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Exhibit 10.8
AMENDMENT ELEVEN
TO
REINSURANCE AGREEMENT
BETWEEN
THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK ("CEDING COMPANY")
AND
XXXXXX LIFE INSURANCE COMPANY ("CEDING COMPANY")
(FORMERLY KNOWN AS "ITT XXXXXX LIFE INSURANCE COMPANY")
WHEREAS, Ceding Company and Reinsurer entered into Reinsurance Agreement 1290-46
effective December 31, 1990 (the "Agreement") under which Reinsurer reinsures
participating whole life policies directly written by Ceding Company; and
WHEREAS, Ceding Company and Reinsurer each desire to amend the Agreement in
order to provide for the Reinsurer's participation in dividends paid by the
Ceding Company; and
WHEREAS, the modifications resulting from this and previous amendments are
distributed throughout the Agreement in a manner which would make a conventional
amendment difficult to read; and
WHEREAS, Ceding Company and Reinsurer have agreed to amend and restate the
Agreement so that only one document need be read.
NOW THEREFORE, in consideration of the foregoing and the mutual promises herein
contained, it is agreed that the document attached hereto amends and restates
the Agreement effective December 31, 1995 and sets forth all the rights and
obligations of the parties.
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IN WITNESS WHEREOF, this Amendment Eleven is executed in duplicate on the dates
indicated below with an effective date of December 31, 1995.
ATTEST: THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
("Ceding Company")
By: /s/ Xxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
Title: AVP & Actuary Title: Sr. VP & Chief Actuary
Date: 2/9/96 Date: 2/9/96
ATTEST: XXXXXX LIFE INSURANCE COMPANY
("Reinsurer")
By: /s/ Xxxxx X. Caioler By: /s/ Xxxxxx Xxxxxxxx
Title: VP & Controller Title: President
Date: 2/7/96 Date: 2/7/96
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AMENDED AND RESTATED REINSURANCE AGREEMENT
BETWEEN
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NEW YORK, NEW YORK
referred to as the "Ceding Company"
AND
XXXXXX LIFE INSURANCE COMPANY
(formerly ITT Xxxxxx Life Insurance Company)
ST. LOUIS, MISSOURI
referred to as the "Reinsurer"
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TABLE OF CONTENTS
Page
ARTICLE I GENERAL PROVISIONS.......................................2
ARTICLE II REINSURANCE PREMIUMS.....................................7
ARTICLE III ALLOWANCE................................................9
ARTICLE IV BENEFIT PAYMENTS........................................10
ARTICLE V DIVIDENDS...............................................12
ARTICLE VI DIVIDEND LIABILITY......................................16
ARTICLE VII MODIFIED COINSURANCE LIABILITY ADJUSTMENT...............20
ARTICLE VIII EXPENSE AND RISK CHARGE.................................22
ARTICLE IX EXPERIENCE REFUND.......................................26
ARTICLE X ACCOUNTING AND SETTLEMENTS..............................29
ARTICLE XI DURATION AND RECAPTURE..................................34
ARTICLE XII TERMINAL ACCOUNTING AND SETTLEMENT......................36
ARTICLE XIII PROXY TAX REIMBURSEMENT.................................38
ARTICLE XIV REPRESENTATIONS.........................................39
ARTICLE XV ARBITRATION.............................................40
ARTICLE XVI INSOLVENCY..............................................41
ARTICLE XVII INTERMEDIARY............................................42
ARTICLE XVIII EXECUTION AND EFFECTIVE DATE............................43
SCHEDULE A POLICIES AND RISKS REINSURED............................45
SCHEDULE B RESERVES................................................47
SCHEDULE C QUARTERLY REPORT OF ACTIVITY AND SETTLEMENTS............55
SCHEDULE D MODIFIED COINSURANCE INTEREST RATE......................62
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Page
SCHEDULE E BASIC DIVIDEND FACTORS.................................65
SCHEDULE F DIVIDEND MULTIPLES.....................................66
SCHEDULE G CEDING COMPANY DATA....................................67
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REINSURANCE AGREEMENT
This Agreement was made and entered into by and between The Mutual Life
Insurance Company of New York (hereinafter referred to as the
"Ceding Company") and Xxxxxx Life Insurance Company
(hereinafter referred to as the "Reinsurer") effective
December 31, 1990. This restatement of the Agreement will be
effective beginning on December 31, 1995 (the "Effective
Date").
The Ceding Company and the Reinsurer mutually agree to reinsure on the
terms and conditions stated herein. This Agreement is an
indemnity reinsurance agreement solely between the Ceding
Company and the Reinsurer, and performance of the obligations
of each party under this Agreement will be rendered solely to
the other party. In no instance, except as described in
Article XVI hereunder, will anyone other than the Ceding
Company or the Reinsurer have any rights under this Agreement,
and the Ceding Company will be and remain the only party
hereunder that is liable to any insured, policyowner or
beneficiary under any policy reinsured hereunder.
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ARTICLE I
GENERAL PROVISIONS
1. Policies and Risks Reinsured. The Reinsurer agrees to indemnify the
Ceding Company for, and the Ceding Company agrees to reinsure with the
Reinsurer, according to the terms and conditions hereof, the portion of
the risks under the policies described in Schedule A attached hereto.
2. Coverages and Exclusions.
A. Only the permanent life insurance policies described in
schedule A are reinsured under this Agreement.
B. The policies reinsured hereunder and described in Schedule A,
Paragraph 2 include any paid-up additions purchased with
dividends on those policies.
C. Riders providing additional life insurance benefits,
accidental death benefits, waiver of premium benefits, or
other "miscellaneous" benefits are not reinsured under this
Agreement.
D. The Reinsurer will not participate in policy loans on policies
reinsured hereunder.
3. Plan of Reinsurance. This indemnity reinsurance is a combination of
coinsurance and modified coinsurance. The Ceding Company will retain,
control and own all assets held in relation to the Modified Coinsurance
Reserve and the Retained Dividend Liability.
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4. Expenses. The Reinsurer will bear no part of the expenses incurred in
connection with the policies reinsured hereunder, except as otherwise
provided herein.
5. Dividends. Beginning December 31, 1995, the Reinsurer will reimburse
the Ceding Company for Dividends paid to the owners of the policies
reinsured hereunder in accordance with, and to the extent described in
Article V. Prior to December 31, 1995, the Reinsurer will have no
liability to the Ceding Company for reimbursement of, and will not
reimburse the Ceding Company for, dividends to policyholders.
6. Policy Changes. The Ceding Company must provide written notification to
the Reinsurer of the Ceding Company's implementation of any change
which both: (a) affects the original terms or conditions of any policy
reinsured hereunder, and (b) is voluntarily on the part of the Ceding
Company, not later than fifteen (15) days after the change takes
effect. The Reinsurer will provide written notification to the Ceding
Company as to the Reinsurer's acceptance or rejection of the change
within fifteen (15) days after receipt of notice of the change. If the
Reinsurer accepts any such change, the Ceding Company and the Reinsurer
will share, proportionately to the amount reinsured hereunder, in any
increase or decrease in the Ceding Company's liability which results
from such change. If the Reinsurer rejects any such change, the
Reinsurer's liability under this Agreement will be determined as if no
such change had occurred.
7. No Extracontractual Damages. The Reinsurer does not indemnify the
Ceding Company for, and will not be liable for, any extracontractual
damages or
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extracontractual liability resulting from fraud, oppression, bad
faith, strict liability, or negligent, reckless or intentional wrongs
on the part of the Ceding Company or its directors, officers, employees
and agents. The following types of damages are examples of damages that
would be excluded from this Agreement for the conduct described above:
actual damages, damages for emotional distress, and punitive or
exemplary damages.
8. Policy Administration. The Ceding Company will administer the policies
reinsured hereunder and will perform all accounting for such policies.
9. Inspection. At any reasonable time, the Reinsurer may inspect, during
normal business hours, at the appropriate office of the Ceding Company,
the original papers and any and all other books or documents relating
to or affecting reinsurance under this Agreement. The Reinsurer will
not use any information obtained through any inspection pursuant to
this Paragraph for any purpose not relating to reinsurance hereinunder.
10. Taxes. The allowance for any premium taxes paid in connection with the
policies reinsured hereunder is included in the Commission and Expense
Allowance as described in Article III. The Reinsurer will not reimburse
the Ceding Company for any other taxes paid by the Ceding Company in
connection with the policies reinsured hereunder.
11. Condition. The reinsurance hereunder is subject to the same limitations
and conditions as the policies issued by the Ceding Company which are
reinsured hereunder, except as otherwise provided in this Agreement.
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12. Misunderstandings and Oversights. If any failure to pay amounts due or
to perform any other act required by this Agreement is unintentional
and caused by misunderstanding or oversight, the Ceding Company and the
Reinsurer will adjust the situation to what it would have been had the
misunderstanding or oversight not occurred.
13. Adjustments. If the Ceding Company's liability under any of the
policies reinsured hereunder is changed because of a misstatement of
age, sex or any other material fact, the Reinsurer will share in the
change proportionately to the amount reinsured hereunder, and will make
any and all proportional adjustments with the Ceding Company.
14. Reinstatements. If a policy reinsured hereunder lapses, and is
subsequently reinstated while this Agreement is in force, the
reinsurance for such policy will be reinstated automatically. The
Ceding Company will pay the Reinsurer the Reinsurer's proportionate
share of all amounts received by the Ceding Company in connection with
the reinstatement of the policy. In addition, the Ceding Company will
pay the Reinsurer any Cash Surrender Values previously reimbursed by
the Reinsurer as a result of such lapse, if such lapse resulted in
extended term insurance or reduced paid-up insurance.
15. Assignment. Neither the Ceding Company nor the Reinsurer may assign any
of its rights, duties or obligations under this Agreement without the
prior written consent of the other party.
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16. Amendments. This Agreement may be amended only by written agreement of
the parties.
17. Entire Agreement. The terms expressed herein constitute the entire
agreement between the parties with respect to the policies reinsured
hereunder. There are no understandings between the parties with respect
to the policies reinsured hereunder other than as expressed in this
Agreement.
18. Election to Determine Specified Policy Acquisition Expenses. The Ceding
Company and the Reinsurer agree that the party with net positive
consideration under this Agreement will capitalize specified policy
acquisition expenses with respect to policies reinsured under this
Agreement without regard to the general deductions limitation of
Section 848(c)(1) of the Internal Revenue Code of 1986, as amended. The
Ceding Company and the Reinsurer will exchange information pertaining
to the amount of net consideration under this Agreement each year to
ensure consistency. The Ceding Company will submit a schedule to the
Reinsurer by June 1 of each year of its calculation of the net
consideration for the preceding taxable year. The Reinsurer may contest
the calculation in writing within thirty (30) days of receipt of the
Ceding Company's schedule. Any differences will be resolved between the
parties so that consistent amounts are reported on the respective tax
returns for the preceding taxable year. This election to capitalize
specified policy acquisition expenses without regard to the general
deductions limitation is effective for the 1995 taxable year and for
all subsequent taxable years during which the Agreement remains in
effect.
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ARTICLE II
REINSURANCE PREMIUMS
1. Reinsurance Premiums. The Ceding Company will pay the Reinsurer
Reinsurance Premiums on all policies in effect under this Agreement in
an amount equal to the sum of:
(i) that portion of the gross base policy premiums collected
during the Accounting Period by the Ceding Company which
corresponds to the applicable portion of the policies
reinsured hereunder, plus
(ii) that portion of any dividends on those policies described in
Schedule A, Paragraph 2 used during the Accounting Period to
purchase paid-up additional insurance which corresponds to the
portion of the paid-up additions reinsured hereunder.
The Reinsurance Premiums paid to the Reinsurer by the Ceding Company
will be remitted to the Reinsurer at the end of the Accounting Period
during which the gross premiums were collected by the Ceding Company
and the Reinsurer will treat any such Reinsurance Premiums as paid
premium for annual statement purposes regardless of the mode of
collection by the Ceding Company on the policies reinsured hereunder.
2. Ceded Reinsurance Premiums. The Reinsurer will reimburse the Ceding
Company for any Ceded Reinsurance Premiums attributable to the portions
of the policies
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reinsured hereunder which are paid by the Ceding Company under yearly
renewable term reinsurance agreements as described in Article IV,
Paragraph 7.
3. Supplemental Consideration. On December 31, 1995, the Ceding Company
will pay the Reinsurer a Supplemental Consideration equal to the sum of
(a) the Net Statutory Reserve, as described in Schedule B, Paragraph 6,
calculated as of December 31, 1995 with respect to the policies assumed
as of December 31, 1995 and described in Schedule A, Paragraph 2, plus
(b) the Retained Dividend Liability determined in accordance with
Article VI, Paragraph 3, calculated as of December 31, 1995 with
respect to the policies assumed as of December 31, 1995 and described
in Schedule A, Paragraph 2.
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ARTICLE III
ALLOWANCE
Commission and Expense Allowance. The Reinsurer will pay the Ceding
Company a Commission and Expense Allowance at the end of each
Accounting Period equal to 7 percent times that portion of the gross
base policy premiums collected by the Ceding Company during the current
Accounting Period, as described in Article II, Paragraph 1, item (i),
which corresponds to the portion of the policies reinsured hereunder.
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ARTICLE IV
BENEFIT PAYMENTS
1. Benefit Payments. Benefit Payments, as referred to in this Agreement,
means the Reinsurer's quota share of (i) Claims as described in
Paragraph 2 below, and (ii) Cash Surrender Values as described in
Paragraph 3 below.
2. Claims. The Reinsurer will pay the Ceding Company that portion of the
Claims paid by the Ceding Company on policies reinsured hereunder which
corresponds to the portion of the policies reinsured hereunder.
3. Cash Surrender Values. The Reinsurer will pay the Ceding Company that
portion of the Cash Surrender Values paid by the Ceding Company on
policies reinsured hereunder which corresponds to the portion of the
policies reinsured hereunder. For purposes of this Agreement, policies
lapsing to Extended Term Insurance or Reduced Paid-Up Insurance will be
treated as surrenders.
4. Notice. The Ceding Company will notify the Reinsurer each Accounting
Period after receipt of any information regarding Claims on policies
reinsured hereunder in accordance with Schedule C. The reinsurance
claim and copies of notification, claim papers, and proofs will be
furnished the Reinsurer upon request.
5. Liability and Payment. The Reinsurer will accept the decision of the
Ceding Company with respect to payment of a Claim on a policy reinsured
hereunder. The Reinsurer will pay its proportionate share of Claims in
a lump sum to the Ceding Company without regard to the form of
settlement by the Ceding Company.
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6. Contested Claims. The Ceding Company will advise the Reinsurer of its
intention to contest, compromise or litigate any Claims involving
policies reinsured hereunder. The Reinsurer will pay its share of the
expense of such contests, in addition to its share of Claims, or it may
choose not to participate. If the Reinsurer chooses not to participate,
it will discharge its liability by payment to the Ceding Company of the
full amount of its liability on the policy reinsured.
7. Facility of Reinsurance. The Ceding Company has entered into certain
YRT reinsurance treaties with respect to the policies reinsured
hereunder and described in Schedule A. The death benefits paid under
this Agreement will be net of the death benefits paid under those
reinsurance treaties and in no event will exceed the product of the sum
of $3 million, plus the associated Statutory Reinsured Reserve
released, on any single life times the corresponding quota share
percentage assumed by the Reinsurer as described in Schedule A.
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ARTICLE V
DIVIDENDS
1. Dividends. For Accounting Periods ending December 31, 1995 and
thereafter, the Reinsurer will reimburse the Ceding Company for the
dividends paid by the Ceding Company on the policies reinsured
hereunder as follows. This reimbursement (referred to as "Dividends")
shall be determined as the greater of (a) and (b), where:
(a) is the Formula Dividend determined in accordance with
Paragraph 4 below, and
(b) is the Reinsurer's quota share of an amount of dividends
determined using the Last Acceptable Scale, as defined in
Paragraph 3 below.
In no event, however, shall the Dividends paid by the Reinsurer during
any Accounting Period exceed the Reinsurer's quota share of the
dividends actually paid by the Ceding Company during the Accounting
Period with respect to the policies reinsured hereunder. As an
additional limitation, for any Accounting Period designated an
Exception Year, as defined in Paragraph 5 below, and the four
Accounting Periods immediately subsequent to such Exception Year, the
Dividends shall be determined as the Formula Dividend determined in
accordance with Paragraph 4 below.
2. Non-Conformity. If the operation of this Article V, and/or Article VI,
is determined by a court or regularly body, having jurisdiction over
this Agreement or the Ceding Company, to violate any law, rule or
regulation applicable to the Ceding Company,
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excluding any determination made in relation to the rehabilitation,
liquidation, or conservation of the Ceding Company, the Reinsurer and
the Ceding Company shall use their best efforts to renegotiate this
Agreement or the terms of this Article V, and Article VI, so that
neither party achieves an unexpected benefit or adverse result from the
terms or operation of this Article V, and/or the following Article VI.
3. Last Acceptable Scale. The Last Acceptable Scale is defined as the
Ceding Company's dividend scale for the most recent year during which
the Reinsurer's quota share of the dividends paid by the Ceding Company
did not exceed the Formula Dividend determined in accordance with
Paragraph 4 below. For purposes of this Article, the dividend scale for
any Accounting Period is determined by the dividend rate adopted by the
Ceding Company for the purposes of determining the payment of
dividends, during that same Accounting Period, on policies reinsured
hereunder and for making illustrations during that Accounting Period of
dividends to be paid by the Ceding Company on the policies reinsured
hereunder in subsequent Account Periods.
4. Formula Dividend. The Formula Dividend shall be determined as the sum,
by valuation basis, of the product of (i) multiplied by the sum of (ii)
plus (iii) for those policies reinsured hereunder, where:
(i) equals the applicable Statutory Reinsured Reserve by valuation
basis at the beginning of the current Accounting Period
determined in accordance with Schedule B, Paragraph 5, times
the number of calendar quarters that have to date ended during
the current Accounting Period, divided by 4;
(ii) equals the applicable Basic Dividend Factor by valuation basis
described in Schedule E for the current Accounting Period; and
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(iii) equals (a) x [(b) - (c)], where:
(a) equals the applicable Dividend Multiple by valuation
basis described in Schedule F for the current
Accounting Period;
(b) equals the Modified Coinsurance Interest Rate
described in Schedule D, Paragraph 1, for the
immediately preceding Accounting Period; and
(c) equals .0683.
Nothwithstanding the above, the sum of (ii) plus (iii), used in the
calculation of the Formula Dividend above for any Accounting Period
with respect to any policy reinsured hereunder, must always be greater
than or equal to zero.
5. Exception Year. An Exception Year is defined as any Accounting Period
in which either (a) or (b) have occurred, where:
(a) is the occurrence of an Excess Year, as described in
Paragraph 6 below, during each of the three
immediately preceding Accounting Periods; and
(b) is the occurrence of an Excess Year, as described in
Paragraph 6 below, both during the immediately
preceding Accounting Period and during any five
Accounting Periods within the preceding eight
Accounting Periods.
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6. Excess Year. An Excess Year is defined as an Accounting Period during which
Dividends exceed the Formula Dividend determined in accordance with
Paragraph 4 above.
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ARTICLE VI
DIVIDEND LIABILITY
1. Dividend Liability. For Accounting Periods ending December 31, 1995 and
thereafter, the Reinsurer will participate in the liability established
by the Ceding Company for the payment of dividends on the policies
reinsured hereunder as follows. This participation on the part of the
Reinsurer (referred to as the "Dividend Liability") shall be determined
as the greater of (a) and (b), where:
(a) is the Formula Liability determined in accordance
with paragraph 4 below, and
(b) is the Reinsurer's quota share of a liability
determined using the Last Acceptable Scale, as
defined in Article V, Paragraph 3. This liability
will be calculated by the Ceding Company, with
respect to the portion of the policies reinsured
hereunder, based on the discounted value of the
dividends payable during the twelve month period
following the last day of the last completed calendar
quarter. With the exception of the dividend scale
used, these calculations will be consistent with
those used to produce the sum of the following from
the Ceding Company's Annual Statement:
Item Annual Statement Reference
---- --------------------------
Policyholders' Dividends Page 3, Column 1, Line 6
Due and Unpaid
Dividends Apportioned Page 3, Column 1, Line 7.1
For Payment
Dividends Not Yet Page 3, Column 1, Line 7.2
Apportioned
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In no event, however, shall the Dividend Liability participated in by the
Reinsurer during any Accounting Period exceed the Reinsurer's quota share of the
dividend liability actually established by the Ceding Company during the
Accounting Period with respect to the policies reinsured hereunder.
The actual dividend liability will be equal to the sum of the following
liabilities as set forth in the Ceding Company's Annual Statement:
Item Annual Statement Reference
---- --------------------------
Policyholders' Dividends Page 3, Column 1, Line 6
Due and Unpaid
Dividends Apportioned Page 3, Column 1, Line 7.1
For Payment
Dividends Not Yet Page 3, Column 1, Line 7.2
Apportioned
As an additional limitation, for the quarterly settlements, described in Article
X, Paragraph 3, as of March 31, June 30 and September 30 of: (a) any Accounting
Period designated an Exception Year, as defined in Article V, Paragraph 5, and
(b) the four Accounting Periods immediately subsequent to such Exception Year,
the Dividend Liability shall be determined as the Formula Liability determined
in accordance with Paragraph 4 below. For the quarterly settlements, described
in Article X, Paragraph 3, as of December 31 of: (c) any Accounting Period
immediately preceding an Exception Year, (d) any Accounting Period designated an
Exception Year, and (e) the three Accounting Periods immediately subsequent to
such Exception Year, the Dividend Liability shall be determined as the Formula
Liability determined in accordance with Paragraph 4 below.
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2. Coinsured Dividend Liability. The Coinsured Dividend Liability at the
end of any Accounting Period is equal to the lesser of: (a) the
Dividend Liability, as defined in Paragraph 1 above, or (b) $16
million. The Reinsurer will establish a dividend liability on its
Annual Statement in the amount of the Coinsured Dividend Liability.
3. Retained Dividend Liability. The Retained Dividend Liability at the end
of any Accounting Period is equal to the net of: (a) the Dividend
Liability determined in accordance with Paragraph 1 above, minus (b)
the Coinsured Dividend Liability determined in accordance with
Paragraph 2 above. The Reinsurer will reimburse the Ceding Company each
Accounting Period for increases in the Retained Dividend Liability
through the operation of the Modified Coinsurance Liability Adjustment
as described in Article VII.
4. Formula Liability. The Formula Liability shall be determined as the
sum, by valuation basis, of the product of (i) multiplied by the sum of
(ii) plus (iii) for those policies reinsured hereunder, where:
(i) equals the Statutory Reinsured Reserve by valuation
basis at the end of the current Accounting Period
determined in accordance with Schedule B, paragraph
5;
(ii) equals the applicable Basic Dividend Factor by
valuation basis described in Schedule E for the
Accounting Period immediately following the current
Accounting Period; and
(iii) equals (a) x [(b) - (c)], where:
(a) equals the applicable Dividend Multiple by
valuation basis
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described in Schedule F for the Accounting
Period immediately following the current
Account Period;
(b) equals the annualized equivalent of the
Modified Coinsurance Interest Rate described
in Schedule D, Paragraph 1, for the current
Accounting Period; and
(c) equals .0683.
Nothwithstanding the above, the sum of (ii) plus (iii), used in the calculation
of the Formula Liability above for any Accounting Period with respect to any
policy reinsured hereunder, must always be greater than or equal to zero.
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ARTICLE VII
MODIFIED COINSURANCE LIABILITY ADJUSTMENT
Modified Coinsurance Liability Adjustment.
A. The Modified Coinsurance Liability Adjustment will be computed each
Accounting Period equal to (i) plus (ii) minus (iii) minus (iv) minus
(v) minus (vi), where:
(i) equals the total amount of the Modified Coinsurance Reserve
determined in accordance with Schedule B, Paragraph 4, at the
end of the current Accounting Period on the policies reinsured
hereunder;
(ii) equals the Retained Dividend Liability, as described in
Article VI, Paragraph 3, at the end of the current Accounting
Period;
(iii) equals the total amount of the Modified Coinsurance Reserve
determined in accordance with Schedule B, Paragraph 4, at the
beginning of the current Accounting Period on the policies
reinsured hereunder;
(iv) equals the Retained Dividend Liability, as described in
Article VI, Paragraph 3, at the beginning of the current
Accounting Period;
(v) equals the Modified Coinsurance Reserve at the beginning of
the current Accounting Period on the policies reinsured
hereunder times the Modified Coinsurance Interest Rate as
described in Schedule D, Paragraph 1; and
(vi) equals the Retained Dividend Liability, as described in
Article VI, Paragraph 3, at the beginning of the current
Accounting Period on policies
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reinsured hereunder times the Modified Coinsurance Interest
Rate as described in Schedule D, Paragraph 1.
In the Accounting Period in which termination of this Agreement occurs,
the reference in (i) above to "the end of the current Accounting
Period" refers to the terminal accounting date as described in Article
XII, Paragraph 2.
B. For any Accounting Period in which the amount computed in A. above is
positive, the Reinsurer will pay the Ceding Company such amount. For
any Accounting Period in which the amount computed in A. above is
negative, the Ceding Company will pay the Reinsurer the absolute value
of such amount.
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ARTICLE VIII
EXPENSE AND RISK CHARGE
Expense and Risk Charge. The Expense and Risk Charge for each calendar
quarter payable to the Reinsurer by the Ceding Company, will be equal
to the sum of (i) plus (ii) plus (iii), where:
(i) equals the Expense and Risk Charge Rate, as defined
below, times the Expense and Risk Charge Base, as
defined below;
(ii) equals .5 percent times the excess of the Statutory
Reinsured Reserve at the end of the current calendar
quarter determined in accordance with Schedule B,
Paragraph 5, over the Net Statutory Reserve at the
end of the current calendar quarter determined in
accordance with Schedule B, Paragraph 6; and
(iii) equals .5 percent times the Coinsured Dividend
Liability at the end of the current calendar quarter
determined in accordance with Article VI, Paragraph
2.
The Expense and Risk Charge Rate applicable to the Expense and Risk
Charge equation described above is defined as follows:
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For Calendar
Quarters Ending During Expense and Risk Charge Rate
---------------------- ----------------------------
1995 through 1997 .5000%
1998 and thereafter .5025%
The Expense and Risk Charge Base applicable to the Expense and Risk
Charge equation described above is defined as follows:
For Calendar
Quarters Ending During Expense and Risk Charge Base
---------------------- ----------------------------
1995 through 1997 the greater of: (a) the
Minimum Net Coinsurance
Reserve determined in
accordance with Schedule
B, Paragraph 7, or (b)
quantity (iv) as defined
below, but never less than
zero
1998 and thereafter (iv) as defined below, but
never less than zero,
where:
(iv) equals the sum of:
(a) the Net Coinsurance Reserve at the beginning of the
current Accounting Period determined in accordance
with Schedule B, Xxxxxxxxx 0, xxxx
00
00
(x) the Statutory Reinsured Reserve at the end of the
current Accounting Period determined in accordance
with Schedule B, Paragraph 5, plus
(c) the Retained Dividend Liability at the end of the
current Accounting Period determined in accordance
with Article VI, Paragraph 3, plus
(d) the Ceded Reinsurance Premiums for the current
Accounting Period determined in accordance with
Article II, Paragraph 2, plus
(e) Benefit Payments for the current Accounting Period as
described in Article IV, plus
(f) Dividends for the current Accounting Period
determined in accordance with Article V, Paragraph 1,
plus
(g) the Commission and Expense Allowance for the current
Accounting Period determined in accordance with
Article III, minus
(h) the Statutory Reinsured Reserve at the beginning of
the current Accounting Period determined in
accordance with Schedule B, Paragraph 5, minus
(i) the Retained Dividend Liability at the beginning of
the current Accounting Period determined in
accordance with Article VI, Paragraph 3, minus
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(j) interest on the Modified Coinsurance Reserve for the
current Accounting Period determined in accordance
with Article VII, Part A., item (v), minus
(k) interest on the Retained Dividend Liability for the
current Accounting Period determined in accordance
with Article VII, Part A, item (vi), minus
(l) Reinsurance Premiums for the current Account Period
determined in accordance with Article II, Paragraph
1, minus
(m) the sum of any Expense and Risk Charge for the
preceding calendar quarters which have ended during
the current Accounting Period.
In no event will the Expense and Risk Charge payable be less than
$55,000 for any calendar quarter.
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31
ARTICLE IX
EXPERIENCE REFUND
1. General. An Experience Refund will be paid by the Reinsurer to the
Ceding Company at the end of each Accounting Period with respect to the
reinsurance hereunder, if the operation of the Experience Refund
formula detailed in Paragraph 2 below produces a positive amount for
that Accounting Period. If the operation of the Experience Refund
formula produces a negative amount for the current Accounting Period,
then the Experience Refund formula in Paragraph 2 will be adjusted to a
calendar year-to-date basis. If there is a remaining negative amount,
then the Experience Refund is set equal to zero and the remaining
negative amount will be carried forward and included in the Memorandum
Account calculation as described in Article X, Paragraph 9, and will be
offset against any future positive Experience Refunds in accordance
with item (ii) (f) of the formula detailed in Paragraph 2 below. No
Experience Refund will be paid by the Reinsurer to the Ceding Company
after the Net Coinsurance Percentage, as defined in Schedule B,
Paragraph 1, becomes zero.
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32
2. Formula. With respect to each Accounting Period, the Experience Refund
will be equal to (i) minus (ii), where:
(i) equals the sum of
(a) Reinsurance Premiums determined in
accordance with Article II, Paragraph 1,
plus
(b) any Supplemental Consideration payable
during the current Accounting Period
determined in accordance with Article II,
Paragraph 3; and
(ii) equals the sum of:
(a) Ceded Reinsurance Premiums determined in
accordance with Article II, Paragraph 2,
plus
(b) Benefit Payments as described in Article IV,
plus
(c) Dividends determined in accordance with
Article V, Paragraph 1, plus
(d) the Commission and Expense Allowance
determined in accordance with Article III,
plus
(e) the Modified Coinsurance Liability
Adjustment determined in accordance with
Article VII, plus
(f) the balance of the Memorandum Account at the
end of the preceding Accounting Period, with
accrued interest thereon, determined in
accordance with Article X, Xxxxxxxxx 0, xxxx
00
00
(x) the sum of the Expense and Risk Charge for
each calendar quarter which has ended during
the current Accounting Period determined in
accordance with Article VIII.
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34
ARTICLE X
ACCOUNTING AND SETTLEMENTS
1. Annual Accounting Period. Each Accounting Period under this Agreement
will be a calendar year, except that: (a) the first annual Accounting
Period runs from January 1, 1995 through the last day of the calendar
year during which January 1,1995 falls, and (b) the final Accounting
Period runs from the end of the preceding Accounting Period until the
terminal accounting date of this Agreement as described in Article XI,
Paragraph 2.
2. Quarterly Accounting Reports. Accounting reports in the form of
Schedule C will be submitted to the Reinsurer by the Ceding Company for
each calendar quarter not later than thirty (30) days after the end of
each calendar quarter of the Accounting Period to which they pertain.
Such reports will include information for the Accounting Period on the
amount of Reinsurance Premiums, Ceded Reinsurance Premiums,
Supplemental Consideration, Commission and Expense Allowance, Benefit
Payments, Dividends, Experience Refund, Memorandum Account, Expense and
Risk Charge, Modified Coinsurance Reserve, Coninsurance Reserve,
Statutory Reinsured Reserve, Net Statutory Reserve, Dividend Liability,
Coinsured Dividend Liability and Retained Dividend Liability.
3. Quarterly Settlements.
A. Within thirty (30) days after the end of each calendar
quarter, the Ceding Company will pay the Reinsurer the
year-to-date sum of:
(i) the Reinsurance Premiums determined in accordance
with Article II, Xxxxxxxxx 0, xxxx
00
00
(xx) any Supplemental Consideration payable during the
current Accounting Period determined in accordance
with Article II, Paragraph 3, plus
(iii) any Modified Coinsurance Liability Adjustment payable
to the Reinsurer determined in accordance with
Article VII, plus
(iv) any quarterly settlement payments paid by the
Reinsurer to the Ceding Company for all preceding
calendar quarters of the current Accounting Period.
B. Simultaneously, the Reinsurer will pay the Ceding Company the
year-to-date sum of:
(i) Ceded Reinsurance Premiums determined in accordance
with Article II, Paragraph 2, plus
(ii) the amount of Benefit Payments paid during the
Accounting Period as described in Article IV, plus
(iii) Dividends determined in accordance with Article VII,
Paragraph 1, plus
(iv) the Commission and Expense Allowance determined in
accordance with Article III, plus
(v) any Modified Coinsurance Liability Adjustment payable
to the Ceding Company determined in accordance with
Article VII, plus
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36
(vi) any Experience Refund determined in accordance with
Article IX, plus
(vii) any quarterly settlement payments paid by the Ceding
Company to the Reinsurer for all preceding calendar
quarters of the current Accounting Period.
4. Amounts Due Quarterly. Except as otherwise specifically provided in
this Agreement, all amounts due to be paid to either the Ceding Company
or the Reinsurer under this Agreement will be determined on a net basis
as of the last day of each calendar quarter and will be due and payable
within thirty (30) days after the end of the calendar quarter.
5. Annual Accounting Reports. The Ceding Company will provide the
Reinsurer with annual accounting reports within thirty (30) days after
the end of the calendar year for which such reports are prepared. These
reports will contain sufficient information about the policies
reinsured hereunder to enable the Reinsurer to prepare its annual
financial reports and to verify information reported in Schedule C, and
will include Exhibit 8 by reserve basis, Page 7, Page 25 and Schedule S
of the NAIC Convention Blank.
6. Estimations. If the amounts, as defined in Paragraph 3 above, cannot be
determined at such dates as defined in Paragraph 4 above, on an exact
basis, such payments will be paid in accordance with a mutually agreed
upon formula which will approximate the actual payments. Adjustments
will then be made to reflect actual amounts within
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37
ninety (90) days after the end of the calendar quarter for which
amounts were estimated.
7. Delayed Payments. For purposes of Paragraph 4 above, if there is a
delayed settlement of a payment due, there will be an interest penalty,
at the Modified Coinsurance Interest Rate described in Schedule D,
Paragraph 1, for the period that the amount is overdue. For purposes of
this Paragraph, a payment will be considered overdue thirty (30) days
after the date such payment is due.
8. Offset of Payments. All monies due either the Ceding Company or the
Reinsurer under this Agreement or any other reinsurance agreements will
be offset against each other, dollar for dollar, regardless of any
insolvency of either party.
9. Memorandum Account. Should the settlement formula under Paragraph 3
above, produce an amount due the Ceding Company, the Reinsurer will pay
such amount in cash or its equivalent within fifteen (15) days after
such report is received by the Reinsurer. The Reinsurer will establish
a "Memorandum Account" in which such amounts paid to the Ceding Company
and all future such payments will accrue with interest at the
Memorandum Account Rate described in Paragraph 10 below. The balance of
the Memorandum Account at the beginning of any Accounting Period will
equal the absolute value of any negative Experience Refund determined
in accordance with Article IX, Paragraph 2, for the preceding
Accounting Period. These losses, and accrued interest thereon, will be
carried forward to subsequent Account Periods and will be a deduction
item in the calculation of future Experience Refunds in accordance with
Article IX, Paragraph 2, item (ii)(f).
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38
10. Memorandum Account Rate. The Memorandum Account Rate for any Accounting
Period will be equal to the Modified Coinsurance Interest Rate as
described in Schedule D, Paragraph 1, but not less than zero.
11. Partial Recapture. If a percentage of all of the policies reinsured
hereunder and issued during an Accounting Period is recaptured in
accordance with Article XX, Xxxxxxxxx 0, then the quarterly settlements
described above will thereafter be made with respect to the policies
not recaptured. Adjustments in the amounts due from either the Ceding
Company or the Reinsurer will be made accordingly.
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39
ARTICLE XI
DURATION AND RECAPTURE
1. Duration. Except as otherwise provided herein, this Agreement will be
unlimited in duration.
2. Reinsurer's Liability. The liability of the Reinsurer with respect to
any policy reinsured hereunder will begin simultaneously with that of
the Ceding Company, but not prior to the Effective Date of this
Agreement. The Reinsurer's liability with respect to any policy
reinsured hereunder will terminate on the earliest of: (i) the date
such policy is recaptured; (ii) the date the Ceding Company's liability
on such policy is terminated; or (iii) the date this Agreement is
terminated. Termination of the Reinsurer's liability is subject to
payments in respect of such liability in accordance with the provisions
of Article XII of this Agreement. In no event should the interpretation
of this Paragraph imply a unilateral right of the Reinsurer to
terminate this Agreement.
3. Termination for Nonpayment of Reinsurance Premiums or Other Amounts
Due. If the Ceding Company fails to pay the Reinsurance Premiums or any
other amounts due to the Reinsurer pursuant to this Agreement, within
seventy-five (75) days after the end of any Accounting Period, the
Reinsurer may terminate this Agreement subject to thirty (30) days
prior written notice to the Ceding Company.
4. Recapture. Beginning January 1, 1997, policies reinsured hereunder are
eligible for recapture, at the option of the Ceding Company, on any
January 1, or on any other date mutually agreed to in writing subject
to ninety (90) days prior written notice. Once policies reinsured
hereunder are eligible for recapture, the Ceding Company
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40
may elect to recapture either all of the policies reinsured hereunder
or some percentage of all of the policies reinsured hereunder. In no
event may the Ceding Company recapture a percentage of one or more of
the policies reinsured hereunder without recapturing an equal
percentage of all policies reinsured hereunder. This Agreement will
terminate if all policies reinsured hereunder are recaptured.
5. Internal Replacements. Should the Ceding Company, its affiliates,
successors or assigns, initiate a program of Internal Replacement that
would include any of the policies reinsured hereunder, the Ceding
Company will immediately notify the Reinsurer. For purposes of this
Agreement, such policies will be treated as recaptured rather than
surrendered, and such recapture will apply to all policies reinsured
hereunder. For purposes of this Agreement, the term "Internal
Replacement" will mean any instance in which a policy or any portion of
the cash value of a policy is exchanged for another policy or annuity,
not covered under this Agreement, which is written by the Ceding
Company, its affiliates, successors or assigns.
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41
ARTICLE XII
TERMINAL ACCOUNTING AND SETTLEMENT
1. Terminal Accounting. In the event that this Agreement is terminated in
accordance with Article XX, Xxxxxxxxx 0, or all reinsurance under this
Agreement is recaptured in accordance with Article XX, Xxxxxxxxx 0, a
Terminal Accounting and Settlement will take place.
2. Date. The terminal accounting date will be the earliest of: (1) the
effective date of recapture pursuant to any notice of recapture given
under this Agreement, (2) the effective date of termination pursuant to
any notice of termination given under this Agreement, or (3) any other
date mutually agreed to in writing.
3. Settlement. The Terminal Accounting and Settlement will consist of:
(a) the quarterly settlement as provided in Article X, Paragraph
3, computed as of the terminal accounting date; and
(b) payment by the Ceding Company to the Reinsurer of an amount
equal to the Modified Coinsurance Reserve on the policies
reinsured hereunder as of the terminal accounting date; and
(c) payment by the Reinsurer to the Ceding Company of a Terminal
Reserve Adjustment equal to the Modified Coinsurance Reserve
on the policies reinsured hereunder as of the terminal
accounting date;
(d) payment by the Ceding Company to the Reinsurer of any
Memorandum Account as described in Article X, Paragraph 9, as
of the terminal accounting date;
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42
(e) payment by the Ceding Company to the Reinsurer of an amount
equal to the Retained Dividend Liability on the policies
reinsured hereunder as of the terminal accounting date; and
(f) payment by the Reinsurer to the Ceding Company of a Terminal
Reserve Adjustment equal to the Retained Dividend Liability on
the policies reinsured hereunder as of the terminal accounting
date.
The Reinsurer will have no further liability for the reimbursement of
dividends following the Terminal Accounting and Settlement. If a
percentage of all the policies reinsured hereunder is recaptured in
accordance with Article XX, Xxxxxxxxx 0, then the Terminal Accounting
and Settlement described above will be with respect to only the
percentage of such policies recaptured.
If the calculation of the Terminal Accounting and Settlement produces
an amount owing to the Ceding Company, such amount will be paid by the
Reinsurer to the Ceding Company. If the calculation of the Terminal
Accounting and Settlement produces an amount owing to the Reinsurer,
such amount will be paid by the Ceding Company to the Reinsurer.
4. Supplementary Accounting and Settlement. In the event that, subsequent
to the Terminal Accounting and Settlement as provided above, a change
is made with respect to any amounts due, a supplementary accounting
will take place pursuant to Paragraph 3 above. Any amount owed to the
Ceding Company or to the Reinsurer by reason of such supplementary
accounting will be paid promptly upon the completion thereof.
37
43
ARTICLE XIII
PROXY TAX REIMBURSEMENT
General. Pursuant to IRC Section 848, insurance companies are required to
capitalize and amortize specified policy acquisition expenses. The amount
capitalized is determined by proxy based on a percentage of "reinsurance
premiums" as defined in the IRS regulations relating to IRC Section 848. At the
Reinsurer's request, the Ceding Company will reimburse the Reinsurer for any
positive timing cost to the Reinsurer which results from the application of IRC
Section 848 to the policies reinsured hereunder and which the Reinsurer
considers material. At the Ceding Company's request, the Reinsurer will
reimburse the Ceding Company for the absolute value of any negative timing cost
to the Reinsurer which results from the application of IRC Section 848 to the
policies reinsured hereunder and which the Ceding Company considers material.
Any proxy tax reimbursements made in accordance with this provision will be
based on a formula to calculate timing cost, as referred to above, agreeable to
both the Ceding Company and the Reinsurer.
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44
ARTICLE XIV
REPRESENTATIONS
Representations. The Ceding Company acknowledges that, at the Reinsurer's
request, it has provided the Reinsurer with the Ceding Company Data described in
Schedule G prior to the execution of this Agreement by the Reinsurer. The Ceding
Company represents that all factual information contained in the Ceding Company
Data is complete and accurate as of the date the document containing the
information was prepared. The Ceding Company further represents that any
assumptions made in preparing the Ceding Company Data were based upon informed
judgment and are consistent with sound actuarial principles. The Ceding Company
further represents that it is not aware of any omissions, errors, changes or
discrepancies which would materially affect the Ceding Company Data. The
Reinsurer has relied on such data and the foregoing representations in entering
into this Agreement. It is understood, however, that the Ceding Company does not
guarantee the future performance of the policies reinsured hereunder.
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45
ARTICLE XV
ARBITRATION
1. General. All disputes and differences between the Ceding Company and
the Reinsurer on which an agreement cannot be reached will be decided
by arbitration. The arbitrators will construe this Agreement from the
standpoint of practical business and equitable principles and the
customs and practices of the insurance and reinsurance business, rather
than from the standpoint of strict law. The parties intend that the
arbitrators will make their decision with a view to effecting the
intent of this Agreement.
2. Method. Three arbitrators will decide any differences. They must be
impartial and present or former officers of life insurance companies
other than the parties to this Agreement or any company owned by, or
affiliated with, either party. One of the arbitrators will be appointed
by the Reinsurer, another by the Ceding Company, and the two
arbitrators thus appointed will select a third arbitrator before
arbitration begins. Should one of the parties decline to select an
arbitrator within thirty (30) days after the date of a written request
to do so, or should the two arbitrators selected by the parties not be
able to agree upon the choice of a third, the appointment(s) will be
left to the President of the American Arbitration Association or its
successor. The arbitrators will decide by a majority of votes and their
decision will be final and binding upon the parties. The costs of
arbitration, including the fees of the arbitrators, will be shared
equally by the parties unless the arbitrators decide otherwise. Any
counsel fees incurred by a party in the conduct of arbitration will be
paid by the party incurring the fees.
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46
ARTICLE XVI
INSOLVENCY
Insolvency. The portion of any risk or obligation assumed by the Reinsurer, when
such portion is ascertained, shall be payable on demand of the Ceding Company at
the same time as the Ceding Company shall pay its net retained position of such
risk or obligation, with reasonable provision for verification before payment,
and the reinsurance shall be payable by the Reinsurer, on the basis of the
liability of the Ceding Company under the contract or contracts reinsured
without diminution because of the insolvency of the Ceding Company. In the event
of insolvency and the appointment of a liquidator, receiver or statutory
successor of the Ceding Company, such portion shall be payable to such
liquidator, receiver or statutory successor immediately upon demand, with
reasonable provision for verification, on the basis of claims allowed against
the insolvent company by any court of competent jurisdiction or by any
liquidator, receiver or statutory successor of the company having authority to
allow such claims, without diminution because of such insolvency or because such
liquidator, receiver or statutory successor has failed to pay all or a portion
of any claims. Payments by the Reinsurer as above set forth shall be made
directly to the Ceding Company or to its liquidator, receiver or statutory
successor, except where the contract of insurance or reinsurance specifically
provides another payee of such reinsurance in the event of the insolvency of the
Ceding Company. The liquidator, receiver or statutory successor of the Ceding
Company will give the Reinsurer written notice of the pendency of a claim
against the Ceding Company on any policy reinsured within a reasonable time
after such claim is filed in the insolvency proceeding. During the pendency of
any such claim, the Reinsurer may investigate such
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47
claim and interpose in the Ceding Company's name (or in the name of the Ceding
Company's liquidator, receiver or statutory successor), in the proceeding where
such claim is to be adjudicated, any defense or defenses which the Reinsurer may
deem available to the Ceding Company or its liquidator, receiver or statutory
successor. The expense thus incurred by the Reinsurer will be chargeable,
subject to court approval, against the Ceding Company as a 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 the
Reinsurer.
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48
ARTICLE XVII
INTERMEDIARY
Intermediary. The Reinsurer and the Ceding Company acknowledge the Reinsurer's
appointment of RGA/Swiss Financial Group, L.L.C. as the designated reinsurance
manager with respect to this Agreement and the business reinsured hereunder. The
Reinsurer hereby directs the Ceding Company to submit all notices and reports
required to be sent to the Reinsurer under this Agreement and remit all amounts
due the Reinsurer under this Agreement directly to RGA/Swiss Financial Group,
L.L.C. as the designated reinsurance manager of the Reinsurer. The Ceding
Company acknowledges the Reinsurer's request and agrees to forward all notices,
reports and remittances required to be sent to the Reinsurer under this
Agreement directly to RGA/Swiss Financial Group, L.L.C. RGA/Swiss Financial
Group, L.L.C. shall receive all notices, reports and remittances on behalf of
the Reinsurer and receipt of such notices, reports and remittances by RGA/Swiss
Financial Group, L.L.C. shall be deemed to be receipt by the Reinsurer.
The Reinsurer and the Ceding Company individually acknowledges that RGA/Swiss
Financial Group, L.L.C. has furnished each with evidence of its Delaware
Reinsurance Intermediary Manager's license. The Ceding Company further
acknowledges that RGA/Swiss Financial Group, L.L.C. has made written disclosure
at the time of negotiation of this Agreement, or its amendment, whichever is
applicable, in accordance with Section 32.1(f) of the New York Insurance
Regulations.
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ARTICLE XVIII
EXECUTION AND EFFECTIVE DATE
In witness of the above, this Amended and Restated Reinsurance Agreement is
executed in duplicate on the dates indicated below with an Effective Date of
December 31, 1995.
THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK
ATTEST: ("Ceding Company")
By: /s/ Xxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------- ---------------------------------
Title: AVP & Actuary Title: Sr. VP & Chief Actuary
Date: 2/9/96 Date: 2/9/96
XXXXXX LIFE INSURANCE COMPANY
ATTEST: ("Reinsurer")
By: /s/ Xxxxx X. Caioler By: /s/ Xxxxxx Xxxxxxxx
--------------------------------- ---------------------------------
Title: VP & Controller Title: President
Date: 2/7/96 Date: 2/7/96
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SCHEDULE A
POLICIES AND RISKS REINSURED
1. Policies and Risks Reinsured Prior to December 31, 1995. Prior to the
Effective Date of this Amended and Restated Reinsurance Agreement, the
Reinsurer reinsured a 40.5 percent quota share of the Ceding Company's
liability on those whole life insurance policies issued by the Ceding
Company from October 1985 through June 1988, under Policy Form Number
1-85. On the Effective Date of this Amended and Restated Reinsurance
Agreement, the Ceding Company will recapture entirely the policies
described above and simultaneously in their stead cede the business
described in Paragraph 2 below to the Reinsurer.
2. Policies and Risks Reinsured On and After December 31, 1995. Effective
December 31, 1995, the Reinsurer reinsures a 31 percent quota share of
the Ceding Company's liability on all permanent premium paying life
insurance policies as of the Effective Date of this Amended and
Restated Reinsurance Agreement and any paid-up additions on those
policies issued by the Ceding Company and valued on one of the
following bases:
Valuation Mortality Interest
Basis Code Table Rate
---------- ----- ----
0 American Experience 3.00%
1 1941 CSO 2.25
2 1941 CSO 2.50
3 1941 CSO 3.00
4 1958 CSO 2.50
5 1958 CSO 3.50
6 1958 CSO 3.00
8 1958 CSO 3.00
9 1958 CSO 3.0%/2.0%
10 1958 CSO 4.00
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51
The reinsurance provided under this Agreement excludes Canadian Business.
During the term of this Agreement, the Ceding Company will retain not less than
31 percent of the liability on the policies reinsured hereunder.
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SCHEDULE B
RESERVES
1. Net Coinsurance Percentage. Reinsurance hereunder will be a combination
of coinsurance and modified coinsurance, and the Net Coinsurance
Reserve, as described in Paragraph 3 below, is based on the Net
Coinsurance Percentage specified below:
Net Coinsurance Percentage
On December 31, 1995 the quotient of 100 times $31,222,000,
divided by the Net Statutory Reserve on the
last day of the current Accounting Period as
defined in Paragraph 6 below
After December 31, 1995 100 times (i) as defined below, but not to
exceed (iii) as defined below, and not less
than (ii) as defined below, dividend by the
amount of the Net Statutory Reserve on the
last day of the current Accounting Period as
defined in Paragraph 6 below, where:
(i) equals the sum of:
(a) the Net Coinsurance Reserve at the beginning
of the current Accounting Period determined
in accordance with Paragraph 3 below, plus
(b) the Statutory Reinsured Reserve at the end
of the current Accounting Period determined
in accordance with Paragraph 5 below, plus
(c) the Retained Dividend Liability at the end
of the current Accounting Period determined
in accordance with Article VI, Xxxxxxxxx 0,
xxxx
00
00
(x) the Ceded Reinsurance Premiums determined in
accordance with Article II, Paragraph 2,
plus
(e) Benefit Payments as described in Article IV,
plus
(f) Dividends determined in accordance with
Article V, Paragraph 1, plus
(g) the Commission and Expense Allowance
determined in accordance with Article III,
plus
(h) the sum of the Expense and Risk Charge for
each calendar quarter which has ended during
the current Accounting Period determined in
accordance with Article VIII, plus
(i) the amount of the Memorandum Account at the
end of the preceding Accounting Period, with
accrued interest thereon, determined in
accordance with Article X, Paragraph 9,
minus
(j) the Statutory Reinsured Reserve at the
beginning of the current Accounting Period
determined in accordance with Paragraph 5
below, minus
(k) the Retained Dividend Liability at the
beginning of the current Accounting Period
determined in accordance with Article VI,
Paragraph 3, minus
(l) Reinsurance Premiums determined in
accordance with Article II, Xxxxxxxxx 0,
xxxxx
00
00
(x) interest on the Modified Coinsurance Reserve
as described in accordance with Article VII,
Part A., item (v); minus
(n) interest on Dividend Liability as described
in accordance with Article VII, Part A.,
item (vi); and
(ii) equals the Minimum Net Coinsurance Reserve determined
in accordance with Paragraph 7 below; and
(iii) equals the greater of (o) as defined below or the sum
of:
(o) the Net Coinsurance Reserve at the beginning
of the current Accounting Period, determined
in accordance with Paragraph 3 below, plus
(p) the Statutory Reinsured Reserve at the
beginning of the current Accounting Period,
determined in accordance with Paragraph 5
below, minus
(q) the Net Statutory Reserve at the beginning
of the current Accounting Period, determined
in accordance with Paragraph 6 below, minus
(r) the Statutory Reinsured Reserve at the end
of the current Accounting Period, determined
in accordance with Paragraph 5 below, plus
(s) the Net Statutory Reserve at the end of the
current Accounting Period, determined in
accordance with Paragraph 6 below.
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55
2. Coinsurance Reserve. The Coinsurance Reserve is equal to (i) plus (ii),
where:
(i) equals the Net Coinsurance Reserve as described in Paragraph 3
below; and
(ii) equals the excess of the Statutory Reinsured Reserve as
defined in Paragraph 5 below, over the Net Statutory Reserve
as defined in Paragraph 6 below.
3. Net Coinsurance Reserve. The Net Coinsurance Reserve is equal to the
Net Coinsurance Percentage, as defined in Paragraph 1 above, times the
Net Statutory Reserve, as defined in Paragraph 6 below.
4. Modified Coinsurance Reserve. The Modified Coinsurance Reserve is equal
to (i) minus (ii), where:
(i) equals the Net Statutory Reserve as defined in Paragraph 6
below, and
(ii) equals the Net Coinsurance Reserve determined in accordance
with Paragraph 3 above.
At any time, the sum of the Coinsurance Reserve, as defined in
Paragraph 2 above, plus the Modified Coinsurance Reserve must be equal
to the Statutory Reinsured Reserve, as defined in Paragraph 5 below.
5. Statutory Reinsured Reserve. The term "Statutory Reinsured Reserve," as
used in this Agreement, means the statutory reserve on the position of
the policies
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reinsured hereunder as calculated by the Ceding Company under its
applicable State law.
6. Net Statutory Reserve. The term "Net Statutory Reserve," as used in
this Agreement, means the reserve as calculated according to the
methods described in Section 807 of the Internal Revenue Code of 1986.
7. Minimum Net Coinsurance Reserve. The Minimum Coinsurance Reserve is
defined below for each Accounting Period except that, if in any
Accounting Period (a) the Termination Rate, as defined in Paragraph 8
below, is greater than 0.15, (b) the compound annualized equivalent of
the Modified Coinsurance Interest Rate, as described in Schedule D,
Paragraph 1, its less than 5.5 percent, (c) the claims-paying ability
rating that Standard & Poor's Corporation assigns to the Ceding Company
is either discontinued or falls to or below BBB-, and/or (d) the
insurance financial strength rating that Xxxxx'x Investors Services
assigns to the Ceding Company is either discontinued or falls to or
below Baa3, then the Reinsurer may elect to define the Minimum Net
Coinsurance Reserve as an amount equal to or less than the amounts
specified below for the first Accounting Period in the current calendar
year and for all Accounting Periods thereafter:
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For Accounting
Periods Ending During Minimum Net Coinsurance Reserve
--------------------- -------------------------------
December 31, 1995 through $50,222,000, minus (i), as defined
December 31, 1997 below, minus (ii), as defined below
January 1, 1998 and Zero
thereafter
(i) equals (a) minus (b), where:
(a) equals the Statutory Reinsured Reserve at
the end of the current Accounting Period, as
defined in Paragraph 5 above; and
(b) equals the Net Statutory Reserve at the end
of the current Accounting Period, as defined
in Paragraph 6 above; and
(ii) equals the Coinsured Dividend Liability at the end of
the current Accounting Period determined in
accordance with Article VI, Paragraph 2.
8. Termination Rate. For Accounting Periods ending December 31,
1995 through December 31, 1996, the Termination Rate will be
equal to 1 - [(i) - (ii)], where:
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58
(i) equals the total number of policies reinsured
hereunder and described in Schedule A, as of the date
the current Accounting Period ends; and
(ii) equals
- for the calendar quarter ending December 31,
1995 only, 467,763;
- for the calendar quarter ending March 31,
1996 only, 459,841;
- for the calendar quarter ending June 30,
1996 only, 451,920;
- for the calendar quarter ending September
30, 1996 only, 443,998; and
- for the calendar quarter ending December 31,
1996 only, 437,000.
For Accounting Periods ending January 1, 1997 and thereafter, the Termination
Rate will be equal to 1 - [(iii) - (iv)], where:
(iii) equals the total number of policies reinsured
hereunder and described in Schedule A, as of the date
the current Accounting Period ends; and
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(iv) equals the total number of policies reinsured
hereunder and described in Schedule A, as of the date
one year prior to the date the current Accounting
Period ends.
9. Reserve Strengthening. Any increase in reserves resulting from a
reserve strengthening with respect to the policies reinsured hereunder
initiated by the Ceding Company will be paid by the Ceding Company to
the Reinsurer at the end of the Accounting Period during which the
reserve strengthening occurs. This Paragraph applies to strengthening
affecting either or both the Statutory Reinsured Reserve or the Net
Statutory Reserve.
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SCHEDULE C
QUARTERLY REPORT OF ACTIVITY AND SETTLEMENTS
FROM CEDING COMPANY TO REINSURER
Reporting Quarter:______________
Calendar Year:_________________
Date Report Completed:_________
1. Reinsurance Premiums (Article II, Paragraph 1)
x. Xxxxx Premiums collected on policies
described in Schedule A, Paragraph 1 _______
x. Xxxxx Premiums collected on policies
described in Schedule A, Paragraph 2 _______
c. Dividends used to purchase paid-up
additional insurance _______
Reinsurance Premiums = a + b + c _______
2. Ceded Reinsurance Premiums (Article II,
Paragraph 2) _______
3. Supplemental Consideration (Article II, Paragraph 3) _______
4. Benefit Payments (Article IV)
a. Death Benefits _______
b. Cash Surrender Values _______
Benefit Payments = a + b _______
5. Dividends (Article V, Paragraph 1) _______
6. Modified Coinsurance Liability Adjustment (Article VII)
a. Modified Coinsurance Reserve beginning of
current Accounting Period _______
b. Retained Dividend Liability beginning of
current Accounting Period _______
c. Modified Coinsurance Reserve end of
current Accounting Period _______
d. Retained Dividend Liability end of
current Accounting Period _______
e. Equals c + d - b - a _______
f. Modified Coinsurance Interest Rate
(Schedule D, Paragraph 1) _______
g. Equals f x (a + b) _______
Modified Coinsurance Reserve Adjustment = e - g _______
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7. Memorandum Account (Article X, Paragraph 9) _______
8. Expense and Risk Charge (Article VIII)
a. First calendar quarter _______
b. Second calendar quarter _______
c. Third calendar quarter _______
d. Fourth calendar quarter _______
9. Commission and Expense Allowance (Article III) _______
10. Experience Refund = 1 - 2 - 4 - 5 - 6 - 7 - 8 - 9
(If negative, see Article IX) _______
11. Sum of net payments paid during all preceding
calendar quarters of the current Accounting Period _______
12. Cash Settlement = 1 - 2 + 3 - 4 - 5 - 6 - 9 - 10 - 11 _______
_______
Supplemental Information - Policies described in Schedule A, Paragraph 2
Number Statutory Net
of Reinsured Statutory Memorandum Dividend
Policies In Force Reserve Reserve Account Liability
-------- -------- ------- ------- ------- ---------
Beginning of Period ______ ______ ______ ______ ______ ______
+ Additions ______ ______ ______ ______ ______ ______
- Terminations ______ ______ ______ ______ ______ ______
End of Period ______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
Reinsurer's Net
Dividend Coinsurance
Liability Reserve
--------- -------
Beginning of Period ______________ ______________
+ Additions ______________ ______________
- Terminations ______________ ______________
End of Period ______________ ______________
______________ ______________
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Termination Rate (Schedule B, Paragraph 8)
For Accounting Periods ending December 31, 1995 through December 31, 1996:
Calendar Quarter Ending
12/31/95 3/31/96 6/30/96 9/30/96 12/31/96
a. Total number of policies as of the date
current Accounting Period ends _______ ______ ______ ______ ______
b. Total number of policies deemed to be
inforce as of the date one year prior to
the date current Accounting Period
ends 467,763 459,841 451,920 443,998 437,000
c. Termination Rate = [1 - (a - b)]
_______ _______ _______ _______ _______
For Accounting Periods ending January 1, 1997 and thereafter:
d. Total number of policies as of the date the
current Accounting Period ends ___________
e. Total number of policies as of the date one year
prior to the date current Accounting Period ends ___________
f. Termination Rate = 1 - (d - e) ===========
Unadjusted Interest Rate (Schedule D, Paragraph 3)
(Based on Dividend Rate Accounting Pool)
(i) Net Investment Income for current calendar year _______
(ii) Sum of:
(a) Net Realized Capital Gains and (Losses) on
Investments for current calendar year __________
(b) Net Unrealized Capital Gains and (Losses)
on Investments for current calendar year __________
(iii) Subtotals, Cash and Invested Assets for current
calendar year ___________
(iv) Subtotals, Cash and Invested Assets for preceding
calendar year ____________
(v) Investment Income Due and Accrued for current
calendar year _____________
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(vi) Investment Income Due and Accrued for
preceding calendar year _____________
(vii) Borrowed Money for current calendar year _____________
(viii) Borrowed Money for preceding calendar year _____________
(ix) Adjusted Exhibit 2 Rate = _____________
_____________
2 x [(i) + (ii)]
______________________________________________________
(iii) + (iv) + (v) + (vi) - (vii) - (viii) - (i) - (ii)
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Dividends (Article V)
1. Formula Dividend (Paragraph 4)
Policies
valued
Policies using
Policies Policies valued 1958 CSO
valued valued using Mortality
using using 1958 CSO and
American 1958 CSO Mortality Interest
Experience Mortality and 3.0% other than
or 1941 CSO and 2.5% or 3.5% 2.5% or 3.0%
Mortality Interest Interest or 3.5% Total
--------- -------- -------- ------- ------
(a) Dividend Multiples, current
Accounting Period (Schedule F)
--------- -------- -------- -------
(b) Modified Coinsurance Interest Rate,
immediately preceding Accounting
Period (Schedule D)
--------- -------- -------- -------
(c) equals .0683 .0683 .0683 .0683
--------- -------- -------- -------
(d) equals a x (b - c)
--------- -------- -------- -------
(e) Basic Dividend Factors current
Accounting Period (Schedule E)
--------- -------- -------- -------
(f) Statutory Reinsured Reserve,
beginning of current Accounting
Period
--------- -------- -------- -------
(g) equals .25 times the number of
calendar quarters that have to date
ended during the current Accounting
Period
--------- -------- -------- -------
(h) equals f x g x (d + e)
--------- -------- -------- -------- ------
2. The Reinsurer's quota share of an amount of dividends determined using
the Last Acceptable Scale, as defined in Article V, Paragraph 3 ------
3. The Reinsurer's quota share of the dividends actually paid by the
Ceding Company during the Accounting Period with respect to the
policies reinsured hereunder ------
4. Dividends equals the greater of 1. and 2. but not to exceed 3., as
defined above, unless either the current Accounting Period or any of
the four immediately preceding Accounting Periods was designated an
Exception Year in accordance with Article V, Paragraph 5. In the latter
case Dividends will be equal to 1. above. ------
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Dividend Liability (Article VI)
1. Formula Liability (Paragraph 4)
Policies
valued
Policies using
Policies Policies valued 1958 CSO
valued valued using Mortality
using using 1958 CSO and
American 1958 CSO Mortality Interest
Experience Mortality and 3.0% other than
or 1941 CSO and 2.5% or 3.5% 2.5% or 3.0%
Mortality Interest Interest or 3.5% Total
--------- -------- -------- ------- -----
(a) Dividend Multiples, Accounting
Period immediately following
current Accounting Period (Schedule
F)
--------- -------- -------- -------
(b) Annualized equivalent of Modified
Coinsurance Interest Rate, current
Accounting Period (Schedule D)
--------- -------- -------- -------
(c) equals .0683 .0683 .0683 .0683
--------- -------- -------- -------
(d) equals a x (b - c)
--------- -------- -------- -------
(e) Basic Dividend Factors Accounting
Period immediately following
current Accounting Period (Schedule
E)
--------- -------- -------- -------
(f) Statutory Reinsured Reserve, end of
current Accounting Period
--------- -------- -------- ------- -------
(g) equals f x (d + e)
--------- -------- -------- ------- -------
2. The Reinsurer's quota share of a dividend liability determined using
the Last Acceptable Scale, as defined in Article V, Paragraph 3
-----
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3. The Reinsurer's quota share of the dividend liability actually
established by the Ceding Company during the Accounting Period with
respect to the policies reinsured hereunder
-----
4. The Dividend Liability equals the greater of 1. and 2. but not to
exceed 3., as defined above, unless either the current Accounting
Period or any of the four immediately preceding Accounting Periods was
designated an Exception Year in accordance with Article V, Paragraph 5.
In the latter case Dividend Liability will be equal to 1. above.
-----
5. Coinsured Dividend Liability equals the lesser of 4. or $16 million
6. Retained Dividend Liability equals 4. - 5.
-----
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SCHEDULE D
MODIFIED COINSURANCE INTEREST RATE
1. Modified Coinsurance Interest Rate. The Modified Coinsurance Interest
Rate for any Accounting Period will be equal to the Ceding Company's
Unadjusted Interest Rate, as described in Paragraph 3 below, for the
Accounting Period based on the performance of the assets comprising the
Ceding Company's Dividend Rate Accounting Pool, as described in
Paragraph 2 below.
2. Dividend Rate Accounting Pool. For purposes of this Agreement, the
Dividend Rate Accounting Pool will include all assets and the
performance thereof used in the determination of the Ceding Company's
Unadjusted Interest Rate, as described in Paragraph 3 below. The assets
to be included in the Dividend Rate Accounting Pool are as described in
(a) and (b) below:
(a) all cash, invested assets and investment income due and
accrued, net of any borrowed money, as reported in the Ceding
Company's Annual Statement; and
(b) all cash, invested assets, and investment income due and
accrued, net of any borrowed money, reported in the Annual
Statement of AUSA Life Insurance Company, Inc., Cedar Rapids,
Iowa as a result of the Asset Transfer and Acquisition
Agreement by and among the Ceding Company, AEGON USA, Inc., and
AUSA Life Insurance Company, Inc., dated December 31, 1993.
Wherever specific figures from the Dividend Rate Accounting Pool are
referenced in this Amended and Restated Reinsurance Agreement, those
figures shall be derived as the sum of the corresponding figures
from(a) and (b) above.
3. Unadjusted Interest Rate. For purposes of this Agreement, the
Unadjusted Interest Rate for any Accounting Period will be equal to
2 x [(i) + (ii)]
-------------------------------------------------------,
(iii) + (iv) + (v) + (vi) - (vii) - (viii) - (i) - (ii) where:
(i) equals the Net Investment Income determined in
accordance with Page 10, Exhibit 2, Column 7, Line
16, of the Dividend Rate Accounting Pool for the
current Accounting Period;
(ii) equals the sum of (a) plus (b), where:
(a) equals the portion of Net Realized Capital
Gains and (Losses) on Investments,
determined in accordance with
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Page 11, Exhibit 3, Column 4, Line 10, of
the Dividend Rate Accounting Pool for the
current Accounting Period;
(b) equals the portion of Net Unrealized Capital
Gains and (Losses) on Investments,
determined in accordance with Page 11,
Exhibit 4, Column 4, Line 10 of the Dividend
Rate Accounting Pool for the current
Accounting Period;
(iii) equals Subtotals, Cash and Invested Assets determined
in accordance with Page 2, Column 1, Line 10A, of the
Dividend Rate Accounting Pool for the current
Accounting Period;
(iv) equals Subtotals, Cash and Invested Assets determined
in accordance with Page 2, Column 1, Line 10A, of the
Dividend Rate Accounting Pool for the preceding
Accounting Period;
(v) equals Investment Income Due and Accrued determined in
accordance with Page 2, Column 1, Line 16, of the
Dividend Rate Accounting Pool for the current
Accounting Period;
(vi) equals Investment Income Due and Accrued determined in
accordance with Page 2, Column 1, Line 16, of the
Dividend Rate Accounting Pool for the preceding
Accounting Period;
(vii) equals Borrowed Money determined in accordance with
Page 3, Column 1, Line 22, of the Dividend Rate
Accounting Pool for the current Accounting Period; and
(viii) equals Borrowed Money determined in accordance with
Page 3, Column 1, Line 22, of the Dividend Rate
Accounting Pool for the preceding Accounting Period.
If the Annual Statement blank is changed or modified, such that the
items described above do not appear on the pages, exhibits, columns and
lines referred to above, or if they should be eliminated or combined
with other amounts, then they will be determined in accordance with a
method satisfactory to the Reinsurer and the Ceding Company.
The Ceding Company will also calculate an Alternate Rate for each
Accounting Period. For purposes of this Agreement, the Alternate Rate
will be equal to the Unadjusted Interest Rate based on quarterly
compounded calculations. If the
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Unadjusted Interest Rate for any Accounting Period is less than the
Alternative Rate for that Accounting Period, minus 25 basis points,
then the Modified Coinsurance Interest Rate for the Accounting Period
will be equal to the Alternative Rate.
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SCHEDULE E
BASIC DIVIDEND FACTORS
Basic Dividend Factors. Basic Dividend Factor for each Accounting
Period for all policies reinsured hereunder will be equal to the
appropriate figures taken from the table below:
Policies valued Policies valued Policies valued
using American Policies valued using 1958 CSO using 1958 CSO
Experience or using 1958 CSO Mortality and Mortality and
Accounting 1941 CSO Mortality and 3.0% or Interest other than
Period Mortality 2.5% Interest 3.5% Interest 2.5% or 3.0% or 3.5%
------ --------- ------------- ------------- --------------------
1995 0% 0% 0% 0%
1996 3.90% 4.25% 4.73% 4.15%
1997 3.92% 4.24% 4.70% 4.26%
1998 3.95% 4.23% 4.67% 4.37%
1999 3.96% 4.22% 4.64% 4.43%
2000 3.97% 4.20% 4.61% 4.47%
2001 3.98% 4.20% 4.58% 4.51%
2002 3.98% 4.19% 4.55% 4.53%
2003 3.98% 4.18% 4.53% 4.57%
2004 3.99% 4.18% 4.50% 4.61%
2005 3.98% 4.17% 4.47% 4.62%
2006 3.98% 4.17% 4.44% 4.61%
2007 3.98% 4.16% 4.43% 4.61%
2008 3.99% 4.16% 4.41% 4.60%
2009 3.99% 4.16% 4.38% 4.58%
2010 4.00% 4.15% 4.35% 4.57%
2011 4.00% 4.15% 4.32% 4.56%
2012 4.01% 4.16% 4.30% 4.55%
2013 4.02% 4.16% 4.28% 4.55%
2014 4.02% 4.17% 4.26% 4.55%
2015 and thereafter 4.23% 4.37% 4.44% 4.75%
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SCHEDULE F
DIVIDEND MULTIPLES
Dividend Multiples. Dividend Multiple for each Accounting Period for
all policies reinsured hereunder will be equal to the appropriate
figures taken from the table below:
Policies valued Policies valued Policies valued
using American Policies valued using 1958 CSO using 1958 CSO
Experience or using 1958 CSO Mortality and Mortality and
Accounting 1941 CSO Mortality and 3.0% or Interest other than
Period Mortality 2.5% Interest 3.5% Interest 2.5% or 3.0% or 3.5%
------ --------- ------------- ------------- --------------------
1995 0% 0% 0% 0%
1996 75.39% 74.14% 79.77% 80.00%
1997 75.66% 74.28% 79.67% 80.25%
1998 75.91% 74.44% 79.63% 80.51%
1999 76.17% 74.62% 79.62% 80.77%
2000 76.42% 74.81% 79.66% 81.03%
2001 76.64% 75.01% 79.71% 81.28%
2002 76.84% 75.24% 79.77% 81.54%
2003 77.04% 75.47% 79.86% 81.80%
2004 77.24% 75.71% 79.86% 82.03%
2005 77.45% 75.95% 79.83% 82.31%
2006 77.58% 76.18% 79.83% 82.54%
2007 77.90% 76.49% 79.81% 82.82%
2008 78.20% 76.73% 79.80% 83.11%
2009 78.48% 76.96% 79.84% 83.40%
2010 78.79% 77.20% 79.87% 83.72%
2011 79.08% 77.47% 79.89% 84.04%
2012 79.40% 77.68% 80.04% 84.38%
2013 79.72% 77.96% 80.11% 84.72%
2014 80.12% 78.24% 80.22% 85.07%
2015 and thereafter 80.47% 78.51% 80.38% 85.42%
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SCHEDULE G
CEDING COMPANY DATA
- Quarterly accounting settlement reports provided to the Reinsurer in
accordance with this Agreement since fourth quarter 1990
- Special Valuation Summary as of June 30, 1990 for the reinsured block
by form, index, year and age group
- Summary of policy count and face amount for the reinsured block as of
June 30, 1990 by year of issue
- Facsimile dated December 24, 1992 from Xxxxxxx Xxxxxxxxx of the Ceding
Company to G. Xxxxxxx Xxxx of the Reinsurer which included AIDS
mortality information from 1983 through 1992
- Quarterly accounting settlement reports received under this Agreement
since inception
- Summary of policy count, face amount, and reserves inforce by plan
codes as of December 31, 1994 for the additional policies reinsured
effective July 1, 1995
- Diskettes containing a seriatim listing of all policies and riders in
valuation bases 0 through 10 as of December 31, 1994
- October 23, 1995 letter from Xxxxx Xxxxxx of MONY to Xxxxx Xxxxxxx of
RGA/Swiss with descriptions of several plans to be reinsured and
premium rates for the Keyman policy series
- August 18, 1995 facsimile from Xxxxxx Xxxxxxxxxx of MONY to Xxxx Xxxx
of RGA/Swiss which states that the dividend factors and formula in the
treaty is an appropriate proxy for MONY's actual dividend payments
based on the following assumptions:
1) the projection model accurately captures the policies in the
block;
2) assumptions are matched by experience; and
3) the dividend scale remains unchanged except for the interest
factor
These items were neither intended by the Ceding Company nor interpreted
by the Reinsurer to be a guarantee of future performance of the
reinsured block. These items were, however, relied upon by the
Reinsurer as being an accurate statement regarding the Ceding Company's
policies as of the date they were provided to the Reinsuer.
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- Projections of the block of business reinsured effective December 31,
1995 under various sets of assumptions with respect to mortality,
lapses, and interest rates for each of four policy groupings: valuation
bases 0 through 3; valuation basis 4; valuation bases 5 through 8; and
valuation bases 9 and 10. These projections were neither intended by
the Ceding Company nor interpreted by the Reinsurer to be a guarantee
of future performance of the reinsured policies. These items were,
however, relied upon by the Reinsurer as being an accurate statement
regarding the Ceding Company's policies as of the date they were
provided to the Reinsurer
- Summary of policy count, face amount, and reserves inforce by plan code
and valuation basis as of December 31, 1993, December 31, 1994 and
September 30, 1995
- Mortality study covering exposures during 1992 and 1993
- Lapse study covering exposures during 1993 and 1994
- Policy forms for following policy series reinsured effective December
31, 1995: Whole Life, Flexible Whole Life, MONY-1, MONYProvider, Whole
Life with Increasing Premiums, and Executive Equity
- May 26, 1995 letter from Xxxxxx Xxxxxxxxxx (MONY) to Xxxx Xxxx
(RGA/Swiss) in which 5 percent of base policy premium is represented to
reflect direct renewal expenses with respect to the policies reinsured
effective December 31, 1995
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