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VARIABLE ANNUITY REINSURANCE AGREEMENT
Effective Date of July 1, 1998
Between
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
(Boston, Massachusetts)
and
MANULIFE REINSURANCE CORPORATION (U.S.A)
(Bloomfield Hills, Michigan)
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Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
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VARIABLE ANNUITY REINSURANCE AGREEMENT
between
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
and
MANULIFE REINSURANCE CORPORATION (U.S.A)
INDEX
ARTICLE PAGE
------- ----
Access to Records XII 8
Amounts at Risk II 3
Arbitration XVII 11
Automatic Excess Reinsurance III 4
Claims VII 6
Currency XIV 9
DAC Tax Regulation Election XVIII 12
Delays, Errors, or Omissions XIII 9
Effective Date; Term and Termination XIX 12
Extra Contractual Obligations IX 7
Hold Harmless XV 10
Insolvency XVI 10
Liability of Manulife Reinsurance IV 4
Litigation X 8
Notices XX 14
Offset XI 8
Parties to the Agreement I 3
Premium Accounting VI 5
Reinsurance Premiums V 5
Reserves VIII 7
SCHEDULES
A Maximum Limits of Reinsurance in Manulife Reinsurance
B Contracts and Funds Subject to this Reinsurance Agreement
C Limits and Rules of MNA
D Reinsurance Premium Rates and Calculation Criteria
E Quarterly Reporting Format
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Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
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VARIABLE ANNUITY REINSURANCE AGREEMENT
(hereinafter called Agreement)
between
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
(hereinafter called MNA)
and
MANULIFE REINSURANCE CORPORATION (U.S.A.)
(hereinafter called Manulife Reinsurance)
It is agreed by the two companies as follows:
ARTICLE I - PARTIES TO THE AGREEMENT
This Agreement shall be binding upon and shall inure solely to the benefit of
MNA and Manulife Reinsurance. This Agreement shall not and is not intended to
create any right or interest in any third party and shall not and is not
intended to create any legal relationship between either party and any third
party, including, without limitation, annuitants, insureds, certificate or
contract holders, employees, dependents, beneficiaries, policy owners,
applicants or assignees under any policy or contract issued by MNA.
ARTICLE II - AMOUNTS AT RISK
A. The Guaranteed Minimum Death Benefit (GMDB) reinsurance benefit, on the
Contract Forms identified in Schedule B, is the excess of the guaranteed
minimum death benefit over the account value, as defined in Schedule A.
B. At issue, MNA will cede to Manulife Reinsurance and Manulife Reinsurance
will reinsure and fully indemnify MNA for 100% of all new issues of the
Guaranteed Minimum Death Benefit, as defined in (A) above, subject to the
following conditions:
- MNA will cede and Manulife Reinsurance will accept 50% of the
Guaranteed Minimum Death Benefit on Venture Vantage and Venture
Vision issued on or after July 1, 1998 and prior to August 1, 1998.
- MNA will cede and Manulife Reinsurance will accept 100% of the
Guaranteed Minimum Death Benefit on Venture Vantage and Venture
Vision issued on or after August 1, 1998.
- MNA will cede and Manulife Reinsurance will accept 100% of the
Guaranteed Minimum Death Benefit on Manulife Rollover issued on or
after July 1, 1998.
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C. The Contract Value represents the owner's invested assets in the funds in
Schedule B as it appears in the records of MNA before application of any
surrender charges, on any given date.
ARTICLE III - AUTOMATIC EXCESS REINSURANCE
A. On and after the Effective Date of this Agreement, subject to the limits
of Manulife Reinsurance's liability set forth in Schedule A and all other
terms, conditions and limitations set forth in this Agreement and the
Schedules attached to and made a part hereof, MNA shall cede and Manulife
Reinsurance shall accept the percentage liability on the GMDB of MNA under
the Variable Annuity Contracts, as described in Article II.
B. This Agreement covers only MNA'S liability for claims paid under Variable
Annuity Contracts written on forms and investment in funds which were
reviewed by Manulife Reinsurance prior to their issuance. Forms, as
supplemented by additional materials, and funds available as of the date
of this Agreement are listed on Schedule B. If MNA intends to cede to
Manulife Reinsurance liability with respect to a new form or fund, or a
revised version of an approved form or fund, it must provide to Manulife
Reinsurance written notice of such intention together with a copy of the
proposed form, fund or revision, and a revised Schedule B. Upon receipt of
such notification, Manulife Reinsurance then has the obligation to notify
MNA within 10 days of its decision to accept or not accept the reinsurance
risk for such a revision. Should Manulife Reinsurance not respond within
10 days, it shall be deemed that Manulife Reinsurance agrees to accept
such revision.
C. MNA shall provide written notice to Manulife Reinsurance of any changes in
its published limits and rules identified on Schedule C, and Manulife
Reinsurance shall have no liability pursuant to revised limits and rules
unless and until Manulife Reinsurance provides written notice to MNA that
such revised limits and rules are acceptable.
ARTICLE IV - LIABILITY OF MANULIFE REINSURANCE
Manulife Reinsurance's liability for reinsurance under this Agreement shall
follow that of MNA in every case, and be subject in all respects to the general
stipulations, terms, clauses, conditions, waivers and modifications of the
Variable Annuity Contracts.
In no event shall Manulife Reinsurance have any reinsurance liability unless the
Variable Annuity Contract issued by MNA is in force and the underwriting and
issuance of coverage by MNA constitutes the doing of business in a state of the
United States of America in which MNA is properly licensed and authorized to do
business.
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ARTICLE V - REINSURANCE PREMIUMS
Premiums rates for reinsurance on new issues of the GMDB through June 30, 2001,
subject to the terms and conditions of this Agreement, are guaranteed while the
reinsurance coverage is in effect per Article XIX. Premiums for reinsurance
shall be paid in advance on a quarterly basis and shall be determined by the
application of the rates set forth in Schedule D to the amount of reinsurance
coverage provided for each annuity insured by MNA as calculated based on the
criteria defined in Schedule D.
ARTICLE VI - PREMIUM ACCOUNTING
A. On or before the Due Date (as defined in Paragraph B), MNA shall forward
to Manulife Reinsurance its statement of account as set forth in Schedule
E together with its remittance for the net amount due as shown therein as
well as any premium adjustments from the prior quarter. If the statement
shows a balance due MNA, Manulife Reinsurance shall remit that amount to
MNA on or before the Remittance Date (the date occurring thirty days after
the Due Date). If the amounts described in Article VI cannot be determined
by the Due Dates set forth in Article VI, on an exact basis, such payments
will be made with a generally agreed upon formula which will approximate
the actual payments. Adjustments will then be made to reflect actual
amounts when they become available.
B. For the purposes of this Agreement the Due Date for Manulife Reinsurance's
receipt of the statement of account and premium due is the thirtieth day
following the close of any reporting period. The payment of reinsurance
premiums in accordance with the provisions herein shall be a condition
precedent to the liability of Manulife Reinsurance for reinsurance covered
by this Agreement. In the event that reinsurance premiums are not received
by Manulife Reinsurance as of the Due Date following the close of the
reporting period in which they fall due, Manulife Reinsurance will notify
MNA that such premiums are due and unpaid, and MNA will remit the premium
on or before the Remittance Date. In the event that the premiums are not
paid by the Remittance Date, Manulife Reinsurance shall have the right to
give MNA notice of termination of such reinsurance immediately.
C. If reinsurance is terminated as provided in paragraph B, and if all
reinsurance premiums in default and any additional charges due in
accordance with this Agreement, including such premiums and charges which
may become in default are not paid by the Remittance Date, Manulife
Reinsurance shall thereupon be relieved automatically of future liability
under all reinsurance for which premiums and other charges remain unpaid.
New and existing Reinsurance for which premiums subsequently fall due will
terminate automatically if reinsurance premiums are not paid when due as
provided in paragraph B of this Article. The reinsurance so terminated may
be reinstated at any time within sixty days of the date of termination
upon payment of all reinsurance premiums and other charges in arrears; but
in the
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event of such reinstatement, Manulife Reinsurance shall have no liability
in connection with any claims incurred between the date of termination and
the date of reinstatement of the reinsurance without prior written consent
of Manulife Reinsurance.
D. Not withstanding termination of reinsurance as provided herein, MNA shall
continue to be liable to Manulife Reinsurance for all unpaid reinsurance
premiums earned by Manulife Reinsurance under this Agreement. Such
premiums are subject to an annual interest charge as specified in Article
XIX.
ARTICLE VII - CLAIMS
MNA is solely responsible for payment of its claims under the Policies
identified on Schedule B.
MNA shall provide Manulife Reinsurance with proof of claim, proof of claim
payment and any other claim documentation requested by Manulife Reinsurance in
accordance with Schedule E. Payment of reinsurance shall be made by Manulife
Reinsurance in one sum regardless of the method of payment by MNA and within
thirty (30) calendar days following receipt of required claim documentation.
MNA shall notify Manulife Reinsurance of its intention to contest or deny a
claim which may involve the reinsurance coverage under this Agreement before any
notice of contest or denial is provided to the claimant. Manulife Reinsurance
shall then have thirty (30) calendar days within which to advise MNA whether it
agrees that the claim should be contested or denied. If Manulife Reinsurance
does not agree that the claim should be contested or denied, then it shall pay
to MNA the full amount of the reinsurance on the risk reinsured, as set forth in
this Agreement, and Manulife Reinsurance shall have no further obligation in
respect to such claim. If Manulife Reinsurance agrees that the claim should be
contested or denied, then Manulife Reinsurance shall pay its share of the
following in accordance with its share of liability as set forth in this
Agreement:
- Expenses incurred by MNA in investigating, contesting litigating or
otherwise resisting the Claim, excluding salaries and expenses of
employees, officers and agents of MNA and ordinary expenses of MNA,
and costs of third party administrators acting on behalf of MNA; and
- Interest which is paid by MNA in respect of the Claim.
If the denial of a Claim results in an award verdict or judgment against MNA,
where Manulife Reinsurance has agreed with the claim denial and MNA intends to
appeal the verdict or judgment, written notice of the intention to appeal shall
be provided to Manulife Reinsurance. Manulife Reinsurance shall be entitled at
that time to pay its share of the judgment, together with any expenses and
interest as set forth above, and to have no further obligation in connection
with such
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Claim. If Manulife Reinsurance does not pay its share of the judgment and any
expenses and interest due at that time, Manulife Reinsurance shall pay its share
of the expenses associated with the appeal of the judgment or verdict, together
with its share of any additional interest charges that may accrue during the
appeal.
ARTICLE VIII - RESERVES
The reserve held by Manulife Reinsurance for reinsurance of the variable annuity
death benefit will be determined in accordance with the NAIC Actuarial Guideline
XXXIV, but in no event less than the recognized statutory required reserve.
ARTICLE IX - EXTRA CONTRACTUAL OBLIGATIONS
A. In no event shall Manulife Reinsurance be liable for extra contractual
damages (whether they constitute Compensatory damages, Statutory
penalties, Exemplary or Punitive damages) which are awarded against MNA as
a result of an act, omission or course of conduct by MNA in connection
with policies subject to this Agreement, unless Manulife Reinsurance shall
have received notice in writing of and concurred with the actions taken or
not taken by MNA which led to its liability, in which case Manulife
Reinsurance shall pay its share of such liability. For this purpose,
Manulife Reinsurance's share shall be proportionate with its risk under
the business reinsured hereunder.
B. The following definitions shall apply:
(1) Punitive damages and Exemplary damages are those damages awarded as
a penalty, the amount of which is not governed nor fixed by statute.
(2) Statutory penalties are those amounts which are awarded as a penalty
but fixed in amount by statute.
(3) Compensatory damages are those amounts awarded to compensate for the
actual damages sustained and are not awarded as a penalty nor fixed
in amount by statute.
ARTICLE X - LITIGATION
In the event of any action brought against MNA under any Underlying Annuity
Contract that is subject to the terms and conditions of this Agreement, MNA
shall provide a copy of such action and written notice of such action within ten
(10) business days to Manulife Reinsurance. If
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Manulife Reinsurance is a party to action brought against MNA, MNA shall seek
agreement by Manulife Reinsurance on the selection and appointment of local
counsel to represent MNA in such action.
ARTICLE XI - OFFSET
Either party shall have, and may exercise at any time and from time to time, the
right to offset any balance or amounts whether on account of premiums or on
account of losses or otherwise, due from one party to the other under the terms
of this Agreement. However, in the event of insolvency of MNA subject to the
provisions of Article XVI, offset shall only be allowed in accordance with the
statutes and/or regulations of the state having jurisdiction over the
insolvency.
ARTICLE XII - ACCESS TO RECORDS
MNA and Manulife Reinsurance, or its duly authorized representative, shall have
access at any reasonable time during regular business hours, to all records of
the other, including the right to photocopy and retain copies of such documents,
which reasonably pertain in any way to this Agreement. Books and records shall
be maintained in accordance with prudent standards of insurance company record
keeping and must be retained for a period of at least seven (7) years from the
date of creation. Within one hundred and fifty (150) days following the end of
each calendar year, MNA and Manulife Reinsurance will provide each office with
copies of their respective audited financial statements.
MNA and Manulife Reinsurance may come into the possession or knowledge of
Confidential Information of the other in fulfilling obligations under this
Agreement. Each party agrees to hold such confidential information in the
strictest confidence and to take all reasonable steps to ensure that such
Confidential Information is not disclosed in any form by any means by each of
them or by any of its employees to third parties of any kind, other than
attorneys, accountants, other consultants or retrocessionairs having an interest
in such information, except by advance written authorization by an officer of
the authorizing party; provided, however, that either party will be deemed to
have satisfied its obligations as to the Confidential Information by protecting
its confidentiality in the same manner that such party protects its own
proprietary or confidential information of like kind which shall be at least a
reasonable manner. "Confidential Information" means any information which (1) is
not generally available to or known by the public, or (2) has not been lawfully
obtained or developed by either party independently and not in violation of this
Agreement or from any source other than the other party, provided that such
source is not bound by a duty of confidentiality to such other party, and which
consists of:
A. Information or knowledge about each party's products, processes, services,
finances,
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customers, research, computer programs, marketing and business plans, claims
management practices; and
B. Any medical or other personal, individually identifiable information about
people or business entities with whom the parties do business, including
customers, prospective customers, vendors, suppliers, individuals covered
by insurance plan, and each party's producers and employees.
ARTICLE XIII - DELAYS, ERRORS OR OMISSIONS
No accidental delay, errors or omissions on the part of MNA shall relieve
Manulife Reinsurance of liability provided immediate notice of such delay,
errors or omissions is provided to Manulife Reinsurance and are rectified as
soon as possible after discovery. However, Manulife Reinsurance shall not be
liable with respect to any reinsurance which may have been inadvertently
included in the premium computation but which ought not to have been included by
reason of the terms and conditions of this Agreement. Such inadvertent premium
payments shall be returned. Adjustment(s) of premiums payable and claims
incurred as a result of delay, errors or omissions shall be limited to the year
in which they are discovered and the calendar year prior to such discovery.
It is expressly understood and agreed that if failure to comply with any terms
of this Agreement is shown to be unintentional or the result of a
misunderstanding or oversight on the part of either party, both parties shall be
restored to the position they would have occupied had no such error or oversight
occurred, subject always to the correction of the error or oversight.
ARTICLE XIV - CURRENCY
All retentions and limits hereunder are expressed in United States dollars and
all premium and loss payments shall be made in United States currency. For the
purposes of this Agreement, amounts paid or received by Manulife Reinsurance in
any other currency shall be converted into United States dollars at the rates of
exchange on the date such transactions are entered on the books of Manulife
Reinsurance.
ARTICLE XV - HOLD HARMLESS
A. Manulife Reinsurance shall indemnify and hold MNA harmless from any and
all liability, loss, damage, fines, punitive damages, penalties and costs,
including expenses and attorney's fees, which results from any negligence
or willful misconduct of Manulife Reinsurance in fulfilling its duties and
obligations under this Agreement or which results from any action which
exceeds its authority under this Agreement.
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B. MNA shall indemnify and hold Manulife Reinsurance harmless from any and
all liability, loss, damage, fines, punitive damages, penalties and costs,
including expenses and attorney's fees, which results from any negligence
or willful misconduct of MNA in fulfilling its duties and obligations
under this Agreement or which results from any action which exceeds its
authority under this Agreement.
ARTICLE XVI - INSOLVENCY
In the event of insolvency of MNA, the reinsurance under this Agreement shall be
payable directly by Manulife Reinsurance to MNA or to its liquidator, receiver,
conservator or statutory successor on the basis of Manulife Reinsurance's
liability to MNA without diminution because of the insolvency of MNA or because
the liquidator, receiver, conservator or statutory successor of MNA has failed
to pay all or a portion of any claim. It is agreed, however, that the
liquidator, receiver, conservator or statutory successor of MNA shall give
prompt written notice to Manulife Reinsurance of the pendency of a claim against
MNA within a reasonable time after such claim is filed in the receivership,
conservation, insolvency or liquidation proceeding and that during the pendency
of such claim, Manulife Reinsurance 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 MNA or its liquidator,
receiver, conservator or statutory successor. The expense thus incurred by
Manulife Reinsurance shall be chargeable, subject to the approval of the Court,
against MNA as part of the expense of conservation or liquidation to the extent
of a pro-rata share of the benefit which may accrue to MNA solely as a result of
the defense undertaken by Manulife Reinsurance.
Where two or more reinsurers are involved in the same claim and a majority in
interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by MNA.
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Vantage, Vision and Manulife Rollover - Variable Annuity
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ARTICLE XVII - ARBITRATION
A. As a condition precedent to any right of action hereunder, any dispute
between the parties with respect to the interpretation of this Agreement
or any right, obligation or liability of either party, whether such
dispute arises before or after termination of this Agreement, shall be
submitted to arbitration upon the written request of either party. Each
party shall select an arbitrator within thirty (30) days of the written
request for arbitration. If either party refuses or neglects to appoint an
arbitrator within thirty (30) days of the written request for arbitration,
the other party may appoint the second arbitrator. The two arbitrators
shall select an umpire within thirty (30) days of the appointment of the
second arbitrator. If the two arbitrators fail to agree on the selection
of the umpire within thirty (30) days of the appointment of the second
arbitrator, each arbitrator shall submit to the other a list of three
umpire candidates, each arbitrator shall select one name from the list
submitted by the other and the umpire shall be selected from the two names
chosen by a lot drawing procedure to be agreed upon by the arbitrators.
B. The arbitrators and the umpire all shall be active or retired,
disinterested executive officers of insurance or reinsurance companies.
C. The arbitration panel shall interpret this Agreement as an honorable
engagement rather than merely as a legal obligation and shall make its
decision considering the custom and practice of the applicable insurance
and reinsurance business. The arbitration panel is released from judicial
formalities and shall not be bound by strict rules of procedure and
evidence.
D. The decision of the arbitration panel shall be final and binding on both
parties. The arbitration panel may, at its discretion, award costs and
expenses as it deems appropriate, including, but not limited to,
attorneys' fees, interest and punitive damages. Judgment may be entered
upon the final decision of the arbitration panel in any court of competent
jurisdiction.
E. All meetings and hearings before the arbitration panel shall take place in
Boston, Massachusetts unless some other place is mutually agreed upon by
both parties or ordered by the panel.
F. In the absence of a decision to the contrary by the arbitration panel,
each party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other party the expense of the umpire and of the
arbitration.
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ARTICLE XVIII - DAC TAX REGULATION ELECTION
Manulife Reinsurance and MNA hereby agree to make an election pursuant to
Internal Revenue Code Regulation Section 1.848-2(g)(8). This election shall be
effective for all taxable years for which the Reinsurance Agreement remains in
effect.
The terms used in this article are defined by reference to Regulation Section
1.848-2 promulgated on December 28, 1992.
Manulife Reinsurance and MNA agree that the entity with net positive
consideration for the reinsurance agreement for each taxable year will
capitalize specified policy acquisition expenses with respect to the reinsurance
agreement without regard to the general deductions limitation of Section
848(c)(1) of the Internal Revenue Code of 1986, as amended.
Manulife Reinsurance and MNA agree to exchange information pertaining to the
amount of net consideration under the reinsurance agreement each year to ensure
consistency. To achieve this, MNA shall provide Manulife Reinsurance with a
schedule of its calculation of the net consideration for all reinsurance
agreements in force between them for a taxable year by no later than April 30 of
the succeeding year. Manulife Reinsurance shall advise MNA if it disagrees with
the amounts provided by no later than May 31, otherwise the amounts will be
presumed correct and shall be reported by both parties in their respective tax
returns for such tax year. If Manulife Reinsurance contests MNA'S calculation of
the net consideration, the Parties agree to act in good faith to resolve any
differences within thirty (30) days of the date Manulife Reinsurance submits its
alternative calculation and report the amounts agreed upon in their respective
tax returns for such tax year.
Manulife Reinsurance represents and warrants that it is subject to U.S. taxation
under either Subchapter L or Subpart F of Part III of Subchapter N of the
Internal Revenue Code of 1986, as amended.
ARTICLE XIX EFFECTIVE DATE; TERM AND TERMINATION
A. The effective date of this Agreement is July 1, 1998. This Agreement
remains effective for all annuity contracts subject to this Agreement
written by MNA through June 30, 2001, unless terminated pursuant to the
paragraphs listed below:
B. Either Manulife Reinsurance or MNA shall have the option of terminating
this agreement with ninety (90) days written notice to the other party for
new business anytime on or after June 30, 2001, or after the occurrence of
any of the following exceptions:
- Within the three years, Manulife Reinsurance retains the right to
adjust the rates if the average issue age of the new business
exceeds the average age indicated by the age
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distributions provided by MNA. This adjustment threshold works out
to average ages of 64 for Venture Vantage and Venture Vision, and 51
for Manulife Rollover. The rate adjustments will be limited to 10%
for each year in excess of the initial average age.
- If the average age on the new business decreases to less than 58 for
Venture Vantage and Venture Vision, and 45 for Manulife Rollover,
then the reinsurance rates may be similarly adjusted downwards.
- Manulife Reinsurance also retains the right to adjust the rates, for
new business only, once the new business volumes exceed $3.0 billion
in deposits in total for all three variable annuities.
C. Manulife Reinsurance shall have the option of terminating this Agreement
for new and existing business should MNA fail to pay premium in accordance
with Article V and VI. If, during the sixty (60) days notice period,
Manulife Reinsurance receives all premiums in arrears and all premiums
which may become due within the sixty (60) days notice period, the notice
of termination shall be deemed withdrawn. In the event of termination
under this paragraph, this Agreement may be reinstated upon the written
consent of Manulife Reinsurance if, at any time within sixty (60) days of
termination, MNA pays and Manulife Reinsurance receives all premiums due
with interest thereon and payable up to the date of reinstatement. (Please
refer to paragraph I below for the interest calculation description)
D. Failure by Manulife Reinsurance to pay reinsurance death benefits in
accordance with Article II. If, during the sixty (60) days notice period,
MNA receives all reinsurance death benefits in arrears, the notice of
termination shall be deemed withdrawn. In the event of termination under
this paragraph, this Agreement may be reinstated upon the written consent
of MNA if, at any time within sixty (60) days of termination, Manulife
Reinsurance pays and MNA receives all reinsurance death benefits due with
interest thereon and payable up to the date of reinstatement. (Please
refer to paragraph I below for the interest calculation description)
E. If this Agreement is terminated for new and existing business, Manulife
Reinsurance shall be relieved of all liability to MNA for claims incurred
following the termination date of this Agreement under such Underlying
Annuity Contracts issued by MNA.
F. If this Agreement is terminated for new business only, Manulife
Reinsurance will remain liable, after termination, in accordance with the
terms and conditions of this Agreement, with respect to all reinsurance
effective prior to termination of the Agreement.
G. Both parties shall continue to be entitled to all offset credits provided
by Article XI up to the effective date of termination.
H. MNA shall not have the right to assign or transfer any portion of the
rights, duties and obligations of MNA under the terms and conditions of
this Agreement without the written approval of Manulife Reinsurance.
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I. In the event of reinstatement as described in paragraph E and F above,
there will be an interest charge at the three (3) month LIBOR Rate (as
published in the Wall Street Journal), plus .01, determined on the first
business day following the end of the 60 day notice period. The settlement
is considered overdue at the end of the 60 day notice period and interest
shall commence from the overdue date.
ARTICLE XX - NOTICES
All notices required to be given hereunder shall be in writing and shall be
deemed delivered if personally delivered, sent via facsimile, or dispatched by
certified or registered mail, return receipt requested, postage prepaid,
addressed to the parties as follows:
Xxxxx X. Xxxxxx, FSA, MAAA
Vice President, Treasurer and CFO
The Manufacturers Life Insurance Company Of North America
00 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Phone No. (000) 000.0000 Fax No. (000) 000.0000
Xxxxxx Xxxxx, FSA, MAAA
Assistant Vice President Marketing and Pricing
Manulife Reinsurance Corporation (U.S.A)
000 Xxxxx Xxxxxx Xxxx, XX-0
Xxxxxxx XX X0X 0X0
Phone No. (000) 000.0000 Fax No. (000) 000.0000
Notice shall be deemed given on the date it is received in the mail or sent via
facsimile in accordance with the foregoing. Any party may change the address to
which to send notices by notifying the other party of such change of address in
writing in accordance with the foregoing.
The text of this Agreement and all Exhibits, Schedules and Amendments are
considered to be the entire contract between the parties. There are no other
understandings or agreements between the parties regarding the policies
reinsured other than as expressed in this Agreement. Either party may make
changes or additions to this Agreement, but they will not be considered to be in
effect unless they are made by means of a written amendment which has been
signed by both parties.
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
-14-
15
In witness whereof, the parties hereto have caused this Agreement to be signed
in duplicate on the dates indicated to be effective as of the date specified
above.
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
By:_______________________________________
Date:_______________________________, 19__
MANULIFE REINSURANCE CORPORATION (U.S.A.)
By:_______________________________________
Date:_______________________________, 19__
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
-15-
16
SCHEDULE A
Maximum Limits of Reinsurance in Manulife Reinsurance
Manulife Reinsurance requires prior notification of any annuity purchase in
excess of $5,000,000.00 per annuitant/owner. Upon receipt of such notification,
Manulife Reinsurance then has the obligation to notify MNA within 10 days of its
decision to accept or not accept the reinsurance risk for such an annuity
purchase. Should Manulife Reinsurance not respond within 10 days, it shall be
deemed that Manulife Reinsurance agrees to accept such risk.
The purchase amount is the sum of all premium contributions less withdrawals in
the contract. For purchase amounts in excess of the maximum, Manulife
Reinsurance's death benefit liability will be reduced by the ratio of purchase
amounts in excess of the maximum to the total purchase amounts.
Guaranteed Minimum Benefits
The GMDB reinsured hereunder are provided by MNA under the Venture Vantage,
Venture Vision and Manulife Rollover Combination Fixed and Variable Annuity
Contract as described in its prospectus including state availability
supplements, effective May 1, 1998.
Vantage Guaranteed Minimum Death Benefit (GMDB)
Form Venture.015 and Venture.015.98
The death benefit will be paid if the contract owner dies during the first nine
contract years and shall be the greater of :
(A) the contract value less any payment enhancements applied in the 12 month
period prior to the date of death, or
(B) the excess of (i) the sum of all purchase payments less any payment
enhancements applied in the 12 month period prior to the date of death
over (ii) the sum of any amounts deducted in connection with partial
withdrawals
The death benefit will be paid if the contract owner dies after the ninth
contract year and shall be the greater of
(A) the contract value less any payment enhancements applied in the 12 month
period prior to the date of death, or
(B) the excess of (i) the sum of all purchase payments less any payment
enhancements applied in the 12 month period prior to the date of death
over (ii) the sum of any amounts deducted for partial withdrawals, or
(C) the death benefit on the last day of the ninth contract year, plus the sum
of all purchase payments made and any amount deducted in connection with
partial withdrawals since then and less any payment enhancements applied
in the 12 month period prior to the date of death.
SCHEDULE A (Continued)
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
17
Vision Guaranteed Minimum Death Benefit (GMDB)
Form Vision.001, Vision.002, Vision.001.94
1. If any Owner dies on or prior to their 85th birthday and the oldest Owner
had an attained age of less than 81 years on the Contract Date, the Death
Benefit will be the greater of:
(a) the Contract Value, or
(b) the excess of (i) over (ii) where:
(i) equals the sum of each Payment accumulated daily, at the
equivalent of 5% per year, starting on the date each Payment
is allocated to the Contract, with a maximum accumulation of 2
times each Payment.
(ii) equals the sum of any amounts deducted in connection with
partial withdrawals, accumulated daily at the equivalent of 5%
per year, starting on the date each such deduction occurs,
with a maximum accumulation of 2 times each amount deducted.
2. If any Owner dies after their 85th birthday and the oldest Owner had an
attained age of less than 81 years on the Contract Date, the Death Benefit
will be determined as the greater of:
(a) the Contract Value, or
(b) the excess of (i) over (ii) where:
(i) equals the sum of all Payments,
(ii) equals the sum of any amounts deducted in connection with
partial withdrawals.
3. If any Owner dies and the oldest Owner had an attained age of 81 or
greater on the Contract Date, the Death Benefit will be the Contract Value
less any applicable Withdrawal Charges at the time of payment of benefits.
Manulife Rollover Guaranteed Minimum Death Benefit (GMDB)
Form Venture.025 and Venture.026
If any Owner dies the Death Benefit will be the greater of the Contract Value or
Purchase Payments less withdrawals at the time of payment of benefits.
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
18
SCHEDULE B
Contracts and Funds Subject to this Reinsurance Agreement
Form
Number* Policy Description Date
------- ------------------ ----
Venture .015 Vantage 7/1/98
Venture .015.98 Vantage
Vision.001 Vision 7/1/98
Vision.002 Vision
Vision.001.94 Vision
Venture.025 Manulife Rollover 7/1/98
Venture.026 Manulife Rollover
* Includes all state variations of VTG 20, 21, 25 and XXX 0, 0, 00, 00, xxx
XXXX00
Xxxx/Xxxxxxxxx Description
Pacific Rim Emerging Markets Trust Balanced Trust
Science & Technology Trust Aggressive Asset Allocation Trust
International Small Cap Trust High Yield Trust
Emerging Growth Trust Moderate Asset Allocation Trust
Pilgrim Xxxxxx Growth Trust Conservative Asset Allocation Trust
Small/Mid Cap Trust Strategic Bond Trust
International Stock Trust Global Government Bond Trust
Worldwide Growth Trust Capital Growth Bond Trust
Global Equity Trust Investment Quality Bond Trust
Small Company Value U.S. Government Securities Trust
Growth Trust Money Market Trust
Equity Trust Lifestyle Aggressive 1000 Trust
Quantitative Equity Trust Lifestyle Growth 820 Trust
Blue Chip Growth Trust Lifestyle Balanced 640 Trust
Real Estate Securities Trust Lifestyle Moderate 460 Trust
Value Trust Lifestyle Conservative 280 Trust
International Growth and Income Special Value Trust
Growth and Income Trust Basic Value Trust
Equity-Income Trust Developing Markets Trust
Guaranteed Funds
One Year
Three Year
Five Year
Seven Year
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
19
SCHEDULE C
Limits and Rules of MNA
1) MNA will determine the Guaranteed Minimum Benefit for each deceased within
seven (7) working days of receipt of due proof of death and all required
claim forms.
2) The maximum purchase payment without company approval is $1,000,000.
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
20
SCHEDULE D
Reinsurance Premiums
1. The reinsurance premiums shall be based on the Average Aggregate Contract
Value at the end of each quarter.
2. The amount at risk each quarter will be calculated as the reinsurance benefit
for each variable annuity contract covered under this agreement. For
determining the amount at risk, the guaranteed minimum death benefit and the
contract value are calculated as the average of the values at the end of the
current quarter and the end of the prior quarter. The amount at risk cannot
fall below zero.
3. There will be no premium for funds identified as guaranteed in Schedule B.
4. The quarterly premium is determined as basis points of Contract Value. Fund
based charges, in basis points, are as follows:
-------------------------------------------------------
REINSURANCE PREMIUM ANNUAL PREMIUM
COVERAGE QUARTERLY
-------------------------------------------------------
Vantage 6.4 1.60
-------------------------------------------------------
Vision 22.9 5.73
-------------------------------------------------------
Manulife Rollover 3.0 0.75
-------------------------------------------------------
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
21
SCHEDULE E
Quarterly Reporting Format
1. Policy Exhibits (Quarterly)
Sample Policy Exhibit (for Administrative purposes to "book" the business):
a) Summary of Cashflows:
- Reinsurance Premiums
- Death Claims
- Net Check Amount
b) Policy Exhibit:
------------------------------------------------------
ITEM CASE COUNT ACCOUNT VALUE
------------------------------------------------------
Opening Balance
New Issues
Surrenders/Lapses
Death Claims
Closing Balance
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
22
SCHEDULE E (Continued)
2. Seriatim Reporting (Quarterly)
------------------------------------------------------------------
FIELD NAME RECORD A RECORD B RECORD C RECORD D
------------------------------------------------------------------
Policy No. 0001234 0042332 0067354 0084231
Coverage No. 01 01 01 01
Plan Code ABC QWE SDF DFG
Sex M F F M
DOB 19370310 19620520 19500731 19511106
Tax Code N N Q N
Issue Date 19900613 19960420 19930830 19890215
Ratchet Period 07 05 05
Rollup Rate 0.00000 0.05375 0.03500 0.00000
Surrender Value 00174600 00019600 00084000 00105000
GMDB Ratchet Value 0180000 0000000 0080000 0110000
GMDB Rollup Value 0000000 0021075 0087000 0000000
Current GMDB 0180000 0021075 0087000 0110000
Max GMDB 0200000 0040000 0120000 0160000
Total AV 0180000 0021075 0087000 0110000
Fund #1 - ID AAA DDD JJJ BBB
Fund AV 0050000 0005000 0025000 0065000
-- -- -- -- --
Fund #20 - ID KKK LLL MMM NNN
Fund AV 0005000 0000000 0000000 0000000
------------------------------------------------------------------
Notes on Examples:
Record A This contract has a seven year ratchet. The ratchet period is
set to 7 and the Ratchet Value has been calculated. The Current
GMDB is based only on the Ratchet Value.
Record B This contract has an annual rollup of 5.375%. The rollup rate is
set to 5.375% and the Rollup Value has been calculated. The Current
GMDB is based only on the Rollup Value.
Record C This contract has a combination ratchet/rollup. The ratchet period
is 5 years and rollup rate is 3.5%. The Current GMDB is based on the
maximum of the Ratchet/Rollup Values.
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
23
SCHEDULE E (Continued)
FIELD NAME DESCRIPTION
---------- -----------
Policy No. Policy or contract number used to uniquely identify a policy
or contract.
Coverage No. Coverage or record number (only required if policies can have
two or more records)
Plan Code Product code or kind code that is used to determine the
policy's characteristics.
Sex Sex of insured
DOB Date of Birth of insured
Tax Code Indicates whether the Policy is a qualified Policy under
Federal Tax Regulations, if available
Issue Date Issue date of policy
Maturity Date Maturity date of policy
Ratchet Period Period of possible ratchet increases in the GMDB ( blank if
no ratcheting)
Rollup Rate Rate of rollup increases in the GMDB (zeroes if no rollups)
Surrender Value Surrender value (total account value minus surrender charge)
Ratchet Value The greater of the ratchet value and the total account value
at the last ratchet point (zero if no ratchet increases).
Rollup Value The accumulated value of premiums (net of withdrawals) at the
rollup rate (zero if no rollup increases).
Current GMDB Current GMDB based on policy or contract characteristics
(either ratchet, rollup, or combination)
Maximum GMDB Maximum GMDB based on some multiple of premium deposits net
of withdrawals (zero if no maximum)
The following fields repeat for the maximum number of funds permitted per
contract or coverage/record.
-----------------------------------------------------------
FIELD DESCRIPTION
-----------------------------------------------------------
Fund ID Fund name or code
Account Value Account value (current value invested in
this fund)
-----------------------------------------------------------
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
24
SCHEDULE E (Continued)
3. Initial Set Up
For each Plan Code, please provide the following items of information, if they
are applicable.
Plan Code
1. plan name and basic description
2. surrender charges by duration and base (total premiums, account
value)
3. ratchet method (period and limitations)
4. rollup method (rates and limitations)
5. guaranteed interest rates
6. minimum and maximum benefits
7. minimum and maximum rates
8. guaranteed benefits basis (account value, surrender value, etc.)
9. a classification of this plan according to the Standard Valuation
Law and NAIC Actuarial Guideline 33, if available (Plan Type,
Guarantee Duration etc.)
10. tax qualification eligibility and limitations (if available)
For each Fund Code, please provide the following items of information, if
they are applicable
Fund Code
- fund name and basic description
- Asset Class for this fund using the definitions in NAIC Actuarial
Guideline 34 (Appendix III)
- appropriate asset charges for this fund (may be the same as management
fees)
- tax qualification eligibility and limitations (if available)
--------------------------------------------------------------------------------
The Manufacturers Life Insurance
Company of North America
Vantage, Vision and Manulife Rollover - Variable Annuity
Effective July 1, 1998
