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Exhibit (7)
GUARANTEED MINIMUM DEATH BENEFIT REINSURANCE
PROVIDENT MUTUAL
ACCEPTANCE
Provident Mutual agrees to accept the reinsurance arrangement offered by CNA
Life Re. Upon execution of this agreement, all parties will be bound by its
terms and conditions until the agreement is replaced by a Reinsurance Treaty
executed by both parties. Upon execution of the Reinsurance Treaty, this
agreement shall become null and void.
5% ROLLUP DEATH BENEFIT
For new business written on Provident Mutual's variable annuity with age at
issue less than or equal to 70, CNA Life Re is able to reinsure the 5% Rollup
Death Benefit minimum death benefit guarantee at a rate of 38 basis points. This
premium will be charged monthly at the monthly rate of 3.1667 basis points times
account value at the end of each calendar month.
The guaranteed minimum death benefit (GMDB) will be the greatest of:
1) The total of all purchase payments paid, less any partial
withdrawals and any applicable surrender charges and any incurred
taxes, accumulated at 5% interest from the date of each purchase
payment or surrender to the most recent contract anniversary date prior
to the annuitant's 76th birthday and accumulated at 0% thereafter, less
an adjustment for amounts surrendered, plus purchase payments received
after that contract anniversary. Such total accumulated amount shall
not exceed 200% of the net purchase payments and amounts surrendered.
The adjustment for amounts subsequently surrendered after the most
recent contract anniversary will reduce the 5% rollup benefit in the
same proportion that the contract value was reduced on the date of the
partial surrender.
2) The contract value on the date that proof of death is received by
the Company.
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ANNUAL RATCHET DEATH BENEFIT
For new business written on Provident Mutual's variable annuity with age at
issue less than or equal to 70, CNA Life Re is able to reinsure the Annual
Ratchet Death Benefit minimum death benefit guarantee at an annual rate of 22
basis points. This premium will be charged monthly at the monthly rate of 1.8333
basis points times account value at the end of each calendar month.
The guaranteed minimum death benefit (GMDB) will be the greatest of:
1) The purchase payments paid, less any partial withdrawals and any
applicable surrender charges and any incurred taxes.
2) The maximum anniversary value, defined as the highest amount based
on the account value at each anniversary reduced proportionally for any
partial surrenders and incurred taxes, plus purchase payments received
after the most recent contract anniversary. Maximum anniversary value
does not increase after age 85. The GMDB at age 85 and later will equal
the GMDB as of the annuitant's 85th birthday plus subsequent premiums
and proportional reductions for any partial surrenders.
3) The contract value on the date that proof of death is received by
the Company.
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ONE TIME (8TH YEAR) RATCHET DEATH BENEFIT
For new business written on Provident Mutual's variable annuity with age at
issue less than or equal to 85, CNA Life Re is able to reinsure the One Time
(8th Year) Ratchet Death Benefit minimum death benefit guarantee at an annual
rate of 12 basis points. This premium will be charged monthly at the monthly
rate of 1.0000 basis points times account value at the end of each calendar
month.
The guaranteed minimum death benefit (GMDB) for death prior to the 7th contract
anniversary and age 90 will be the greatest of:
1) The purchase payments paid, less any partial withdrawals and
any applicable surrender charges and any incurred taxes.
2) The contract value on the date that proof of death is received
by the Company.
The guaranteed minimum death benefit (GMDB) for death on or after the 7th
contract anniversary and prior to age 90 will be the greatest of:
1) The purchase payments paid, less any partial withdrawals any
applicable surrender charges and any incurred taxes.
2) The contract value at the 7th contract anniversary adjusted by
any subsequent purchase payments and reduced proportionally
for any partial surrenders and incurred taxes, plus purchase
payments received after the most recent contract anniversary.
3) The Contract Value on the date that proof of death is received
by the Company.
The GMDB ceases at attained age 90.
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ONE TIME (9TH YEAR) RATCHET DEATH BENEFIT
For new business written on Provident Mutual's variable annuity with age at
issue less than or equal to 85, CNA Life Re is able to reinstate the One Time
(9th Year) Ratchet Death Benefit minimum death benefit guarantee at an annual
rate of 11.5 basis points. This premium will be charged monthly at the monthly
rate of 0.9583 basis points times account value at the end of each calendar
month.
The guaranteed minimum death benefit (GMDB) for death prior to the 8th contract
anniversary and age 90 will be the greatest of:
1) The purchase payments paid, less any partial withdrawals and
any applicable surrender charges and any incurred taxes.
2) The contract value on the date that proof of death is received
by the Company.
The guaranteed minimum death benefit (GMDB) for death on after the 8th contract
anniversary and prior to age 90 will be the greatest of:
4) The purchase payments paid, less any partial withdrawals any
applicable surrender charges and any incurred taxes.
5) The contract value at the 8th contract anniversary adjusted by
any subsequent purchase payments and reduced proportionally
for any partial surrenders and incurred taxes, plus purchase
payments received after the most recent contract anniversary.
6) The Contract Value on the date that proof of death is received
by the Company.
The GMDB ceases at attained age 90.
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CNA Life Re provides capacity of $400 million of total deposits, regardless of
the split of business among the benefits outlined above.
Coverage under terms of this agreement will be the greater of zero or the GMDB
less the Account Value, payable as of the date that proof of death is received
by the Company. In the event of lapse or other policy termination, no benefit is
payable under this coverage.
The above rates are guaranteed for one year from the effective date, January 15,
2000, of the reinsurance contract, with the following caveat. If the benefits or
charges to the policyholder are changed (includes contract charges, M&E charges,
and admin fees), CNA Life Re reserves the right to adjust the premium rates.
Fund fees are allowed to fluctuate.
Subject to a 90-day notice, CNA Life Re reserves the right to change these rates
for both inforce and new business on the reinsurance anniversary date. For
inforce business, the rates will not be increased above 1.5 times the initial
rates.
CNA Life Re reserves the right to accept the risk associated with more than $3.0
million in initial value per policy subject to individual consideration.
The above rates are effective for all contracts with contract dates on or prior
to January 15, 2001. Subject to 90 days prior notice, CNA Life Re reserves the
right to reset the reinsurance capacity for contracts with effective dates of
January 15, 2001 or later.
Recapture is not permitted unless the rates are raised.
All business will be administered by Provident Mutual or designee thereof.
CNA Life Re will require monthly seriatim report (see attached reporting
requirements) of all GMDB business. The first seriatim report shall be provided
by Provident Mutual by the end of April 2000.
Reserves are to follow Actuarial Guideline 34 but not less than statutory
required reserves.
CNA Life Re will not be responsible for any taxes incurred now or in future,
directly or indirectly, by Provident Mutual.
This agreement is subject to any required state approvals. Any such required
approvals will be obtained by Provident Mutual.
Acceptance:
/s/ Illegible Dated: 10/27/99
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CNA Life Re
/s/ Xxxxx X. Xxxxxx Dated: 11/3/99
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Provident Mutual
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ATTACHMENT
GMDB Monthly Reporting Requirements
FIELD# FIELD NAME DESCRIPTION
------ ---------- -----------
1 Report Date Report date is the last day of the reporting month (mm/dd/yyyy)
2 Direct Writing Company Name of your company
3 Policy Number Policy or contract number
4 Policyholder Name of the policyholder (last name_MI_first name)
5 Current Age Age of the policyholder as of the report date
6 Issue Date Date of the policy issued (mm/dd/yyyy)
7 Sex Gender of the policyholder (M or F)
8 Plan Code 0001 - Annual Ratchet
0002 - Rollup
0003 - One Time (8th Year) Ratchet
0004 - One Time (9th Year) Ratchet
9 Date of Last Ratchet or Rollup Last ratchet or Rollup date (mm/dd/yyyy)
10 Current, Ratchet or Rollup Value Ratchet or Rollup value as of the report date ($xx.xx)
11 Current Guaranteed Minimum Death GMDB as of the report date ($xx.xx)
Benefit
12 Current Total Account Value Total account value as of the report date ($xx.xx)
13 Current Account Value by Fund Account value by individual fund as of the report date. The sum of Field
13 should equal Field 12. Note that you may want to store this information
in a separate file. ($xx.xx)
14 Total Death Benefits Paid Total death benefits paid for this reporting month ($xx.xx)
15 Death Benefits Paid by CNA Death benefits paid by CNA for this reporting month ($xx.xx)
16 Total Death Benefits Due and Unpaid Total death benefits due and unpaid for this reporting month ($xx.xx)
17 Death Benefits Due and Unpaid by CNA Death benefits due and unpaid by CNA for this reporting month ($xx.xx)
18 Current Premium Premium paid in this reporting month ($xx.xx)
19 ITD Premium Premium paid since inception ($xx.xx)
20 Current Withdrawal Amount Total withdrawal amount in this reporting month ($xx.xx)
21 ITD Withdrawal Amount Total withdrawal amount since inception ($xx.xx)
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