AMENDMENT TO ASSUMPTION AND
INDEMNITY REINSURANCE AGREEMENT
This Amendment to Assumption and Indemnity Reinsurance Agreement (this
"Amendment") is made as of October 31, 2003, by and between Health Net Life
Insurance Company, a California domiciled life and disability insurance company
(the "Company"), and SafeHealth Life Insurance Company, a California domiciled
life and disability insurance company ("Reinsurer").
WHEREAS, the Company and Reinsurer entered into an Assumption and Indemnity
Reinsurance Agreement dated as of June 30, 2003 (the "Reinsurance Agreement")
pursuant to which the Company shall transfer to Reinsurer at the Effective Time
assets equal to the value of certain of the Company's reserves as part of the
consideration due thereunder;
WHEREAS, as of the Effective Time the Company will have accurate data
reflecting the balance of its reserves relating to the Vision Policies subject
to the Reinsurance Agreement only as of September 30, 2003 and the parties
desire to amend the Reinsurance Agreement to provide a mechanism to adjust, if
necessary, the reserves transferred from the Company to the Reinsurer to reflect
the value of the reserves relating to the Vision Policies subject to the
Reinsurance Agreement as of the Effective Time; and
WHEREAS, the parties desire to amend the Reinsurance Agreement to clarify
the definition of "Vision Policies" therein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Capitalized terms used in this Amendment and not otherwise defined
shall have the meanings given such terms in the Reinsurance Agreement.
2. Section 6.08 is added to Article VI of the Reinsurance Agreement to
read in its entirety as follows:
Section 6.08. Final Reserves. The value of the assets transferred to
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Reinsurer pursuant to Sections 5.03(i) and 5.04(i) (the "Transferred Reserves")
on the Effective Time shall be calculated based upon the financial accounting
records of the Company as of September 30, 2003. Within one hundred and eighty
(180) days after the Effective Time, the Company shall calculate the reserves
described in Sections 5.03(i) and 5.04(i) based upon the financial accounting
records of the Company as of the Effective Time (the "Final Reserves"), and (i)
if the value the Final Reserves exceeds the value of the Transferred Reserves,
then the Company shall pay to Reinsurer in cash the difference between
Transferred Reserves and the Final Reserves, and (ii) if the value of the Final
Reserves is less than the value of the Transferred Reserves, then Reinsurer
shall pay to the Company in cash the difference between the Transferred Reserves
and the Final Reserves.
3. The definition of "Vision Policies" in Article I of the Reinsurance
Agreement is amended to read as follows:
"Vision Policies" means all policies or other agreements (including all
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supplements, endorsements, riders and ancillary agreements in connection
therewith) with individuals, employers or other group sponsors resident or with
their principal place of business in California that obligate the Company to
provide, arrange for the provision of, or indemnify for the cost of vision care
services and vision supplies as specified therein, which policies or other
agreements (i) are in effect as of the Effective Time or (ii) become effective
after the Effective Time, including through (A) the reinstatement of lapsed
policies pursuant to provisions therein or of applicable Law, or (B) the
issuance or renewal thereof by the Company after the Effective Time to honor
quotes outstanding as of January 1, 2004, or to satisfy renewal rights of
individuals, employers or other group sponsors under contractual provisions or
applicable Law, or (C) modifications agreed to by the Reinsurer on behalf of the
Company pursuant to the authority granted to the Reinsurer under Section 7.01 of
this Agreement, provided, however, Vision Policies shall not include (i) any
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policy or other agreements (including all supplements, endorsements, riders and
ancillary agreements in connection therewith) with individuals, employers or
other group sponsors that obligate the Company to provide, arrange for the
provision of, or indemnify for the cost of vision care services and vision
supplies pursuant to any Government Sponsored Contracts, or any policy or other
agreements (including all supplements, endorsements, riders and ancillary
agreements in connection therewith) with individuals, employers or other group
sponsors that obligate the Company to provide, arrange for the provision of, or
indemnify for the cost of vision care services and vision supplies to employees
of the Company or any Affiliate of the Company, and (ii) any policy or other
contract form with individuals, employers or other group sponsors that obligates
the Company to provide, arrange for the provision of, or indemnify for the cost
of vision care services and vision supplies in a single policy or contract form
issued by the Company.
4. Except as amended hereby, the Reinsurance Agreement shall remain in
full force and effect. To the extent of any inconsistencies between the
Reinsurance Agreement and this Amendment, the terms of this Amendment shall
supersede the Reinsurance Agreement.
5. This Amendment may be executed in counterparts.
IN WITNESS WHEREOF, the parties have signed this Amendment as of the date
first written above.
/s/ Xxxxxxx Xxxx /s/ Xxxxxx X. Xxxxxxxx
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Health Net Life Insurance Company SafeHealth Life Insurance Company
By: Xxxxxxx Xxxx By: Xxxxxx X. Xxxxxxxx
President Senior Vice President, General Counsel
and Secretary
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