AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM
REINSURANCE AGREEMENT
BETWEEN
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(NAIC No. 71153)
(FEIN 00-0000000)
AND
HARTFORD LIFE INSURANCE COMPANY
(NAIC No. 88072)
(FEIN 00-0000000)
AND
SCOR GLOBAL LIFE AMERICAS REINSURANCE COMPANY
(NAIC No. 64688)
(FEIN 00-0000000)
EFFECTIVE DATE: NOVEMBER 1, 2012
ARTICLES
I. The Agreement 3
II. Effective Date 3
III. Reinsurance Coverage 4
IV. Liability for Reinsurance 8
V. Underwriting Review 10
VI. Reinsurance Premiums 11
VII. Reinsurance Reporting 14
VIII. Credit for Reinsurance 14
IX. Errors 16
X. Policy Conversions, Other Changes, and Terminations 16
XI. Policy Reinstatement 20
XII. Claims 21
XIII. Extra-Contractual Obligations 24
XIV. DAC Tax Section 1.848-2(g)(8) Election 25
XV. Insolvency 26
XVI. Recapture of Reinsured Business 27
XVII. Offset 28
XVIII. Dispute Resolution 28
XIX. Arbitration 29
XX. Termination of this Agreement for New Business 30
XXI. Confidentiality 30
XXII. General Provisions 32
XXIII. Notices and Communications 36
Execution 37
SCHEDULES
A. Plans of Insurance Covered Under this Agreement 38
B. Reinsurance Specifications 45
C. Foreign National Underwriting Program 48
D. Other Special Underwriting Programs 52
EXHIBITS
I. Reinsurance Premium Calculation 54
II. Retention, Binding, and Total Pool Issue Limits 58
III. Annual Rates per $1,000 of Reinsured Net Amount at Risk 62
IV. YRT Reinsurance Rate Factors 83
V. Substandard Table Percentages 84
VI. Reinsurance Reports 85
ALL SCHEDULES AND EXHIBITS ATTACHED WILL BE CONSIDERED PART OF THIS
REINSURANCE
AGREEMENT.
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ARTICLE I
THE AGREEMENT
A. The Agreement and Parties to the Agreement
This is a monthly renewable term agreement for indemnity life reinsurance (the
"Agreement") solely between Hartford Life and Annuity Insurance Company and
Hartford Life Insurance Company, Connecticut corporations (individually, "Ceding
Company"), and SCOR Global Life Americas Reinsurance Company, a Delaware
corporation ("Reinsurer"). The Ceding Company and the Reinsurer are each
referred to individually as a "Party," and collectively as the "Parties," to
this Agreement.
This Agreement shall be binding upon the Ceding Company and the Reinsurer and
their respective successors and assignees.
The acceptance of risks under this Agreement will create no right or legal
relationship between the Reinsurer and the insured, owner, beneficiary, or
assignee of any insurance policy or other contract of the Ceding Company.
B. Complete and Entire Agreement
This Agreement, which includes all Schedules and Exhibits attached hereto and
any amendments entered into hereafter, constitutes the entire agreement of the
Parties pertaining to the transaction contemplated by this Agreement. This
Agreement supersedes and replaces all oral and written agreements previously
made or existing by and between the Parties or their representatives with regard
to the transaction contemplated by this Agreement.
This Agreement shall not be amended or modified except by written amendment,
signed by duly authorized officers of each Party.
Routine communications are those communications contemplated by this Agreement
that are not intended to change any of its risk transfer characteristics. Such
communications may include, but are not limited to, reinsurance reporting and
premium administration, underwriting review, claim submission and review,
participation in claim litigation and settlements, audit reviews, and the
resolution of disputes by arbitration or court proceedings. These communications
serve to clarify the obligations of the Parties under this Agreement and should
not be construed as modifications of this Agreement. Any modifications of this
Agreement shall be effected only by written amendment as provided for above.
ARTICLE II
EFFECTIVE DATE
The Effective Date of this Agreement is November 1, 2012.
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ARTICLE III
REINSURANCE COVERAGE
Reinsurance under this Agreement will apply to those Plans of Insurance and
Riders set forth in Schedule A. Such reinsurance shall be either on an automatic
basis, subject to the requirements set forth in Section A below, on an automatic
processing basis, subject to the requirements set forth in Section B below, or
on a facultative basis, subject to the requirements set forth in Section C
below. Notwithstanding the foregoing, reinsurance coverage on a facultative
basis may also apply to plans of insurance not listed in Schedule A, with the
agreement of the Reinsurer. The specifications for all reinsurance under this
Agreement are provided in Schedule B.
The term "Excess Risk," as used in this Agreement, shall mean a risk for which
the amount to be written on a life by the Ceding Company, when added to any
other amounts of risk for that life already in the Automatic Pool and any
amounts not in the Automatic Pool that are retained by the Ceding Company or its
affiliated companies, exceeds, either in whole or in part, the Total Allocation
Limit for that life shown in Exhibit II.
A. Automatic Reinsurance
For each risk that meets the requirements for Automatic Reinsurance as set forth
below, the Reinsurer will participate in a reinsurance pool whereby the
Reinsurer will automatically reinsure a portion of the risk as indicated in
Schedule B ("Automatic Pool"). The requirements for Automatic Reinsurance are as
follows:
1. Each life, at the time of application, must satisfy one of the following
requirements:
a. have been a legal resident of the United States or Canada for at
least six months; or
b. be a citizen of the United States or Canada; or
c. qualify for the Foreign National Underwriting Program as specified
in Schedule C.
2. Each risk must be underwritten according to the Ceding Company's standard
underwriting practices and guidelines, which have been provided to the
Reinsurer, or one of the special underwriting programs described in
Schedule C and Schedule D. Changes to such documents will be handled in
accordance with Section XXII.M.
If the Ceding Company would like to offer coverage at a risk class more
favorable than the True Assessed Risk Class, the Ceding Company may:
a. Reinsure the risk automatically under this Agreement with
Reinsurance Premiums based on the True Assessed Risk Class; or
b. Seek to reinsure the risk facultatively under this Agreement at rates
more favorable than the True Assessed Risk Class; or
c. Decide not to reinsure the risk under this Agreement.
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For purposes of this Agreement, "True Assessed Risk Class" shall mean the risk
class assessed by the Ceding Company prior to any adjustments made as a result
of the Ceding Company's Enhanced Standard or similar special underwriting
program.
3. For any Excess Risk, if any risk on the life of a proposed insured was
previously submitted by the Ceding Company on a facultative basis to the
Reinsurer or to any other reinsurer, at least three (3) years must have
elapsed since that previous risk was submitted facultatively, unless the
original reason for submitting facultatively no longer applies.
4. The maximum issue age for each life is 85. For Last Survivor policies, the
minimum issue age is 18, for all other policies, the minimum age is 0.
5. The mortality rating on each life does not exceed Table P. However, for
Last Survivor policies, one life may be uninsurable if the other life does
not exceed Table F.
6. For any Excess Risk, the total amount of risk on that life to be reinsured
in the Automatic Pool and under any other individual life
reinsurance
agreement with any reinsurer does not exceed the Automatic Binding Limit
for that life shown in Exhibit II.
7. For any Excess Risk, the total amount of risk on that life in force and
applied for in all companies must not exceed the Jumbo Limit for that life
shown in Exhibit II. (For Last Survivor risks, see the Last Survivor Limits
and Retention Worksheet in Exhibit II.) Any amounts of risk being replaced
by the Ceding Company may be deducted from this total amount of risk only
under the following conditions:
a. Existing permanent insurance is being replaced by the Ceding
Company, with or without a Section 1035 exchange, and the Ceding
Company has obtained a duly executed absolute assignment of the
insurance being replaced; or
b. Existing term insurance is being replaced by the Ceding Company, and
the Ceding Company has obtained a duly executed absolute assignment
of the insurance being replaced; or
c. An internal replacement is being made, where the Ceding Company is
replacing an in-force policy with a new policy of equal or greater
death benefit.
When the total amount in force and applied for, that is to be compared with the
applicable Jumbo Limit, is reduced due to the above conditions, the Ceding
Company assumes full responsibility to effect the cancellation of life insurance
coverage under the replaced insurance concurrently with the commencement of
coverage under the new policy. If the cancellation does not occur in a timely
manner and the failure to cancel results in the new policy causing reinsurance
coverage to exceed the applicable Jumbo Limit, then the Reinsurer may (when the
Reinsurer becomes aware of the Jumbo Limit violation) decline reinsurance
coverage on the new policy during the period of time while both policy coverages
are in effect, by written notice to the Ceding Company. Once this notice has
been given, the Reinsurer will have no liability for reinsurance coverage on the
new policy while both policy coverages are in effect and shall refund to the
Ceding Company all related Reinsurance Premiums for the new policy. However, if
reinsurance coverage on the new policy is declined for this reason and the
cancellation of life insurance coverage
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under the replaced insurance is later effected, then, upon receipt of the Ceding
Company's written notice to this effect, the Reinsurer will again become liable
for reinsurance coverage on the new policy as of the effective date of
cancellation of coverage under the replaced policy, and Reinsurance Premiums for
the new policy will again be payable.
8. If all the other requirements for Automatic Reinsurance are met and the
life is a player or coach on a team in the National Hockey League, the
National Football League, the National Basketball Association or Major
League Baseball, and:
a. The risk is not an Excess Risk, then the Ceding Company shall notify
the Reinsurer of this fact at the time of issue of the risk; or
b. The risk is an Excess Risk, then, prior to ceding the risk
automatically under this Agreement, the Ceding Company must confirm
the Reinsurer's available capacity for that risk. The Ceding Company,
by telephone call or electronic mail, shall: (1) notify the
Reinsurer's Chief Underwriter, or designee, of the life's name, date
of birth, sport and team affiliation, the total life insurance in
force and to be placed on the life, and the amount of new reinsurance
coverage required from the Reinsurer; and (2) confirm that an
application for insurance on the life has been completed. The
Reinsurer shall endeavor to inform the Ceding Company of its
available capacity for the risk within two business days after such
notification and confirmation. After the Reinsurer has advised the
Ceding Company of the amount of its available capacity, the Ceding
Company may then cede to the Reinsurer no more than that amount on an
automatic basis under this Agreement.
9. The Ceding Company, or one of its affiliates, shall retain its share of
each risk on a life, as described in this Agreement and in any other life
reinsurance agreement applicable to risk on that life. However, the Ceding
Company reserves the right to separately reinsure any amount of the
retained risk on a life reinsured under this Agreement with these
conditions:
a. This right, as it pertains to such lives, applies only to groups of
risks defined as cohorts of risks reinsured for at least five (5)
years and issued either during a continuous period (such as one or
more years) or under one or more Plans of Insurance shown in
Schedule A, and does not apply to individual lives or to small,
non-homogeneous groups of risks;
b. The remaining amount of risk retained on that life by the Ceding
Company,
c. Any amounts of retention separately reinsured in this manner shall
not reduce the amount of the Ceding Company's retention on that life
for the purpose of any other terms of this Agreement.
Notwithstanding the above, all policies issued under the Issue First program
shall be deemed automatically reinsured. Issue First is a policy issuance
program administered by the Ceding Company, under which a policy can be issued
before the underwriting process has been completed. The Ceding Company shall
provide notice to the Reinsurer of any material changes to the program.
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B. Automatic Processing
If the requirements for Automatic Reinsurance are met for a life except for the
requirement stated above in Section A.6, but the total amount of risk on that
life to be reinsured in the Automatic Pool and under any other individual life
reinsurance agreement with any reinsurer does not exceed the Automatic
Processing Limit for that life shown in Exhibit II, then the Ceding Company may
submit to the Lead Reinsurer (designated in Schedule B) all information relating
to the insurability of that life. For Last Survivor policies where one life is
deemed uninsurable, only the information for the other life needs to be
submitted.
The Lead Reinsurer shall review the submitted information to determine if the
life should be reinsured by the Automatic Pool and, if so, on what basis. The
Lead Reinsurer shall endeavor to provide the Ceding Company with a response
within 72 hours of receipt of such information. Approval by the Lead Reinsurer
shall be binding on all other current Automatic Pool reinsurers. This process
shall be known as Automatic Processing and shall be subject to Exhibit II.
Hereinafter, all references to Automatic Reinsurance, coverage automatically
reinsured, and the Automatic Pool will include coverage reinsured through
Automatic Processing.
C. Facultative Reinsurance
If the requirements for Automatic Reinsurance are not met and the Ceding Company
applies for Facultative Reinsurance with the Reinsurer, or if the requirements
for Automatic Reinsurance are met but the Ceding Company prefers to apply for
Facultative Reinsurance with the Reinsurer, then the Ceding Company shall submit
to the Reinsurer sufficient evidence agreed upon between the Ceding Company and
the Reinsurer, relating to the insurability of each life submitted for
Facultative Reinsurance. For Last Survivor policies where one life is deemed
uninsurable, only the information for the other life needs to be submitted.
The Reinsurer shall promptly notify the Ceding Company in writing of its
declination to offer, its underwriting offer subject to additional requirements,
or its final underwriting offer. The final underwriting offer will automatically
expire upon the earliest of: (1) the date the policy application is withdrawn;
(2) the expiration date specified in the final offer; (3) the date one hundred
twenty (120) days after the date of the final offer; and (4) the date the final
offer is accepted, provided such offer is accepted within the lifetime of the
proposed insured(s).
Once the Ceding Company has accepted the Reinsurer's final underwriting offer,
then Facultative Reinsurance for the risk under this Agreement will become
effective under this Agreement as described below in Article IV.C or Article
IV.E, as applicable.
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ARTICLE IV
LIABILITY FOR REINSURANCE
A. The Reinsurer's liability for Automatic Reinsurance will begin
simultaneously with the Ceding Company's liability, but in no event prior to
the Reinsurance Effective Date.
B. The Reinsurer's liability for any risk reported as reinsured on an automatic
basis that did not meet the requirements for Automatic Reinsurance as
specified in Article III shall be limited to a refund of any net Reinsurance
Premiums paid under this Agreement with respect to such risk. Such refund
shall be made without interest.
C. The Reinsurer's liability under this Agreement for Facultative Reinsurance
on a risk:
1. Shall be subject to the terms and conditions of the accepted final
underwriting offer for that risk; and
2. Shall begin simultaneously with the Ceding Company's liability once:
a. The Reinsurer has made a written final underwriting offer to the
Ceding Company on its application for Facultative Reinsurance; and
b. The Ceding Company has accepted the Reinsurer's final underwriting
offer:
(1) While life insurance coverage (if any) is in effect under the
Ceding Company's Insurance Receipt, as provided below in Section
E; or
(2) Otherwise, by written acceptance provided to the Reinsurer.
However, the Reinsurer reserves the right to rescind its liability under this
Agreement for Facultative Reinsurance on such risk, by written notice to the
Ceding Company, if the Ceding Company has not, within 240 days after the date of
the final underwriting offer:
1. Reported the risk to the Reinsurer; or
2. Remitted the applicable first Reinsurance Premium for the risk.
D. In no event shall reinsurance be in force and binding if the issuance and
delivery of such insurance constituted the doing of business in a
jurisdiction in which the Ceding Company knowingly was not properly
licensed.
E. The Reinsurer's liability for coverage under the Ceding Company's
conditional receipt or temporary insurance agreement, whichever the Ceding
Company uses (a copy of which has been provided to the Reinsurer and
hereinafter called the "Insurance Receipt"), is limited to the amount the
Reinsurer would reinsure under this Agreement on an Automatic Reinsurance
basis, not to exceed the Insurance Receipt Limit for Basic TIA Coverage
shown in Exhibit II, (whether the risk qualifies for Automatic Reinsurance
or not) if the coverage under the policy applied for would have been
approved and issued, as limited by the terms of the Insurance Receipt,
provided:
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1. The Ceding Company has followed its normal cash-with-application procedures
for such coverage; and
2. The Ceding Company's original underwriting assessment for the risk was not
a decline (if it was a decline, the Reinsurer would have no liability for
such coverage except as described below in Paragraph 5); and
3. There is no coverage in effect on the life in the Automatic Pool through
any other Insurance Receipt having an effective date preceding, or the same
as, the effective date of such coverage; and
4. If such coverage is on a risk that also exceeds either the Automatic
Binding Limit or the Jumbo Limit for the risk as shown in Exhibit II, then
the Reinsurer's liability for such excess amount of coverage will be
limited by the Reinsurer's available capacity; and
5. If the Ceding Company has accepted any final underwriting offer(s) for
Facultative Reinsurance on the risk (whether such offer is made by the
Reinsurer as described above in Section III.C. or by any other
reinsurer(s)), then the Reinsurer's liability for such coverage under the
Insurance Receipt will be equal to:
a. The amount of coverage in effect under the terms of the Insurance
Receipt; multiplied by
b. The proportion equal to the amount of Facultative Reinsurance
included in the Reinsurer's final underwriting offer that is accepted
by the Ceding Company, divided by the total amount of the risk to be
issued by the Ceding Company.
In no event, however, will the Reinsurer have any liability under the Insurance
Receipt once the Reinsurer has notified the Ceding Company in writing of its
declination to offer Facultative Reinsurance coverage, as described above in
Article III.C.
The Reinsurer's liability for coverage under the Insurance Receipt shall
terminate simultaneously with the termination of the Ceding Company's liability
under the Insurance Receipt.
F. The Reinsurer's liability for reinsurance on each risk will terminate when
the Ceding Company's liability terminates, unless it terminates earlier as
specified otherwise in this Agreement or later as a result of the full
acceleration of the death benefit.
G. The liability of each reinsurer in the Automatic Pool shall be separate and
not joint with the other pool reinsurers. In no way will the liability of
the Reinsurer be increased by reason of the inability of the Ceding Company
to collect from any other reinsurers, whether specific or general, any
amounts which may be due from them, whether such inability arises from
insolvency of such other reinsurers or otherwise.
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ARTICLE V
UNDERWRITING REVIEW
X. Xxxxxxx of Underwriting Review
For new business written by the Ceding Company that meets the requirements for
Automatic Reinsurance, the Ceding Company intends to underwrite applications for
such business as if the business were to be fully retained by the Ceding
Company. Such business shall be underwritten according to the Ceding Company's
standard underwriting practices and guidelines and as described in Schedules C
and D, if applicable.
The underwriting practices and professional judgment used by the Ceding Company
in arriving at a risk assessment may not agree entirely with the underwriting
practices customarily used by, or the professional judgment of, the Reinsurer
under similar circumstances.
It is the purpose of this review to:
1. Afford the Reinsurer a reasonable period of time to review the underwriting
practices used, and risk assessments made, by the Ceding Company on
automatically reinsured business; and
2. Settle on a risk assessment for a case that is mutually agreeable between
the Parties and that shall be used to determine the Reinsurance Premiums
for the risk from the beginning of the reinsurance liability under this
Agreement for any such case reviewed by the Reinsurer within that period of
time where the underwriting practices used or risk assessment made by the
Ceding Company differ materially from the opinion of the Reinsurer.
It is not the purpose of this review, nor is it within the authority of the
Reinsurer under this Agreement, to deny reinsurance coverage on any
automatically reinsured business written by the Ceding Company due to a
difference of opinion over the risk assessment on a policy application.
B. Underwriting Review Process
1. This review shall only be available to the Reinsurer during the first
twenty-four (24) months following the effective date of any risk
automatically reinsured under this Agreement.
2. For any risk reviewed during this period where the Reinsurer's opinion
differs materially from that of the Ceding Company, the Parties shall work
together in good faith to develop a mutually agreeable risk assessment to
be used to calculate the Reinsurance Premiums for that risk from the
beginning of the Reinsurer's liability for that risk under this Agreement.
3. For any risk reviewed during this period where the Parties cannot mutually
agree on a risk assessment within a reasonable time period, the Parties
shall submit the risk for dispute resolution under Article XVIII.
4. This review shall not be available and the Reinsurer may not challenge any
risk
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assessments made by the Ceding Company after this twenty-four (24) month
period. However, nothing herein shall be construed to prevent Reinsurer
from reviewing, at time of claim, all aspects of the underlying risk,
including but not limited to financial and medical underwriting, for the
purpose of confirming qualification of the risk for Automatic Reinsurance.
C. Ceding Company's Responsibilities to the Reinsurer for Underwriting Review
The Ceding Company shall provide to the Reinsurer all information in its
possession, reasonably requested by the Reinsurer that was used in underwriting
and assessing the risks for each qualifying case identified for review under
this Article.
This information to be provided to the Reinsurer may be transmitted using any
medium agreed upon by the Parties; a valid copy of the information shall satisfy
this purpose.
This information shall be delivered to the Reinsurer within thirty (30) calendar
days after the Ceding Company receives the request for the information, unless
an alternative delivery period is agreed upon by the Parties.
ARTICLE VI
REINSURANCE PREMIUMS
A. Computation
Reinsurance Premiums under this Agreement shall be calculated as described in
Exhibit I.
B. Timing
Reinsurance Premiums are payable each month of coverage for reinsured risks in
force at the end of the preceding month. For newly reinsured risks with a
reinsurance effective date during the current month, the Reinsurance Premium for
the first month of coverage will be payable in the next following monthly
statement.
C. Extended Policy Maturity
If the maturity date of a reinsured policy is extended in accordance with the
policy, the death benefit under the policy will continue to be payable as
provided in the policy, and the reinsurance under this Agreement will remain in
effect on the same terms as before the policy's original maturity date.
D. Unearned Reinsurance Premiums
The Reinsurer will refund to the Ceding Company all unearned Reinsurance
Premiums, less applicable allowances, arising from policy conversions, other
changes, and terminations described in Article X. If termination is due to
lapse, surrender or conversion, unearned Reinsurance Premium will be determined
as of the effective date of termination. If termination is due to death,
unearned Reinsurance Premium will be determined as of the date of death.
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E. Guaranteed Rates
Although the Reinsurer anticipates continuing to accept Reinsurance Premium at
the current rate level, the Reinsurer reserves the right to increase the YRT
Reinsurance Rate Factors (described in Exhibit I) for any Plan of Insurance but
in no event will the increased annual YRT Reinsurance Premium Rate, as defined
in Exhibit I, for standard risks exceed the applicable annual rates in the
Valuation Mortality Table specified in Schedule A for that Plan of Insurance.
Such increased rates shall apply for policy years beginning during the fifth
calendar year after the calendar year during which the Ceding Company receives
written notice of the rate increase.
The Reinsurer and the Ceding Company shall then endeavor in good faith to
mutually agree on the amount of rate increase that shall apply to that specific
Plan of Insurance. If the Parties cannot agree on the amount of such rate
increase for a Plan of Insurance, then the Ceding Company reserves the right to
recapture the risks associated with such Plans of Insurance without fee, as of
the effective date of the rate increase. Written notice of such recapture shall
be provided to the Reinsurer no later than thirty (30) days following the
effective date of the rate increase.
F. Payment of Reinsurance Premiums
The Net Reinsurance Premium Balance payable each month equals the sum of the
Reinsurance Premiums described above in Section A, minus the sum of any unearned
Reinsurance Premiums described above in Section D. For any month, this net
balance may be positive (greater than zero) or negative.
Any positive Net Reinsurance Premium Balance for a month is payable to the
Reinsurer. The Ceding Company shall forward this balance to the Reinsurer by its
due date, which is thirty (30) days after the close of the calendar month.
The absolute value of any negative Net Reinsurance Premium Balance for a month
is payable to the Ceding Company. The Reinsurer shall forward this balance to
the Ceding Company by its due date, which is thirty (30) days after the Ceding
Company submits the statement for that month.
G. Overpayment of Reinsurance Premiums
If the Ceding Company overpays a Net Reinsurance Premium Balance and the
Reinsurer accepts the overpayment, the Reinsurer's acceptance of the overpayment
will not constitute or create an additional reinsurance liability, and it will
not result in any additional reinsurance. Instead, the Reinsurer shall be liable
to the Ceding Company for a credit in the amount of the overpayment without
interest.
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H. Underpayment of Reinsurance Premiums
If the Ceding Company fails to make a full payment of the Net Reinsurance
Premium Balance, due to an Error defined in Article IX, the amount of
reinsurance coverage provided by the Reinsurer on the risks related to such
underpayment shall not be reduced. However, once the underpayment is discovered
by one Party and the other Party is notified of the underpayment, the Ceding
Company shall promptly pay to the Reinsurer the difference between the full
payment amount and the amount actually paid. If payment of the full amount of
the underpayment is not made to the Reinsurer within sixty (60) days after such
discovery, the underpayment shall be treated as delinquent premium and be
subject to the conditions listed below in Section I.
The Reinsurer reserves the right to charge the Ceding Company interest on the
amount of the underpayment, even if it becomes delinquent as described below in
Section I. Such interest will accrue from the due date of the underpaid Net
Reinsurance Premium Balance and be computed as described in Section XXII.P.
I. Termination of Reinsurance for Nonpayment of Reinsurance Premiums
If undisputed Reinsurance Premiums for one or more reinsured risks are
delinquent, the Reinsurer has the right to terminate its reinsurance liability
on those risks by giving the Ceding Company sixty (60) days advance written
notice of termination. This notice shall list the risks and the amount of the
delinquent Reinsurance Premium for each risk. If the delinquent Reinsurance
Premiums have not been paid to the Reinsurer as of the end of such notice
period, the Reinsurer's liability will terminate for the risks described in the
termination notice at the end of such notice period.
If the Reinsurer's liability on one or more of the Ceding Company's risks is
terminated because of nonpayment of Reinsurance Premiums, the Ceding Company
will continue to be liable to the Reinsurer after the termination for all unpaid
Reinsurance Premiums earned up to the date of such termination.
The Ceding Company shall not force termination under the provisions of this
Section I solely to avoid the recapture requirements or to transfer the block of
business reinsured to another reinsurer.
J. Reinstatement of Reinsurance Terminated for Nonpayment of Reinsurance
Premiums
The Ceding Company may reinstate reinsurance on risks terminated in accordance
with Section I 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, the Reinsurer will not be liable for any claim incurred
between the date of termination and the date of reinstatement of the reinsurance
coverage. The effective date of reinstatement will be the date the required
unpaid Reinsurance Premiums are received by the Reinsurer.
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ARTICLE VII
REINSURANCE REPORTING
A. Accounting Statements and Other Reports
Within thirty (30) days after the close of each calendar month the Ceding
Company shall provide the Reinsurer an electronic accounting statement. The
Ceding Company shall also provide the Reinsurer with additional reports as
provided in Exhibit VI.
For Automatic and Facultative Reinsurance becoming effective during the calendar
month, the Ceding Company will notify the Reinsurer of such new reinsurance
business in the succeeding monthly report.
The Ceding Company may provide an estimated Net Amount at Risk for new
reinsurance business in the first monthly report in which such business appears.
In the event that the Ceding Company provides an estimated Net Amount at Risk,
it shall provide an actual Net Amount at Risk in subsequent monthly reports.
Additional reports reasonably requested by a Party will be provided by the other
Party in a timely manner.
B. Reporting Format and Medium
The information to be provided by the Ceding Company in these monthly reports to
the Reinsurer shall be in a format and be transmitted using a medium mutually
agreeable to the Parties. As of the Effective Date of this Agreement, the
information to be provided by the Ceding Company in these monthly reports to the
Reinsurer shall be on a self-administered reporting basis as set out in Exhibit
VI.
ARTICLE VIII
CREDIT FOR REINSURANCE
X. Xxxxxxxxxxx Credit
The Parties intend that the Ceding Company be entitled to take credit for the
reinsurance ceded under this Agreement in its statutory financial statements
filed in all jurisdictions in which the Ceding Company is licensed, accredited,
or otherwise authorized to transact business ("Reinsurance Credit"). The Parties
shall use best efforts to ensure that such entitlement shall become and remain
available to the Ceding Company throughout the duration of this Agreement.
The amount of the Reinsurance Credit shall be determined by the Ceding Company
and shall include mortality risk reserves, unearned premium reserves, and
reinsurance recoverables on paid and unpaid losses for the reinsurance ceded
under this Agreement. Such amounts shall be calculated in accordance with
applicable accounting and valuation laws, regulations and actuarial guidelines
to which the Ceding Company is subject on each valuation date and shall take
into account the terms of this Agreement.
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B. Security for Reinsurance Credit
In the event the Ceding Company reasonably believes it will not be entitled to
take Reinsurance Credit as a result of a change to the Reinsurer's licensing or
accreditation, the Reinsurer shall establish and maintain the security, at its
sole expense, that is needed to allow the Ceding Company to continue to take
Reinsurance Credit and that meets all applicable laws and regulations regarding
Reinsurance Credit.
In the event the Ceding Company reasonably believes it will not be entitled to
take Reinsurance Credit as a result of a regulatory change or interpretation
outside of the Reinsurer's control, the Reinsurer shall establish and maintain
the security that is needed to allow the Ceding Company to continue to take
Reinsurance Credit and that meets all applicable laws and regulations regarding
Reinsurance Credit. In this event, the expense of establishing and maintaining
the security shall be shared equally by the Ceding Company and the Reinsurer.
If such security is required in either event, the Reinsurer shall establish a
trust or a letter of credit, satisfactory to the Ceding Company, in a form that
meets all applicable standards of law and regulation to entitle the Ceding
Company to claim such Reinsurance Credit. However, the Reinsurer may propose an
alternative option under which Reinsurance Credit shall be allowed the Ceding
Company, at the sole discretion and approval of the Ceding Company.
The Parties shall amend this Agreement, in accordance with Section I.B, to
reflect the establishment of such security or such approved alternative option
so that the Ceding Company shall continue to be entitled to take such
Reinsurance Credit.
If the Reinsurer fails to provide the Ceding Company with such security or
approved alternative option needed to continue to be entitled to take such
Reinsurance Credit for the business covered under this Agreement, the Ceding
Company may recapture the business covered under this Agreement, subject to the
terms of Article XVI. In no event shall recapture be construed to be the
exclusive remedy of the Ceding Company.
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ARTICLE IX
ERRORS
Errors, omissions, oversights, delays or misunderstandings in the administration
of this Agreement (collectively, "Error") by either Party, shall not invalidate
the reinsurance hereunder. As soon as reasonably possible after discovery,
notice shall be provided, the Error shall be rectified and both Parties shall be
restored, to the extent possible, to the position they would have occupied had
the Error not occurred.
However, if it is not reasonably possible to restore each Party to the position
it would have occupied if not for the Error, the Parties will endeavor in good
faith to promptly resolve the situation in a manner that is fair and reasonable,
and most closely approximates the intent of the Parties as evidenced by this
Agreement.
ARTICLE X
POLICY CONVERSIONS, OTHER CHANGES, AND TERMINATIONS
A. Conversions
A conversion is a policyholder's exercise of a contractual right to replace
in-force coverage with a new permanent policy without evidence of insurability.
Conversions from a policy reinsured under this Agreement will continue to be
reinsured under this Agreement as follows:
1. The converted coverage under the new policy will be reinsured with the
Reinsurer in the same proportion as was determined for the in-force
coverage converted; and
2. Reinsurance Premiums for such converted coverage shall be calculated on a
point-in-scale basis.
If the new policy was converted under the Conversion Option Rider from either
(a) two single life policies reinsured under this Agreement; or (b) one single
life policy reinsured under this Agreement and one newly underwritten life, to a
last survivor policy, Reinsurance Premiums for both lives shall be calculated on
a point-in-scale basis. The Reinsurance Premiums for both lives shall be
calculated using the tables of Annual Rates per $1,000 of Reinsured Net Amount
at Risk and table of YRT Reinsurance Rate Factors applicable to the earliest
original coverage in accordance with the procedures set out in Exhibit I.
Conversions from a policy not reinsured under this Agreement shall not be
reinsured under this Agreement. Notwithstanding the foregoing, face amount
increases on conversions from term plans reinsured by the Reinsurer under
another
reinsurance agreement to plans of insurance covered under this Agreement
shall be reinsured under this Agreement. The Reinsurer shall reinsure such
increases using new-business rates.
B. Increases and Decreases in Policy Face Amount
1. If the face amount of a policy reinsured under this Agreement increases
and:
a. The increase is subject to full underwriting, then the provisions of
Article III shall apply to the increase in reinsurance, and
Reinsurance Premiums for the increase shall be based on new-business
rates; or
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b. The increase is not subject to full underwriting, the Reinsurer will
accept the increase, provided that:
(1) If the policy was ceded automatically, the Ceding Company
underwrote the full face amount (including all scheduled
increases) in accordance with the terms of this Agreement (whether
through Automatic Reinsurance or Automatic Processing); or
(2) If the policy was ceded facultatively, the Ceding Company received
approval from the Reinsurer for the full face amount (including
all scheduled increases) at the time of facultative application.
Reinsurance Premiums for increases not subject to full underwriting shall be
calculated on a point-in-scale basis.
c. For increases in accordance with B.1.b, the Ceding Company's
retention and the amount of risk ceded to the Reinsurer shall be
determined for the increase at the time the increase goes into
effect, as follows:
(1) For increases in accordance with B.1.b (1), in accordance with
Schedule B; or
(2) For increases in accordance with B.1.b (2), the Ceding Company's
retention and the amount of risk ceded to the Reinsurer shall be
determined by mutual agreement of the Parties.
2. If the face amount of a policy reinsured under this Agreement decreases
and:
a. If the face amount of a policy that was previously increased is
subsequently decreased, the decrease will be applied first to the
increase with the latest effective date, and then to the increase
with the next earlier effective date, and so forth as necessary,
until applying any remaining decrease to the initial face amount of
the policy.
b. The Ceding Company's retention and the amount of risk ceded to the
Reinsurer shall be determined at the time the decrease goes into
effect, as follows:
(1) For decreases under policies ceded automatically, in accordance
with Schedule B; or
(2) For decreases under policies ceded facultatively, the amount of
the risk reinsured to the Reinsurer shall be reduced
proportionately.
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C. Policy Exchanges and Other Changes
A policy exchange is a new policy replacing an existing policy where the new
policy is not fully underwritten. Exchanges from one single life policy
reinsured under this Agreement to a different single life policy will be
reinsured on a point-in-scale basis. Likewise, exchanges from one last survivor
policy reinsured under this Agreement to a different last survivor policy will
be reinsured on a point-in-scale basis.
Exchanges from a last survivor policy reinsured under this Agreement with the
Last Survivor Exchange Option Rider or Twenty-Four (24) Month Exchange Rider to
two single life policies will be reinsured, if both risks under the Last
Survivor policy were fully underwritten (and neither was deemed to be
uninsurable) and the total face amount of the two new Single Life policies does
not exceed the face amount of the Last Survivor policy. In this event, the new
Single Life policies shall be reinsured on a point-in-scale basis at the
applicable single life rates. For each new policy after the exchange, the
insurance will continue to be reinsured by the Reinsurer in the same proportions
as set at issue of the original coverage.
If there is a contractual change in a policy reinsured under this Agreement that
is not subject to full underwriting, other than the changes described above in
Sections A and B, the insurance shall continue to be reinsured with the
Reinsurer in the same proportions as the original coverage and Reinsurance
Premiums for contractual changes shall be calculated on a point-in-scale basis.
The Ceding Company shall notify the Reinsurer of any such changes in policies
reinsured under this Agreement in its monthly reinsurance reports.
Exchanges made from a policy not reinsured under this Agreement shall not be
reinsured under this Agreement.
D. Policy Terminations and Lapses
If a policy reinsured under this Agreement terminates, the reinsurance for the
risk will terminate as of the effective date of policy termination.
Notwithstanding the foregoing, if a policy is deemed to have terminated as a
result of full acceleration of the death benefit, the corresponding reinsurance
on the policy will continue as specified in Section IV.F.
If a policy reinsured under this Agreement lapses to extended term insurance
under the terms of that policy, the corresponding reinsurance on the reinsured
policy will continue on the same basis as the original reinsurance until the
expiry of the extended term period.
If a policy reinsured under this Agreement lapses to reduced paid-up insurance
under the terms of that policy, the amount of the corresponding reinsurance on
the reinsured policy will be reduced according to the terms of Section B.2.
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If the Ceding Company allows a policy reinsured under this Agreement to remain
in force under its automatic premium loan provisions, the corresponding
reinsurance on the reinsured policy will continue unchanged and in force as long
as such provisions remain in effect, except as otherwise provided in this
Agreement.
E. Reduction in Retained Coverage on a Life
If any portion of the aggregate amount of insurance retained by the Ceding
Company or its affiliates on an individual life reduces or terminates, the
Ceding Company or its affiliates will recalculate its retention on any remaining
risk(s) in force on that life. The Ceding Company or its affiliates will not be
required to retain an amount in excess of its retention limit for the age,
mortality rating, and risk classification based on the applicable retention
limit that was in effect at the time of issue for any risk. Unless provided for
otherwise in the applicable
reinsurance agreements, the Ceding Company or its
affiliates will first recalculate the retention on the risk(s) having the same
mortality rating as the terminated risk(s). Order of recalculation will
secondarily be determined by effective date of the risk, oldest first.
F. Multiple Reinsurers
If reinsurance of a risk is shared by more than one reinsurer, the Reinsurer's
percentage of any increased or reduced reinsurance will be the same as its
initial percentage of the reinsurance for that risk unless specified otherwise
in Schedule B or agreed upon by the Reinsurer.
G. Mortality Rating Changes
On Facultative Reinsurance, if the Ceding Company wishes to reduce the mortality
rating or otherwise improve the risk class, such change shall be subject to the
Reinsurer's approval. On Automatic Reinsurance, the Reinsurer shall accept this
change if the change qualifies under the underwriting practices and guidelines
described in the Ceding Company's standard practices and guidelines and
Schedules C or D, as applicable.
H. Rescission of Policy Coverage Prior to Death Claim
If a misrepresentation, misstatement, or omission on an application results in
the Ceding Company's rescission of coverage, the Reinsurer shall refund to the
Ceding Company any Reinsurance Premiums it received on that coverage. This
refund shall be in lieu of any and all other reinsurance benefits payable on
that coverage under this Agreement. The Reinsurer shall also reimburse the
Ceding Company for its proportionate share of any non-routine expenses incurred
by the Ceding Company in connection with the rescission. Such non-routine
expenses shall include the costs of investigations and of obtaining financial
and medical reports; they would not include the compensation of salaried
officers and employees of the Ceding Company.
The Ceding Company shall promptly notify the Reinsurer in the event a rescission
is challenged by legal action. The Ceding Company shall also furnish to the
Reinsurer copies of all information related to such action.
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Recognizing the urgent nature of these communications, within eight (8) business
days of receipt of such information, the Reinsurer shall notify the Ceding
Company in writing of the Reinsurer's decision whether or not it shall
participate in the defense of the rescission. If the Reinsurer does not respond
to the Ceding Company within such eight (8) business day period, the Reinsurer
will be deemed to have elected to participate in the defense of the rescission.
If the Reinsurer elects or is deemed to have elected to participate in the
defense of the rescission, the Reinsurer shall also reimburse the Ceding Company
for its proportionate share of court costs and legal expenses incurred by the
Ceding Company in connection with the defense of the rescission of coverage.
If a rescission of policy coverage is reversed and the policy coverage is
restored to in-force status, any related reinsurance coverage under this
Agreement shall also be restored upon the Ceding Company's payment to the
Reinsurer of all applicable Reinsurance Premiums.
ARTICLE XI
POLICY REINSTATEMENT
If a policy reinsured under this Agreement lapses or terminates, and is later
reinstated under the Ceding Company's terms and rules, the Reinsurer will
reinstate the reinsurance as follows:
A. Procedure to Reinstate Reinsurance
If the policy being reinstated was reinsured on an automatic basis under this
Agreement, or if the policy being reinstated was reinsured on a facultative
basis under this Agreement and the reinstatement occurs less than ninety (90)
days after the policy has lapsed or terminated, the reinsurance cession shall be
automatically reinstated.
If the policy being reinstated was reinsured on a facultative basis under this
Agreement and the reinstatement occurs ninety (90) days or more after the policy
has lapsed or terminated, copies of the application for reinstatement, any
personal declaration or medical examination, and any other underwriting
documents that the Ceding Company routinely requires (collectively,
"Underwriting Information") shall be forwarded by the Ceding Company to the
Reinsurer, together with the request for reinstatement of the reinsurance. The
Reinsurer shall notify the Ceding Company promptly of its acceptance or
declination of the request for reinstatement.
The Reinsurer reserves the right to request any available Underwriting
Information on any reinstatement.
Reinsurance Premiums for a reinstated policy will be calculated on a
point-in-scale basis.
B. Cost to Reinstate Reinsurance
Upon reinstatement of reinsurance under this Article, the Ceding Company shall
pay the Reinsurer Reinsurance Premiums in the same manner as the Ceding Company
received corresponding policy charges under the policy for the period of lapse.
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The Reinsurer reserves the right to charge the Ceding Company interest on such
Reinsurance Premiums in accordance with Section XXII.P.
C. Nonforfeiture Reinsurance Termination
If the Ceding Company reinstates a policy that is reinsured while under an
extended term or reduced paid-up nonforfeiture option, then reinsurance under
such nonforfeiture option will terminate upon policy reinstatement.
ARTICLE XII
CLAIMS
A. Liability for Claims
The Ceding Company is responsible for the settlement of claims on policies
reinsured under this Agreement. It is the Ceding Company's sole decision to
determine whether a claim is payable under a policy. The Ceding Company shall
operate in good faith and adjudicate claims on policies reinsured under this
Agreement as if there were no reinsurance. All claim settlements on policies
reinsured hereunder will be subject to the terms and conditions of the
particular policy, the applicable statutory requirements, and the standard claim
practices of the Ceding Company. The Ceding Company's decision to pay a claim,
provided the Ceding Company has complied with the terms of this Agreement, shall
be binding on the Reinsurer, and the Reinsurer shall be liable for its portion
of the reinsurance on that risk, as described in Schedule B.
B. Notification of Claims
The Ceding Company shall promptly notify the Reinsurer when it is advised of a
death claim on coverage reinsured under this Agreement.
C. Claim Payment
1. Proofs
If a death claim is made under a risk reinsured under this Agreement, the Ceding
Company shall provide the Reinsurer with copies of proof(s) of death of the
insured(s), proof of claim payment, and the claimant's statement (collectively
"Proofs"). Copies of claim files, underwriting files and other documents
relating to a claim payment under this Agreement shall be furnished to the
Reinsurer upon written request.
2. Payment of Reinsurance Proceeds
The Reinsurer shall pay the Ceding Company reinsurance proceeds on claims for
which it is liable, on claims made under policies eligible for reinsurance under
this Agreement. The due date for such payment is the date thirty (30) days after
the date that the Reinsurer has received the Proofs and other information
reasonably requested by the Reinsurer.
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The Reinsurer shall also reimburse the Ceding Company for its proportionate
share of non-routine claims expenses (defined below in Section G) and any
interest paid by the Ceding Company on such claims, such proportion based on the
Reinsurer's proportionate share of the Total Net Amount at Risk of the coverage,
as defined in Schedule B. Interest paid by the Ceding Company on such claims
shall be in accordance with the policy provisions and applicable state
requirements.
Payment of reinsurance proceeds will be made to the Ceding Company in a single
sum, regardless of the Ceding Company's mode of settlement with the payee under
the policy.
3. Claim Balances in Default
If the Reinsurer is delinquent by more than thirty (30) days on an undisputed
amount due to the Ceding Company relating to a claim:
a. The Ceding Company shall have the right to charge interest on delinquent
amounts in accordance with Section XXII.P;
b. The Ceding Company shall have the right to offset such amount, including any
accrued interest charged by the Ceding Company, from any amount due the
Reinsurer in accordance with Article XVII; and
c. To the extent there is an insufficient balance from which to offset such
amounts, the Ceding Company shall have the right to recapture the remaining
reinsurance under this Agreement, as described in Article XVI, provided the
Ceding Company has given the Reinsurer ninety (90) days advance written
notice of its intent to recapture and the Reinsurer has failed to pay the
net amount due, including any accrued interest charged by the Ceding
Company, by the end of such notice period. In no event shall recapture be
construed to be the exclusive remedy of the Ceding Company.
D. Contested Claims
1. The Ceding Company shall promptly notify the Reinsurer of its intent to
deny, reduce, compromise, contest, litigate, or assert defenses against
(collectively, "Contest") a claim on a risk reinsured under this Agreement.
The Ceding Company shall also furnish all information material to such
action.
Recognizing the urgent nature of these communications, within eight (8)
business days of receipt of all such information (the "Contested Claim
Review Period"), the Reinsurer shall notify the Ceding Company in writing
of the Reinsurer's decision whether or not it shall participate in the
Contest. If the Reinsurer does not respond to the Ceding Company within the
Contested Claim Review Period, the Reinsurer will be deemed to have elected
to participate in the Contest.
2. If the Reinsurer elects or is deemed to have elected to participate in the
Contest, then:
a. The Ceding Company will advise the Reinsurer of all significant
developments, including notice of legal proceedings initiated in
connection with the contested claim at reasonable intervals until
the claim is resolved;
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b. The Reinsurer shall pay its proportionate share of the settlement of
the claim, such proportion based on the Reinsurer's proportionate
share of the Total Net Amount at Risk of the coverage, as defined in
Schedule B, and in accordance with Article XIII; and
c. The Reinsurer shall also share in the non-routine claims expenses
(defined below in Section G) and Extra-Contractual Obligations, as
defined in Article XIII, associated with the Contest in the same
proportion as stated above in Paragraph b.
3. If the Reinsurer declines to participate in the Contest of the claim, then:
a. The Reinsurer shall release all of its liability under this
Agreement for the claim by paying the Ceding Company the full amount
of its reinsurance coverage under this Agreement for the claim as
though there were no Contest and its proportionate share of
non-routine claims expenses (defined below in Section G) incurred to
the date on which the Reinsurer notifies the Ceding Company that it
declines to be a party to the action, in the same proportion as
stated above in Paragraph 2.b; and
b. The Reinsurer shall not share in any subsequent increase or decrease
in liability for the claim.
4. The Reinsurer will not recommend that the Ceding Company contest a claim.
E. Misstatement of Age or Sex
If the amount of insurance provided by the policy or policies reinsured under
this Agreement is increased or decreased because of misstatement of age or sex
that is established after the death of the insured (or the second death in the
case of a last survivor policy), the Reinsurer will share with the Ceding
Company in this increase or decrease of insurance in proportion to the
Reinsurer's share of the Total Net Amount at Risk, as defined in Schedule B. The
amount will be adjusted from the inception of the policy, and any difference in
amounts due between the Parties under this Agreement will be settled without
interest. The Reinsurer's proportionate share will be equal to share of the
Total Net Amount at Risk of the increase or decrease, as defined in Schedule B.
F. Return of Premium for Misrepresentations and Suicides
1. If a misrepresentation, misstatement, or omission on an application, or the
death of an insured by suicide, results in the Ceding Company returning the
policy premiums (or monthly deductions) to the policy owner rather than
paying the death benefits under a risk reinsured under this Agreement, the
Reinsurer shall refund to the Ceding Company all of the Reinsurance
Premiums it received on that coverage without interest. This refund paid by
the Reinsurer shall be in lieu of any and all other reinsurance benefits
payable on that risk under this Agreement.
2. In addition, the Reinsurer shall pay its proportionate share of reasonable
third-party investigation and legal expenses connected with the Ceding
Company's decision to return the policy premiums (or monthly deductions) as
described above in Section F.1.
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G. Claims Expenses
1. Routine Claims Expenses
The Ceding Company shall pay routine expenses incurred in connection with
settling claims. These expenses may include the compensation of agents and
employees, and the expense of routine investigations.
2. Non-Routine Claims Expenses
The Reinsurer will participate in non-routine claims expenses, defined as the
expenses incurred by the Ceding Company in connection with the Contest, or
potential Contest, of a claim. These non-routine claims expenses may include
court costs and investigation, autopsy and legal expenses; they would not
include the compensation of salaried officers and employees of the Ceding
Company. However, if the Reinsurer declines to participate in the Contest of a
claim as described above in Section D.3, the Reinsurer will not share in any
non-routine expenses for the claim that are incurred after the date of the
Reinsurer's release.
3. Claims expenses do not include expenses incurred by the Ceding Company as a
result of a dispute or contest arising out of conflicting claims of entitlement
to policy proceeds.
ARTICLE XIII
EXTRA-CONTRACTUAL OBLIGATIONS
In no event will the Reinsurer have any liability for any Extra-Contractual
Obligations that are awarded against the Ceding Company as a result of acts,
omissions, or course of conduct committed solely by the Ceding Company with no
involvement of the Reinsurer in connection with the business reinsured under
this Agreement. The Reinsurer will, however, to the extent permitted by law, pay
its share of Extra-Contractual Obligations awarded against the Ceding Company in
connection with the business reinsured under this Agreement if the Reinsurer
agreed in writing to the act or course of conduct of the Ceding Company that
resulted in the assessment of such damages.
For the purposes of this Agreement, "Extra-Contractual Obligations" shall mean
any punitive, exemplary, compensatory, consequential or other damages paid or
payable by the Ceding Company as a result of an action arising under, relating
to, or in connection with a Contest.
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ARTICLE XIV
DAC TAX SECTION 1.848-2(G)(8) ELECTION
The Ceding Company and the Reinsurer jointly agree to the DAC Tax Election
pursuant to Section 1.848-2(g)(8) of the Income Tax Regulations (the "Treasury
Regulations") issued under Section 848 of the Internal Revenue Code of 1986, as
amended (the "Code"). As used in this Article, the terms "net positive
consideration," "net consideration," "specified policy acquisition expenses,"
and "general deductions limitation" are defined by reference to Treasury
Regulations Section 1.848-2(g)(8) and Code Section 848 as of the Effective Date.
As part of this DAC Tax Election, both Parties agree:
A. That the Party with the net positive consideration for this Agreement for
each taxable year will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deductions
limitation of Code Section 848(c)(1);
B. To exchange information pertaining to the amount of net consideration under
this Agreement each year to ensure consistency; and
C. That the method and timing of the exchange of this information shall be as
follows:
1. The Ceding Company shall submit a schedule to the Reinsurer by May 1
of each year with its calculation of the net consideration for the
preceding calendar year.
2. The Reinsurer shall, in turn, complete the schedule by indicating
acceptance of the Ceding Company's calculation of net consideration
or shall note in writing any discrepancies, and then return the
completed schedule to the Ceding Company by June 1 of each year.
3. If there are any discrepancies between the Ceding Company's and the
Reinsurer's calculations of net consideration, the Parties shall act
in good faith to resolve these discrepancies in a manner that is
acceptable to both Parties by July 1 of each year.
4. Each Party shall attach the final schedule to its respective U.S.
federal income tax return for each taxable year in which
consideration is transferred under this Agreement. The schedule
shall identify this Agreement, shall restate the election described
in this Article, and shall be signed by a duly authorized
representative of each Party.
D. This DAC Tax Election shall be effective on the Effective Date of this
Agreement and shall be effective for all years for which this Agreement
remains in effect.
E. The Ceding Company and the Reinsurer each represent and warrant that they
are subject to U.S. taxation under the provisions of either Subchapter L of
Chapter 1 or Subpart F of Part III of Subchapter N of Chapter 1 of the Code.
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F. Should the Reinsurer breach the representation and warranty of tax status
set forth in this Article, the Reinsurer agrees to indemnify and hold the
Ceding Company, its directors, officers, employees, agents, and
shareholders harmless from any and all liability, loss, damages, fines,
penalties, interest, and reasonable attorney's fees that the Ceding
Company, its directors, officers, employees, agents, and shareholders may
sustain by reason of such breach.
ARTICLE XV
INSOLVENCY
A. Insolvency of the Ceding Company
In the event of the insolvency of the Ceding Company, as determined by the
regulatory agency responsible for such determination, all reinsurance will be
payable by the Reinsurer on the basis of the liability of the Ceding Company
under policies reinsured under this Agreement directly to the liquidator,
receiver or statutory successor of the Ceding Company, without diminution
because of the insolvency of the Ceding Company.
In the event of the insolvency of the Ceding Company, the liquidator, receiver
or statutory successor will give written notice to the Reinsurer of all pending
claims against the Ceding Company on any policy reinsured under this Agreement
within a reasonable time after such claim is filed in the insolvency proceeding.
While a claim is pending, the Reinsurer may investigate and interpose, at its
own expense, in the proceeding where such claim is to be adjudicated, any
defense or defenses which it may deem available to the Ceding Company or its
liquidator, receiver or statutory successor.
The expenses incurred by the Reinsurer will be chargeable, subject to court
approval, against the Ceding Company as part of the expense of the insolvent the
Ceding Company to the extent of a proportionate share of the benefit which may
accrue to the Ceding Company solely as a result of the defense undertaken by the
Reinsurer. Where two or more reinsurers are involved in the same claim and a
majority in interest elect to interpose a defense or defenses to any such claim,
the expense will be apportioned in accordance with the terms of this Agreement
as though such expense had been incurred by the Ceding Company.
Insolvency of one Ceding Company shall not affect this Agreement as it relates
to the solvent Ceding Company.
B. insolvency of the Reinsurer
In the event of Reinsurer's insolvency, as determined by the regulatory agency
responsible for such determination, the Ceding Company may recapture all of the
inforce policies reinsured under this Agreement by giving written notice to the
Reinsurer of its intent to do so. The effective date of recapture will be no
earlier than the effective date of the Reinsurer's insolvency.
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ARTICLE XVI
RECAPTURE OF REINSURED BUSINESS
The Ceding Company has the right to recapture risks reinsured under this
Agreement as described under the following circumstances:
(1) If the Ceding Company does not agree with the rate increase on a Plan of
Insurance in accordance with Section VI.E;
(2) With sixty (60) days advance written notice to the Reinsurer, for risks
reinsured under this Agreement for at least twenty (20) years;
(3) If the Reinsurer fails to provide security in accordance with Section
VIII.C;
(4) If the Reinsurer is delinquent on payment of an undisputed net amount due
in accordance with Section XII.C.3; or
(5) If the Reinsurer is deemed insolvent, in accordance with Article XV.
In the event recapture is elected based on Section A (1) or (2) described above,
no recapture fees are due and no reserves will be transferred.
In the event recapture is based on any of the other circumstances described in
Section A above:
1. The Ceding Company and the Reinsurer shall mutually agree upon the
recapture terms -- however, if no such agreement can be reached, an
independent actuary shall be hired to determine the value of the business
to be recaptured. The costs of the independent actuary will be shared
equally between the Ceding Company and the Reinsurer;
2. The value of the business to be recaptured will be based on reasonable
actuarial assumptions as to interest, mortality, and lapse rates; and
3. Other actuarial assumptions and considerations used to value the business
to be recaptured shall include, but not be limited to:
a. Projected future claims costs;
b. Projected future Reinsurance Premiums;
c. Statutory reserve requirements;
d. NAIC risk based capital and/or other capital measures, which are
reflective of statutory capital levels, that should be maintained for
an insurance company with financial strength ratings comparable to
those of the Ceding Company; and
e. Any other considerations considered relevant by the Parties or the
independent actuary.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
27
ARTICLE XVII
OFFSET
Any undisputed debts or credits, in favor of or against either the Reinsurer or
the Ceding Company, with respect to this Agreement between the Parties, are
deemed mutual debts or credits and may be offset, and only the balance will be
allowed or paid provided the Party that seeks to avail itself of this right of
offset is not in breach of any provision of this Agreement.
To the extent permitted by applicable law, the right of offset will not be
affected or diminished because of the insolvency of either Party.
ARTICLE XVIII
DISPUTE RESOLUTION
In the event that any dispute between the Parties under this Agreement cannot be
resolved to mutual satisfaction, the dispute will first be subject to good-faith
negotiation, as described below, in an attempt to resolve the dispute without
the need to institute formal arbitration proceedings.
Within ten (10) calendar days after one of the Parties has given the other the
first written notification of the specific dispute, each of the Parties will
appoint a designated officer to attempt to resolve the dispute. The designated
officers will meet at a mutually agreeable location as early as possible and as
often as necessary, in order to discuss the dispute and to negotiate in good
faith without the necessity of any formal arbitration proceedings. During the
negotiation process, all reasonable requests made by one officer to the other
for information will be honored. The designated officers will decide the
specific format for such discussions.
If the designated officers cannot resolve the dispute within thirty (30)
calendar days of their first meeting, both Parties agree that they will submit
the dispute to formal arbitration. However, the Parties may agree in writing to
extend the negotiation period for an additional thirty (30) calendar days.
No later than fifteen (15) calendar days after the final negotiation meeting,
the designated officers taking part in the negotiation will give both Parties
written confirmation that they are unable to resolve the dispute, and that they
recommend establishment of formal arbitration in accordance with Article XIX.
Allocated Retention. Pool -- Effective 11/1/2012
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28
ARTICLE XIX
ARBITRATION
It is the intention of the Parties that the customs and practices of the life
and health insurance and life and health reinsurance industries will be given
full effect in the operation and interpretation of this Agreement. The Parties
agree to act in all matters with good faith. However, if, in accordance with
Article XVIII, the Parties cannot mutually resolve a dispute that arises out of
or relates to this Agreement, the dispute will be decided through arbitration as
follows:
An arbitration panel consisting of three past or present officers of life and
health insurance or life and health reinsurance companies not affiliated with
either of the Parties in any way will settle the dispute. Each Party will
appoint one arbitrator within thirty (30) calendar days of the demand for formal
arbitration and the two so appointed shall then appoint the umpire. If either
Party refuses or neglects to appoint an arbitrator within the thirty (30)
calendar days, the other Party may appoint the second arbitrator. If the two
arbitrators cannot agree on the umpire within thirty (30) calendar days after
both arbitrators have been appointed, each of the two arbitrators shall nominate
three individuals within ten (10) calendar days thereafter. Each arbitrator
shall then decline two of the nominations presented by the other arbitrator. The
umpire shall be chosen from the remaining two nominations by drawing lots.
Within thirty (30) calendar days after the appointment of the umpire, the
arbitration panel shall meet and determine timely periods for briefs, discovery
procedures, and schedules for hearings. The arbitration shall take place at a
location determined by the arbitration panel and, insofar as the arbitration
panel looks to the substantive law, it shall consider the laws of the state of
Connecticut. The arbitration panel shall have the power to set all procedural
rules for the arbitration, including the discretion to make any order with
respect to pleadings, discovery, depositions, scheduling, the hearing, reception
of evidence and any other matter whatsoever relating to the conduct of the
arbitration.
Within sixty (60) calendar days after the beginning of the arbitration
proceedings the arbitration panel will issue a written, reasoned, decision on
the dispute and a statement of any award to be paid as a result. The decision
will be based on the terms and conditions of this Agreement as well as the usual
customs and practices of the insurance and reinsurance industry, rather than on
strict interpretation of the law. The decision will be final and binding on both
Parties and there will be no further appeal. Judgment upon the award may be
entered in any court having jurisdiction thereof.
In the absence of a decision to the contrary by the arbitration panel, each
Party shall bear the expense of its own arbitration activities, including, but
not limited to, its appointed arbitrator's fees, outside attorney fees, witness
fees, expenses incurred in the taking or preservation of testimony, and other
related expenses.
The Parties shall jointly and equally bear the expense of the third arbitrator
and other costs directly attended to the arbitration proceeding, provided that
neither Party's liability for such costs shall ever exceed 50% of the total of
such costs, regardless of the other Party's failure to pay.
The Parties may mutually agree to extend any of the periods shown in this
Article.
Allocated Retention. Pool -- Effective 11/1/2012
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29
ARTICLE XX
TERMINATION OF THIS AGREEMENT FOR NEW BUSINESS
A. Either Party may terminate this Agreement, as it applies to the reinsurance
of new policies being issued by the Ceding Company:
(1) immediately upon written notice to the other Party, if that other
Party becomes insolvent as described in Article XV; or
(2) with ninety (90) days advance written notice to the other Party.
B. After termination of this Agreement for new business, the Parties shall
remain liable under the terms of this Agreement for:
(1) reinsurance of policies that becomes effective prior to such
termination of this Agreement;
(2) reinsurance of policies with an application date on or before the
effective date of termination; and
(3) reinsurance that becomes effective as a result of coverage changes
described in accordance with Article X.
C. The Ceding Company shall continue to cede, and the Reinsurer shall continue
to accept, any new business issued prior to the termination of this
Agreement.
ARTICLE XXI
CONFIDENTIALITY
During the course of performance under this Agreement, a Party (the "Owner") or
its agent may make available to the other Party (the "Recipient") or its agent
certain technical materials such as manuals, policyholder lists, data files and
the data contained therein, systems, forms, methods, processes and procedures,
and other information or data (collectively, "Proprietary Information") that is
proprietary or trade secret in nature. Proprietary Information shall
specifically exclude information that was previously known to the Recipient or
that is or was publicly disclosed to the Recipient by any party not known by the
Recipient to be under a duty to retain such information as confidential.
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30
Each Party acknowledges that all Proprietary Information is offered for the sole
purpose of performing its obligations under this Agreement. Further, each Party
agrees that the Owner is deemed to be the sole owner of such Proprietary
Information and that any use, furnishing, disclosure, dissemination,
publication, or revealing of Proprietary Information in any way by the Recipient
to any person, organization, firm or government agency contrary to applicable
law or to the terms of this Agreement, shall obligate the Recipient to indemnify
and hold the Owner harmless from any damages, litigation, liability, claimed
liability, claims, and expenses -- including reasonable attorneys' fees and
incidental expenses -- resulting from any such improper use, furnishing,
disclosure, or revealing of Owner's Proprietary Information, whether occurring
during the term of this Agreement or thereafter, except to the extent that any
such loss or damage was caused or contributed to by the Owner. The Ceding
Company acknowledges that the Reinsurer can aggregate the Ceding Company's
Proprietary Information with other companies reinsured with the Reinsurer as
long as the data cannot be identified as belonging to the Ceding Company.
The Parties shall hold all Proprietary Information in trust and confidence and
shall use Proprietary Information only for the purposes of this Agreement.
Unless required by applicable law, neither Party shall disclose any Proprietary
Information without the express written consent of the other Party.
Notwithstanding the foregoing, the Parties may disclose Proprietary Information
to their Representatives who need such Proprietary Information to carry out the
purposes for which it was disclosed -- it being understood that the Party
disclosing the Proprietary Information shall inform its Representatives of the
confidential nature of the Proprietary Information, shall cause such
Representatives to observe the terms of this Agreement, and shall be liable to
the Owner for any breach of this Agreement by itself or by any of its
Representatives. The term "Representatives," as used in this Agreement, shall
mean a Party's directors, officers, employees, retrocessionaires, partners,
agents, other controlling persons, and professional advisors, including but not
limited to attorneys, accountants, actuaries, auditors and intermediaries.
In the event the Recipient or its Representative breaches this obligation, the
Owner shall have all rights and remedies available under law and equity,
including the right to protect its Proprietary Information by injunction,
without proving economic loss, which the Parties acknowledge and concede is
appropriate and necessary to protect the value of the Owner's Proprietary
Information.
Notwithstanding anything herein to the contrary, except as reasonably necessary
to comply with applicable securities laws, each Party (and each Representative
of such Party) may consult any tax advisor regarding the U.S. federal income tax
treatment or tax structure of the transaction ("Tax Treatment"), and disclose to
any and all persons, without limitation of any kind, the Tax Treatment and all
materials of any kind (including opinions or other tax analyses) that are
provided to such Party relating to the Tax Treatment. This permission to
disclose the Tax Treatment is limited to any facts relevant to the Tax Treatment
and does not include information relating to the identity of the Parties.
In the event that any Party is served with a subpoena, request for production of
documents, other legal process, or request by regulator or arbitration panel,
such Party shall immediately notify, and send a copy of such subpoena, other
legal process, or regulatory request to, the other Party so that the other Party
may reasonably determine whether any of its Proprietary Information may be
included in the data required to be produced. Such other Party may, at its own
expense, take such legal action as it deems necessary to preserve the
confidentiality of its Proprietary Information or may waive its rights to do so.
Allocated Retention. Pool -- Effective 11/1/2012
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31
To the extent possible, Proprietary Information shall be promptly returned to
the Owner or destroyed, as the Owner may direct, upon the termination of this
Agreement or, with respect to any particular data files and data, on such
earlier date that the same are no longer required by Recipient in order to
continue to perform its obligations hereunder. The Recipient will not be
obligated to destroy any Proprietary Information that is retained for back-up or
archiving purposes, in accordance with a document retention policy, or that the
Recipient, in the opinion of counsel, is legally compelled to keep and store.
The Parties agree to immediately notify each other, in writing, of all
circumstances surrounding any known or potential access to, or possession of,
Proprietary Information by any person other than persons authorized by this
Agreement. Such notice shall be provided under Article XXIII and shall include,
but not be limited to, the name and address of each such unauthorized person.
This Article shall survive the termination of this Agreement.
ARTICLE XXII
GENERAL PROVISIONS
A. Policy Forms
When requested, the Ceding Company will furnish the Reinsurer with a sample copy
of each policy and rider form that applies to the Plans of Insurance to be
reinsured hereunder.
B. Severability
If any provision of this Agreement shall be declared or found to be illegal,
invalid, unenforceable, or void, the Parties shall be relieved of their
obligations under such provision. The validity of the remaining provisions shall
not be affected. To the extent possible, the Parties shall work in good faith to
amend this Agreement to address such provision.
C. Survival
All provisions of this Agreement shall survive its termination to the extent
necessary to carry out the purposes of this Agreement or to ascertain and
enforce the Parties' rights or obligations hereunder existing at the time of its
termination.
D. Non-Waiver
No act, delay, omission, course of dealing or prior transaction by or between
the Parties to this Agreement shall constitute a waiver of any right or remedy
under this Agreement. No waiver of any right or remedy under this Agreement
shall be construed to be a waiver of any other or subsequent right or remedy
under this Agreement.
E. Currency
The Reinsurance Premiums and benefits payable under this Agreement will be
payable in United States Dollars.
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32
F. Definitions of Terms in Policies
Terms that are not defined in this Agreement will have the meaning conferred on
them in the underlying reinsured contracts. Such terms include, but may not be
limited to: Monthly Activity Date, Monthly Deduction Amount, Account Value, and
Policy Protection Account.
G. Governing Law
This Agreement shall be governed by the laws of the State of Connecticut,
exclusive of the rules with respect to conflicts of law.
H. Assignment and Transfer
The rights, duties and obligations of the Parties under this Agreement shall not
be assigned or transferred, in whole or in part, except as otherwise provided
herein, by either Party without the prior written consent of the other Party.
Such consent shall not be unreasonably withheld. This provision is not intended
to preclude the Reinsurer from retroceding the reinsurance on an indemnity
basis, nor to prevent successors in interest from having rights and obligations
under this Agreement.
I. Execution of Agreement in Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument.
J. Force Majeure
Neither Party shall be liable for any delay or non-performance of any covenant
contained herein nor shall any such delay or non-performance constitute a
default hereunder, or give rise to any liability for damages if such delay or
non-performance is caused by an event of "Force Majeure." As used herein, the
term "Force Majeure" means: an event, explosion, action of the elements, strike
or other labor relations problem; restriction or restraint imposed by law, rule,
or regulation of any public authority, whether federal, state or local, and
whether civil or military; act of any military authority or international
terrorist group; interruption of transportation, communication, or transmission
facilities; or any other cause that is beyond the reasonable control of such
Party and that, by the exercise of reasonable diligence, such Party is unable to
prevent. The existence of any event of Force Majeure shall extend the term of
performance on the part of such Party to complete performance in the exercise of
reasonable diligence after the event of Force Majeure has been removed.
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33
K. Anti-Money Laundering
It is the intention of the Ceding Company and the Reinsurer to comply with all
applicable laws, statutes, and regulations relating to anti-money laundering and
anti-terrorism financing activities. The Ceding Company is responsible for
compliance with all such laws, statutes, and regulations applicable to the sale
and solicitation of policies reinsured under this Agreement, including, but not
limited to, the requirements of the USA PATRIOT Act and the United States
Department of the Treasury's Office of Foreign Assets Control (hereinafter
referred to as "OFAC"). Should either Party receive information that a policy
reinsured under this Agreement may insure, be owned by, be transferred or
payable to, or be brokered or sold by a Specially Designated National, as such
term is defined by OFAC (hereinafter referred to as "SDN"), that Party shall
provide such information to the other Party. In no event shall the Reinsurer be
liable for reinsurance of a risk under this Agreement unless the Ceding
Company's issuance of life insurance coverage for such risk met the OFAC
regulatory requirements. No reinsurance claim shall be payable on a policy
insuring, owned by, or payable to a SDN that does not hold a valid OFAC license
at the time of death of the insured.
L. Material Compliance Provision
The Parties represent that, to the best of their knowledge, they are in
substantial compliance with all state and federal laws material to the business
reinsured under this Agreement. In the event that either Party is found to be
noncompliant with any law material to this Agreement, this Agreement will remain
in effect and the non-compliant Party will indemnify the other Party for any
direct loss that Party suffers as a result of the noncompliance and, to the
extent practicable, will remedy the noncompliance as soon as possible.
M. Representations and Warranties and Good Faith
The Parties have entered into this Agreement in reliance upon mutual
representations and warranties.
Each Party represents to the other that, as of the Effective Date of this
Agreement, it was solvent on a statutory basis in all states in which it is
licensed to transact business.
In addition, the Parties agree that the principles of good faith traditional to
life reinsurance shall be adhered to in the performance of this Agreement, in
the underwriting and administration of the business reinsured hereunder, and in
their dealing with each other. Pursuant to such principles, the Ceding Company
shall inform the Reinsurer in writing with thirty (30) days advance notice of
any material change impacting the Reinsurer's liability in the underwriting
(including changes to InfoBase), administration, claims practices, or Insurance
Receipt for the Reinsurer's consideration and written approval.
Any proposed changes to the Ceding Company's choice of underwriting manual, or
the other items included in Ceding Company's standard underwriting practices and
guidelines, shall be submitted to the Reinsurer's Chief Medical Director with
thirty (30) days advance written notice for approval prior to implementation. If
the Reinsurer does not respond in writing within this thirty (30) day period, it
shall be presumed that the Reinsurer is agreeable to such modifications.
Allocated Retention. Pool -- Effective 11/1/2012
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34
If the Reinsurer does not consent to any such changes, the Reinsurer reserves
the right to decline reinsurance coverage on such policies and/or negotiate a
corresponding adjustment of the reinsurance terms and conditions for the risks
reinsured hereunder.
N. Taxes
The Reinsurer will not reimburse the Company for premium taxes or other
insurance-related taxes paid on business reinsured under this Agreement.
O. Inspection of Records
Each Party or its authorized representatives will have the right, at any
reasonable time with at least thirty (30) days advance notice, to inspect, audit
and review the other Party's documents and records that relate to this Agreement
and the business that is the subject matter of this Agreement.
P. Short-Term Interest
For certain payments as specified under this Agreement that are due from one
Party to the other Party, the Party owed has the right to charge the other Party
interest on those payments. If that right is exercised, such interest will be
computed, from the date the payment is due to the date payment is made, using
the short-term interest method.
Interest under the short-term interest method will accrue at an effective annual
rate set equal to the lesser of (i) a rate equal to the sum of 50 basis points
(0.50%) plus the annualized Three Month London Interbank Offering Rate (LIBOR)
published in the Wall Street Journal (or, if not available, a comparable
publication agreed upon by the Parties) on the due date of the payment, if the
due date is a business day, or if not, on the first business day following the
due date, or (ii) the maximum annual rate allowed by law for this purpose in the
governing-law state specified above in Section G.
The effective annual interest rate to be used under the short-term interest
method for a payment due will be reset every three months after such due date,
as necessary, if the payment accrues interest for a period longer than three
months. If multiple payments are accruing interest under one computation, then
the rate will be reset every three months after the due date of the earliest
such payment, and the reset rate for each successive period shall apply to
accrue interest on all such payments accrued during such period.
Q. Expenses
The Ceding Company shall pay the expense of all medical examinations, inspection
fees, and other charges in connection with the issuance of the insurance
reinsured under this Agreement.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
35
ARTICLE XXIII
NOTICES AND COMMUNICATIONS
A. Communications
For the purpose of this Agreement, communications associated with material
breach of this Agreement, rescission of policies challenged by legal action,
termination or recapture of this Agreement, demand for arbitration or
negotiation under this Agreement, a change in or loss of the Reinsurer's
licensing or and/or confidentiality and compliance provisions set forth in this
Agreement shall be addressed as follows:
If to the Ceding Company: If to the Reinsurer:
Individual Life Director of Reinsurance SVP, Value Added Services
The Hartford SCOR Global Life Americas Reinsurance Company
000 Xxxxxxxxx Xxxxxx 000 Xxxxx Xxxxx Xxxxxx, Xxx 0000
Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Copies (which shall not constitute Copies (which shall not constitute
notice) to: notice) to:
Vice President of Ceded Reinsurance Chief Actuary
The Hartford SCOR Global Life Americas Reinsurance Company
000 Xxxxxxxxx Xxxxxx 000 Xxxxx Xxxxx Xxxxxx, Xxx. 0000
Xxxxxxxx, XX 00000 Xxxxxxxxx XX 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Reinsurance Counsel General Counsel
The Hartford SCOR Global Life Americas Reinsurance Company
One Hartford Plaza 000 Xxxxx Xxxxx Xxxxxx, Xxx. 0000
Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
or such other address or facsimile number as one Party may provide to the other
Party. The foregoing shall not preclude the effectiveness of actual written
notice given to a Party at any address or by any means.
All other communications will be sent to the contact either (a) provided by the
receiving party, or (b) identified in the course of routine administration of
this Agreement.
B. Notices
All notices with regard to this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date when delivered personally; (ii)
on the date sent by facsimile transmission or electronic mail with proof of
delivery; or (iii) on the earlier of the date received and the date three (3)
business days after any such notice was sent by nationally recognized courier or
by first-class U.S. mail, postage prepaid, return receipt requested.
Allocated Retention. Pool -- Effective 11/1/2012
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36
EXECUTION
In witness whereof, the Parties, by their duly authorized representatives, have
executed this Agreement in duplicate:
SCOR GLOBAL LIFE AMERICAS REINSURANCE COMPANY
By: /s/ Xxxxx Xxxxxxxxxx Attest: /s/ Xxxxx Xxxxxxxxx
-------------------------------------- --------------------------------------
Name: Xxxxx Xxxxxxxxxx Name: Xxxxx Xxxxxxxxx
Title: Executive Vice President Title: Assistant Vice President
Date: November 5, 2012 Date: November 8, 2012
HARTFORD LIFE INSURANCE COMPANY
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
By: /s/ Xxxx Xxxxxxx Attest: /s/ Xxxxxxx Xxxxxx
-------------------------------------- --------------------------------------
Name: Xxxx Xxxxxxx, FSA, MAAA Name: Xxxxxxx Xxxxxx, FSA, MAAA
Title: Assistant Vice President and Actuary Title: Senior Vice President
Individual Life Product Management Individual Life Product Management
Date: November 16, 2012 Date: November 16, 2012
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37
SCHEDULE A
PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT
EFFECTIVE NOVEMBER 1, 2012
SINGLE LIFE PLANS OF INSURANCE
REINSURANCE
NAR EFFECTIVE
BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE**
----------------------------------------------------------------------------------------------------------
Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 11/01/2012
Hartford Leaders VUL Liberty 2001 CSO M/F Composite Ultimate ANB A 11/01/2012
Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 11/01/2012
Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 11/01/2012
Extended Value Option
Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B 11/01/2012
Hartford Bicentennial UL Freedom 2013 2001 CSO M/F S/NS Ultimate ANB B 11/12/2012
Hartford ExtraOrdinary Whole Life 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Extended Value Option
Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Extended Value Option
Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Extended Value Option
Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Extended Value Option
------------
* NAR Type is described in Schedule B.
** Eligibility for new business is based on issue date on or after the
Reinsurance Effective Date shown.
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38
REINSURANCE
EFFECTIVE
RIDERS THAT ARE ELIGIBLE FOR REINSURANCE DATE**
--------------------------------------------------------------------------------
Primary Term Insured Rider 11/01/2012
Other Covered Insured Term Life Rider 11/01/2012
Cost of Living Adjustment (COLA) Rider 11/01/2012
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base
Policy to which it is attached.
------------
** Eligibility for new business is based on issue date on or after the
Reinsurance Effective Date shown.
RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE
Accidental Death Benefit (ADB) Rider
Accelerated Benefit Rider (ABR)
LifeAccess Accelerated Benefit Rider (LAABR)
Policy Continuation Rider
Policy Protection Rider (PPR)
Enhanced No Lapse Guarantee Rider
Lifetime No Lapse Guarantee Rider
Guaranteed Minimum Accumulation Benefit (GMAB) Rider
Paid-Up Life Insurance Rider
Conversion Option Rider
Overloan Protection Rider
Waiver of Specified Amount (WSA) Rider
Waiver of Monthly Deductions (WMD) Rider
Children's Life Insurance Rider
Foreign Travel Exclusion Rider
Modified Surrender Value Rider
Cash Surrender Value Endorsement
Automatic Premium Payment Rider
Additional Premium Rider
Qualified Plan Rider
Owner Designated Settlement Option Rider
DisabilityAccess Rider (DAR)
LongevityAccess Rider
LifeAccess Care Rider
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Between XXX and HLIC and SGLARC
39
RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent
the description conflicts with the terms of the rider, the rider will govern.)
RIDERS THAT ARE ELIGIBLE FOR REINSURANCE:
Primary Insured Term Rider: Provides additional level term life coverage on the
base policy insured.
Other Covered Insured Term Life Rider: Provides level term life coverage on an
insured other than the base policy insured.
Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount
increases, without underwriting, based on increases in the Consumer Price Index.
The maximum amount of any single increase is $50,000. Any increase can be
declined by the policyholder, which stops future increases. Available only at
issue and only for non-substandard issue ages 0 through 60.
RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE:
Accidental Death Benefit Rider: Pays an additional death benefit if the death
on the insured is caused by a qualifying accident.
Accelerated Benefit Rider: Provides the policyholder up to 100% of the death
benefit, discounted with interest, if the insured's life expectancy is 12 months
or less. After acceleration, the Ceding Company shall continue to pay the
Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described
in Schedule B based on the Death Benefit prior to acceleration, and the
Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death
of the insured.
LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up
to 2% of death benefit) if insured meets certain ADL and home-care requirements.
In accordance with Schedule B, dDuring and after acceleration, the Ceding
Company shall continue to pay the Reinsurer Reinsurance Premiums on the
Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration,
and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the
death of the insured.
Policy Continuation Rider: Intended to prevent the lapse of highly loaned
policies.
Policy Protection Rider: Protects the death benefit of the base policy and any
primary insured term rider from lapse as long as the Policy Protection Account
Value ("shadow account") is not negative.
Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as
long as cumulative premiums paid less indebtedness less withdrawals are greater
than or equal to the cumulative no lapse guarantee premiums. Length of guarantee
varies by issue age.
Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider
but with lifetime guarantee.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
40
RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED):
Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of
the GMAB Guarantee Period (usually 20 years), that the policy Account Value will
be increased, if necessary, to equal the sum of gross premiums paid to that
date. There is a small monthly charge and a minimum cumulative premium
requirement to keep the rider in force.
Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same
Guarantee Period, a monthly charge, and a cumulative premium requirement. At end
of the Guarantee Period, the owner may elect to change coverage to paid-up life
using the Account Value as a 5% NSP to determine the amount of coverage;
however, the amount of coverage will never be lower than the sum of gross
premiums paid to that date. Once elected, premiums are no longer payable.
Conversion Option Rider: During certain policy years and prior to the insured's
attained age 70, the policy may be converted, without evidence of insurability,
to any permanent plan of life insurance the Ceding Company then makes available
for conversions of this policy.
Overloan Protection Rider: Protects a policy from terminating due to overloan.
Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while
the insured is disabled.
Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts
while the insured is disabled.
Children's Life Insurance Rider: Provides level term life coverage for each
child of the insured.
Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value
less indebtedness) if the insured dies due to travel to, from, or within certain
foreign countries, or due directly or indirectly to illness or injury sustained
during such travel.
Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to
equal the Account Value) if the policy is surrendered within 3 years after the
policy issue date.
Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value
(equal to the current Account Value) in the event of policy surrender in the
first 4 policy years, unless the policy is exchanged under Section 1035 to
another company's policy.
Automatic Premium Payment Rider: Provides for any Scheduled Premium due and
unpaid by the end of any Policy Grace Period to be paid by an automatic
deduction from the Account Value, if the Account Value exceeds the Guaranteed
Cash Value.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
41
RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED):
Additional Premium Rider: Allows additional premium amounts to be paid at the
same payment intervals as scheduled premiums.
Qualified Plan Rider: This rider ilndicates that the policy is owned by a
qualified plan, details the policy owner's reporting responsibilities to the
Ceding Company, and describes features and activities that are unavailable when
the policy is owned by a Qualified Plan.
Owner Designated Settlement Option Rider. This rider allows the policy owner to
designate a Settlement Option to be used for the payment of Death Proceeds.
DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the
primary insured on the life insurance policy to which it is attached. The amount
of monthly benefit is permanently set at rider issue and is limited to a
24-month benefit period. The maximum monthly benefit amount is $5,000; it is
further limited to 2% of the initial face amount or 30% of monthly income at
policy issue. The minimum monthly benefit is $1,000.
LongevityAccess Rider: Provides for monthly benefits (up to 1% of death
benefit) when the insured reaches age 90 and meets the rider's eligibility
requirements. Includes a residual death benefit of 10% of the death benefit
prior to withdrawals. In accordance with Schedule B, during and after
withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance
Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to
withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at
Risk upon the death of the insured.
LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but
filed as a health product in some states. Provides for monthly benefits (up to
2% of death benefit) if insured meets certain ADL and home-care requirements.
Allocated Retention. Pool -- fective 11/1/2012
Between XXX and HLIC and SGLARC
42
LAST SURVIVOR PLANS OF INSURANCE
REINSURANCE
NAR EFFECTIVE
BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE**
---------------------------------------------------------------------------------------------------
Hartford Joint Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012
Hartford Bicentennial UL Joint Freedom II 2001 CSO M/F S/NS Ultimate ANB B 11/01/2012
Hartford Bicentennial UL Joint
Freedom II 2013 2001 COS M/F S/NS Ultimate ANB B 11/12/2012
------------
* NAR Type is described in Schedule B.
** Eligibility for new business is based on issue date on or after the
Reinsurance Effective Date shown.
REINSURANCE
EFFECTIVE
RIDERS THAT ARE ELIGIBLE FOR REINSURANCE DATE**
--------------------------------------------------------------------------------
Estate Protection Rider (NAR Type is C) 11/01/2012
RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE
LS Exchange Option Rider
Policy Protection Rider
Foreign Travel Exclusion Rider
Guaranteed Minimum Accumulation Benefit (GMAB) Rider
Paid-Up Life Insurance Rider
Owner Designated Settlement Option Rider
Joint LifeAccess Rider
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
43
RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent
the description conflicts with the terms of the rider, the rider will govern.)
RIDERS THAT ARE ELIGIBLE FOR REINSURANCE:
Estate Protection Rider: This rider provides last survivor level term life
insurance on the base policy insureds for three years.
RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE:
LS Exchange Option Rider: Allows a Last Survivor policy to be split into two
Single Life policies, without new evidence of insurability, if divorce, business
dissolution, or estate-tax repeal or reduction occurs. The face amount of each
new Single Life policy will equal one half of the Last Survivor policy face
amount. Upon a split, reinsurance will continue at point-in-scale rates for each
single life, as documented in Section X.C. (This rider is not available when one
of the insureds is uninsurable or above Table H.)
Policy Protection Rider: Protects the death benefit of the base policy and any
Estate Protection Rider from lapse as long as the Policy Protection Account
Value ("shadow account") is not negative.
Foreign Travel Exclusion: Provides a limited death benefit (Account Value less
indebtedness) if either insured dies due to travel to, from, or within certain
foreign countries, or due directly or indirectly to illness or injury sustained
during such travel.
Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider:
Same as Single Life riders.
Owner Designated Settlement Option Rider. This rider allows the policy owner to
designate a Settlement Option to be used for the payment of Death Proceeds.
Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider.
Available only on Last Survivor products where the benefit will be payable for
the last surviving insured if chronically ill or if both insureds are
concurrently chronically ill.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
44
SCHEDULE B
REINSURANCE SPECIFICATIONS
EFFECTIVE NOVEMBER 1, 2012
AUTOMATIC REINSURANCE: The Ceding Company shall retain its available retention
on each risk, defined below as the Retained Net Amount at Risk, subject to the
applicable Ceding Company's Treaty Retention Limit shown in Exhibit II.
The Reinsurer will automatically reinsure a portion of the remainder of the
risk, called the Reinsured Net Amount at Risk, as defined below in this Schedule
B.
FACULTATIVE REINSURANCE: The Reinsurer will reinsure X% (as determined at issue)
of the Total Net Amount at Risk for the risk.
TOTAL ALLOCATION LIMIT (TAL): As shown in Exhibit II.
CEDING COMPANY'S TREATY RETENTION LIMIT (CCTRL): As shown in Exhibit II.
CEDING COMPANY'S ALLOCATED RETENTION (CCAR): As shown in Exhibit II.
CURRENT RETENTION (CURRRET) = Current amount of life insurance retained by the
Ceding Company and its affiliated companies on the life for in-force life
insurance coverage. (For Last Survivor risks, see the Last Survivor Limits and
Retention Worksheet in Exhibit II.)
REINSURER'S ALLOCATED RETENTION (REINSARET): As shown in Exhibit II.
REINSURER'S ATTACHMENT POINT (REINSAPT): As shown in Exhibit II.
NAR TYPE for the Plan of Insurance to be reinsured under this Agreement, as
shown in Schedule A.
STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE*
TOTAL NET AMOUNT AT RISK (TOTNAR) =
For NAR TYPE A, Death Benefit minus the Account Value.
For NAR TYPE B, Death Benefit minus the Working Reserve, where
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
45
STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE* (CONTINUED)
STEP 2 -- DETERMINE NET AMOUNT AT RISK FOR EACH "LAYER" OF COVERAGE
STEP 3 -- DETERMINE THE NAR FOR THE CEDING COMPANY AND THEN FOR THE REINSURER
For risks reinsured under this Agreement where the death benefit has been
reduced as a result of acceleration or withdrawal in accordance with Riders, the
Ceding Company shall use commercially reasonable efforts to eliminate the impact
of acceleration on the Reinsured Net Amount at Risk.
NOTE: For ReinsQS2% and ReinsQS3%, round percentages to 2 decimal places. (This
rounding may cause slight increases or decreases in the amounts allocated to
each Party.)
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
46
MINIMUM AUTOMATIC REINSURANCE CESSION: [ILLEGIBLE]
MINIMUM FACULTATIVE REINSURANCE APPLICATION: [ILLEGIBLE]
LEAD REINSURER: [ILLEGIBLE]
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
47
SCHEDULE C
FOREIGN NATIONAL UNDERWRITING PROGRAM
FOR SINGLE LIFE PERMANENT POLICIES ONLY; NOT AVAILABLE FOR LAST SURVIVOR
POLICIES
EFFECTIVE NOVEMBER 1, 2012
The Ceding Company's Foreign National business shall be automatically reinsured
under the terms of this Agreement, if it meets all the requirements for
Automatic Reinsurance in Section III.A, with the following differences.
TYPE OF REINSURANCE
Risks qualifying under this program will be reinsured on a first-dollar quota
share basis.
CEDING COMPANY'S RETENTION
FOREIGN NATIONAL REINSURANCE POOL SHARE
AUTOMATIC BINDING LIMIT (EXCLUDES CEDING COMPANY'S RETENTION):
JUMBO LIMIT:
TOTAL ALLOCATION LIMIT:
ADDITIONAL PLAN, AMOUNT, [ILLEGIBLE]
1. Permanent life policies only. Term coverage may be considered, but only in
the form of a rider included on a permanent base policy. Last survivor
coverage is excluded from this program.
2. Other than term riders referenced in Paragraph 1, above, no supplemental
benefit coverage, such as accidental death or waiver of premium, will be
allowed.
3. The minimum face amount is as follows:
4. Annual premium or Check-O-Matic premium mode only. The minimum annual
premium is the annual premium to endow. If Check-O-Matic is the premium
mode, it must be arranged with a U.S. Bank.
5. Premiums must be paid in U.S. currency and must be billed to a residence or
bank in the U.S.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
48
ADDITIONAL UNDERWRITING AND RISK CLASS GUIDELINES
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
49
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
50
SCHEDULE D
OTHER SPECIAL UNDERWRITING PROGRAMS
EFFECTIVE NOVEMBER 1, 2012
The Ceding Company has several special underwriting programs. The majority of
these programs are contained within the Underwriting Brochure entitled "Life
insurance underwriting that opens doors and closes cases", form LCM-05-418-1-09.
Another program, Life Express, effective October 26, 2009, is documented in a
LifeTIMES Bulletin dated October 30, 2009. Both of these publications have been
shared in advance of the execution of this Agreement with the Reinsurer. The
Ceding Company has two additional special underwriting programs not listed in
the Underwriting Brochure, the "Xxxxx Program" and the "Director's Charitable
Award Program", which are listed below.
XXXXX PROGRAM
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
51
SCHEDULE D
SPECIAL UNDERWRITING PROGRAMS
EFFECTIVE NOVEMBER 1, 2012
DIRECTOR'S CHARITABLE AWARD PROGRAM (DCAP) -- FOR LAST SURVIVOR PLANS ONLY
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
52
DIRECTOR'S CHARITABLE AWARD PROGRAM (DCAP) -- CONTINUED
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
53
EXHIBIT I
REINSURANCE PREMIUM CALCULATION
EFFECTIVE NOVEMBER 1, 2012
FOR SINGLE LIFE PLANS OF INSURANCE
REINSURANCE PREMIUM
Reinsurance Premium shall be calculated each month for each risk reinsured as [
(i) + (ii) ] / 12, where:
(i) equals the Yearly Renewable Term (YRT) Reinsurance Premium for the
coverage (as defined below); and
(ii) equals the Annual Flat Extra Reinsurance Premium (as defined below)
for the coverage, where
the sum of [ (i) + (ii) ] shall not exceed the Reinsured Net Amount at Risk for
such coverage, defined in Schedule B.
For the purposes of calculating Reinsurance Premium, the following will be
considered separate coverages: base policy, increases in coverage, and reinsured
riders.
YEARLY RENEWABLE TERM (YRT) REINSURANCE PREMIUM
The YRT Reinsurance Premium for each coverage shall equal (i) x (ii) x (iii) /
1,000, where:
(i) equals [ (a) x (b) ],(the "YRT Reinsurance Premium Rate") where:
(a) equals the applicable rate from the tables of Annual Rates per
$1,000 of Reinsured Net Amount at Risk specified in Exhibit III;
and
(b) equals the applicable percentage from the tables of YRT Reinsurance
Rate Factors to be applied to the Annual Rates per $1,000 of
Reinsured Net Amount at Risk specified in Exhibit IV;
(ii) equals the applicable Substandard Table Percentage, specified in
Exhibit V, for the risk; and
(iii) equals the Reinsured Net Amount at Risk for such coverage, defined
in Schedule B.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
54
FOR SINGLE LIFE PLANS OF INSURANCE
ANNUAL FLAT EXTRA REINSURANCE PREMIUM
The Annual Flat Extra Reinsurance Premium for each coverage equals {(i) x [ 1 -
(ii) ] x [(iii) / 1,000]}, where:
(i) equals the applicable annual flat extra rate per 1,000, for the year
of coverage, that the Ceding Company charges for the coverage;
(ii) equals the Flat Extra Allowance Percentage, specified below; and
(iii) equals the Reinsured Net Amount At Risk for such coverage, defined
in Schedule B.
FLAT EXTRA ALLOWANCE PERCENTAGE
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
55
FOR LAST SURVIVOR PLANS OF INSURANCE
REINSURANCE PREMIUM
Reinsurance Premium shall be calculated each month for each risk reinsured as
[(i) x (ii) / 1,000] / 12, where:
(i) equals the result of the following steps:
(ii) equals the Reinsured Net Amount at Risk for the coverage, defined in
Schedule B.
For the purposes of calculating Reinsurance Premium, the following will be
considered separate coverages: base policy, increases in coverage, and reinsured
riders. Reinsurance Premium for a single life rider attached to a last survivor
policy shall be determined in accordance with the Reinsurance Premium
calculations for single life plans of insurance.
YRT REINSURANCE PREMIUM RATE PER 1,000*
The YRT Reinsurance Premium Rate per 1,000 for each life for each coverage shall
equal (i) x (ii) + (iii), but in no event more than 1,000, where:
(i) equals the YRT Reinsurance Premium Rate per 1,000, which equals the
quantity [ (a) x (b) ] (the "YRT Reinsurance Premium Rate"), where:
(a) equals the applicable rate from the tables of Annual Rates per
$1,000 of Reinsured Net Amount at Risk specified in Exhibit III;
and
(b) equals the applicable percentage from the tables of YRT Reinsurance
Rate Factors to be applied to the Annual Rates per $1,000 of
Reinsured Net Amount at Risk specified in Exhibit IV;
(ii) equals the applicable Substandard Table Percentage, specified in
Exhibit V, for the risk; and
(iii) equals the Annual Flat Extra Reinsurance Premium per 1,000, as
defined below.
* For purposes of determining the YRT Reinsurance Premium Rate per 1,000, a
life deemed uninsurable will be treated as Table P with a $250 flat extra
for 10 years.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
56
ANNUAL FLAT EXTRA REINSURANCE PREMIUM PER 1,000
The Annual Flat Extra Reinsurance Premium per 1,000 for each coverage equals
{(i) x [ 1 - (ii)]}, where:
(i) equals the applicable annual flat extra rate per 1,000, for the year
of coverage, that the Ceding Company charges for the coverage; and
(ii) equals the Flat Extra Allowance Percentage, specified below.
FLAT EXTRA ALLOWANCE PERCENTAGE
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
57
EXHIBIT II
RETENTION, BINDING, AND TOTAL POOL ISSUE LIMITS
APPLICABLE TO ALL SINGLE LIFE AND LAST SURVIVOR PERMANENT LIFE BUSINESS
(FOR SPECIFICS ON CALCULATION OF LIMITS WITH LAST SURVIVOR COVERAGE, SEE
WORKSHEET ON PAGE 4)
EFFECTIVE NOVEMBER 1, 2012
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
58
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
59
EXHIBIT II
RETENTION, BINDING, AND TOTAL POOL ISSUE LIMITS
APPLICABLE TO ALL SINGLE LIFE AND LAST SURVIVOR PERMANENT LIFE BUSINESS
EFFECTIVE NOVEMBER 1, 2012
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
60
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
61
EXHIBIT III
ANNUAL RATES PER $1,000 OF REINSURED NET AMOUNT AT RISK
EFFECTIVE NOVEMBER 1, 2012
FOR SINGLE LIFE AND LAST SURVIVOR PLANS OF INSURANCE
AND
FOR AUTOMATIC AND FACULTATIVE REINSURANCE
Annual Rates per $1,000 of Reinsured Net Amount at Risk are provided in the
following attached tables of Exhibit III. They are provided on a Select &
Ultimate basis and vary by:
1. Age basis (Age Nearest Birthday or Age Last Birthday), to align with the
Valuation Mortality Table for the Plan of Insurance;
2. Gender (Male, Female); and
3. Rate class --
a. Preferred Plus Non-Nicotine (PPNN);
b. Preferred Non-Nicotine (PNN);
c. Standard Non-Nicotine (SNN);
d. Preferred Nicotine (PN); and
e. Standard Nicotine (SN).
For Life Solutions II UL plans, allowance percentages will be determined as
follows:
(1) For "Preferred" policies, use the SNN rate class; and
(2) For "Standard" policies, use the SN rate class.
All risks insured by the Ceding Company on a Unisex basis will be reinsured
using gender-specific rates.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
62
EXHIBIT IV
YRT REINSURANCE RATE FACTORS
EFFECTIVE NOVEMBER 1, 2012
FOR SINGLE LIFE AND LAST SURVIVOR PLANS OF INSURANCE
AND
FOR AUTOMATIC AND FACULTATIVE REINSURANCE
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
63
EXHIBIT V
SUBSTANDARD TABLE PERCENTAGES
EFFECTIVE NOVEMBER 1, 2012
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
64
EXHIBIT VI
REINSURANCE REPORTS
EFFECTIVE NOVEMBER 1, 2012
REPORT ACCOUNTING PERIOD DUE DATE
---------------------------------------------------------------------------------------------------------------
1. New Business* Monthly 30thday after month end
(New issues only -- first time
policy reported to the Reinsurer)
2. Renewal Business* Monthly 30thday after month end
(Policies with renewal dates
within the Accounting Period)
3. Changes & Terminations* Monthly 30thday after month end
(includes conversions, replacements
reinstatements, increases, decreases,
recaptures, lapses, claims, etc.)
4. Inforce List Monthly 30thday after month end
(Listing of each policy in force)
5. Statutory Reserves Quarterly 30thday after quarter end
6. Policy Exhibit Monthly 30thday after month end
------------
* Policyrecord details for new business, renewal business, and changes and
terminations (Reports 1, 2, and 3 above) may be reported as separate reports
or combined into one report, provided the required data elements continue to
be satisfied.
REPORTING SYSTEM:
The system used by the Ceding Company to administer its reinsurance is: XXX.
NOTE:
Certain policy transactions, such as increases, are coded in the policy
administration system as riders, although they do not correspond to filed rider
forms.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
65
MINIMUM DATA REQUIREMENTS
INFORCE AND TRANSACTION FILE
COMPANY IDENTIFIES THE CEDING COMPANY
----------------------------------------------------------------------------------------------------------------
Policy Policy number which is part of the policy key
Coverage/rider Coverage number which is part of the policy key. This number is used to identify
specific policy coverage.
Cession ID This field contains the number assigned to this cession by the Reinsurer
Transaction Sequence This field indicates the transaction record(s) created during the month.
Line of Business This field indicates the line of business the policy falls under.
Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer.
Reporting Company Identifies the company used for reporting purposes. Will be the same as the
Reinsurance Company.
Transaction Type Identifies the type of transaction being reported on the Transaction extract.
Transaction Count This field is used on the Transaction extract to identify the addition or
termination of a cession.
Reinsurance From Date This field contains the beginning date of the period covered by this record. The
premiums on the Transaction record cover the period beginning with the From Date
through the To Date.
Reinsurance To Date This field contains the end date of the period covered by a record.
Date Reported On the Transaction extract, this is the month the transaction was reported.
Mode Identifies the mode of reinsurance premium payment.
Policy Duration The duration at issue is 01.
Reinsurance Duration Contains the reinsurance duration. It may differ from the policy duration if the
cession is a continuation.
Cession Number Hartford does not currently use. Defaults to spaces.
Policy Date This field contains the effective date of the policy.
Reinsurance Date This field contains the effective date of the reinsurance. For most cessions it
is the same as the Policy Date. For continuations, it contains the effective
date of the original coverage.
Issue State This field contains a two-letter abbreviation of the state or province of issue.
Used to determine unisex rates.
Resident State This field contains a two-letter abbreviation of the state or province of issue.
Used to compute premium tax reimbursement if applicable.
Joint Type Identifies Joint business type
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
66
COMPANY IDENTIFIES THE CEDING COMPANY
----------------------------------------------------------------------------------------------------------------
Joint Age Used for joint coverages using a joint equivalent age for rate searches.
Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis.
Death Benefit Option This field contains the option chosen by the insured for death proceeds payment.
Participation code This field indicates whether the business is Non Participating (N) or
Participating (P).
Issue Type Identifies how a cession was issued. (New business or Continuation)
Underwriting Method Identifies the type of underwriting used to issue the coverage.
Treaty Number This field contains the TAI system treaty number
Reinsurance Type This field is a one-character code that identifies the type of reinsurance.
(Y=YRT, C=Coinsurance & M=Modco.)
Plan This field contains the coverage plan code.
Product code This field contains the product type code.
Product code 1 For Joint Life policies, this field contains the product type code for Insured
1.
Product code 2 For Joint Life policies, this field contains the product type code for Insured
2. (If this is not a Joint Life policy, this field will be blank.)
Currency Code This field identifies the currency. (USD or CND if applicable)
Last Name -- 1 This field contains the insured's last name. For Joint Life policies, this field
contains the last name for Insured 1. (Maximum of 20 characters)
First Name -- 1 This field contains the insured's first name. For Joint Life policies, this
field contains the first name for Insured 1. (Maximum of 15 characters)
Middle Initial -- 1 This field contains the insured's middle initial. For Joint Life policies, this
field contains the middle initial for Insured 1. (1 character)
Client ID -- 1 This field contains the unique client ID for an insured used to connect lives
when calculating retention on a life. For Joint Life policies, this field
indicates the client ID for Insured 1. (Maximum of 20 characters)
Insured Status -- 1 This field indicates the insured's coverage status. For Joint Life policies,
this field indicates the insured's coverage status for Insured 1.
DOB -- 1 This field contains the insured's date of birth. For Joint Life policies, this
field contains the date of birth for Insured 1.
Sex -- 1 This field is used to identify the sex of the insured. For Joint Life policies,
this field contains the sex of Insured 1.
Allocated Retention. Pool -- Effective 11/1/2012
Between XXX and HLIC and SGLARC
67
COMPANY IDENTIFIES THE CEDING COMPANY
---------------------------------------------------------------------------------------------------------------------------------
Class -- 1 This field contains the company's rating of standard or preferred and the smoker class. For Joint
Life policies, this field contains the class for Insured 1.
Mortality -- 1 This field contains the insured's mortality rating. For Joint Life policies, this field contains the
mortality rating for Insured 1.
Mortality Duration -- 1 This field contains the duration of the insured's mortality rating. For Joint Life policies, this
field contains the duration of the mortality rating for Insured 1.
Temp Flat -- 1 This field contains the temporary flat extra per 1000. For Joint Life policies, this field contains
the temporary flat extra per 1000 for Insured 1.
Temp Duration -- 1 This field contains the number of years that the temporary flat extra rating is being charged. For
Joint Life policies, this field contains the number of years that the flat extra rating is being
charged for Insured 1.
Perm Flat -- 1 This field contains the permanent flat extra per 1000. For Joint Life policies, this field contains
the permanent flat extra per 1000 for Insured 1.
Perm Duration -- 1 This field contains the number of years that the permanent flat extra rating is being charged. For
Joint Life policies, this field contains the number of years that the flat extra rating is being
charged for Insured 1.
Last Name -- 2 This field contains the insured's last name. For Joint Life policies, this field contains the last
name for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (Maximum of 20
characters)
First Name -- 2 This field contains the insured's first name. For Joint Life policies, this field contains the first
name for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (Maximum of 15
characters)
Middle Initial -- 2 This field contains the insured's middle initial. For Joint Life policies, this field contains the
middle initial for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (1
character)
Client ID -- 2 This field contains the unique client ID for an insured used to connect lives when calculating
retention on a life. For Joint Life policies, this field indicates the client ID for Insured 2. (If
this is not a Joint Life policy, this field will be blank.) (Maximum of 20 characters)
Insured Status -- 2 This field indicates the insured's coverage status. For Joint Life policies, this field indicates
the insured's coverage status for Insured 2. (If this is not a Joint Life policy, this field will be
blank.)
DOB -- 2 This field contains the insured's date of birth. For Joint Life policies, this field contains the
date of birth for Insured 2. (If this is not a Joint Life policy, this field will be blank.)
Allocated Retention. Pool -- Effective 11/1/2012
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68
COMPANY IDENTIFIES THE CEDING COMPANY
---------------------------------------------------------------------------------------------------------------------------------
Sex -- 2 This field is used to identify the sex of the insured. For Joint Life policies, this field contains
the sex of Insured 2. (If this is not a Joint Life policy, this field will be blank.)
Pricing Sex -- 2 This field contains the sex used to compute premiums and allowances. For Joint Life policies, this
field contains the pricing sex of Insured 2. (If this is not a Joint Life policy, this field will be
blank.)
Age -- 2 This field contains the insured's issue age. For Joint Life policies, this field contains the issue
age for Insured 2. (If this is not a Joint Life policy, this field will be blank.)
Class -- 2 This field contains the company's rating of standard or preferred and the smoker class. For Joint
Life policies, this field contains the class for Insured 2. (If this is not a Joint Life policy,
this field will be blank.)
Mortality -- 2 This field contains the insured's mortality rating. For Joint Life policies, this field contains the
mortality rating for Insured 2. (If this is not a Joint Life policy, this field will be blank.)
Mortality Duration -- 2 This field contains the duration of the insured's mortality rating. For Joint Life policies, this
field contains the duration of the mortality rating for Insured 2. (If this is not a Joint Life
policy, this field will be blank.)
Temp Flat -- 2 This field contains the temporary flat extra per 1000. For Joint Life policies, this field contains
the temporary flat extra per 1000 for Insured 2. (If this is not a Joint Life policy, this field
will be blank.)
Temp Duration -- 2 This field contains the number of years that the temporary flat extra rating is being charged. For
Joint Life policies, this field contains the number of years that the flat extra rating is being
charged for Insured 2. (If this is not a Joint Life policy, this field will be blank.)
Perm Flat -- 2 This field contains the permanent flat extra per 1000. For Joint Life policies, this field contains
the permanent flat extra per 1000 for Insured 2. (If this is not a Joint Life policy, this field
will be blank.)
Perm Duration -- 2 This field contains the number of years that the permanent flat extra rating is being charged. For
Joint Life policies, this field contains the number of years that the flat extra rating is being
charged for Insured 2. (If this is not a Joint Life policy, this field will be blank.)
Policy Face Amount Indicates the face amount of the total policy.
Retained Amount This field contains the amount retained on this policy coverage, not on the life.
Ceded Amount This field contains the policy amount ceded to a specific reinsurer.
Net Amount at Risk This field contains the reinsured net amount at risk (NAR) for a specific reinsurer.
Benefit Mortality ADB or Waiver mortality.
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COMPANY IDENTIFIES THE CEDING COMPANY
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Premium This field contains the reinsurance premium.
Allowance This field contains the reinsurance allowance.
Flat extra type This field indicates whether there is a temporary flat extra (T) or a permanent
flat extra (P) being charged.
Premium Tax If premium tax is reimbursed, this field contains the tax amount.
Cash Value If applicable, this field is used to recover coinsured cash values from the
Reinsurer.
Benefit If applicable, this field is used to recover benefits from the Reinsurer.
Dividend If applicable, this field contains the reinsurer's share of the direct dividend.
Policy Fee This field contains the reinsurance policy fee.
Continuation Original Company This field indicates the ceding company on the original policy. (Used for
conversions only.)
Continuation Original Policy This field indicates the policy number for the original policy. (Used for
conversions only.)
Continuation Original This field indicates the coverage/rider for the original policy. (Used for
Coverage/Rider conversions only.)
Message An informational message may be manually added to a policy by the Ceding
Company.
Image switch Hartford does not currently use. Defaults to spaces.
Policy Fee Allowance This field contains the reinsurance policy fee allowance.
Location Code Hartford does not currently use. Defaults to spaces.
Treaty Reference Number Upon request, this field contains the Reinsurer's treaty number.
Claim Hartford does not currently use. Defaults to spaces.
Policy Status This field identifies the status of the cession.
Policy Master Smoker -- 1 Policy smoker class on direct policy. For Joint Life policies, this field
contains the policy master smoker class for Insured 1.
Policy Master Smoker -- 2 Policy smoker class on direct policy. For Joint Life policies, this field
contains the policy master smoker class for Insured 2. (If this is not a Joint
Life policy, this field will be blank.)
Policy Effective Date This field contains the issue date of the policy.
Policy Application Date This field indicates the date the insured signed the application.
NAR Type This field indicates the method used in determining the Total Net Amount at Risk
(as defined in Schedule B).
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POLICY EXHIBIT FILE*
COMPANY IDENTIFIES THE CEDING COMPANY
----------------------------------------------------------------------------------------------------------------
Policy Policy number which is part of the policy key.
Coverage/rider Coverage number which is part of the policy key. This number is used to identify
a specific policy coverage.
Cession ID This field contains the number assigned to this cession by the Reinsurer.
Line of Business This field indicates the line of business the policy falls under.
Report Date This is the month the transaction was reported.
Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer.
Reporting Company Identifies the company used for reporting purposes. Will be the same as the
Reinsurance Company.
Treaty Number This field contains the TAI system treaty number.
Transaction Type Identifies the type of transaction being reported on the Transaction extract.
Policy Count Each New Business, Continuation & Reinstatement will be assigned a count of 1,
Terminations will be assigned -1 and Renewals/NAR changes will be assigned 0.
Base Ceded Amount This field contains the policy base amount ceded.
ADB ceded Amount This field contains the policy ADB amount ceded.
Waiver Ceded Amount This field contains the policy waiver amount ceded.
Net Amount at Risk The reinsured net amount at risk (NAR).
Plan This field contains the coverage plan code.
Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis.
Reinsurance Type This field is a one-character code that identifies the type of reinsurance.
(Y=YRT, C=Coinsurance & M=Modco.)
Currency Code This field identifies the currency. (USD or CND if applicable)
------------
* The Policy Exhibit will include a summary of reinsurance movement for a
given period categorized by transactions type. This summary provides the
Cession Count, Ceded Amount and Net Amount at Risk at the beginning of the
reporting period, a summary of the transactions occurring during the report
period as well as what is in force as of the ending of the report period.
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RESERVE FILE
COMPANY IDENTIFIES THE CEDING COMPANY
----------------------------------------------------------------------------------------------------------------
Policy Policy number which is part of the policy key
Coverage/rider Coverage number which is part of the policy key. This number is used to identify
a specific policy coverage.
Cession ID This field contains the number assigned to this cession by the Reinsurer
Benefit Type This field is the reserve type. 1 = Life, 2=ADB, 3=Waiver, 4=Flat Extras,
5=Substandard
Calc Method Hartford's TAI Valuation Method 1=Xxxxxxx Reserve + 1/2 cx, E=Coinsurance
Reserve, H=Half Premium, L=Factor FLX1, X=1/2 cx
Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer.
Reporting Company Identifies the company used for reporting purposes. Will be the same as the
Reinsurance Company.
Line of Business This field indicates the line of business the policy falls under. (L=Life)
Treaty Number This field contains the TAI system treaty number
Plan This field contains the coverage plan code.
Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis.
Product code This field contains the product type code.
Joint Type Identifies Joint business Type
Joint Method Switch Identifies XXX Xxxxxxx method calculation
Mode Identifies the mode of reinsurance premium payment.
Cession Status This field identifies the status of the cession.
Reinsurance Type This field is a one-character code that identifies the type of reinsurance.
Duration Contains the reinsurance duration. It may differ from the policy duration if the
cession is a continuation.
Participation code This field indicates whether the business is Non participating (N) or
Participating (P).
Issue Date This field contains the effective date of the policy.
Reinsurance To Date This field contains the end date of the period covered by a record.
Policy Face Amount Indicates the face amount of the total policy.
Ceded Amount This field contains the policy amount ceded to a specific reinsurer
Net Amount at Risk This field contains the reinsured net amount at risk (NAR) for a specific
reinsurer.
Premium This field contains the reinsurance premium.
Reserve Percent Value appears on Coinsurance business only
Cession Count Cession count only appears under Life (Base), not benefits.
Age Basis Nearest/Closest (C), Last (L), Next (N)
Insured Status -- 1 This field indicates the insured's coverage status. For Joint Life policies,
this field indicates the insured's coverage status for Insured 1.
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COMPANY IDENTIFIES THE CEDING COMPANY
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Age -- 1 This field contains the insured's issue age. For Joint Life policies, this field
contains the issue age for Insured 1.
Class -- 1 This field contains the company's rating of standard or preferred and the smoker
class. For Joint Life policies, this field contains the class for Insured 1.
Sex -- 1 This field is used to identify the sex of the insured. For Joint Life policies,
this field contains the sex of Insured 1.
Mortality -- 1 This field contains the insured's mortality rating. For Joint Life policies,
this field contains the mortality rating for Insured 1.
Insured Status -- 2 This field indicates the insured's coverage status. For Joint Life policies,
this field indicates the insured's coverage status for Insured 2. (If this is
not a Joint Life policy, this field will be blank.)
Age -- 2 This field contains the insured's issue age. For Joint Life policies, this field
contains the issue age for Insured 2. (If this is not a Joint Life policy, this
field will be blank.)
Class -- 2 This field contains the company's rating of standard or preferred and the smoker
class. For Joint Life policies, this field contains the class for Insured 2. (If
this is not a Joint Life policy, this field will be blank.)
Sex -- 2 This field is used to identify the sex of the insured. For Joint Life policies,
this field contains the sex of Insured 2. (If this is not a Joint Life policy,
this field will be blank.)
Mortality -- 2 This field contains the insured's mortality rating. For Joint Life policies,
this field contains the mortality rating for Insured 2. (If this is not a Joint
Life policy, this field will be blank.)
Reserve Statutory or Tax Reserve for each coverage.
Reserve Interest Rate This field identifies the Interest Rate used when calculating reserves.
Reserve Factor Applicable Mortality Basis YRT Factor
Factor Pointer TAI specific field to identify applicable mortality table used when calculating
reserves.
Attained Age TAI specific field. Default is 1
Setback TAI specific field. Default is zero
Class Switch TAI specific field. Valuation Class (D=Distinct)
Curtate Switch This field indicates whether reserves are on a curtate or continuous basis.
Caption Hartford's TAI Valuation Method
Error Code Informational field used by Hartford -- Usually Blank
Reserve Class 1 This field contains insured's smoker class. For Joint Life policies, this field
contains the class for Insured 1.
Reserve Class 2 This field contains insured's smoker class. For Joint Life policies, this field
contains the class for Insured 2. (If this is not a Joint Life policy, this
field will be blank.)
Currency Code This field identifies the currency. (USD or CND if applicable)
Valuation Interest Pointer TAI assigned field that is used to read applicable interest rates when
calculating 1/2 cx reserves.
NAR Type This field indicates the method used in determining the Total Net Amount at Risk
(as defined in Schedule B).
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Between XXX and HLIC and SGLARC
73
