COINSURANCE AGREEMENT
Between:
American Capitol Insurance Company
Houston, Texas
hereinafter referred to as
CEDENT
and: Reserve
National Insurance
Company
Oklahoma City, Oklahoma
hereinafter referred to as
REINSURER
Effective:
December
31,
2006
TABLE OF CONTENTS
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A.
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Coinsurance Coverage
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4
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B.
|
Representations and Warranties of
the
CEDENT
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4
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C.
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Representations and Warranties of
the
REINSURER
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6
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D.
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Offset
|
6
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E.
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Payments
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6
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F.
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Terms of Coinsurance
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8
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G.
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Assessments
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8
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H.
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Indemnity
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8
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I.
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Policy Changes
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9
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J.
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Errors and Omissions
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9
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K.
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Audit of Records and Procedures
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10
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L.
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Arbitration
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10
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M.
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Insolvency
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11
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N.
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Parties to Agreement
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11
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O.
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Effective Date
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12
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P.
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Terms Effective Upon Election to
Convert to
Assumption Reinsurance
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12
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Q.
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Confidentiality
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13
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R
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Entire Agreement
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14
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S.
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Duration of Agreement
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14
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T.
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Severability of Provisions
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14
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U.
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Other Conditions
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14
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V.
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Execution of Agreement
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15
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SCHEDULE I
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Policies Subject to
Reinsurance
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16
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SCHEDULE II
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Coinsurance Percentages
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17
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Exhibit “A”
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Administrative Services
Agreement
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Exhibit “B”
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Medicare Supplement Business Activity
Indicators Report
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A.
Coinsurance
Coverage
1.
The
policies
issued or accepted as insurance by CEDENT as described in Schedule I (the
"Policies") shall be reinsured with REINSURER on a coinsurance basis pursuant
to
this Agreement. The reinsurance shall cover that portion of the risk as
specified in Schedule II.
2.
The
liability
of REINSURER shall begin on the effective date of this Agreement.
Notwithstanding the foregoing, the reinsurance provided pursuant to this
Agreement shall cover only policies validly issued or assumed by the CEDENT
and
in force as of the Effective Date or validly reinstated following the Effective
Date.
3.
The
reinsurance
hereunder shall follow the fortunes of the CEDENT, and the REINSURER shall
be
liable in the same amount and to the same extent as CEDENT except as to
extra-contractual liabilities as provided in Subsection H.
4.
The
reinsurance
under this Agreement with respect to any Policy shall be maintained in force
without reduction so long as and to the extent that the liability of CEDENT
under such policy reinsured hereunder remains in force without reduction,
unless
reinsurance is terminated or reduced as provided herein.
5.
The CEDENT shall
notify the REINSURER in writing, as soon as CEDENT is notified,
of the pendancy of any and all examinations of the CEDENT or its principal
officers or shareholders conducted by any federal, state or local governmental
or regulatory agency.
6.
The
CEDENT and
REINSURER agree that REINSURER has the option to convert this Agreement to
an
assumption reinsurance agreement on a state by state basis as regulatory
approvals are obtained at the expense of the REINSURER. REINSURER shall be
responsible for complying with state requirements for filing for approval
or the
assumption reinsurance agreement. Once such approvals have been obtained,
REINSURER will comply with all notice requirements, including mailing or
delivery of an assumption certificate to each applicable policyholder of
a
Policy within 45 days from the date approval is obtained; and including any
notification of right of the policyholder’s right to reject, if
applicable.
7.
The
CEDENT and
REINSURER agree that from and after the Effective Date, REINSURER will serve
as
Administrator for CEDENT, pursuant to the Administrative Service Agreement
attached hereto as Exhibit “A”, to process claims made on the Policies,
including claims with dates of service prior to the Effective Date which
have
not been processed by CEDENT. REINSURER agrees to make all filings or
registrations necessary to serve in this capacity. CEDENT agrees to
transfer to REINSURER all information necessary for REINSURER to serve in
the
capacity of Administrator.
B.
Representations
and Warranties of the CEDENT
1.
The
CEDENT has
provided the REINSURER copies of all forms, applications, rates and values
with
respect to the Policies and shall keep the REINSURER promptly informed with
respect to any changes or modifications to such forms, applications or
rates. CEDENT has provided all files, claims processing manual(s),
electronic records or databases and other documents necessary for REINSURER
to
serve as Administrator.
2.
The CEDENT has provided the REINSURER with the latest Examination Report
of
CEDENT by the Texas Department of Insurance, and all examinations performed
by
any regulatory authority within the last 5 years.
3.
The CEDENT is licensed and in good standing in all jurisdictions in which
policies were issued or assumed and all Policies are in full compliance with
applicable laws, regulations and rules. The CEDENT has not been placed in,
nor
does it have any reason to believe that it is about to be placed in supervision,
rehabilitation, receivership, suspension or liquidation by any insurance
department.
4.
The CEDENT is duly organized, validly existing and in good standing under
the
laws of the state of Texas, and has all necessary corporate power and authority
to entitle it to use its name, to own, lease or otherwise hold its properties
and assets, to carry on its business as currently conducted, and to perform
its
obligations.
5.
The execution, delivery and performance of this Agreement by the CEDENT will
not
(i) violate or conflict with any provision of its Certificate of Incorporation
or by-laws; (ii) violate or result in any breach of or constitute a default
under, or give rise to a right of modification, termination or cancellation
of,
or accelerate the performance required by the terms of, as the case may be,
any
contract, lease, license, mortgage, note, or any agreement to which the CEDENT
is bound; or (iii) violate or conflict with any law, regulation, code, judgment,
order, writ, injunction or decree of any court, governmental body, or
administrative agency by which the CEDENT may be bound.
6.
The CEDENT has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement, and has taken all necessary
corporate and other action to authorize the ceding of the Policies under
the
terms of this Agreement.
7.
This Agreement has been duly executed and delivered by the CEDENT and
constitutes the valid and legally binding obligation of the CEDENT, enforceable
in accordance with its terms. The Policies are in compliance with all applicable
requirements of law and are on forms approved in all material respects by
the
appropriate governmental authorities except to the extent that failure to
be in
compliance therewith does not have a material adverse effect.
8.
The assets reflected by CEDENT on its annual statement to the Insurance
Department of the State of Texas for the year ended December 31, 2005 are
a)
substantially unchanged since that time, b) accurately reflected as to value,
c)
unencumbered, except as reflected on the statement, and d) fully available
to
the CEDENT to support its obligations to its policyholders.
9.
The disclosures CEDENT has made regarding the premium, claims and reserves,
including but not limited to, the loss ratios for the year 2005 and the first
nine months of 2006 contained in the Medicare Supplement Business Activity
Indicators Report attached hereto as Exhibit “B” and incorporated herein by this
reference, fairly and accurately present the information contained therein
and
contain no material omissions.
10.
To the best of CEDENT’s knowledge there are no other agents or brokers similarly
situated to Xxxxx Xxxxxx who can assert the claims asserted or which could
have
been asserted by Xxxxx Xxxxxx in Morgan v. American Capitol Insurance
Company, Cause No. D‑1-GN-06-004282, filed in the District Court of Xxxxxx
County, State of Texas or assert any claims arising from the facts which
formed
the basis of that suit.
C.
Representations
and Warranties of the REINSURER
1.
The REINSURER is duly organized, validly existing and in good standing as
a
licensed insurance company under the laws of the state of Oklahoma, and has
all
necessary corporate power and authority to entitle it to use its name, to
own,
lease or otherwise hold its properties and assets, to carry on its business
as
currently conducted, and to perform its obligations.
2.
The execution, delivery and performance of this Agreement by the REINSURER
will
not (i) violate or conflict with any provision of its Certificate of
Incorporation or by-laws; (ii) violate or result in any breach of or constitute
a default under, or give rise to a right of modification, termination or
cancellation of, or accelerate the performance required by the terms of,
as the
case may be, any contract, lease, license, mortgage, note, or any agreement
to
which the REINSURER is bound; or (iii) violate or conflict with any law,
regulation, code, judgment, order, writ, injunction or decree of any court,
governmental body, or administrative agency by which the REINSURER may be
bound.
3.
The REINSURER has full corporate power and authority to execute, deliver
and
perform its obligations under this Agreement, and has taken all necessary
corporate and other action to authorize the ceding of the Policies under
the
terms of this Agreement.
4.
This Agreement has been duly executed and delivered by the REINSURER and
constitutes the valid and legally binding obligation of the REINSURER,
enforceable in accordance with its terms.
D.
Offset
1.
Any debits or credits under this Agreement, matured or unmatured, liquidated
or
unliquidated, regardless of when they arose or were incurred, between CEDENT
and
REINSURER are deemed mutual debts or credits, as the case may be, and shall
be
set off dollar for dollar, and only the balance shall be allowed or paid,
regardless of the solvency of either party.
E.
Payments
1.
As of the Valuation Date, REINSURER shall be assigned and entitled to all
premiums for the Policies coinsured by it under this Agreement and CEDENT
agrees
to promptly remit to REINSURER any such premium payments as are received
by it.
REINSURER shall be authorized to endorse all checks, drafts, and money
orders payable to CEDENT with respect to premium paid on the Policies.
CEDENT assigns, to the extent permitted by law, to REINSURER all its rights
and
privileges to draft or debit the accounts of any policyholders for premiums
due
under the Policies pursuant to existing pre-authorized bank draft, credit
card
or electronic fund transfer arrangements between CEDENT and such
policyholders. CEDENT agrees to fully cooperate and perform all acts
necessary to ensure premiums are remitted to the REINSURER, including, but
not
limited to, the execution of any document necessary for any financial
institution to accept the endorsement of the REINSURER or its right to draft
or
debit the account of an insured, and if permissible, requiring its insureds
to
remit payment directly to the REINSURER in the REINSURER’s name as Administrator
of the Policies.
Upon receipt of premium payment for the Policies via any bank draft, credit
card
or electronic fund transfer arrangements after the Effective Date, CEDENT
shall
remit such payments to REINSURER within thirty days after the receipt together
with appropriate detailed policyholder and premium information. REINSURER
has the right to audit and inspect the records related to such payments.
2.
REINSURER agrees to pay CEDENT and CEDENT agrees to accept a single one time
commission payment of 45% of the annualized premium of the Policies in force
with paid to dates on or after the December 15, 2006 (the “Valuation Date”) (the
“Coinsurance Premium”). The Coinsurance Premium paid shall be the net
amount after the following deductions:
a.
Claim Reserve. Actuaries for
REINSURER and CEDENT shall determine an
agreed upon reserve, as of the Valuation Date, for incurred and reported
and
incurred but not reported claims (jointly “Claims”)(“Claim Reserve”).
REINSURER will withhold the Claim Reserve from the Coinsurance Premium and
place
it in a trust account in a bank chosen by REINSURER for the sole purpose
of
paying such claims.
b.
Unearned Premium
Reserve. Actuaries for REINSURER and CEDENT shall
determine as of the Valuation Date, on the daily pro-rata basis, the unearned
premium reserve (“Unearned Premium Reserve”). The Unearned Premium Reserve
shall be deducted from the Coinsurance Premium.
c.
Active Life Reserve. Actuaries for
REINSURER and CEDENT shall determine
the appropriate amount of active life reserve, as of the Valuation Date,
for the
Policies (“Active Life Reserve”). The Active Life Reserve will be deducted
from the Coinsurance Premium.
x.
Xxxxxx Settlement. The present value
of the future additional commission
agreed to be paid to Xxxxxx in settlement of Morgan v. American Capitol
Insurance Company, Cause No. D‑1-GN-06-004282, filed in the District Court
of Xxxxxx County, State of Texas, which the parties agree is $82,268.00.
3.
In the event the agreed Claim Reserve exceeds the amount necessary to pay
Claims, the difference between these two amounts shall be returned to CEDENTas
soon as practicable after the first anniversary of the Effective Date.
Prior to such return, the CEDENT shall have the right to audit the Claims
processed by REINSURER. Such election shall be made within 30 days after
notice
by REINSURER that it will be returning excess Claim Reserve funds. If
CEDENT elects to audit, the audit will be completed within 90 days of its
election. REINSURER shall return excess Claim Reserve funds, as soon as
practicable after the conclusion of any audit elected by CEDENT, or in the
event
no audit is elected, as soon as practicable after the 30 day period to elect
to
audit has expired. However, in the event of threatened or pending
litigation, the parties may agree to determine a reserve for any threatened
or
pending litigation and continue the Claim Reserve in that amount.
4.
In the event the Claim Reserve is less than the amount necessary to pay Claims,
CEDENT shall transfer the amount necessary to satisfy all Claims to the Claim
Reserve trust account within 30 days from receipt of documentation from
REINSURER of payment of claims in excess of the original Claim Reserve.
5.
REINSURER shall be liable for all state or territory premium and maintenance
taxes arising out of business reinsured hereunder.
F.
Terms of Coinsurance
1.
Expenses
1.1.
REINSURER shall be responsible for the administration of agent’s or broker’s
commissions in accordance with the written agent and broker agreements furnished
to REINSURER related to the Policies, except as provided in Section (P)(4).
2.
Collateral
in Trust.
2.1
In the event that the coinsured premium as of December 31, 2007 exceeds 10%
of
the Coinsurance Premium (as defined in Subsection (E)(2)), REINSURER shall
establish a trust for the benefit of CEDENT and deposit in said trust collateral
in an amount equal to the reserve liabilities of the CEDENT; said trust shall
be
adjusted quarterly to maintain collateral sufficient to equal all reserve
liabilities. Collateral assets shall be cash, cash equivalents or
securities of a quality equivalent to NAIC 1 or 2 rated securities.
G.
Assessments
1.
REINSURER shall reimburse CEDENT for payment of all guarantee fund or other
assessments incurred by CEDENT related to the Policies for calendar years
subsequent to 2006.
H.
Indemnity
1.
REINSURER shall not be liable for extra-contractual damages or penalties,
including but not limited to punitive, compensatory, statutory, bad faith,
or
other damages, attorneys fees, fines, or liability in excess of policy limits
which may arise from the acts or omissions of CEDENT or its agents and
representatives, in its conduct with its own insured, policyholder, beneficiary
or assignee of the policy or with other persons. CEDENT agrees to
indemnify and hold harmless REINSURER, its shareholders, directors, officers,
agents and assigns from and against all costs and expenses (including interest,
penalties, reasonable attorneys’, accountants’ and actuaries’ fees, and any
other costs and expenses incident to any suit, action or proceeding), damages,
charges, losses, deficiencies, liabilities, obligations, claims and judgments
sustained or incurred by, or asserted against, REINSURER by any third-party
arising from these extra-contractual damages and penalties.
2.
CEDENT shall not be liable for extra-contractual damages or penalties, including
but not limited to punitive, compensatory, statutory, bad faith, or other
damages, attorneys fees, fines, or liability in excess of policy limits which
may arise from the acts or omissions of REINSURER or its agents and
representatives, in its conduct with its own insured, policyholder, beneficiary
or assignee of the policy or with other persons. REINSURER agrees to
indemnify and hold harmless CEDENT, its shareholders, directors, officers,
agents and assigns from and against all costs and expenses (including interest,
penalties, reasonable attorneys’, accountants’ and actuaries’ fees, and any
other costs and expenses incident to any suit, action or proceeding), damages,
charges, losses, deficiencies, liabilities, obligations, claims and judgments
sustained or incurred by, or asserted against, CEDENT by any third-party
arising
from these extra-contractual damages and penalties.
3.
CEDENT agrees to indemnify and hold harmless REINSURER, its shareholders,
directors, officers, agents and assigns from and against all costs and expenses
(including interest, penalties, reasonable attorneys’, accountants’ and
actuaries’ fees, and any other costs and expenses incident to any suit, action
or proceeding), damages, charges, losses, deficiencies, liabilities,
obligations, claims and judgments sustained or incurred by, or asserted against,
REINSURER by any third-party arising from the breach of its representation
and
warranty that there are no other agents or brokers similarly situated to
Xxxxx
Xxxxxx who can assert the claims asserted or which could have been asserted
by
Xxxxx Xxxxxx in Xxxxxx x. American Capitol Insurance Company, Cause No.
D‑1-GN-06-004282, filed in the District Court of Xxxxxx County, State of Texas.
I.
Policy Changes
1.
The REINSURER shall have the exclusive right to make changes to the terms
and
conditions of Policies issued or assumed by the CEDENT and reinsured hereunder
including, but not limited to, changes in the current premium rates on the
Policies. CEDENT will cooperate with REINSURER in any such regulatory filings
in
connection with the Policies, including without limitation, loss ratio
information, request for rate adjustments and the like. If necessary, these
filings will be made in the name of CEDENT. CEDENT will furnish all
information reasonably requested by REINSURER in connection with all such
filings.
J.
Errors and
Omissions
1.
If either CEDENT
or REINSURER shall unintentionally perform an obligation
incorrectly under this Agreement or unintentionally fail to perform an
obligation required by this Agreement, such error or omission shall be corrected
by restoring both CEDENT and REINSURER to the positions they would have occupied
had no such error or omission occurred.
2.
This
provision
shall apply only to misunderstandings, oversights or clerical errors relating
to
the administration of reinsurance covered by this Agreement.
3.
Any negligent
or deliberate acts of commission or omission by CEDENT are the
responsibility of CEDENT but not that of REINSURER.
K.
Audit of Records
and Procedures
1. REINSURER
shall have the right to audit all records and procedures relating to business
covered under this Agreement. Further, CEDENT agrees to complete, at the
reasonable request of REINSURER and in a manner acceptable to REINSURER a
process confirming the existence of policies reinsured under this
Agreement.
2. REINSURER
and CEDENT shall have the right to review the Statutory Financial Statements
and
available State Examination reports of the other party in order to monitor
its
statutory solvency and general financial condition.
L.
Arbitration
1.
Any dispute or difference between the parties arising out of or relating
to this
Agreement, including the formation or validity thereof, shall be decided
by
arbitration. The arbiters are empowered to decide all questions or issues
and
shall be free to consider this Agreement as an honorable engagement rather
than
merely as a legal obligation and they are relieved of all judicial formalities
and may abstain from following the strict rules of law.
2.
Arbiters shall be selected from the XXXX Reinsurance and Insurance Arbitration
Society, XXXXX US.
3.
To initiate arbitration, a party shall send by facsimile or overnight delivery,
to the other party's home office, a notice demanding arbitration. If the
demand is sent by facsimile, a report of successful transmission shall be
deemed
proof of delivery and shall trigger the time period in which to name an arbiter;
if the demand is sent by overnight delivery, a delivery receipt provided
by the
overnight carrier shall be deemed proof of delivery and shall trigger the
time
period in which to name an arbiter.
4.
There shall be three neutral and disinterested arbiters who shall be active
or
retired officers of health insurance or health reinsurance companies. An
arbiter
may not be a present or former employee, officer, director or attorney of
CEDENT
or REINSURER or either's affiliates. The CEDENT and REINSURER shall each
appoint
one of the arbiters and these two arbiters shall select the third. In the
event
that either company fails to appoint an arbiter within thirty days after
it
receives a written request from the other to do so, the other company may
choose
two arbiters, who shall in turn choose a third arbiter before entering
arbitration. If the two arbiters are unable to agree upon the selection of
a
third arbiter within thirty days of the appointment of the second arbiter,
each
party shall nominate five qualified candidates, four of whom the other shall
decline and the final selection shall be made by any random method agreed
to by
the arbiters.
5.
Each party shall
present is case to the arbiters within 30 days following the
appointment of the third arbiter. The arbiters shall decide by a majority
vote and such decision shall be final and binding on both parties.
Judgment upon the final decision may be entered in any court of competent
jurisdiction. There shall be no motion to vacate or amend the arbitration
panel’s award, except to the extent permitted by the Federal Arbitration Act.
The cost of arbitration, including the fees of the arbiters, but not
including attorneys fees, shall be borne by the losing party unless the arbiters
decide otherwise.
M.
Insolvency
1.
In the event
of the insolvency of the CEDENT, this reinsurance, with respect to
Policies not converted to assumption reinsurance only, shall be payable directly
to the CEDENT or to its liquidator, receiver, conservator or statutory successor
on the basis of the liability of the CEDENT, without diminution because of
the
insolvency of CEDENT or because the liquidator, receiver, conservator or
statutory successor of the CEDENT has failed to pay all or a portion of any
claim.
2.
The liquidator,
receiver, conservator or statutory successor of the CEDENT shall
give written notice to the REINSURER of the pendency of a claim against the
CEDENT indicating the policy reinsured which claim would involve a possible
liability on the part of the REINSURER within a reasonable time after such
claim
is filed in the conservation or liquidation proceeding or in the receiveship,
and that during the pendency of such claim, the REINSURER may investigate
such
claim and interpose, at its own expense, in the proceeding where such claim
is
to be adjudicated any defense or defenses that it may deem available to CEDENT
or its liquidator, receiver, conservator or statutory successor.
3.
The expense thus
incurred by the REINSURER shall be chargeable, subject to the
approval of the Court, against the CEDENT as part of the expense of conservation
or liquidation to the extent of a pro rata share of the benefit which may
accrue
to CEDENT solely as a result of the defense undertaken by REINSURER.
4.
In the event
of the insolvency of the REINSURER, CEDENT shall have the right to
immediately take possession of and exercise control over any and all trust
funds
established under this agreement, and to apply said funds to pay policy
obligations, commissions, fees and any other legal obligations relating to
the
policies subject to this agreement.
N.
Parties to
Agreement
1.
This is an Agreement for indemnity reinsurance solely between CEDENT and
REINSURER. The acceptance of reinsurance hereunder shall not create any right
or
legal relation whatever between REINSURER and any original issuing or insuring
company (if other than CEDENT), the insured or the beneficiary under any
policy
reinsured hereunder, and the CEDENT shall be and remain solely liable to
such
insured or beneficiary under any such policy.
2.
This Agreement may not be assigned by either party without the written
permission of the other party.
O.
Effective Date
1.
The effective date of this Agreement is December 31, 2006.
P.
Terms Effective
Upon Election to Convert to Assumption
Reinsurance
1.
On and after the effective date of any conversion, REINSURER will be responsible
for the investigation, payment, denial, settlement or litigation under the
Policies of claims with dates of service after the effective date of any
conversion (“Post-Conversion Claims”).
2.
REINSURER agrees that as of the effective date of any conversion, it is
responsible for the contractual obligations under the Policies and all liability
under the Policies resulting from any actions taken by it on or after the
conversion date(s), including liability which may result from the processing
of
Claims and Post-Conversion Claims. However, REINSURER does not assume any
tort liability under the Policies which may have resulted from the action
or
inaction of CEDENT prior to or after the effective date of any conversion,
or
the liability for any extra-contractual damages or penalties arising from
such
tort liability or otherwise, as set forth in paragraph H(1). CEDENT’S
agreement to indemnify and hold harmless REINSURER in paragraph H(1) extends
to
all liability not assumed pursuant to this Agreement. Any liability of the
CEDENT under this paragraph expires 24 months from the conversion date(s)
of the
relevant policies.
3.
Litigation.
3.1.
A reasonable time prior to the effective date of any conversion, CEDENT shall
provide a schedule setting forth a description of each lawsuit involving
a
Policy subject to this Agreement and shall disclose any potential litigation
for
which it has received written notice. CEDENT shall retain the defense of
all litigation pending as of the Effective Date. In the event any
judgment, settlement or compromise of pending litigation contemplates continued
coverage under a Policy reinsured by REINSURER, CEDENT shall notify REINSURER
and REINSURER will have the right to participate in any proceeding related
to
the terms of continuation of coverage.
3.2.
For any lawsuit filed after the effective date of any conversion, REINSURER
shall have the sole right and shall at its own costs and expense investigate,
pay, settle, compromise or defend any demand, threat of litigation or litigation
arising from Policies as it deems best; provided, however:
(a)
In the event such
demand, threat of litigation or litigation involves liability
not assumed by REINSURER under this Agreement, REINSURER shall promptly notify
CEDENT of such claim in writing, and CEDENT shall have the sole right to
investigate, pay, settle, compromise, defend against, or otherwise deal with
such claim as it deems best, and REINSURER shall be obligated to pay only
that
part of the payment, settlement, compromise or judgment attributable to contract
liability. If such payment, settlement, compromise or judgment arises from
Claim(s), REINSURER’s payment will be made from the Claim Reserve.
However, if any such payment, settlement, compromise, or judgment which is
attributable, in whole or in part, to contract liability Claims is made after
the return of the Claim Reserve (and the parties have not continued the Claim
Reserve to address the risk at issue), then CEDENT shall be responsible for
any
portion attributable to contract liability.
(b)
In the event a
demand, threat of litigation or litigation involves both contract
and tort liability, then the expenses of handling such demand, threat of
litigation or litigation, shall be borne by REINSURER and CEDENT in the
proportion of their respective exposure.
3.3.
In the event service of process or other legal notice is served on CEDENT
in any
legal action instituted against CEDENT in connection with any Policy reinsured
by REINSURER under this Agreement, it will promptly forward such notice to
REINSURER at its Home Office. In the event service of process or other
legal notice is served on REINSURER in any legal action instituted against
CEDENT and/or REINSURER in connection with a claim under any Policy reinsured
by
REINSURER under this Agreement, for which CEDENT remains liable hereunder,
REINSURER will promptly forward such notice to CEDENT at its Home Office.
4.
A reasonable time prior to the effective date of any conversion, CEDENT shall
provide copies of agents or brokers agreements, which agents or brokers may
have
commissions payable to them on and after the effective date of conversion.
REINSURER assumes only the contractual liability of any written agency or
broker
agreements solely with respect to the commissions provided in such agent
agreements and due after the effective date of the conversion of the Policies
subject to all remedies, rights of defense, set off or counterclaim that
CEDENT
may or might have against agents or brokers.
5.
On or immediately after the effective date of conversion, CEDENT agrees that
it
will deliver to REINSURER all of its books, files and records, including
all
electronic files, spreadsheets, databases and records, forms and supplies
pertaining to the Policies, the policyholders, and samples of its said policy
forms and policy contracts, if any not previously provided. CEDENT agrees
to
cooperate with REINSURER, including but not limited to, issues related to
electronic data transfer and interpretation, software compatibility, transfer
of
paper records, claims handling practices and procedures and the like.
Q.
Confidentiality
1.
Pursuant to the provisions of the Health Insurance Portability and
Accountability Act of 1996 and federal regulations issued pursuant thereto,
and/or the Gramm‑Xxxxx‑Xxxxxx Act, the NAIC Insurance Information and Privacy
Protection Model Act, the NAIC Privacy of Consumer Financial and Health
Information Model Regulation and/or similar laws and regulations as enacted
in
various states, the parties recognize that, in the performance of their
respective obligations under this Agreement, they each may obtain from the
other
nonpublic personal or privileged information about individuals collected
or
received in connection with insurance transactions under the Policies. Each
of
the parties agrees not to disclose such information to third-parties without
the
individual’s written authorization unless such disclosure is otherwise permitted
by law, and each of the parties shall also maintain the confidentiality of
all
other information related to the Policies and all other information denominated
as confidential by the other party provided to it in connection with this
Agreement and shall not disclose such information to any third parties without
prior written consent of the other party, except as may be required by
regulatory authorities, or pursuant to legal process.
R.
Entire Agreement
1.
This Agreement represents the entire contract between CEDENT and REINSURER
and
supersedes, with respect to its subject, any prior oral or written agreement.
There are no understandings between the parties other than those expressed
in
this Agreement.
2.
Any change or modification to the Agreement shall be null and void unless
made
by amendment to the Agreement and signed by both
parties.
S.
Duration of
Agreement
1.
At the end of any accounting period, this Agreement shall automatically
terminate if none of the Policies hereunder are in force, or if they have
been
assumed by a company other than CEDENT.
T.
Severability
of Provisions
1.
If any provisions of this Agreement were declared null and void by a regulatory
authority in any jurisdiction within which either party operates, the remaining
provisions shall nevertheless continue to have full force and effect.
U.
Other Conditions
1
The obligations of the CEDENT and the REINSURER to consummate the transactions
described hereunder are expressly subject to:
(i)
the approvals
of the insurance commissioners, directors, or superintendents, as
the case may be, of the insurance departments necessary for the consummation
of
the transactions contemplated by this Agreement, and such approvals shall
be in
full force and effect, and shall not impose upon either the CEDENT or the
REINSURER any material conditions or other requirements that would impose
upon
either party any material additional costs;
(ii)
the REINSURER
having discovered no material errors, omissions or liabilities
previously undisclosed to it in the due diligence investigation and
documentation provided the REINSURER by the CEDENT prior to the date
hereof;
(iii)
the CEDENT and
the REINSURER having all requisite corporate power and authority
to execute and deliver the Agreement and to consummate the transactions
contemplated hereunder; and
(iv)
there being no
material change in the amount of the Policy Reserves or the
annualized premium in force of the CEDENT from December 15, 2006 to the date
of
the execution of the Agreement. Notwithstanding the foregoing, a "material
change" shall be deemed to have occurred if, on the Effective Date of the
Agreement the CEDENT's reserves are less than $622,000, or its annualized
premium in force is less than $3,746,000.
V.
Execution of
Agreement
IN
WITNESS OF THE AGREEMENT that is detailed in the Provisions and attached
Schedules, the PARTIES have had their respective officers execute this Agreement
in duplicate below.
AMERICAN CAPITOL INSURANCE COMPANY
Houston,
Texas
By:_/s/ Xxxxxxxx X.
Miller_____________________
Title:__Sr. Vice
President______________________
Witness:__/s/ Xxxxxxx X.
Knight_________________
RESERVE NATIONAL INSURANCE
COMPANY
Oklahoma City, Oklahoma
Oklahoma City, Oklahoma
By:__/s/ Xxxxxxx Xxx
Cole____________________
Title:__President_____________________________
Witness:__/s/ Xxxx Crossley_____________________
2655
SCHEDULE
I
A.
Policies Subject to Reinsurance
1.
The Medicare supplement policies and the hospital indemnity policies included
on
the attached Exhibit “A”.
SCHEDULE
II
A.
Coinsurance Percentages
Policies
Quota Share Reinsured
All policies in Schedule
I
100%
