AUTOMATIC
REINSURANCE AGREEMENT
between
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
of Newark, Delaware
(hereinafter, "Cedent")
and
of
(hereinafter, "Reinsurer")
EFFECTIVE JULY 1, 1999
[SPECIMEN]
TABLE OF CONTENTS
ARTICLES PAGE
-------- ----
I Reinsurance Coverage 4
II Requirements for Automatic Reinsurance 4
III Requirements for Facultative Reinsurance 5
IV Liability 5
V Reinsurance Ceded to NYLARC or ________ 6
VI Notification of Reinsurance 7
VII Types of Reinsurance 7
VIII Reinsurance Premiums 7
IX Reinsurance Accounting 8
X Oversights 9
XI Reductions, Terminations and Changes 10
XII Increase In Retention 11
XIII Reinstatement 12
XIV Expenses 12
XV Claims 12
XVI Premium Tax Reimbursement 14
XVII DAC Tax Requirements 14
XVIII Inspection Of Records 16
XIX Insolvency 16
XX Arbitration 17
XXI Parties To Agreement 18
XXII Entire Agreement 18
XXIII Duration Of Agreement 19
XXIV Choice of Law and Forum 19
XXV Compliance with Law 19
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SCHEDULES
A Policies
B Insured's Country of Residence
C Reinsurance Premium Rates
EXHIBITS
1 DAC Tax Calculation
2 Reinsurance Questionnaire
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ALL SCHEDULES AND EXHIBITS ATTACHED HERETO WILL BE CONSIDERED
PART OF THIS AGREEMENT.
ARTICLE I
REINSURANCE COVERAGE
1. Reinsurance under this Agreement shall be individual life insurance of
the type of business stated in Schedule A, Cedent shall automatically
reinsure and Reinsurer shall automatically accept the life insurance
for the plans and riders as stated in Schedule A that meet the
requirements of Article II below. Reinsurer's liability for the risks
ceded hereunder shall be based on the quota share specified in Schedule
A unless a greater amount is reinsured pursuant to Article III.
(Individual life insurance reinsured pursuant to Article I and II or
Article III hereinafter referred to as a "Covered Policy(ies)")
2 The effective date of this Agreement shall be July 1,1999.
ARTICLE II
REQUIREMENTS FOR AUTOMATIC REINSURANCE
Cedent shall not cede, and Reinsurer shall not accept, any individual life
insurance for reinsurance under this Agreement unless it meets the following
requirements:
1. The individual risk must be a resident of a country listed in Schedule
B.
2. The individual risk must be underwritten by Cedent in accordance with
Cedent's usual underwriting practices and guidelines. The individual
must be classified as non-smoker, select standard, standard,
substandard nonsmoker or substandard, in accordance with those
guidelines.
3. The age of the individual risk at issue must be no greater than the
maximum issue age shown on Schedule A.
4. The maximum amount of insurance issued and applied for in all insurance
companies on each life must not exceed the jumbo limits shown on
Schedule A.
5. The maximum amounts of insurance to be reinsured on an individual life
must not exceed the automatic binding limits shown on Schedule A.
6. The initial minimum amount of life insurance on each policy must not be
less than the minimum amount at issue as shown on Schedule A.
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7. The issuance of the insurance must constitute the doing of business in
a jurisdiction in which Cedent is properly licensed.
8. On each Individual life, Cedent must retain % of the amount of each
risk.
ARTICLE III
REQUIREMENTS FOR FACULTATIVE REINSURANCE
1. If the requirements for automatic reinsurance on an individual life are
not met, or are met but Cedent prefers to apply for facultative
reinsurance, then Cedent may apply to Reinsurer for facultative
reinsurance. In order to apply for facultative reinsurance, Cedent must
submit to Reinsurer complete copies of the original application,
medical examiner's reports, inspection reports, attending physicians'
statements plus any other papers or Information that may have a bearing
on the insurability of the risk.
2. After Reinsurer has examined the underwriting information submitted in
accordance with Paragraph 1 above, Reinsurer shall promptly notify
Cedent in writing of either a final underwriting offer for facultative
reinsurance or an underwriting offer for facultative reinsurance
subject to additional requirements. Either underwriting offer of
facultative reinsurance on an individual life will automatically
terminate on the first of the following dates:
(a) The date Reinsurer receives notice from Cedent that Cedent has
withdrawn Cedent's application for facultative reinsurance;
(b) A date that is one hundred twenty (120) days after the date
Reinsurer made the offer; or
(c) The date specified in Reinsurer's offer.
3. If an underwriting offer made by Reinsurer in accordance with Paragraph
2 is accepted by Cedent in writing prior to the date the offer
terminates, that individual life is reinsured under the terms of this
Agreement.
ARTICLE IV
LIABILITY
1 Reinsurer's liability for automatic reinsurance on each Covered Policy
will begin simultaneously with Cedent's liability.
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2. Reinsurer's liability for facultative reinsurance on each Covered
Policy will begin simultaneously with Cedent's liability once Reinsurer
has accepted the application for facultative reinsurance in writing and
Cedent has accepted Reinsurer's offer.
3. Reinsurer's liability for reinsurance on each Covered Policy will
terminate when Cedent's liability terminates.
4. The initial and subsequent Reinsurance Premiums (as defined herein)
must be received by Reinsurer on a timely basis as provided in Article
IX for Reinsurer to maintain Reinsurer's liability for each individual
risk.
5. Reinsurer agrees to accept policies backdated to January 1,1999 for
reinsurance coverage under this Agreement. However, it is agreed that
Reinsurer shall not be liable for any mortality risk on such policies
until July 1,1999.
6. Reinsurer shall not be liable for proceeds paid under Cedent's
conditional receipt or temporary insurance agreement for risks
submitted on a facultative basis.
ARTICLE V
REINSURANCE CEDED TO NYLARC OR MLIFE
In determining the amount of a Covered Policy to be reinsured under this
Agreement, where the Covered Policy is reinsured under an agreement between
either New York Life Agents Reinsurance Company ("NYLARC") or Insurance
Company and Cedent, the net amount of any reinsurance eligible to be
assumed by NYLARC or and not retroceded back to New York Life Insurance
Company ("New York Life") will first be deducted and then the terms of Article I
through III and Schedule A will be applied to the remainder to determine the
amount of reinsurance.
The amount of reinsurance assumed by NYLARC or and not retroceded back to
New York Life will be 25% of the face amount of each eligible Covered Policy up
to a maximum amount of $250,000 per life. If 25% of the face amount of all
Covered Policies issued on an individual life is greater than $250,000, the
difference between such amounts will be retroceded to New York Life and will not
be reinsured under this Agreement. This Article will not apply to any Covered
Policy until the reinsurance agreement between either NYLARC or and Cedent
becomes effective with respect to that Covered Policy. The following policies or
riders are not considered eligible for reinsurance with NYLARC or and
therefore will be reinsured according to the terms of Articles I through III and
Schedule A.
A. Substandard or rated policies or riders.
B. Policies or riders issued to insureds under age 15.
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ARTICLE VI
NOTIFICATION OF REINSURANCE
Within thirty-one (31) days after the end of each calendar quarter, Cedent will
send Reinsurer an in force listing of all Covered Policies reinsured under this
Agreement.
ARTICLE VII
TYPES OF REINSURANCE
1. Automatic reinsurance under this Agreement shall be on a yearly
renewable term basis, based on the net amount at risk. The net amount
at risk shall be the death benefit under the Covered Policy less the
total cash value.
2. When requested, Cedent shall furnish Reinsurer with a copy of each
policy, rider and rate book which applies to the life insurance
reinsured.
ARTICLE VIII
REINSURANCE PREMIUMS
1. The premium for each Covered Policy reinsured pursuant to this
Agreement will be: (a) the quota share shown on Schedule A; multiplied
by (b) the reinsurance premium rate calculated in accordance with
Schedule C applied to the net amount at risk (hereinafter, the
"Reinsurance Premium").
2. For technical reasons relating to the uncertain status of deficiency
reserve requirements, the reinsurance premium rates shown in Schedule C
cannot be guaranteed for more than one year. However, Reinsurer
anticipates continuing to accept premiums on the basis of the
reinsurance premium rates as described in Schedule C for reinsurance
ceded. If Reinsurer deems it necessary to increase reinsurance premium
rates, such increased rates shall not be higher than the valuation net
premiums for yearly renewable term Insurance calculated using the
minimum statutory mortality rates and maximum statutory interest rate
for each year of issue.
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ARTICLE IX
REINSURANCE ACCOUNTING
1. PAYMENT OF REINSURANCE PREMIUMS
A. Cedent shall prepare and submit to Reinsurer by regular U.S.
postal service a monthly statement, which will provide the
pertinent policy premium details on a mutually agreed upon
report format, within thirty (30) days following the last day
of the same calendar month. The net monthly premiums due will
be the balance of the monthly Reinsurance Premiums due on
reinsurance in force at the end of the immediately preceding
calendar month plus Reinsurance Premiums due on new business
reinsured during the current month less the refunds of
Reinsurance Premiums due Cedent on deaths, lapses and changes.
B. If the monthly statement shows a net Reinsurance Premium
balance is payable to Reinsurer, Cedent shall remit this
amount due Reinsurer within thirty (30) days. If the amount is
not paid within the prescribed period, the premiums for all of
the reinsurance risks listed on the statement will be
delinquent.
C. If the monthly statement shows a net Reinsurance Premium
balance is payable to Cedent, Reinsurer shall remit
Reinsurer's payment to Cedent within thirty (30) days after
receiving Cedent's statement.
2. TERMINATION BECAUSE OF NON-PAYMENT OF PREMIUMS
When Reinsurance Premiums are delinquent, Reinsurer shall have the
right to terminate the reinsurance risks on the statement by giving
Cedent thirty (30) days' written notice. As of the close of this thirty
(30) day period all of Reinsurer's liability will terminate for:
A. The risks described in the preceding sentence, and
B. The risks where the Reinsurance Premiums became delinquent
during the thirty (30) day period.
Regardless of these terminations, Cedent will continue to be liable to
Reinsurer for all unpaid Reinsurance Premiums earned by Reinsurer.
Cedent agrees that Cedent will not force termination under this
provision solely to avoid the recapture requirements or to transfer the
block of business reinsured to another reinsurer.
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3. REINSTATEMENT OF A DELINQUENT STATEMENT.
Cedent may reinstate the terminated risks within sixty (60) days after
the effective date of termination by paying the unpaid Reinsurance
Premiums for the risks in force prior to the termination. However,
Reinsurer will not be liable for any claim incurred between the date of
termination and reinstatement. The effective date of reinstatement will
be the day Reinsurer receive the required back Reinsurance Premiums.
4. CURRENCY.
The Reinsurance Premiums and claims payable under this Agreement will
be payable in the lawful money of the United States.
5. OFFSET
Any debts or credits incurred on and after July 1, 1999 in favor of or
against either Cedent or Reinsurer with respect to this Agreement are
deemed mutual debts or credits, as the case may be, and shall be set
off, and only the balance shall be allowed or paid.
6. BALANCES IN DEFAULT
Reinsurer reserves the right to charge interest at the Prime Rate plus
2% as stated in the Wall Street Journal on the first business day in
January prior to the due date of the premium when renewal premiums are
not paid within sixty (60) days of the due date or premiums for new
business are not paid within one hundred twenty (120) days of the date
the policy is issued.
ARTICLE X
OVERSIGHTS
Inadvertent delays, errors or omissions made in connection with this Agreement
or any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery, and provided that the party making such error or omission or
responsible for such delay shall be responsible for any additional liability
which attaches as a result.
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ARTICLE XI
REDUCTIONS, TERMINATIONS AND CHANGES
1. If there is a contractual or non-contractual replacement or change in
the insurance reinsured under this Agreement where full underwriting
evidence according to Cedent's regular underwriting rules is not
required, the insurance will continue to be reinsured with Reinsurer.
2. If the insurance reinsured under this Agreement increases and
A. The increase is subject to new underwriting evidence, the provisions
of Article I and II or Article III shall apply to the increase in
reinsurance.
B. The increase is not subject to new underwriting evidence, Reinsure
will accept automatically the increase in reinsurance but not to
exceed Reinsurer's automatic binding limit.
3. If the insurance reinsured under this Agreement is increased or
reduced, the reinsurance for each policy involved will be
proportionately increased or reduced on the effective date of increase
or reduction.
4. If any portion of the total insurance retained by Cedent on an
Individual life reduces or terminates, any reinsurance under this
Agreement based on the same life will also be reduced or terminated.
Cedent will reduce Cedent's reinsurance by applying the retention
limits which were in effect at the time the policy was issued. Cedent
will not be required to retain an amount in excess of Cedent's regular
retention limit for the age, mortality rating and risk classification
at the time of issue for any policy on which reinsurance is being
reduced.
Cedent must first reduce the reinsurance of the insurance which has the
same mortality rating as the terminated insurance. If further reduction
is required, the reinsurance to be terminated or reduced will be
determined by chronological order in which the reinsurance was first
reinsured.
5. If the insurance for a risk is shared by more than one reinsurer,
Reinsurer's percentage of the increased or reduced reinsurance will be
the same as Reinsurer's percentage of the initial reinsurance of each
policy.
6. If insurance reinsured under this Agreement is terminated, the
reinsurance for the policy involved will be terminated on the effective
date of termination.
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7. On facultative reinsurance, if Cedent wish to reduce the mortality
rating, this reduction will be subject to the facultative provisions of
this Agreement.
8. Reinsurer will refund to Cedent all unearned reinsurance premiums,
arising from reductions, terminations and changes as described in this
Article.
ARTICLE XII
INCREASE IN RETENTION
1. If Cedent should Increase Cedent's retention limits, Cedent shall give
Reinsurer prompt written notice of this increase.
2. Cedent will have the option to recapture all or any part of the
reinsurance under this Agreement when Cedent's retention limit
increases, Cedent may exercise Cedent's option to recapture by giving
Reinsurer ninety (90) days prior written notice of such recapture.
3. If Cedent exercise this option to recapture, then
A. Cedent must reduce the reinsurance on each individual life on which
Cedent retained % of Cedent's maximum retention limit for the
age and mortality rating that was in effect at the time the
reinsurance was ceded to Reinsurer.
B. No recapture will be made to reinsurance on an individual life if
Cedent did not retain insurance on the life.
C. Cedent must increase Cedent's total amount of insurance on the
individual life up to Cedent's new retention limit by reducing the
total reinsurance on that life by the same amount. If an individual
life is shared by more than one reinsurer, Reinsurer's percentage of
the reduced reinsurance will be the same percentage as Reinsurer's
initial reinsurance on the individual risk.
D. The reduction of reinsurance will become effective on the later of
the following dates:
(1) The policy anniversary date immediately following the effective
date of Cedent's increase in retention limits.
(2) The number of years stated in Schedule A starting with the
original policy date shown on Cedent's listing.
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ARTICLE XIII
REINSTATEMENT
If a Covered Policy lapses for nonpayment of premium and is reinstated under
Cedent's terms and rules, the reinsurance will be reinstated by Reinsurer.
Cedent must pay Reinsurer all back Reinsurance Premiums in the same manner as
Cedent received insurance premiums under Cedent's policy. If Reinsurer is
requested to reinstate a policy that was originally ceded to Reinsurer on a
facultative basis, then Cedent must submit the policy and associated papers
concerning the individual's insurability to Reinsurer to be underwritten and
approved for the reinsurance to be reinstated if;
1. the policy lapsed for six months or longer, or
2. Cedent seeks additional underwriting information, or
3. Cedent reinsures % of the policy.
If the above conditions are not present, Cedent may automatically reinstate a
policy that was originally ceded to Reinsurer on a facultative basis.
ARTICLE XIV
EXPENSES
Cedent shall pay the expense of all medical examinations, inspection fees and
other underwriting expenses in connection with the issuance of the insurance.
ARTICLE XV
CLAIMS
1. Reinsurer shall pay Reinsurer's quota share of any claim under a
Covered Policy within a reasonable time after Cedent submits the claim
to Reinsurer, Reinsurer shall make payment to Cedent in a single sum
regardless of Cedent's mode of settlement.
2. All reinsurance claim settlements made in accordance with Paragraph 1
above will be subject to the terms and conditions of the Covered Policy
under which Cedent is liable.
3. When Cedent is advised of a claim for insurance benefits reinsured
under this Agreement, Cedent must promptly notify Reinsurer.
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4. If a claim is made under a Covered Policy reinsured under this
Agreement, Reinsurer will abide by the issue as It is settled by
Cedent. The maximum benefit payable to Cedent under each Covered Policy
is the amount specifically reinsured with Reinsurer. When Cedent
requests payment of the reinsurance proceeds, Cedent must deliver a
copy of the proof of death, proof of payment and the claimant's
statement to Reinsurer.
5. A. Cedent must promptly notify Reinsurer of Cedent's intent to contest
insurance reinsured under this Agreement or to assert defenses to a
claim for such insurance. Reinsurer shall participate in the contest
or assertion of defenses unless Reinsurer notifies Cedent promptly
that Reinsurer declines to participate. If Cedent's contest of such
insurance results in the reduction of Cedent's liability, Reinsurer
will share in this reduction. Reinsurer's percentage of the
reduction will be Reinsurer's net amount of risk on the individual
life as it relates to Cedent's total net amount at risk on the date
of the death of the insured.
B. If Reinsurer should decline to participate in the contest or
assertion of defenses, Reinsurer will then release all of
Reinsurer's liability by paying Cedent the full amount of
reinsurance as if there had been no contest, compromise or
litigation of a claim, and Reinsurer's proportionate share of
covered expenses incurred to the date, from the date Reinsurer
notifies Cedent that Reinsurer declined to be a party and by not
sharing in any subsequent reduction in liability.
6. If the amount of insurance provided by a Covered Policy reinsured under
this Agreement is increased or reduced because of a misstatement of age
or sex established after the death of the insured, Reinsurer will share
with Cedent in this increase or reduction. Reinsurer's share of this
increase or reduction will be the percentage that Reinsurer's net
liability relates to Cedent's total net liability, immediately prior to
this increase or reduction. Any adjustment in Reinsurance Premiums will
be made without interest.
7. Cedent shall pay the routine expenses incurred in connection with
settling claims. These expenses may include compensation of agents and
employees and the cost of routine investigations.
8. Reinsurer shall share with Cedent all expenses that are not routine.
Expenses that are not routine are those directly incurred in connection
with the contest or the possibility of a contest of insurance or the
assertion of defenses. These expenses will be shared in proportion to
the net sum at risk for both parties. However, if Reinsurer has
released Reinsurer's liability under Paragraph 5 of this Article,
Reinsurer will not share in any expenses incurred after Reinsurer's
date of release.
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9. Notwithstanding anything contained in this Article to the contrary,
Reinsurer will pay Reinsurer's proportionate share of a fixed judgment
which includes extra-contractual damages awarded against Cedent In a
lawsuit arising out of a contested claim unless Reinsurer has declined
to participate in the contest pursuant to Paragraph 5.B of this
article.
Reinsurer's liability for extra-contractual damages shall be limited to
such extra-contractual damages that arise out of the investigation,
processing and settlement of claims under the covered policy. Reinsurer
shall not be liable for such extra-contractual damages that arise
solely from fraudulent or criminal conduct of an employee of the
Cedent, as determined by the appropriate tribunal or authority, in
connection with the investigation, processing and settlement of claims
under the covered policy.
The extent of such sharing between Cedent and Reinsurer is dependent
upon the good faith assessment of culpability in each case, but all
factors being equal, the parties will share in such extra-contractual
damages in the same proportion as the quota share accepted by each
party under the Agreement.
10. If either a misrepresentation or misstatement on an application or a
death of an insured by suicide results In Cedent returning the policy
premiums to the policy owner rather than paying the policy benefits,
Reinsurer will refund all of the Reinsurance Premiums Reinsurer
received on that policy to Cedent. This refund given by Reinsurer will
be in lieu of all other reinsurance benefits payable on that policy
under this Agreement.
ARTICLE XVI
PREMIUM TAX REIMBURSEMENT
Reinsurer shall not reimburse Cedent for any taxes Cedent may be required to pay
with respect to reinsurance hereunder.
ARTICLE XVII
DAC TAX REQUIREMENTS
1. In accordance with Treasury Regulations Section 1.848-2(g)(8), Cedent
and Reinsurer hereby elect to determine specified policy acquisition
expenses with respect to this Agreement without regard to the general
deductions limitation of Section 848(c)(1) of the Internal Revenue
Code (the "IRC"). This election shall be effective for calendar year
1999 and for all subsequent taxable years for which this Agreement
remains In effect.
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2. All uncapitalized; terms used herein shall have the meanings set forth
in the regulations under section 848 of the IRC.
3. Any party with the net positive consideration under this Agreement for
each taxable year shall capitalize specified policy acquisition
expenses with respect to this Agreement without regard to the general
deductions limitation of Section 848(c)(1) of the IRC.
4. Both parties agree to exchange information pertaining to the amount of
net consideration under this Agreement each year to ensure consistency.
5. Cedent shall submit a schedule in the format specified in Exhibit 1 to
Reinsurer by March 1 of each year of Cedent's calculations of the net
consideration under this Agreement for the preceding calendar year.
This schedule of calculations shall be accompanied by a statement
signed by an officer of Cedent stating that Cedent will report such net
consideration in its Federal Income tax return for the preceding
calendar year.
6. Reinsurer may contest such calculation by providing an alternative
calculation to Cedent in writing within thirty (30) days of Reinsurer's
receipt of Cedent's calculation. If Reinsurer does not notify Cedent
within such time that it contests the calculation, Reinsurer shall
report the net consideration as determined by Cedent in Reinsurer's tax
return for the previous calendar year.
7. If Reinsurer contests Cedent's calculation of the net consideration,
the parties will act In good faith to reach an agreement as to the
correct amount within thirty (30) days of the date Reinsurer submits
its alternative calculation. If the parties reach an agreement on an
amount of net consideration, each party will report the agreed upon
amount in its Federal income tax return for the previous calendar year.
If during such period, Cedent and Reinsurer are unable to reach
agreement, they shall promptly thereafter cause independent accountants
of nationally recognized standing satisfactory to Cedent and Reinsurer
(who shall not have any material relationship with Cedent or
Reinsurer), promptly to review (which review shall commence no later
than five (5) days after the selection of such independent
accountants), this Agreement and the calculations of Cedent and
Reinsurer for the purpose of calculating the net consideration under
this Agreement. In making such calculation, such independent
accountants shall consider only those items or amounts in Cedent's
calculation as to which Reinsurer has disagreed.
Such independent accountants shall deliver to Cedent and Reinsurer, as
promptly as practicable (but no later than sixty (60) days after the
commencement of their review), a report setting forth such calculation,
which calculation shall result in a net consideration between the
amount thereof shown in Cedent's calculation delivered
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pursuant to Paragraph 5 and the amount thereof in Reinsurer's
calculation delivered pursuant to Paragraph 6. Such report shall be
final and binding upon Cedent and Reinsurer. The fees, costs and
expenses of such Independent accountants shall be borne (i) by Cedent
If the difference between the net consideration as calculated by the
independent accountants and Cedent's calculation delivered pursuant to
Paragraph 5 is greater than the difference between the net
consideration as calculated by the independent accountants and
Reinsurer's calculation delivered pursuant to Paragraph 6, (ii) by
Reinsurer if the first such difference is less than the second such
difference; and (iii) otherwise equally by Cedent and Reinsurer
8. Both parties agree to attach a schedule to their respective federal
income tax returns for the first taxable year ending after the date on
which this election becomes effective which identifies this Agreement
as a reinsurance agreement for which an election has been made under
Treasury Regulations Section 1.848-2(g)(8).
9. Reinsurer represents and warrants that it is subject to United States
taxation under Subchapter L of the IRC.
10. Reinsurer shall complete a Reinsurance Questionnaire In the format
specified in Exhibit 2 and submit it to Cedent by May 1st of each
calendar year.
ARTICLE XVIII
INSPECTION OF RECORDS
Reinsurer shall have the right, at any reasonable time, to inspect Cedent's
books and documents which relate to Cedent's reinsurance under this Agreement.
ARTICLE XIX
INSOLVENCY
1. If Cedent become insolvent, all of the reinsurance due Cedent will be
paid in full directly to Cedent or Cedent's liquidator (receiver or
statutory successor) on the basis of Cedent's liability under the
policy or policies reinsured, without diminution because of Cedent's
insolvency.
2. If Cedent become insolvent, the liquidator, receiver or statutory
successor will give Reinsurer written notice of a pending claim against
Cedent for insurance reinsured under this Agreement within a reasonable
time after the claim is filed in the Insolvency proceeding. During the
insolvency proceedings where the claim is to be settled, Reinsurer may
Investigate this pending claim and interpose in Cedent's or Cedent's
liquidator's, receiver's or statutory successor's name, but at
Reinsurer's
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own expense, any defense or defenses which Reinsurer may believe
available to Cedent or Cedent's liquidator, receiver or statutory
successor.
3. The expenses incurred by Reinsurer will be chargeable, subject to court
approval, against Cedent as part of the expense of liquidation, to the
extent of the proportionate share of the benefit which may accrue to
Cedent solely as a result of the defense undertaken by Reinsurer. Where
two or more reinsurers are involved in the same claim and a majority in
interest elects to interpose a defense or defenses to this claim, the
expense will be apportioned in accordance with the terms of this
Agreement as though such expense had been incurred by Cedent.
4. In the event of Reinsurer's insolvency, as determined by the department
of insurance responsible for such determination, all reinsurance ceded
under this Agreement may be recaptured immediately by Cedent without
penalty effective as of the day prior to the earlier of Reinsurer's
becoming insolvent or the date of such determination by the said
department of insurance.
5. Where two or more reinsurers are members of a pool of reinsurers
established hereby, the insolvency of one reinsurer shall not be deemed
to abrogate this Agreement with respect to the other reinsurers.
ARTICLE XX
ARBITRATION
1. If the parties cannot mutually resolve a dispute or claim arising out
of or in connection with this Agreement, including the formation or
validity thereof, and whether arising during or after the period of
this Agreement, the dispute or claim shall be settled by arbitration.
The arbitrators shall have the authority to interpret this Agreement
and in doing so shall consider the customs and practices of the life
insurance and life reinsurance industries. To initiate arbitration,
either party shall notify the other party by facsimile or by overnight
delivery of its desire to arbitrate, stating the nature of the dispute
and the remedy sought (the "Notice of Arbitration"). The party to which
the notice is sent shall respond to the notification in writing within
ten (10) business days of receipt.
2. Arbitration shall be conducted by three arbitrators who shall be
current or past officers of life insurance companies other than the
contracting companies or their affiliates. Each party shall appoint one
arbitrator, and serve written notice of the appointment upon the other
party, within thirty (30) business days after the date of delivery of
the Notice of Arbitration. The two arbitrators so appointed shall
select the third arbitrator within thirty (30) business days after the
date of appointment of the second arbitrator to be appointed.
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3. In the event either party fails to choose an arbitrator within thirty
(30) business days, as provided in Paragraph 2, the party which has
given written notice may choose two arbitrators who shall in turn
choose a third arbitrator before entering arbitration.
4. If the two arbitrators appointed in accordance with Paragraph 2 or
Paragraph 3 are unable to agree upon the selection of a third
arbitrator within thirty (30) business days after the appointment of
the second arbitrator to be appointed, each arbitrator shall nominate
three candidates within ten (10) business days thereafter, two of whom
the other shall decline and the decision shall be made by drawing lots.
5. Arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in effect on
the date of delivery of Notice of Arbitration.
6. Each party will pay the fees of its own attorneys, the arbitrator
appointed by that party, and all other expenses connected with the
presentation of its own case. The two parties will share equally in the
cost of the third arbitrator. The arbitration hearing will be held In
New York City.
7. The award agreed by the arbitrators will be final and binding, and
judgment may be entered upon it in any court having jurisdiction. The
arbitrators shall not award punitive damages.
ARTICLE XXI
PARTIES TO AGREEMENT
This is an Agreement solely between Cedent and Reinsurer There will be no legal
relationship between Reinsurer and any person having an interest of any kind in
any Covered Policy.
ARTICLE XXII
ENTIRE AGREEMENT
1. This Agreement shall constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and there
are no understandings between the parties other than as expressed in
this Agreement.
2. Any change or modification to this Agreement shall be null and void
unless made by amendment to this Agreement and signed by both parties.
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ARTICLE XXIII
DURATION OF AGREEMENT
1. This Agreement may be terminated as to new business, with respect to the
percentage participation in the risks reinsured hereunder by Reinsurer, as
set forth in Schedule A, at any time by either party giving ninety (90)
days' written notice of termination. The day the notice is deposited in the
mail addressed to the home office or to an officer of either party will be
the first day of the ninety (90) day period. During the ninety (90) day
period, new Covered Policies shall be reinsured under this Agreement
pursuant to Articles I and II or Article III. Reinsurer's acceptance will
be subject to the terms of this Agreement and Cedent's payment of
Reinsurance Premiums.
G2. This Agreement may be terminated immediately as to new business by
either party if the other party materially breaches this Agreement or
becomes insolvent or financially impaired.
3. After termination, Reinsurer will both be liable for all automatic
reinsurance which becomes effective prior to termination of this Agreement
and also for all facultative reinsurance approved by Reinsurer based upon
applications Reinsurer received prior to termination of this Agreement.
ARTICLE XXIV
CHOICE OF LAW AND FORUM
New York law shall govern the terms and conditions of the Agreement.
ARTICLE XXV
COMPLIANCE WITH LAW
When Reinsurer receive information from Cedent which is subject to any state or
Federal privacy laws or regulations, or similar laws or regulations, Reinsurer
will keep such information confidential to the extent required by such state or
Federal law or regulation and otherwise comply with such state or Federal law or
regulation.
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IN WITNESS WHEREOF the said
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
and
have by their respective officers executed and delivered these presents in
duplicate on the date shown below.
NEW YORK LIFE INSURANCE AND NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION ANNUITY CORPORATION
Signed at New York, NY Signed at________________________
By Xxxxxx X. Xxxxx By_______________________________
-------------------------------
Its authorized representative Its authorized representative
Title Corporate V.P. & Actuary Title____________________________
----------------------------
Date______________________________ Date_____________________________
Signed at_________________________ Signed at_______________________
By _______________________________ By_______________________________
Its authorized representative Its authorized representative
Title_____________________________ Title____________________________
Date______________________________ Date_____________________________
SCHEDULE A
POLICIES
1. Quota Share Percentage: The Quota Share Percentage for Covered Policies shall
be % of the Risk.
2. Type of Business: Permanent Life Insurance Issued by Cedent.
3. Plans of Insurance: Variable Universal Life Insurance; NYLIAC Accumulator
Policies; NYLIAC Protector Policies.
4. Maximum Issue Age: 65
5. Jumbo Limit: $
6. Automatic Binding Limit: $
7. Minimum Amount at Issue: $
8. Recapture Period: 10 Years
SCHEDULE B
INSUREDS' COUNTRY OF RESIDENCE
Argentina
Australia
Austria
Belize
Brazil
Caribbean Countries (except Cuba and Haiti).
Chile
Costa Rica
Ecuador
Western Europe (except Northern Ireland) (Western Europe includes all of Germany
but does not include any other country that, prior to 1990, was part of the
Union of Soviet Socialist Republics)
Fiji
French Antilles
Guiana and Martinique
Greece
Hong Kong
Indonesia
Japan
South Korea
Macau
Malaysia
Mexico
New Zealand
Singapore
Solomon Islands
Taiwan
Tonga
Turkey
Uruguay
Vanuatu
Venezuela
Western Samoa
SCHEDULE C
REINSURANCE PREMIUM RATES
1. Reinsurance Premium Rate
The reinsurance premium rate under this Agreement is calculated based upon
the tables to this Schedule C.
2. Flat Extra Premiums
The flat extra premium will be % of the annual flat extra premium which
Cedent charges its insured on that amount of the insurance reinsured.
3. Substandard Special Class Extra Premiums
The substandard special class extra premium is calculated based upon the
tables to this Schedule C multiplied by the following percentages:
Special Class Percentage
------------- ----------
A %
B %
C %
D %
E %
F %
G %
3. Renewal Premiums
The renewal of insurance shall be considered as a continuation of the
original insurance for the purpose of calculating future reinsurance
premiums.
EXHIBIT 1
DAC TAX CALCULATION
CEDING COMPANY: NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
ASSUMING COMPANY: __________________________________
DATE: __________________________
DAC TAX - DEDUCTIONS FROM GROSS PREMIUM
DAC TAX CALCULATION AMOUNT
GROSS PREMIUM
LOSS:
DEDUCTIONS FROM GROSS PREMIUMS
Commissions
Death Claims
Claim Interest
Premium Taxes
Claim Investigation Expense
Claim Legal Expense
Waiver Claims
Surrenders
Experience Refunds
Admin Fee
Fee Income
Miscellaneous Interest
Dividends
Termination Dividends
Productions Bonus
Reserve Adjustments
Other (specify)
TOTAL DEDUCTIONS
NET CONSIDERATIONS
Please sign below confirming agreement with net considerations or provide an
alternate calculation within 30 days
__________________________________
Signature
__________________________________
Type or Print Name
__________________________________
Title
__________________________________
Date
EXHIBIT 2
REINSURANCE QUESTIONNAIRE
FOR FEDERAL INCOME TAX DETERMINATIONS
The purpose of this questionnaire is to secure sufficient information to allow
New York Life Insurance and Annuity Corporation ("NYLIAC") to account properly
under the federal Income tax rules for the reinsurance transactions you have
with NYLIAC. Please provide NYLIAC with the following information:
1. Are you either
(a) a company that is subject to U.S. taxation directly under the
provisions of subchapter L of chapter 1 of the Internal Revenue Code
(i.e., an insurance company liable for filing Form 1120L or Form
1120-PC), or
(b) a company that is subject Indirectly to U.S. taxation under the
provisions of subpart F of subchapter N of chapter 1 of the Internal
Revenue Code (i.e., a "controlled foreign corporation" with the meaning
of Internal Revenue Code Section 957)?
Answer: ________Yes _________No
2. If your answer to 1. is no, have you entered into a closing agreement with
the Internal Revenue Service to be subject to U.S. taxation with respect to
reinsurance income pursuant to Treasury Regulation
Section 1.848-2(h)(2)(ii)(B)?
Answer: ________Yes _________No
(If your answer is yes, please provide a copy of the dosing agreement.)
Company Name: ___________________________
Signed by: ___________________________
Title: ___________________________
Date: ___________________________
