINSURANCE: Yearly Renewal Term.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
This addendum hereby adds the above plan (Vari-Exceptional Life) to the existing
treaty providing reinsurance coverage between State Mutual Life Assurance
Company and Cologne Life Re under the terms and conditions as specified above
and as in the basic treaty and other applicable addenda.
Acceptable and Agreed:
COLOGNE LIFE REINSURANCE COMPANY STATE MUTUAL LIFE ASSURANCE COMPANY
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx, Xx.
-------------------- ---------------------------
Senior Vice President, Director of Marketing Title: Assistant Vice President
----------------------------
& Associate Actuary
----------------------------
Date: September 10 , 1987 Date: December 18, 1987
----------------------------------- -----------------------------
16
Correspondence
Omitted 13 Pages
17
ADDENDUM TO TREATY #S145-100-000 DATED August 1, 1983
CEDING COMPANY: STATE MUTUAL COMPANIES
Worcester, MA
REINSURANCE COMPANY: COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ACCOUNT NUMBER(S): 2012
AMENDMENT NUMBER: S145-100-002
TYPE OF BUSINESS: Facultative.
EFFECTIVE DATE: October 1, 1990.
PRODUCTS COVERED: Treaty # S145-100-000 is hereby amended to
include VEL 91 Variable Universal Life.
PLAN OF REINSURANCE: Yearly Renewal Term.
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
COLOGNE LIFE REINSURANCE COMPANY STATE MUTUAL COMPANIES
By: /s/ By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------------- ----------------------------------
Title: Vice President Title: A.V.P. & Actuary
------------------------------ -------------------------------
Date: January 17, 1992 Date: 1/22/92
------------------------------- --------------------------------
Attest: /s/ Attest: /s/
----------------------------- ------------------------------
18
ADDENDUM TO TREATY DATED August 1, 1983
CEDING COMPANY: STATE MUTUAL LIFE ASSURANCE CO.
Worcester, MA
REINSURANCE COMPANY: COLOGNE LIFE REINSURANCE COMPANY
00 Xxx Xxxxxx
Xxxxxxxx, XX 00000
ADDENDUM NUMBER: S145-100-003
ACCOUNT NUMBER(S): 2012
EFFECTIVE DATE: January 1, 1993
TYPE OF TREATY: Facultative.
SPECIAL PROVISION: Effective January 1, 1993 the following revisions apply:
- Minimum new business cession to 50,001.
(as shown in the attached Exhibit A.)
- Minimum inforce cession change to 25,001.
CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute this
amendment below:
COLOGNE LIFE REINSURANCE COMPANY STATE MUTUAL LIFE ASSURANCE COMPANY
By: /s/ By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------------- ----------------------------------
Title: Senior Vice President Title: A.V.P. & Actuary
------------------------------ -------------------------------
Date: 1/26/93 Date: January 28, 1993
------------------------------- --------------------------------
Attest: /s/ Attest: /s/
----------------------------- ------------------------------
19
EXHIBIT A
STATE MUTUAL OF AMERICA RETENTION SCHEDULE
LIFE
STANDARD RISKS
SPECIAL CLASSES SPECIAL CLASSES
A THROUGH H AND J, L, & P and
FLAT EXTRAS OF FLAT EXTRAS OF
AGES $20.00 OR LESS $20.01 AND OVER
---- --------------- ---------------
0 $ 500,000 $ 250,000
1 - 60 2,000,000 1,000,000
61 - 70 1,000,000 500,000
71 - 80 500,000 250,000
Notes: (1) The above maximum limits are also the maximums on any one life for
all plans and riders combined.
(2) The minimum size reinsurance case will be $50,001.
AVIATION
Any situation involving aviation will use a $500,000 retention.
WAIVER OF PREMIUM DISABILITY & ACCIDENTAL DEATH BENEFITS
Fully retained
Effective date January 1, 1993
20
DAC TAX AMENDMENT
This Amendment effective April 30, 1993, between STATE MUTUAL LIFE ASSURANCE CO.
(referred to as Ceding Company, Reinsured; you, your), and COLOGNE LIFE
REINSURANCE COMPANY (referred to as The Cologne, Reinsurer; we, us, our) hereby
amends and becomes a part of the following Reinsurance Agreement.
DOCUMENT NUMBER EFFECTIVE DATE SCHEDULE "S" TYPE
--------------- -------------- -----------------
1021 05/01/1983 YRT
1. The attached DAC Tax Article, entitled Section 1.848-2(g)(8) Election, is
hereby added to the Agreement.
2. This Amendment does not alter, amend or modify the Reinsurance Agreement
other than as stated in this Amendment. It is subject to all of the terms
and conditions of the Reinsurance Agreement together with all Amendments
and Xxxxxxxx's.
Executed in duplicate by COLOGNE LIFE REINSURANCE COMPANY at Stamford,
Connecticut.
By: /s/ Attest: /s/
------------------------------------- -----------------------
Title: Vice President
---------------------------------
Date: June 1, 1993
----------------------------------
Executed in duplicate by STATE MUTUAL LIFE ASSURANCE CO
at Worcester, MA
By: /s/ Xxxxxx X. Xxxxx, Xx. Attest: /s/
------------------------------------ -----------------------
Title: AVP & Actuary
---------------------------------
Date: July 20, 1993
----------------------------------
21
DAC TAC ARTICLE
TREASURY REG. SECTION 1.848-2(g)(8)
The Ceding Company and the Reinsurer hereby agree to the following pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulations issued December 29, 1992,
under Section 848 of the Internal Revenue Code of 1986, as amended. This
election shall be effective for 1992 and for all subsequent taxable years for
which this Agreement remains in effect.
1. The term "party" will refer to either the Reinsured or the Reinsurer as
appropriate.
2. The terms used in this Article are defined by reference to Regulation
Section 1.848-2 in effect as of December 29, 1992
3. 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).
4. The Ceding Company and Reinsurer agree to exchange information pertaining
to the amount of the net consideration under this Agreement each year to
ensure consistency or as otherwise required by the Internal Revenue
Service.
5. The Ceding Company will submit a schedule to the Reinsurer by June 1 (by
July 1 for tax year 1992) of each year of 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.
6. The Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company in writing within 30 days of the
Reinsurer's receipt of the Ceding Company calculation. If the Reinsurer
does not so notify the Ceding Company, the Reinsurer will report the net
consideration as determined by the Ceding Company in the Reinsurer's tax
return for the previous calendar year.
7. 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 thirty (30) days of the date the Reinsurer
submits its alternative calculation. If the Ceding Company and the
Reinsurer reach agreement on an amount of net consideration, each party
shall report such amount in their respective tax returns for the previous
calendar year.
22
The Cologne Life Re
ADDENDUM TO TREATY #S145-100-000 DATED August 1, 1983
CEDING COMPANY: STATE MUTUAL LIFE ASSURANCE CO,
WORCESTER, MA
REINSURANCE COMPANY: THE COLOGNE LIFE REINSURANCE COMPANY
00 XXX XXXXXX
XXXXXXXX, XX 00000
ACCOUNT NUMBER(S): 2012
EFFECTIVE DATE: October 11, 1995
AMENDMENT NUMBER: S145-100-004
TYPE OF BUSINESS: Facultative
SPECIAL PROVISIONS: Effective October 11, 1995 the name of State Mutual Life
Insurance Company is changed to:
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
OTHER CONDITIONS: As in basic treaty and other applicable addenda.
IN WITNESS WHEREOF, the Parties have had their respective officers execute it
below.
THE COLOGNE LIFE REINSURANCE FIRST ALLMERICA FINANCIAL LIFE
COMPANY INSURANCE COMPANY
By: /s/ By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------ -----------------------------
Title: 2nd Vice President Title: AVP & Actuary
--------------------------------- --------------------------
Date: 9 Oct 96 Date: October 15, 1996
---------------------------------- ---------------------------
Attest: /s/ Attest: /s/
-------------------------------- -------------------------
23
