Exhibit 10.1
IN THE MATTER OF
METROPOLITAN LIFE INSURANCE COMPANY
___________________________________/
REGULATORY SETTLEMENT AGREEMENT
TABLE OF CONTENTS
Page
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I. BACKGROUND AND RECITALS.......................................... 1
II. GENERAL TERMS.................................................... 3
A. Definitions................................................. 3
III. REGULATORY SETTLEMENT AGREEMENT TERMS............................ 24
IV. BENEFITS FOR IN-FORCE POLICIES................................... 30
A. The Enhanced Future Death/Maturity Benefit.................. 30
B. The Enhanced Future Termination/Non-Forfeiture Benefit...... 33
C. The Enhanced Additional Insurance Benefit................... 35
D. The Cash Payment Option..................................... 36
E. The Prospective Commitment.................................. 37
V. RELIEF FOR DEATH/MATURITY POLICIES: THE ENHANCED
PAST DEATH/MATURITY BENEFIT...................................... 38
A. Standard Enhancements....................................... 39
B. Additional Enhancements..................................... 40
VI. BENEFITS FOR TERMINATED POLICIES................................. 41
A. The Enhanced Past Termination Benefit....................... 41
B. The Settlement Death Benefit................................ 42
VII. MET SERIES ENHANCEMENT........................................... 45
VIII. UNCLAIMED BENEFITS RELIEF........................................ 45
IX. COMPANY CERTIFICATION OF RELIEF.................................. 49
X. RELIEF QUALIFICATIONS............................................ 50
XI. MINIMUM/MAXIMUM COST OF BENEFITS................................. 56
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TABLE OF CONTENTS
(Continued)
Page
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XII. NOTICE TO CLASS MEMBERS AND COMMUNICATIONS WITH
CLASS MEMBERS AND POLICYOWNERS................................... 59
A. Class Notice Package........................................ 59
B. Publication Notice and Other Media Notice................... 63
C. Remailing and Additional Notice............................. 64
D. Post-Settlement Mailing..................................... 65
E. Retention of Administrator.................................. 65
F. Communication with Class Members, Policyowners and Producers 70
XIII. ORDER OF DISMISSAL............................................... 71
XIV. ORDER OF NOTICE, FAIRNESS HEARING AND ADMINISTRATION............. 71
XV. FINAL APPROVAL, AND FINAL JUDGMENT AND ORDER APPROVING SETTLEMENT 72
XVI. NEW ENGLAND MUTUAL............................................... 72
XVII. REGULATORY RESOLUTION............................................ 74
XVIII. MODIFICATION OR TERMINATION OF THIS AGREEMENT.................... 76
XIX. GENERAL MATTERS AND RESERVATIONS................................. 78
ii
IN THE MATTER OF
METROPOLITAN LIFE INSURANCE COMPANY
____________________________________/
REGULATORY SETTLEMENT AGREEMENT
THIS REGULATORY SETTLEMENT AGREEMENT (the "Regulatory Settlement
Agreement") is entered into as of this 29th day of August 2002, by and between
Metropolitan Life Insurance Company ("Metropolitan Life" or "MetLife") as party
of the first part, and the State of New York Insurance Department (the
"Department" or "Lead Regulatory Negotiator"), along with the insurance
regulators of each of the states of the United States and of the District of
Columbia that adopt, approve and agree to this Regulatory Settlement Agreement
(the "Participating Regulators"), as parties of the second part.
I. BACKGROUND AND RECITALS
A. On June 22, 2000, the Department issued Supplement No. 1 to
Circular Letter No. 19 (2000) notifying all life insurers and fraternal benefit
societies that the Department was investigating allegations of race-based
underwriting of life insurance by its licensees.
B. The Department thereafter conducted an examination with
respect to race-based underwriting practices and policies of MetLife, New
England Mutual Life
Insurance Company ("New England Mutual Life"), and United Mutual Life Insurance
Company. New England Mutual Life merged with and into MetLife in 1996, and
United Mutual Life Insurance Company merged with and into MetLife in 1992. The
examination included a review of more than 750,000 pages of documents, thousands
of policy application files, extensive data analysis and interviews of current
and former employees and agents.
C. Details regarding the scope of, and findings from, the
Department's examination are set forth in a report entitled State of New York
Insurance Department Report on Examination of Metropolitan Life Insurance
Company Regarding Response to Supplement No. 1 to Circular Letter No. 19 (2000)
dated March 1, 2002 (the "Report on Examination").
D. Members of the National Association of Insurance Commissioners
("NAIC"), including the Participating Regulators, as the chief regulatory
officials of their respective jurisdictions, agreed that the Department would be
principally responsible as Lead Regulatory Negotiator for negotiating this
Regulatory Settlement Agreement on behalf of and for the benefit of the
Participating Regulators and the NAIC.
E. After extensive negotiations, MetLife and the Department have
agreed to enter into this Regulatory Settlement Agreement. This Regulatory
Settlement Agreement provides benefits to current and former policyholders and
others who may have been affected by certain race-based underwriting practices.
F. MetLife is a defendant in various lawsuits (collectively, the
"Action"), which are more specifically identified at Section II.A.1.a of this
Agreement and assert,
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among other things, racial discrimination claims relating to the pricing,
underwriting, sale, issuance, characteristics, and/or administration of
MetLife's Industrial Policies and Ordinary Policies.
G. By the execution of a Stipulation of Settlement (the
"Stipulation of Settlement" or "Settlement Agreement") MetLife has agreed to
settle the Action without admitting the allegations made or any wrongdoing. A
copy of the Stipulation of Settlement accompanies this Regulatory Settlement
Agreement.
H. The Department, the Participating Regulators and the Company
desire to resolve all regulatory issues arising from or in any way relating to
race-based underwriting practices, including the subject matter described in the
Report on Examination, on the terms and conditions set forth herein.
IT IS HEREBY STIPULATED AND AGREED:
II. GENERAL TERMS
A. DEFINITIONS
1. As used in this Regulatory Settlement Agreement and
the annexed exhibits (which are an integral part of this Regulatory Settlement
Agreement and are incorporated in their entirety by reference), the following
terms have the following meanings, unless a Section or Subsection of this
Regulatory Settlement Agreement or its exhibits expressly provides otherwise:
a. "Action" shall mean the lawsuit captioned
Xxxxxxxx, et al. v. Metropolitan Life Insurance Company, Xx. 00 Xxx. 0000 (XX),
and all cases consolidated with it, including, but not limited to, Xxxxxx, et
al. v. Metropolitan Life
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Insurance Company, No. 00 Civ. 9068 (HB), XxXxxxxx v. Metropolitan Life
Insurance Company, Xx. 00 Xxx. 0000 (XX) and Xxxxxxx v. Metropolitan Life
Insurance Company, Xx. 00 Xxx. 0000 (XX).
b. "Additional Enhancement" shall mean the
enhancements or payments, in addition to the enhancements or payments provided
as Standard Enhancements (defined in Section II.A.1.jjjj, below), that shall be
provided to Holders of certain In-Force Policies and Death/Maturity Policies
pursuant to this Regulatory Settlement Agreement.
c. "Additional Insurance" shall mean paid-up
insurance additional to the Face Amount of a Policy, having its own contractual
cash values.
d. "Additional Premium" shall mean the
annualized amount by which the premiums paid for a New England Mutual Affected
Policy exceeded the premiums that were charged for an otherwise identical life
insurance policy insuring a person of the same age and issued with a standard
risk classification.
e. "Adjustment Amount" shall mean the sum of
(i) all Additional Premiums on a New England Mutual Affected Policy and (ii)
interest on each Additional Premium accumulated at 4% per annum from the premium
due date to the date that the benefit under Section XVI is provided.
f. "Administrator" shall mean any third-party
agents or administrators whom the Company shall retain to help implement the
terms of this Regulatory Settlement Agreement.
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g. "Affinity Group" shall mean (i) the Class
Member or his or her spouse, sibling, parent or child (including a stepchild
residing with the Class Member), and/or (ii) any person in whom the Class Member
has an insurable interest; provided however, that no member of the Affinity
Group shall be over age 72 as of January 1, 2004.
h. "Agent Script" shall mean the script that
the Company shall disseminate to its current Producers, as further described in
Section XII.F.3 below.
i. "Agreement" or "Regulatory Settlement
Agreement" shall mean this Regulatory Settlement Agreement and the attached
exhibits, including any subsequent amendments thereto and any exhibits to such
amendments.
j. "Alternate Covered Person" shall mean, for
purposes of any Settlement Death Benefit provided pursuant to Section VI.B, a
person who is a member of the Class Member's Affinity Group who is designated
pursuant to the terms of Section VI.B.7 as the person upon whose qualifying
death the Settlement Death Benefit provided under this Agreement shall be paid.
k. "Alternate Recipient" shall mean such person
as the Class Member may choose to receive the SDB payment pursuant to the terms
and conditions set forth in Section VI.B below.
l. "Amended Complaint" shall mean the Amended
Consolidated Class Action Complaint in the Action filed by Plaintiffs on July
19, 2002.
m. "Application File" shall mean the
application submitted for the Policy; any statement of the agent or other sales
representative submitted in
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connection with the application for the Policy; any report of medical or
paramedical examination obtained in connection with the underwriting of the
application; any mercantile report obtained in connection with the underwriting
of the application; and any other documents in the application file for the
Policy.
n. "Automatic Adjustment Date" shall mean a
date selected by the Company that is no more than 40 days following the Final
Settlement Date.
o. "Cash Payment Option" shall mean the option
of Eligible Holders of In-Force Policies to receive a cash payment from the
Company instead of the Enhanced Future Death/Maturity Benefit, the Enhanced
Future Termination/Non-Forfeiture Benefit and the Enhanced Additional Insurance
Benefit, as described in Section IV.D below.
p. "Cash Payment Option Election Letter" shall
mean the letter sent to the Holders of In-Force Policies, substantially in the
form attached hereto as Exhibit J, by which such Class Members may exercise
their right to receive a cash payment from the Company instead of the Enhanced
Future Death/Maturity Benefit, the Enhanced Future Termination/Non-Forfeiture
Benefit and the Enhanced Additional Insurance Benefit, as described in Section
IV.D below.
q. "Cash Value" shall mean the cash value
associated with a Policy's Face Amount. For each Policy other than any Policy
that went onto an extended term-insurance non-forfeiture status and then expired
prior to January 1, 1968, the cash value associated with the Policy's Face
Amount shall not be reduced by any policy loan.
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r. "Claim Form" shall mean the form included
with the Class Notice Package that Holders of certain Policies shall be required
to complete and submit in order to become Eligible Holders, pursuant to Sections
X.B and X.E below. The Claim Form shall be in substantially the form appended
hereto as Exhibit A, and shall be contained in a wrapper that clearly indicates
that (i) a Claim Form is enclosed, (ii) the Claim Form must be submitted to
obtain settlement benefits unless a Statement of Benefits included in the Class
Notice Package states that submission of the Claim Form for the Policy is
unnecessary, and (iii) Claim Forms must be postmarked by the Claim-In Date.
s. "Claim-In Date" shall mean the date 75 days
after the Fairness Hearing.
t. "Claim-Resolution Date" shall mean the date
by which all disputes concerning the eligibility for settlement benefits of any
person or entity who submits a Claim Form shall be finally resolved pursuant to
Section X.G below, which date shall be no later than 195 days after the Claim-In
Date.
u. "Class" or "Class Members" shall mean all
Holders (including their estates) of Policies, but shall not include (unless and
to the extent such persons or entities are Class Members by virtue of their
status as Holder of another Policy) the following: (i) any Excluded Entity; (ii)
any persons or entities who are Holders (or their estates) of a Policy (a) for
which a timely request for exclusion from the proposed class has been received
from any Holder or Estate Holder; (b) that was issued by the Company, but not
accepted and paid for, or was returned to the Company as part
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of the exercise of a free look provision in the Policy; or (c) that is the
subject of a release signed by any person or entity while represented by counsel
settling a claim or dispute and releasing Metropolitan Life from any further
liability concerning such Policy; and (iii) any insurance company that owns or
owned a Policy pursuant to an absolute assignment effected as part of an
exchange under section 1035 of the Internal Revenue Code.
v. "Class Counsel" shall mean Xxxxxxx Xxxxx
Xxxxxxx Xxxxx & Xxxxxx LLP; Bonnett, Fairbourn, Xxxxxxxx & Xxxxxx, P.C.; James,
Hoyer, Newcomer & Smiljanich, P.A.; Xxxxxx Xxxxxxxxx Xxxxxx & Xxxxxx, P.C.;
Xxxxxxx Drake, LLC; Xxxxxx, Xxxxx & Xxxxx, P.S.C.; Xxxxxx Xxxxxx Xxxx & Xxxxxx,
LLP; Xxxxxx & Xxxxx; The Xxxxxxx Law Firm; Barrett, Towmey, Broom, Xxxxxx &
Xxxxxx; Xxxxxxxx, Xxxxxx & Xxxxx, LLC; Foote, Meyers, Miekle, Flowers & Xxxxxx,
LLC; and Xxxxxxx Xxxxxxx Xxxxx & Xxxxxxx, P.C.
w. "Class Notice" shall mean the notice of the
terms of the proposed settlement included in the Class Notice Package.
x. "Class Notice Package" shall mean the notice
package, as approved in form and content by the Department, Lead Counsel and the
Company, and the Court, and substantially in the form attached hereto as Exhibit
A, to be provided to Class Members pursuant to Section XII.A of this Regulatory
Settlement Agreement. The Class Notice Package shall include (i) the Class
Notice, (ii) a Claim Form, and (iii) in the case of Database Policies, a
Statement of Benefits.
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y. "Company" or "Metropolitan" or "Metropolitan
Life" shall mean Metropolitan Life Insurance Company.
z. "Company's Counsel" shall mean the law firm
of Debevoise & Xxxxxxxx.
aa. "Confirmatory Letter" shall mean the letter,
in the form attached hereto as Exhibit K, to be sent to the last-known address
on the Company's electronic records of payees of certain Death/Maturity Policies
as updated hereunder, seeking to confirm the address of such payee or to obtain
an updated address for such payee postmarked within 30 days of the date of the
letter, as described in Section X.C.3 below.
bb. "Court" shall mean the United States
District Court for the Southern District of New York, where the Action is
pending.
cc. "Covered Met Series Policy" shall mean any
life insurance policy described in Exhibit N hereto.
dd. "Covered Person" shall mean the person upon
whose qualifying death the Settlement Death Benefit provided under this
Agreement will be paid, which person shall be the insured under the Policy
making the Class Member eligible for relief, unless the Class Member designates
an Alternate Covered Person pursuant to Section VI.B.7 below.
ee. "Database Policies" shall mean (a) any
Policy for which the insured is reflected on the Company's electronic records as
non-Caucasian; (b) any 1920-1929 Intermediate Policy and any Other Industrial
Monthly Substandard
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Policy on the Company's electronic records for which the race of the insured is
identified in the Application File as other than Caucasian; and (c) any
1930-1935 Ordinary Substandard Policy, 1927-1929 Industrial Monthly Substandard
Policy or Industrial Weekly Substandard Policy on the Company's electronic
records for which the race of the insured is not identified in the Company's
electronic records as Caucasian.
ff. "Death/Maturity Policies" shall mean any
Policy on which, prior to the Eligibility Date, a death, maturity or endowment
benefit has been paid or has become payable pursuant to its terms.
gg. "Domestic Partner" shall mean an individual
who, prior to the death of a Holder:
(i) Lived with the Holder in an
intimate and committed relationship of mutual caring at a time where both
individuals were at least 18 years of age and neither individual was married or
in another domestic partnership;
(ii) Shared the same residence with the
Holder at the time of the Holder's death; and
(iii) Agreed with the Holder to be
jointly responsible for basic living expenses incurred during the domestic
partnership.
hh. "Early Termination Adjustment" shall equal
X/Y, where:
(i) X equals the number of years that a
Policy was premium-paying; and
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(ii) Y equals the lesser of (a) the
number of years that the Company required premiums to be paid for the Policy
absent the death of the insured and (b) 2002 minus the year in which the Policy
was issued.
ii. "Eligibility Date" shall mean August 19,
2002.
jj. "Eligible Holder" shall mean a Holder who
has satisfied the requirements, if any, set forth in Section X below. Only those
Holders who are Eligible Holders shall be entitled to receive benefits under
this Agreement.
kk. "Enhanced Additional Insurance Benefit"
shall mean the Additional Insurance to be provided to Eligible Holders of
certain In-Force Policies under this Regulatory Settlement Agreement, as
described in Section IV.C below.
ll. "Enhanced Future Death/Maturity Benefit"
shall mean the terminal dividend (composed of a Standard Enhancement and, where
applicable, an Additional Enhancement) to be provided to Eligible Holders of
certain In-Force Policies under this Regulatory Settlement Agreement, as
described in Section IV.A below.
mm. "Enhanced Future Termination/Non-Forfeiture
Benefit" shall mean the surrender dividend (composed of a Standard Enhancement
and, where applicable, an Additional Enhancement) to be provided to Eligible
Holders of certain In-Force Policies under this Regulatory Settlement Agreement,
as described in Section IV.B below.
nn. "Enhanced Past Death/Maturity Benefit" shall
mean the cash payment to be provided to Eligible Holders of Death/Maturity
Policies under this Regulatory Settlement Agreement, as described in Section V
below.
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oo. "Enhanced Past Termination Benefit" shall
mean the cash payment to be provided to Eligible Holders of certain Terminated
Policies under this Regulatory Settlement Agreement, as described in Section
VI.A below.
pp. "Estate Holder" shall mean, with respect to
any Policy for which all Eligible Holders are deceased, any estate of a Holder
of the Policy that satisfies the requirements of Section III.C below.
qq. "Excluded Entity" shall mean any entity that
is not a natural person (such as a funeral home, creditor, institutional
assignee or state government, or any branch, department or entity thereof) and
that is an assignee of the benefits of, or is not an owner of, a Policy.
Excluded Entities shall not be Class Members and shall not be eligible to
receive any benefit provided under this Agreement, whether directly, indirectly,
or on behalf of, or on account of benefits made available to, a Class Member.
rr. "Execution Date" shall mean the first date
on which the Settlement Agreement in the Action has been executed.
ss. "Face Amount" shall mean the amount of
insurance specified on the face of the Policy, including any additions to such
amount of insurance by Company liberalizations, equalizations or other
enhancements.
(i) The Face Amount of a Policy shall
be exclusive of any Additional Insurance, ancillary benefit or rider coverage;
provided however, that if a Policy has paid or pays in the future an accidental
death benefit in addition to the amount of insurance specified on the face of
the Policy (including any additions thereto by
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Company liberalizations, equalizations or other enhancement), then the
accidental death benefit shall be included as part of the Face Amount.
(ii) Except as provided in Section
XX.X.0.xx(iii) below, the Face Amount of a Policy that is providing reduced
paid-up insurance coverage under a contractual non-forfeiture option shall be
the amount of reduced paid-up insurance coverage provided under that option.
(iii) For purposes of the calculation of
any Settlement Death Benefit pursuant to Section VI.B below, (a) the Face Amount
of any Policy on a reduced paid-up non-forfeiture status shall equal the face
amount of the Policy at the time that it was issued; and (b) for any Industrial
Weekly Policy that was issued in a substandard policy plan, and that was placed
on a reduced paid-up non-forfeiture status at any time, the Face Amount of the
Policy shall equal the face amount of the Policy at the time that it was issued,
multiplied by 1.32.
tt. "Fairness Hearing" shall mean the hearing at
or after which the Court will make a final decision whether to approve the
Settlement Agreement in the Action.
uu. "Final Judgment" shall mean the judgment
entered pursuant to the Order Approving Settlement in the Action.
vv. "Final Settlement Date" shall mean the date
on which the Final Judgment and Order Approving Settlement in the Action become
final. For purposes of this definition, the Final Judgment and Order Approving
Settlement in the Action shall become final:
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(i) if no appeal is taken therefrom, on
the date on which the time to appeal has expired;
(ii) if any appeal is taken therefrom,
on the date on which all appeals therefrom, including petitions for rehearing or
reargument, petitions for rehearing en banc and petitions for certiorari or any
other form of review, have been finally disposed of in a manner resulting in an
affirmance of the Final Judgment and Order Approving Settlement; or
(iii) on a date after entry of the Final
Judgment and Order Approving Settlement, which date counsel for the Plaintiffs,
the Company and the Department agree to in writing.
ww. "Hearing Order" shall mean the order to be
entered by the Court concerning notice, administration and the Fairness Hearing,
as contemplated in Section XVI of the Settlement Agreement in the Action, and
substantially in the form attached hereto as Exhibit D.
xx. "Holders" shall mean, with respect to any
Policy, the following persons and entities:
(i) All past and present owners of Ordinary
Policies;
(ii) All past and present insureds under
Industrial Policies;
(iii) All individual assignees of Industrial
Policies that have been assigned by the
Policy's named Insured; and
(iv) All payees of the contractual death benefits
of Policies, where such death benefits
became payable prior to the Eligibility Date
based upon the death of the insured under
the Policy.
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yy. "Identifying Information" shall mean either
(i) the policy number for a Policy or (ii) the alternative identifying
information requested by Exhibit E hereto. Persons or entities who have
completed and submitted Claim Forms postmarked on or before the Claim-In Date
shall be given a reasonable opportunity to provide additional Identifying
Information if such information is required to locate a Policy; provided
however, that all such additional Identifying Information must be postmarked
within 60 days of the Claim-In Date.
zz. "Implementation Period" shall mean a period
of time that (i) commences on a date selected by the Company, is communicated in
writing to the Department, and is on or before the later of (a) 30 days after
the Final Settlement Date and (b) 130 days after the Claim-Resolution Date; and
(ii) ends on a date 150 days after it commences.
aaa. "Industrial Monthly Policies" shall mean (i)
any 1927-1929 Industrial Monthly Substandard Policy, (ii) any Other Industrial
Monthly Substandard Policy and (iii) any Industrial Monthly Standard Policy.
bbb. "Industrial Monthly Standard Policy" shall
mean any life insurance policy issued by the Company from its Industrial
Department insuring the life of a non-Caucasian, issued in a standard policy
plan or with a standard risk classification, and on which the policy's terms
required payment of monthly premiums.
ccc. "Industrial Policies" shall mean Industrial
Monthly Policies and Industrial Weekly Policies.
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ddd. "Industrial Weekly Policies" shall mean (i)
any Pre-1948 Industrial Weekly Substandard Death/Maturity Policy, (ii) any
Pre-1963 Industrial Weekly Substandard Non-Forfeiture Policy, (iii) any Pre-1963
Industrial Weekly Substandard Terminated Policy and (iv) any other life
insurance policy issued by the Company from its Industrial Department insuring
the life of a non-Caucasian, and on which the policy's terms required payment of
weekly premiums.
eee. "Industrial Weekly Substandard Policies"
shall mean any life insurance policy issued by the Company from its Industrial
Department in a substandard policy plan, on which the policy's terms required
payment of weekly premiums, and for which the Company's records do not indicate
the race of the insured as Caucasian.
fff. "In-Force Policies" or "In Force" shall
mean, for purposes of this Regulatory Settlement Agreement only, any Policy that
is providing insurance coverage as of the Eligibility Date, including Policies
that as of the Eligibility Date are (a) fully paid-up; (b) providing coverage as
reduced paid-up or extended term insurance under a contractual non-forfeiture
provision; or (c) in the process of escheatment to any state but for which a
returned Claim Form discloses information sufficient to identify the appropriate
payee of the Policy's benefits.
ggg. "Interest" shall mean simple interest at 4.0
percent per annum calculated to the first day of the Implementation Period, and
commencing on the later of (i) the date of the Policy's termination, maturity,
or payment of death benefit, as applicable, or (ii) January 1, 1975.
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hhh. "Issue Date" shall mean the "issue date"
set forth in the Policy contract.
iii. "Lead Counsel" shall mean the law firms of
Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP; Bonnett, Fairbourn, Xxxxxxxx & Xxxxxx,
P.C.; and Xxxxxx Xxxxxx Xxxx & Xxxxxx, LLP.
jjj. "Neutral" shall mean a third-party to whom
the Department, the Company and Lead Counsel shall agree, which third-party
shall resolve disputes as to whether a person or entity who has submitted a
Claim Form and, when requested, other Identifying Information is entitled to
benefits under this Settlement Agreement, as described in Section X.G below.
kkk. "New England Mutual Affected Policy" shall
mean one of the seven life insurance policies issued by New England Mutual, and
identified by the Department in its Report on Examination of Metropolitan Life
Insurance Company Regarding Response to Supplement No. 1 to Circular Letter No.
19 (2000), as having been issued with a substandard "Special Class B" risk
rating and for which the examiners' review identified no race-neutral basis for
the rating.
lll. "1930-1935 Ordinary Substandard Policies"
shall mean any life insurance policy issued by the Company from its Ordinary
Department in the Endowment at 80, 25-Year Endowment or 25-Pay Life policy plan,
from January 1, 1930 through December 31, 1935, for which the Company's records
do not indicate the race of the insured as Caucasian.
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mmm. "1920-1929 Intermediate Policies" shall
mean any life insurance policy insuring the life of a non-Caucasian issued by
the Company from January 1, 1920 through December 31, 1929 in an intermediate
policy plan.
nnn. "1927-1929 Industrial Monthly Substandard
Policies" shall mean any life insurance policy issued by the Company from its
Industrial Department in a substandard policy plan from January 1, 1927 through
December 31, 1929, for which the Company's records do not indicate the race of
the insured as Caucasian, where such policy's terms required payment of a stated
amount of premiums per month.
ooo. "Notice Card" shall mean the card,
substantially in the form attached hereto as Exhibit F, that the Company shall
make available to its Producers, and that the Administrator shall make available
to certain others (by hand, mail, or via the Internet, including the
Administrator's Web site), to give to Class Members who inquire about this
Regulatory Settlement Agreement or Stipulation of Settlement, as further
described in Section XII.F.3 below.
ppp. "Order Approving Settlement" shall mean the
order entered by the Court approving the Settlement Agreement in the Action.
qqq. "Ordinary Policies" shall mean all Ordinary
Substandard Policies and Covered Met Series Policies.
rrr. "Ordinary Substandard Policies" shall mean
(i) any 1930-1935 Ordinary Substandard Policy and (ii) any other life insurance
policy, other than a 1920-1929 Intermediate Policy, issued by the Company from
its Ordinary Department
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with an intermediate, special-class or other substandard risk classification,
and insuring the life of a non-Caucasian.
sss. "Other Industrial Monthly Substandard
Policy" shall mean any life insurance policy, other than a 1927-1929 Industrial
Monthly Substandard Policy, issued by the Company from its Industrial Department
insuring the life of a non-Caucasian, in an other-than-standard policy plan or
with an other-than-standard risk classification, and on which the policy's terms
required payment of monthly premiums.
ttt. "Other Ordinary Substandard Policies" shall
mean any Ordinary Substandard Policy other than a 1930-1935 Ordinary Substandard
Policy.
uuu. "Parties" or "Party" shall mean the
Department and the Company collectively and, where applicable, their respective
counsel.
vvv. "Plaintiffs" shall mean Xxxx X. Xxxxxxxx,
Xxxxxx Xxxxx, Xxxxxxxx XxXxxxxx, Xxxxxxxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxx (as the administrator of the Estate of Xxxxxx Xxxxxxxxx)
and any other Class Members added to the Amended Complaint or any subsequent
pleading as named plaintiffs, in their individual and representative capacities.
www. "Policy" or "Policies" shall mean any and
all Industrial Policies, Ordinary Substandard Policies, 1920-1929 Intermediate
Policies and Covered Met Series Policies with an Issue Date during the period
from January 1, 1901 through December 31, 1972, inclusive; provided however,
that any Metropolitan Life insurance policy for which the claims asserted in the
Action have been previously litigated and resolved or dismissed with prejudice,
and are barred by the doctrine of res judicata, shall
19
not be a Policy; and provided however, that any Metropolitan Life insurance
policy for which any Holder or Estate Holder has timely requested exclusion from
the proposed class shall not be a Policy.
xxx. "Postal Service" shall mean the United
States Postal Service.
yyy. "Post-Settlement Mailing" shall mean the
mailing that the Company shall make starting at the commencement of the
Implementation Period, as described in Section XII.D below. The Post-Settlement
Mailing shall be completed within 60 days of the commencement of the
Implementation Period.
zzz. "Preliminary Approval Hearing" shall mean
the hearing at or after which the Court will make a decision whether notice of
the Action and the proposed Settlement Agreement in the Action may be given.
aaaa. "Pre-1948 Industrial Weekly Substandard
Death/Maturity Policies" shall mean any life insurance policy issued by the
Company from its Industrial Department in a substandard policy plan, for which
the Company's records do not indicate the race of the insured as Caucasian, on
which the policy's terms required payment of a stated amount of premiums per
week, and where the policy terminated prior to January 1, 1948 by reason of the
death of the insured or the maturity of the Policy.
bbbb. "Pre-1963 Industrial Weekly Substandard
Non-Forfeiture Policies" shall mean any life insurance policy issued by the
Company from its Industrial Department in a substandard policy plan, for which
the Company's records do not indicate the race of the insured as Caucasian, on
which the policy's terms required
20
payment of a stated amount of premiums per week, and where the policy went onto
a reduced paid-up or extended term non-forfeiture status prior to January 1,
1963.
cccc. "Pre-1963 Industrial Weekly Substandard
Terminated Policies" shall mean any life insurance policy issued by the Company
from its Industrial Department in a substandard policy plan, for which the
Company's records do not indicate the race of the insured as Caucasian, on which
the policy's terms required payment of a stated amount of premiums per week, and
where the policy lapsed, surrendered, or was terminated (other than by reason of
Policy maturity or the death of the insured) prior to January 1, 1963.
dddd. "Primary Eligible Holder" shall mean, with
respect to any Terminated Policy eligible for the SDB hereunder, the following
Eligible Holder of the Policy:
(i) For an Industrial Policy, the
insured under the Policy.
(ii) For an Ordinary Policy, the owner
of the Policy at the time it terminated, or if such person is not an Eligible
Holder, the first Eligible Holder of the Policy to become an Eligible Holder
under Section X below.
eeee. "Producer" shall mean any of the Company's
current account representatives, managers or managing directors.
ffff. "Publication Notice" shall mean the
published notice and other media notice of the proposed settlement, as approved
in form and content by the
21
Department, counsel for Plaintiffs and the Defendant, and the Court, as
described in Section XII.B.
gggg. "Recipient" shall mean the person or persons
to whom the Settlement Death Benefit under this Agreement shall be paid. Subject
to Section III.F below, the Eligible Holder(s) of the Policy under Section X
below shall be entitled to payments under the SDB, unless the Class Member
designates an Alternate Recipient; provided however, that if the Recipient is
deceased at the time the payment is to be made, the Company may pay the
applicable death benefit to any person named as the beneficiary of the Policy
making the Class Member eligible for the SDB, or if that person is deceased or
cannot be paid for any reason, to any other person who appears to the Company to
be equitably entitled to such payment under Section III.D below.
hhhh. "SDB Certificate" shall mean the
certificate, substantially in the form included at Exhibit H and including a
tear-off sheet for Class Members to designate an Alternate Covered Person and/or
Alternate Recipient, that shall be provided to Eligible Holders of certain
Terminated Policies starting at the commencement of the Implementation Period as
evidence of the benefits provided by the SDB.
iiii. "Settlement Death Benefit" or "SDB" shall
mean a form of relief to be provided to Eligible Holders of certain Terminated
Policies, as described in Section VI.B below.
jjjj. "Standard Enhancement" shall mean the
enhancements or payments that shall be provided to Holders of certain In-Force
and Death/Maturity Policies pursuant to this Regulatory Settlement Agreement.
Wherever a Holder is
22
eligible for an Additional Enhancement (defined in Section II.A.1.b, above), the
Standard Enhancement calculation shall utilize the Policy's Face Amount, Cash
Value or death or maturity benefit as enhanced by the Additional Enhancement,
exclusive of Interest.
kkkk. "Statement of Benefits" shall mean the
summary of benefits that is included in the Class Notice Package for Database
Policies, and provided upon request to Eligible Holders whose policies have been
confirmed to be Policies or whose Claim Forms identify the number of a Policy
for which information is available on the Company's electronic records, as
described in Section XII.A.4 below.
llll. "Terminated Policies" shall mean any Policy
that, as of the Eligibility Date, has lapsed, surrendered or otherwise
terminated without insurance coverage, and has not been reinstated. For purposes
of this Regulatory Settlement Agreement, the term "terminated" shall not include
policies that, as of the Eligibility Date, are fully paid-up or are providing
coverage as reduced paid-up or extended term insurance under a contractual
non-forfeiture provision.
2. Defined terms used in combination in this Regulatory
Settlement Agreement shall have the combined definitions ascribed to them in the
Regulatory Settlement Agreement. For example, an In-Force Industrial Weekly
Policy shall mean an Industrial Policy that is both an Industrial Weekly Policy
and In Force.
3. Capitalized terms used in this Regulatory Settlement
Agreement but not defined above shall have the meaning ascribed to them in this
Regulatory Settlement Agreement and the attached exhibits.
23
III. REGULATORY SETTLEMENT AGREEMENT TERMS
A. Pursuant to this Regulatory Settlement Agreement, Class
Members will, depending on their eligibility hereunder, receive one or more
forms of the benefits described in Sections IV through VIII below.
B. With respect to each Policy making a Class Member eligible for
benefits, the Policy's Eligible Holder(s) will receive the benefits for which
that Policy is eligible hereunder, subject to the terms of Sections III.C,
III.D, III.E and III.F below; provided however, that for any settlement benefit
payable under this Agreement based upon a Policy for which a death claim is made
following the commencement of the Implementation Period, the settlement benefit
shall be paid to the payee of the Policy's contractual benefits (or, if there is
more than one payee, to each payee in proportion to the relative amounts of
benefits to which each is entitled under the Policy); and provided however, that
in the event of any conflict between this Section III and Section X below, the
provisions of Section X shall govern. No duplicate relief shall be provided to
multiple Holders of the same Policy, or to their estates or descendants.
C. If all Eligible Holders associated with a Policy are deceased,
then the Estate Holder(s) may exercise the rights of, and receive all settlement
benefits payable to, the Holders of such Policy, subject to the terms of
Sections III.D, III.E and III.F below. Settlement benefits shall be payable to
the Estate Holder only if, prior to the commencement of the Implementation
Period, either (a) the Holder's estate's administrator submits evidence of his
or her court-appointment as administrator of the
24
estate or (b) an heir of the Holder submits a declaration, in the form attached
hereto as Exhibit I, establishing the authority of the heir to act for the
Holder's estate.
D. For all benefits under this Regulatory Settlement Agreement
other than the SDB:
1. Where more than one person or entity is an Eligible
Holder of a Policy, settlement benefits shall be distributed among such Eligible
Holders in the manner and using the procedures specified in Section III.E below.
2. If all Eligible Holders of a Policy are deceased as
of the Eligibility Date, and more than one person or entity is an Estate Holder
of a Policy, settlement benefits shall be distributed among such Estate Holders
in the manner and using the procedures specified in Section III.E below.
3. If no person or entity is eligible for settlement
benefits under the provisions of Sections III.C through III.D.2 above, then any
spouse or Domestic Partner of any Holder may come forward to claim the benefits
for the Policy by submitting a Claim Form received by the Claim-In Date. Where
more than one such person timely claims to be entitled to receive benefits
associated with a Policy, the settlement benefits shall be distributed among
such persons in the manner and using the procedures specified in Section III.E
below.
4. If no person or entity is eligible for settlement
benefits under the provisions of Sections III.C through III.D.3 above, then any
child (including stepchildren) of any Holder may come forward to claim the
benefits for the Policy by submitting a Claim Form received by the Claim-In
Date. Where more than one such
25
person timely claims to be entitled to receive benefits associated with a
Policy, the settlement benefits shall be distributed among such persons in the
manner and using the procedures specified in Section III.E below.
5. If no person or entity is eligible for settlement
benefits under the provisions of Sections III.C through III.D.4 above, then any
parent of any Holder may come forward to claim the benefits for the Policy by
submitting a Claim Form received by the Claim-In Date. Where more than one such
person timely claims to be entitled to receive benefits associated with a
Policy, the settlement benefits shall be distributed among such persons in the
manner and using the procedures specified in Section III.E below.
6. If no person or entity is eligible for settlement
benefits under the provisions of Sections III.C through III.D.5 above, then any
sibling of any Holder may come forward to claim the benefits for the Policy by
submitting a Claim Form received by the Claim-In Date. Where more than one such
person timely claims to be entitled to receive benefits associated with a
Policy, the settlement benefits shall be distributed among such persons in the
manner and using the procedures specified in Section III.E below.
7. If no person or entity is eligible for settlement
benefits under the provisions of Sections III.C through III.D.6 above, then any
grandchild of any Holder, or any offspring of such a grandchild, may come
forward to claim the benefits for the Policy by submitting a Claim Form received
by the Claim-In Date. Where more than one such person timely claims to be
entitled to receive benefits associated with a Policy, the
26
settlement benefits shall be distributed among such persons in the manner and
using the procedures specified in Section III.E below.
8. If no person or entity is eligible for settlement
benefits under the provisions of Sections III.C through III.D.7 above, then any
other descendant or other relative of any Holder may come forward to claim the
benefits for the Policy by submitting a Claim Form received by the Claim-In
Date. Where more than one such person timely claims to be entitled to receive
benefits associated with a Policy, the settlement benefits shall be distributed
among such persons in the manner and using the procedures specified in Section
III.E below.
9. If, by the Claim-In Date, no person or entity is
eligible for settlement benefits under the provisions of Sections III.C through
III.D.8 above, then the Company may provide the settlement benefits to any other
person appearing to the Company to be equitably entitled to receive the
benefits.
E. If more than one person or entity is eligible for benefits
under Section III.D above, then the settlement benefits for the Policy shall be
divided equally among all such persons and entities. In the event both an owner
and a payee of contractual death benefits are Eligible Holders of a
Death/Maturity Ordinary Policy, each shall be eligible at least to the benefits
described in Section XI.D below.
F. For the SDB provided under this Regulatory Settlement
Agreement and described in Section VI.B below:
1. If more than one person or entity is an Eligible
Holder, then:
27
a. Unless an Alternate Recipient is designated,
all Eligible Holders shall be the Recipients under the SDB. Payments under the
SDB shall be made jointly to all Eligible Holders and mailed to the first person
or entity to become an Eligible Holder.
b. The Primary Eligible Holder shall have the
authority to designate an Alternate Covered Person or Alternate Recipient for
the SDB.
2. If all Eligible Holders under a Policy are deceased
as of the Eligibility Date, and more than one person or entity is an Estate
Holder, then:
a. Unless an Alternate Recipient is designated,
all Estate Holders shall be the Recipients under the SDB. Payments under the SDB
shall be made jointly to all Estate Holders and mailed to the first person or
entity to become an Estate Holder.
b. The first Estate Holder satisfying the
requirements of Section III.C above shall have the authority to designate an
Alternate Covered Person or Alternate Recipient for the SDB.
3. If no person or entity is eligible for the SDB
pursuant to Sections III.C, III.F.1 or III.F.2 above, then the first relative of
any Holder to timely submit a Claim Form for the Policy shall be the Recipient
under the SDB and shall have the authority to designate an Alternate Covered
Person or Alternate Recipient for the SDB.
4. If no person or entity is eligible for the SDB
pursuant to Sections III.C, III.F.1, III.F.2 or III.F.3 above, then the Company
may provide the settlement
28
benefits to any other person appearing to the Company to be equitably entitled
to receive the benefits.
G. Notwithstanding any other provision of this Agreement, where
no address is available for an Eligible Holder or other person eligible for
settlement benefits, or where there is an available address but it is known by
the Company to be invalid, no settlement benefits shall be mailed to the
Eligible Holder or other person.
H. If any Holder or Estate Holder excludes himself or herself
from the Class with respect to a Policy, all Holders (and their estates) of that
Policy will be deemed to be excluded with respect to that Policy.
I. In the event that provision of a particular form of relief
hereunder could cause adverse tax and/or other regulatory consequences to the
Class Member, or to his or her Policy, the Company shall not be obligated to
provide such relief but may, in its sole discretion and as an alternative, make
an economically comparable form of relief available to the Class Member. The
Department shall be notified in advance of any such substitution of relief.
J. In the event that the Parties determine that any provision of
this Regulatory Settlement Agreement regarding its implementation has become
administratively impracticable, the Parties may agree to amend or eliminate such
provision as they mutually deem appropriate.
K. If a death claim is made under an In-Force Policy, or if an
In-Force Policy matures, after the Eligibility Date but before the commencement
of the Implementation
29
Period, then the Inforce Policy shall be treated as if it were a Death/Maturity
Policy on the Eligibility Date.
L. If an In-Force Policy is terminated after the Eligibility
Date but before the commencement of the Implementation Period, then the In-Force
Policy shall be treated as if it were a Terminated Policy on the Eligibility
Date.
M. Pursuant to the terms of Section 8.2(a)(iii) of Metropolitan
Life Insurance Company's Plan of Reorganization under Section 7312 of the New
York Insurance Law as adopted on September 28, 1999 (and subsequently amended
and restated by the Company's Board of Directors), the Company shall neither add
assets to nor deduct assets from the "closed block" (as that term is defined in
the Plan) in connection with this Settlement Agreement without the prior
approval of the Department.
IV. BENEFITS FOR IN-FORCE POLICIES
A. THE ENHANCED FUTURE DEATH/MATURITY BENEFIT
1. Starting at the commencement of the Implementation
Period, Eligible Holders of In-Force Industrial Weekly Policies, In-Force
Industrial Monthly Policies, and In-Force Other Ordinary Substandard Policies
that mature or pay a death benefit in the future shall receive, in addition to
the contractual death or maturity benefit, a terminal dividend in the amount of
the sum of the Standard Enhancement and the Additional Enhancement (if any) for
the Policy (calculated pursuant to Sections IV.A.2 and IV.A.3 below). Eligible
Holders of all such In-Force Policies shall receive the Standard Enhancement.
Eligible Holders of In-Force Pre-1963 Industrial Weekly
30
Substandard Non-Forfeiture Policies shall receive both the Standard Enhancement
and the Additional Enhancement.
2. Standard Enhancements. The percentage of the Face
Amount at the time of the insured's death or the Policy's maturity (as enhanced
by any Additional Enhancement) constituting the Standard Enhancement shall be as
follows:
Policy Type Percentage Enhancement
----------- ----------------------
Industrial Weekly 12.5%
Other Industrial Monthly Substandard 12.5%
Industrial Monthly Standard 5%
Other Ordinary Substandard 15%
3. Additional Enhancements. For In-Force Pre-1963
Industrial Weekly Substandard Non-Forfeiture Policies, the Additional
Enhancement to the Policy's Face Amount at the time of the insured's death or
the Policy's maturity shall be calculated, on a Policy-by-Policy basis, based
upon the ratios in Exhibit L hereto. Such Additional Enhancement is designed to
provide In-Force Pre-1963 Industrial Weekly Substandard Non-Forfeiture Policies
with the benefit of the Company's 1963 equalization of Industrial Weekly
Substandard policy non-forfeiture values.
4. In-Force 1920-1929 Intermediate Policies. Eligible
Holders of In-Force 1920-1929 Intermediate Policies shall be provided the
Enhanced Future Death/Maturity Benefit in the form of an increase, at the
commencement of the Implementation Date, of 9% to the Policy's Face Amount and
associated Cash Value.
5. Death Certificate Review Obligation. Starting on the
Final Settlement Date, the Company shall review all future death certificates
submitted in
31
connection with claims for benefits under life insurance policies that may be
Policies eligible for the Enhanced Future Death/Maturity Benefit depending on
the race of the insured.
a. If, for any such policy, the Company's
review discloses that the insured's race was listed on the death certificate as
other than Caucasian, then the Holders of such Policy shall be deemed Eligible
Holders and the Enhanced Future Death/Maturity Benefit for the Policy shall be
provided, unless all documents in the Application File that describe the
insured's race indicate that the insured's race is Caucasian.
b. If the death certificate does not provide
the race of the insured, then the Company shall review the Application File (to
the extent it has not already reviewed the Application File in connection with
this Agreement) for the life insurance policy. If the Company's review discloses
that the insured's race was identified in any part of the Application File as
other than Caucasian, then the Holders of such Policy shall be deemed Eligible
Holders and the Enhanced Future Death/Maturity Benefit for the Policy shall be
provided.
6. Policy Application File Review Obligation. Starting
on the Final Settlement Date, the Company shall review the Application File (to
the extent it has not already reviewed the Application File in connection with
this Agreement) of any life insurance policy that becomes eligible for payment
of maturity or endowment benefits and that may be a Policy eligible for the
Enhanced Future Death/Maturity Benefit depending on the race of the insured. If,
for any such policy, the Company's review
32
discloses that the insured's race was listed in any part of the Application File
as other than Caucasian, then the Holders of such Policy shall be deemed
Eligible Holders and the Enhanced Future Death/Maturity Benefit for the Policy
shall be provided.
B. The Enhanced Future Termination/Non-Forfeiture Benefit
1. Starting at the commencement of the Implementation
Period, Eligible Holders of In-Force Industrial Weekly Policies, In-Force
Industrial Monthly Policies, and In-Force Other Ordinary Substandard Policies
that lapse, surrender, or otherwise terminate (other than by death or maturity)
in the future, or that are placed on a reduced paid-up or extended term
non-forfeiture status in the future, shall receive a surrender dividend in the
amount of the sum of the Standard Enhancement and the Additional Enhancement (if
any) for the Policy (calculated pursuant to Sections IV.B.2 and IV.B.3 below).
Eligible Holders of all such Policies shall receive the Standard Enhancement.
Eligible Holders of In-Force Pre-1963 Industrial Weekly Substandard
Non-Forfeiture Policies shall receive both the Standard Enhancement and the
Additional Enhancement.
2. Standard Enhancements. The percentage of the Policy's
Cash Value at the time of termination or placement on non-forfeiture status (as
enhanced by any Additional Enhancement) constituting the Standard Enhancement
shall be as follows:
33
Policy Type Percentage Enhancement
----------- ----------------------
Industrial Weekly 12.5%
Other Industrial Monthly Substandard 12.5%
Industrial Monthly Standard 5%
Other Ordinary Substandard 15%
3. Additional Enhancements. For In-Force Pre-1963
Industrial Weekly Substandard Non-Forfeiture Policies, the Additional
Enhancement to the Policy's Cash Value at the time of termination or placement
on non-forfeiture status shall be calculated, on a Policy-by-Policy basis, based
upon the ratios in Exhibit L hereto. Such Additional Enhancement is designed to
provide In-Force Pre-1963 Industrial Weekly Substandard Non-Forfeiture Policies
with the benefit of the Company's 1963 equalization of Industrial Weekly
Substandard policy non-forfeiture values.
4. Application of Surrender Dividends to Non-Forfeiture
Policies. For those Policies that are placed on non-forfeiture status after the
commencement of the Implementation Period, the surrender dividend (composed of
the Standard Enhancement plus, where applicable, the Additional Enhancement)
shall be provided in the following form:
a. For Policies placed on an extended term
insurance non-forfeiture status, the surrender dividend shall be added to the
Policy's total cash value for the purpose of calculating the duration of
non-forfeiture benefits provided by the Policy and the amount of cash value
available in the event the Policy is later surrendered for its cash value.
34
b. For Policies placed on a reduced paid-up
non-forfeiture status, the surrender dividend shall be provided for the Policy
at the time the Policy pays a death benefit or is surrendered for its cash
value.
5. In-Force 1920-1929 Intermediate Policies. Eligible
Holders of In-Force 1920-1929 Intermediate Policies shall be provided the
Enhanced Future Termination/Non-Forfeiture Benefit in the form of an increase,
at the commencement of the Implementation Date, of 9% to the Policy's Face
Amount and associated Cash Value.
6. Policy Application File Review Obligation. Starting
on the Final Settlement Date, the Company shall review the Application File (to
the extent it has not already reviewed the Application File in connection with
this Agreement) of any life insurance policy that terminates and is presented
for payment of cash surrender benefits, and that may be a Policy eligible for
the Enhanced Future Termination/Non-Forfeiture Benefit depending on the race of
the insured. If, for any such policy, the Company's review discloses that the
insured's race was listed in the Application File as other than Caucasian, then
the Holders of such Policy shall be deemed Eligible Holders and the Enhanced
Future Termination/Non-Forfeiture Benefit for the Policy shall be provided.
C. THE ENHANCED ADDITIONAL INSURANCE BENEFIT
1. Eligible Holders of In-Force 1920-1929 Intermediate
Policies and In-Force 1930-1935 Ordinary Substandard Policies shall receive at
the commencement of the Implementation Period an increase in the Policy's amount
of insurance coverage in the form of Additional Insurance.
35
2. For Eligible Holders of In-Force 1920-1929
Intermediate Policies, the amount of Additional Insurance comprising the
Enhanced Additional Insurance Benefit shall equal 35 percent of the Face Amount
of the Policy as of the Eligibility Date; provided however, that for any such
Policy on a non-forfeiture status as of the Eligibility Date, the Face Amount of
the Policy shall be increased by 35 percent. The Enhanced Additional Insurance
Benefit shall be provided in addition to the Enhanced Future Death/Maturity
Benefit and the Enhanced Future Termination/Non-Forfeiture Benefit for which the
Policy is eligible.
3. For Eligible Holders of In-Force 1930-1935 Ordinary
Substandard Policies, the amount of Additional Insurance comprising the Enhanced
Additional Insurance Benefit shall equal 15 percent of the Face Amount of the
Policy as of the Eligibility Date; provided however, that for any such Policy on
a non-forfeiture status as of the Eligibility Date, the Face Amount of the
Policy shall be increased by 15 percent.
D. THE CASH PAYMENT OPTION
1. Eligible Holders of any In-Force Policy may, instead
of receiving the Enhanced Future Death/Maturity Benefit, the Enhanced Future
Termination/Non-Forfeiture Benefit or the Enhanced Additional Insurance Benefit,
elect to receive a cash payment from the Company in an amount equal to the cost
for the Policy's settlement benefits pursuant to column 4 of the table in
Section I of Exhibit M hereto.
2. Starting at the commencement of the Implementation
Period and ending no later than 30 days thereafter, the Company shall mail the
Cash Payment Option Election Letter, substantially in the form attached hereto
as Exhibit J, to each Eligible
36
Holder associated with an In-Force Policy at the address indicated on a Claim
Form for the Policy, or at the last-known address for the Eligible Holder if no
Claim Form is submitted for the Policy. The Cash Payment Option Election Letter
shall indicate both (i) the dollar amounts of the Enhanced Future Death/Maturity
Benefit, the Enhanced Future Termination/Non-Forfeiture Benefit and the Enhanced
Additional Insurance Benefit (if any) for the Policy, together with a general
description of those forms of benefits and (ii) the dollar amount that is
payable in the alternative under the Cash Payment Option. The Cash Payment
Option Election Letter shall contain a tear-off form that allows the Eligible
Holder to request the Cash Payment Option.
3. To exercise the Cash Payment Option described in this
Section IV.D, the Eligible Holder(s) of the Policy must elect the cash payment
by either (i) contacting the Administrator at the Toll-Free Number within 30
days after the date of the Cash Payment Option Election Letter for the Policy or
(ii) completing and returning the form included with the Cash Payment Option
Election Letter (which form must be postmarked no later than 30 days after the
date of the Cash Payment Option Election Letter).
4. Eligible Holders who timely elect the Cash Payment
Option shall be provided their cash payments within 60 days of the date of the
Cash Payment Option Election Letter.
E. THE PROSPECTIVE COMMITMENT
1. The Company commits under this Agreement that,
starting at the commencement of the Implementation Period, any future
non-guaranteed policy elements
37
that may be provided to Holders of 1930-1935 Ordinary Substandard Policies shall
utilize the mortality assumptions and factors utilized for the corresponding
standard policy plan or form issued in the same year to insure persons of the
same issue age in the same risk classification, and with the same Face Amount as
the Policy (as enhanced by the Enhanced Additional Insurance Benefit).
2. The Company commits under this Agreement that,
starting at the commencement of the Implementation Period, any future
non-guaranteed policy elements that may be provided to Holders of 1920-1929
Intermediate Policies shall utilize the mortality assumptions and factors
utilized for the standard risk classification in the corresponding policy plan
or form issued in the same year to insure persons of the same issue age, and
with the same Face Amount as the Policy (as enhanced by the Enhanced Future
Death/Maturity Benefit and the Enhanced Additional Insurance Benefit).
V. RELIEF FOR DEATH/MATURITY POLICIES:
THE ENHANCED PAST DEATH/MATURITY BENEFIT
Eligible Holders of Death/Maturity Industrial Weekly Policies,
Death/Maturity Industrial Monthly Policies, Death/Maturity Ordinary Substandard
Policies and Death/Maturity 1920-1929 Intermediate Policies shall receive a cash
payment equal to the amount that is the sum of the Standard Enhancement and the
Additional Enhancement (if any) for the Policy (calculated pursuant to Sections
V.A and V.B below). Eligible Holders of all such Policies shall receive the
Standard Enhancement. Eligible Holders of Pre-1948 Industrial Weekly Substandard
Death/Maturity Policies, Pre-1963 Industrial Weekly Substandard Non-Forfeiture
Policies and 1927-1929 Industrial Monthly
38
Substandard Policies shall receive both the Standard Enhancement and the
Additional Enhancement. Such cash payment shall be provided via the
Post-Settlement Mailing, as further described in Section XII.D below.
A. STANDARD ENHANCEMENTS
1. For Death/Maturity Industrial Weekly Policies and
Death/Maturity Other Industrial Monthly Substandard Policies, the Standard
Enhancement (if any) shall equal 12.5 percent of the Policy's Face Amount at the
time of the insured's death or the Policy's maturity (as enhanced by any
Additional Enhancement).
2. For Death/Maturity Industrial Monthly Standard
Policies and 1927-1929 Industrial Monthly Substandard Policies, the Standard
Enhancement shall equal 5 percent of the Policy's Face Amount at the time of the
insured's death or the Policy's maturity (as enhanced by any Additional
Enhancement).
3. For Death/Maturity Other Ordinary Substandard
Policies, the Standard Enhancement shall equal 15 percent of the Policy's Face
Amount at the time of the insured's death or the Policy's maturity.
4. For Death/Maturity 1930-1935 Ordinary Substandard
Policies, the Standard Enhancement shall equal 15 percent of the Policy's Face
Amount at the time of the insured's death or the Policy's maturity, multiplied
by the Early Termination Adjustment, accumulated with Interest; provided
however, that the Early Termination Adjustment shall not apply to any such
Policy that paid a death or maturity benefit while providing reduced paid-up
insurance coverage under a contractual non-forfeiture provision.
39
5. For Death/Maturity 1920-1929 Intermediate Policies,
the Standard Enhancement shall equal the sum of (i) 35 percent of the Policy's
Face Amount at the time of the insured's death or the Policy's maturity,
multiplied by the Early Termination Adjustment, accumulated with Interest; and
(ii) 9 percent of the Policy's Face Amount at the time of the insured's death or
the Policy's maturity, accumulated with Interest; provided however, that the
Early Termination Adjustment shall not apply to any such Policy that paid a
death or maturity benefit while providing reduced paid-up insurance coverage
under a contractual non-forfeiture provision.
B. ADDITIONAL ENHANCEMENTS
1. For Pre-1948 Industrial Weekly Substandard
Death/Maturity Policies and Death/Maturity Pre-1963 Industrial Weekly
Substandard Non-Forfeiture Policies, the Additional Enhancement shall equal the
enhancement calculated for the particular Policy using the ratios set forth in
Exhibit L hereto, accumulated with Interest. Such Additional Enhancement shall
be designed to provide these Policies with the benefit of the Company's 1948 and
1963 equalizations of Industrial Weekly Substandard policy amounts of insurance
and non-forfeiture values.
2. For Death/Maturity 1927-1929 Industrial Monthly
Substandard Policies, the Additional Enhancement shall equal 13 percent (for
25-Year Endowment Policies) or 36 percent (for Endowment at 75 Policies) of the
Policy's Face Amount at the time of the insured's death or the Policy's
maturity, accumulated with Interest.
40
VI. BENEFITS FOR TERMINATED POLICIES
A. THE ENHANCED PAST TERMINATION BENEFIT
1. Eligible Holders of Terminated Pre-1963 Industrial
Weekly Substandard Terminated/Non-Forfeiture Policies, Terminated 1927-1929
Industrial Monthly Substandard Policies, Terminated 1930-1935 Ordinary
Substandard Policies and Terminated 1920-1929 Intermediate Policies shall
receive a cash payment equal to the amount calculated for the Policy pursuant to
Sections VI.A.2 through VI.A.5 below. Such cash payment shall be provided via
the Post-Settlement Mailing, as further described in Section XII.D below.
2. For Terminated Pre-1963 Industrial Weekly Substandard
Terminated/Non-Forfeiture Policies, the cash payment shall equal the enhancement
calculated for the particular Policy calculated using the ratios in Exhibit L
hereto, accumulated with Interest. Such payment shall be designed to provide
Terminated Pre-1963 Industrial Weekly Substandard Terminated/Non-Forfeiture
Policies with the benefit of the Company's 1963 equalization of Industrial
Weekly Substandard policy non-forfeiture values.
3. For Terminated 1930-1935 Ordinary Substandard
Policies, the cash payment shall equal 15 percent of the Cash Value of the
Policy at the time of termination, accumulated with Interest.
4. For Terminated 1920-1929 Intermediate Policies, the
cash payment shall equal the 44 percent of the Cash Value of the Policy at the
time of termination, accumulated with Interest.
41
5. For Terminated 1927-1929 Industrial Monthly
Substandard Policies, the cash payment shall equal 13 percent (for 25-Year
Endowment Policies) or 36 percent (for Endowment at 75 Policies) of the Cash
Value of the Policy at the time of termination, accumulated with Interest.
B. THE SETTLEMENT DEATH BENEFIT
1. Eligible Holders of Terminated Industrial Weekly
Policies, Terminated Industrial Monthly Policies and Terminated Other Ordinary
Substandard Policies shall be entitled to the Settlement Death Benefit ("SDB").
Subject to Section VI.B.7 below, the SDB shall commence on the Final Settlement
Date.
2. For each such Policy making the Class Member eligible
for relief, the SDB shall provide a payment to the Recipient, upon the Company's
receipt of due proof of death of the Covered Person within the 5 years following
the Final Settlement Date, of an amount that is a percentage of the Face Amount
of the Policy at the time of termination (as enhanced by any Additional
Enhancement).
3. For Terminated Industrial Weekly Policies and
Terminated Other Industrial Monthly Substandard Policies, the percentage of the
Face Amount of the Policy at the time of termination that is payable under the
SDB shall be 15.5 percent; provided however, that for Terminated Industrial
Weekly Policies that are eligible for the Enhanced Past Termination Benefit, and
for the sole purpose of calculating the percentage of the Face Amount at
termination payable under the SDB, the Face Amount shall be increased by the
ratio for the Policy provided in Exhibit L.
42
4. For Terminated Industrial Monthly Standard Policies
and Terminated 1927-1929 Industrial Monthly Substandard Policies, the percentage
of the Face Amount of the Policy at the time of termination that is payable
under the SDB shall be 8 percent; provided however, that for Terminated
1927-1929 Industrial Monthly Substandard Policies, and for the sole purpose of
calculating the percentage of the Face Amount at termination payable under the
SDB, the Face Amount shall be increased by 13 percent (for 25-Year Endowment
Policies) or 36 percent (for Endowment at 75 Policies) to reflect the Enhanced
Past Termination Benefit provided for the Policy.
5. For Terminated Other Ordinary Substandard Policies,
the percentage of the Face Amount of the Policy at the time of termination that
is payable under the SDB shall be 18 percent.
6. At any time prior to the expiration of the SDB or the
death of the Covered Person, the Class Member may designate an Alternate
Recipient by completing and returning the portion of the SDB Certificate that is
designated for that purpose, as shown in Exhibit H hereto, or by submitting such
designation to the Administrator's Internet Web site while it is operational.
7. If the insured under the Policy creating eligibility
for the SDB is deceased as of the Final Settlement Date, then the Class Member
or his or her estate must designate a member of the Class Member's Affinity
Group as an Alternate Covered Person for purposes of the SDB, either (a) by
completing and returning the portion of the SDB Certificate that is designated
for that purpose, as shown in Exhibit H hereto, postmarked within 30 days after
the commencement of the Implementation Period; or
43
(b) by submitting such designation to the Administrator's Internet Web site
(while it is operational) within 30 days after the commencement of the
Implementation Period. SDB coverage for the Alternate Covered Person shall
commence five days after the date of the postmark of, or submission to the
Administrator's Internet Web site of, the Class Member's designation of the
Alternate Covered Person.
8. Starting at the commencement of the Implementation
Period, the Company shall mail an SDB Certificate, substantially in the form
attached hereto as Exhibit H, to each Eligible Holder entitled to the SDB. The
SDB Certificate shall include a form for designation of an Alternate Covered
Person and an Alternate Recipient.
9. Research Initiative Regarding Terminated Policies
Eligible for the SDB. One year following the end of the Implementation Period,
and annually thereafter until all SDBs provided by this Agreement are no longer
in force, Metropolitan Life shall retain the services of a national information
service bureau (such as TRW, Equifax, or COMSERV, Inc.), subject to the approval
of the Department, for the purpose of determining, based on the social security
numbers of the Covered Persons for all remaining in-force SDBs that are
available to the Company on its electronic records or obtained through Claim
Forms submitted by Class Members, whether any Covered Person covered by an SDB
has died within the coverage period. If (a) the foregoing research reveals that
any such Covered Person has died, and (b) the Company, using its best efforts,
is able to contact the Recipient, and (c) the Recipient qualifies for payment of
the SDB, then the Recipient shall be eligible to receive the payment under the
SDB.
44
VII. MET SERIES ENHANCEMENT
A. Covered Met Series Policies that are eligible to receive other
benefits pursuant to this Regulatory Settlement Agreement shall receive an
enhancement of an additional three percent to the percentages used to calculate
the benefits to be provided by Sections IV through VI above.
B. Covered Met Series Policies that are eligible for no other
benefits under this Regulatory Settlement Agreement shall receive the following
at the commencement of the Implementation Period:
1. For In-Force Policies, either (a) an Enhanced Future
Death/Maturity Benefit of three percent of the Face Amount of the Policy at the
time of death or maturity; or (b) an Enhanced Future Termination/Non-Forfeiture
Benefit of three percent of the Cash Value of the Policy at the time of
termination or placement on non-forfeiture status. Such Policies shall also be
eligible for the Cash Payment Option described in Section IV.D above.
2. For Death/Maturity Policies, a cash payment equal to
three percent of the Policy's Face Amount at the time of the insured's death or
the Policy's maturity.
3. For Terminated Policies, an SDB (as described in
Section VI.B above) with an amount of coverage of three percent of the Policy's
Face Amount at the time of termination.
VIII. UNCLAIMED BENEFITS RELIEF
A. For all Database Policies and Policies for which a Claim Form
has been timely submitted, and for which a death claim was paid in the period
from August 19,
45
1995 through the Claim-In Date, the Company shall conduct a search for other
Metropolitan Life insurance policies that also insured the person insured under
the Policy in an effort to provide any death or maturity benefits due under any
other such policies, as follows:
1. Within 30 days of the Claim-In Date, the Company
shall perform a comprehensive search, using the Company's electronic policy
databases and the protocols attached hereto as Exhibit C, to determine whether
any other Metropolitan Life insurance policy or policies on those databases
insured the life of the deceased insured under the Policy.
2. If the Company's search reveals that the deceased
insured was covered by any other Metropolitan Life insurance policy that, at the
time of the death of the insured, was providing life insurance coverage
(including without limitation pursuant to a contractual non-forfeiture option),
and with respect to which a death benefit was not paid, the Company shall use
its best efforts to notify the beneficiary or beneficiaries of the life
insurance policy and pay any death benefits due, plus any statutorily required
interest, regardless of whether such benefits have already escheated to a state
governmental authority.
3. If the Company's search reveals that the deceased
insured was covered by any other Metropolitan Life insurance policy that, at the
time it reached maturity, was premium-paying, fully paid-up or providing
insurance coverage pursuant to a contractual non-forfeiture provision, and with
respect to which maturity benefits became payable but have not been paid, the
Company shall use its best efforts to notify
46
the person or entity to whom the policy's maturity benefits were payable (or, if
such a person is deceased, his or her estate) and pay the maturity benefits due,
plus any statutorily required interest, regardless of whether such benefits have
already escheated to a state governmental authority.
4. In addition, if the Company's search reveals that the
deceased insured was covered under any other Metropolitan Life insurance policy
that was also a Policy, then the Policy shall be eligible for the settlement
benefits provided for the Policy under this Regulatory Settlement Agreement.
B. For all Policies for which a death claim is paid after the
Claim-In Date, the Company shall conduct a search for other Metropolitan Life
insurance policies that also insured the life of the person insured under the
Policy in an effort to provide any death or maturity benefits due under any
other such policies, as follows:
1. At the time the death claim is made under the Policy,
the Company shall perform a comprehensive search, using its electronic policy
databases and the protocols attached hereto as Exhibit C, to determine whether
any other Metropolitan Life insurance policy or policies on those databases
insured the life of the deceased insured under the Policy.
2. If the Company's search reveals that the deceased
insured was covered by any other Metropolitan Life insurance policy that, at the
time of the death of the insured, was providing life insurance coverage
(including without limitation pursuant to a contractual non-forfeiture option),
the Company shall use its best efforts to pay the
47
death benefits due under the life insurance policy, regardless of whether such
benefits have already escheated to a state governmental authority.
3. If the Company's search reveals that the deceased
insured was covered by any other Metropolitan Life insurance policy that, at the
time it reached maturity, was premium-paying, fully paid-up or providing
insurance coverage pursuant to a contractual non-forfeiture provision, and with
respect to which maturity benefits became payable but have not been paid, the
Company shall use its best efforts to notify the person or entity to whom the
policy's maturity benefits were payable (or, if such a person is deceased, his
or her estate) and pay the maturity benefits due, plus any statutorily required
interest, regardless of whether such benefits have already escheated to a state
governmental authority.
4. In addition, if the Company's search reveals that the
deceased insured was covered under any other Metropolitan Life insurance policy
that was also a Policy, then the Policy shall be eligible for the settlement
benefits provided for the Policy under this Regulatory Settlement Agreement.
C. Starting at the commencement of the Implementation Period, the
Company shall search its electronic records that reflect prior escheatments of
life insurance policy benefits to state governmental authorities, using the
protocols attached hereto as Exhibit C, in an effort to identify other life
insurance policies insuring the lives of the persons insured under the Policies.
If this search identifies any such other life insurance policies for which death
or maturity benefits have previously become payable, but which benefits have
been escheated to a state governmental authority, the Company
48
shall use its best efforts to notify the person or entity to whom the policy's
death or maturity benefits were payable (or, if such a person is deceased, his
or her estate) and pay the death or maturity benefits due, plus any statutorily
required interest.
IX. COMPANY CERTIFICATION OF RELIEF
A. On a date that is not later than six months following the
first anniversary of the end of the Implementation Period, the Company, through
one of its officers who is a member in good standing of the American Academy of
Actuaries, shall provide to the Department a written certification specifying
the actual cost to the Company, determined in accordance with Exhibit M hereto,
of the benefits that have been provided to Class Members pursuant to this
Agreement in the first year following the commencement of the Implementation
Period.
B. Such summary shall detail the costs of benefits provided to
Class Members by each type of benefit provided under this Agreement and shall
describe the relevant supporting information on which the summary is based. In
addition, the certification shall contain a signed statement of the actuary
affirming that the actuary has reviewed the relevant supporting information for
the summary, that the actuary has authority to make the certification on behalf
of the Company, and that the summary is accurate to the best of the actuary's
knowledge and belief. Upon request of the Department, the Company shall provide
the Department with the supporting information on which the cost summary is
based.
49
X. RELIEF QUALIFICATIONS
A. Holders of In-Force Database Policies shall automatically be
Eligible Holders.
B. Holders of In-Force Policies that are not Database Policies
shall become Eligible Holders if:
1. All documents in the Policy's Application File that
state the insured's race do not unanimously indicate the race of the insured as
Caucasian, and
2. One of the following conditions applies:
a. A Claim Form identifying the insured,
identifying the race of the insured under the Policy as non-Caucasian and
providing Identifying Information for the Policy has been submitted postmarked
by the Claim-In Date or
b. The Company's review under Section IV.A.5,
Section IV.A.6 or Section IV.B.6 above discloses that the race of the insured
under the Policy is identified as non-Caucasian in the certificate of death for
the insured or in any part of the Policy's Application File.
C. Holders of Death/Maturity and Terminated Database Policies for
which the Company paid a death benefit within the seven years preceding the
Eligibility Date, or for which the Company paid a maturity, endowment or cash
surrender benefit on or after January 1, 1989, shall automatically be Eligible
Holders, subject to the following terms and conditions:
1. The Company shall conduct research (using the
National Change of Address database and ChoicePoint) to update the address of
the payee of the Policy's
50
contractual benefits listed in the Company's records or in a Claim Form
submitted for the Policy.
2. For those Policies for which the payee's address is
updated or confirmed through the research in Section X.C.1 above, starting at
the commencement of the Implementation Period, the Company shall mail any
benefit payments due under this Agreement to the payee (or, if there are
multiple payees, to each payee in proportion to the relative amounts of benefits
to which each is entitled under the Policy); provided however, that if the
Company's records indicate that the payee of the Policy is an Excluded Entity,
then the provisions of Section X.D below shall apply.
3. For those Policies for which the payee's address
cannot be updated or confirmed through the research in Section X.C.1 above, 30
days after the Claim-In Date, the Company shall mail the Confirmatory Letter,
substantially in the form attached hereto as Exhibit K, to the payee of the
Policy's contractual benefits at the payee's last-known address on the Company's
records.
a. If the Company receives an updated address
or confirmation of the address from the payee, either in a writing postmarked
within 30 days of the mailing of such Confirmatory Letter, or by telephone or
e-mail within such period, then starting at the commencement of the
Implementation Period, the Company shall mail any benefit payments due under
this Agreement to the payee at the updated or confirmed address.
b. If the Company does not receive an updated
address or confirmation of the address from the payee in the manner and within
the times specified
51
in Section X.C.3.a above, then the settlement benefits otherwise payable to the
payee shall increase the benefits that otherwise would be provided to Eligible
Holders, on a proportionate basis based on the cost of each Policy's benefits
(calculated in accordance with Exhibit M hereto).
4. If the Company's records indicate that the payee of
the Policy is an Excluded Entity, then this Section X.C shall not apply and the
provisions of Section X.D below shall apply.
D. If the Company's records indicate that the payee of the Policy
is an Excluded Entity, then the Company shall provide the Policy's benefits
under this Agreement to the Policy's contractual beneficiary at his or her
last-known address on the Company's records. If there is no available
contractual beneficiary for the Policy, then the Company shall provide the
Policy's benefits under this Agreement as specified in Sections III.B through
III.F above.
E. Holders of all Death/Maturity Policies and Terminated Policies
except those described in Sections X.C through X.D above shall become Eligible
Holders only by submitting a Claim Form postmarked no later than the Claim-In
Date that (i) identifies the insured under the Policy, (ii) identifies the race
of the insured under the Policy as non-Caucasian and (iii) provides Identifying
Information for the Policy; provided however, that no Holder of a Policy shall
be an Eligible Holder if all documents in the Policy's Application File that
state the race of the person insured under the Policy indicate unanimously that
the insured's race is Caucasian.
52
F. The Administrator shall assist with the completion of Claim
Forms as follows:
1. The toll-free telephone number established by the
Administrator shall permit persons seeking to obtain a Class Notice Package to
provide their names, telephone numbers, addresses and policy numbers.
2. The Administrator shall establish an Internet Web
site that, in addition to providing notice of the proposed settlement,
facilitates the electronic submission of Claim Form information. If any person
or entity supplies Claim Form information electronically over the
Administrator's Web site, then to the extent practicable, the Administrator
shall provide such person or entity with a Claim Form that includes the
information that has been electronically submitted, together with a
pre-addressed and postage pre-paid envelope for return of the Claim Form to the
Administrator; provided however, that no Claim Form shall be valid unless it is
completed, signed and returned postmarked by the Claim-In Date.
G. Wherever a Claim Form is required by this Regulatory
Settlement Agreement, the Company shall not be obligated to provide settlement
benefits to any person or entity who does not submit a Claim Form and other
Identifying Information sufficient to permit the Company to confirm that the
person or entity is entitled to settlement benefits, subject to the following
conditions:
1. The Company shall use each substantially completed
Claim Form that is submitted by any person or entity on or before the Claim-In
Date to search its electronic databases and paper records in an effort to
identify each life insurance policy
53
referenced in the Claim Form and determine (a) whether such policy is a Policy
and (b) the person or entity who submitted the Claim Form is an Eligible Holder
or is otherwise eligible for settlement benefits under this Agreement.
2. If the Company's search locates any life insurance
policy referenced in the Claim Form but confirms that such policy is not a
Policy, then as soon as is practicable, but in no event later than 60 days after
the Claim-In Date, the Company shall notify in writing the person or entity who
submitted the Claim Form, via first-class mail to the person's or entity's
address on the Claim Form, (a) of each life insurance policy referenced in the
Claim Form that is not a Policy, (b) of the reasons why each such policy is not
a Policy, (c) that no settlement benefits will be provided for each such policy,
and (d) that the person or entity may raise any questions within 30 days of the
Company's notification. Absent such a written notification by the Company within
60 days of the Claim-In Date, any life insurance policy identified in the Claim
Form shall be deemed a Policy and shall receive the settlement benefits to which
it is entitled under this Agreement.
3. If the Company's search does not locate a life
insurance policy referenced in the Claim Form, then:
a. As soon as is practicable, but in no event
later than 30 days after the Claim-In Date, the Company shall request additional
Identifying Information from the person or entity who submitted the Claim Form.
b. For any such person or entity who supplies
additional Identifying Information postmarked within 30 days of the Company's
request, the
54
Company shall use the additional Identifying Information to search its
electronic databases and paper records in an effort to identify the life
insurance policy referenced in the Claim Form and determine whether such policy
is a Policy.
c. As soon as is practicable, but in no event
later than 120 days after the Claim-In Date, the Company shall notify in
writing, via first-class mail to the person's or entity's address in the Claim
Form, each person or entity that has submitted a Claim Form and other
Identifying Information to whom the Company determines not to provide settlement
benefits, either (i) because the Company's searches have not located each life
insurance policy referenced in the Claim Form or (ii) because the Company has
located any life insurance policy referenced in the Claim Form but has confirmed
that such policy is not a Policy (in which case the Company's written
notification shall include the matters set forth in Section X.G.2 above).
4. If any notified person or entity objects in writing
to the Company's determination in a writing postmarked within 30 days of the
date of a Company notification under Section X.G.2 or Section X.G.3 above, then:
a. The Company and Lead Counsel shall confer in
good faith to resolve any disagreement concerning the person's or entity's
eligibility for settlement benefits.
b. If the Company and Lead Counsel are unable
to resolve any such disagreement within 15 days of receipt of the person or
entity's written objection, then the Company and Lead Counsel shall submit their
disagreement to the Neutral, who shall determine whether the person or entity is
entitled to settlement benefits, provided
55
however, that prior to submitting any disagreement to the Neutral, the Company
shall bring that disagreement to the attention of the Department.
c. The Neutral's determinations under this
Section X.G.4 shall be made within 30 days of the submission of the dispute by
the Company and Lead Counsel, but in no event later than the Claim-Resolution
Date.
d. The determinations of the Neutral shall be
final and binding on the Company and Lead Counsel and the person or entity in
question.
H. If, in the course of searching for any life insurance policy
identified in a Claim Form or by other Identifying Information, the Company
determines that the life insurance policy is a Policy and that the Company's
records for the Policy list the numbers of other life insurance policies
covering the life of the insured under the Policy, then the Company shall
attempt to determine whether the other policies referenced are also Policies and
provide any settlement benefits for which the Policies are eligible under this
Agreement.
XI. MINIMUM/MAXIMUM COST OF BENEFITS
A. After the deadline under this Agreement for submission of all
Claim Forms has expired, and no later than the commencement of the
Implementation Period, the Company shall compute the total anticipated cost to
the Company of all settlement benefits to be provided to the Class, using the
factors and assumptions set forth in Exhibit M hereto.
1. If the computation in this Section XI.A results in a
total cost to the Company of all anticipated settlement benefits that is less
than $52 million, then all
56
benefits that otherwise would be provided to Eligible Holders and other eligible
persons and entities shall be increased, on a proportionate basis based on the
cost of each Policy's benefits (calculated in accordance with Exhibit M hereto),
so that the total cost of all anticipated settlement benefits pursuant to the
factors and assumptions set forth in Exhibit M hereto equals $52 million.
2. If the computation in this Section XI.A results in a
total cost to the Company of all anticipated settlement benefits in excess of
$90 million, then all benefits that otherwise would be provided to Eligible
Holders and other eligible persons and entities shall be reduced, on a
proportionate basis based on the cost of each Policy's benefits (calculated in
accordance with Exhibit M hereto), so that the total cost of all anticipated
settlement benefits pursuant to the factors and assumptions set forth in Exhibit
M hereto equals $90 million.
B. Within 30 days after the commencement of the Implementation
Period, the Company shall make a charitable contribution to the United Negro
College Fund, Inc. for scholarship purposes in the amount of $5 million;
provided however, that such amount shall be reduced by the excess, if any, of
the total cost to the Company of all anticipated settlement benefits (calculated
in accordance with Section XI.A above) over $85 million.
C. No later than 85 days prior to the commencement of the
Implementation Period, the Company may propose to the Department increases in
one or more of the percentages listed in column 3 of the table in Section II of
Exhibit M hereto that, for aggregate cost-calculation purposes, are to be
applied to certain types of In-Force life insurance policies for which no Claim
Form has been submitted and for which the
57
insured's race is not reflected on the Company's electronic records (referred to
in Exhibit M as policies "Subject to Race Adjustment"). Each such proposed
increase by the Company shall be subject to review by the Department, as
follows:
1. With its proposal, the Company shall provide the
Department and Lead Counsel with the statistical analysis and all data,
assumptions and calculations supporting its proposed increase.
2. The Department and Lead Counsel shall have 30 days
from their receipt of any proposed percentage increase from the Company to
request additional information and express any objection thereto.
3. The Department, Lead Counsel, and the Company shall
attempt to resolve any objections raised by the Department or Lead Counsel
through good-faith negotiations.
4. Any differences among the Department, Lead Counsel,
and the Company that are not resolved by good-faith negotiation within 10 days
of the Department's or Lead Counsel's objection shall be submitted to a
third-party actuary chosen jointly by the Department, Lead Counsel, and the
Company, who shall determine whether the Company's proposed increase is
necessary to accurately estimate the percentage of non-Caucasian insureds under
life insurance policies that are Subject to Race Adjustment, consistent with
generally accepted statistical principles. The third-party actuary shall render
his or her decision within 15 days of submission of the dispute. The third-party
actuary's decision shall be final and binding on the Parties.
58
D. Notwithstanding any other provision of this Regulatory
Settlement Agreement, if any settlement payment or benefit that would otherwise
be provided in the aggregate for a Policy under this Agreement (other than any
Enhanced Future Termination Benefit that may be payable based upon the expiry of
a Policy's term insurance coverage) is less than $10, then such payment or
benefit shall be increased to $10; provided however, that in the event a Policy
is eligible for benefits under both Section VI.A and VI.B above, then both the
payment under Section VI.A and the payment to the Recipient under Section VI.B
shall equal at least $10; and provided however, that the $10 amount shall be
reduced as necessary pursuant to Sections XI.A.2 and XI.C above; and provided
however, that in making the calculations set forth in Section XI.A.1 above, the
total cost of the payment or benefit that otherwise would have been made shall
be calculated as the cost of providing a payment or benefit of $10.
XII. NOTICE TO CLASS MEMBERS AND COMMUNICATIONS WITH CLASS MEMBERS AND
POLICYOWNERS
A. CLASS NOTICE PACKAGE
1. Subject to the requirements of the Hearing Order and
no later than 85 days before the Fairness Hearing, the Company shall send a
Class Notice Package by first-class mail, postage prepaid, to the last known
address available on the Company's electronic records of each Class Member who
is a Holder of a Database Policy (as updated pursuant to Section XII.A.5 below),
and in cases where the Company is aware of pending litigation by the Class
Member against the Defendant relating to any matter proposed to be released by
this Agreement, also to all legal counsel known to represent
59
the Class Member. The Company will pay for the costs associated with producing
and mailing the Class Notice Package.
2. The form and content of the Class Notice Package
shall be agreed to by the Parties and shall be substantially in the form
attached hereto as Exhibit A. Each Class Notice Package shall contain a Class
Notice and, in the case of Database Policies, a Statement of Benefits. In
addition, the Class Notice Package shall contain a Claim Form and a
pre-addressed and postage pre-paid envelope for return of the Claim Form to the
Administrator.
3. The Class Notice
a. The Class Notice shall, at a minimum,
(i) describe who is in the Class;
(ii) contain a short, plain description
of the background of the Action,
the Class and the proposed
settlement;
(iii) generally describe the proposed
benefits outlined above in Sections
IV through VIII above;
(iv) explain how to secure settlement
benefits, including how to submit a
Claim Form if one is required to
become an Eligible Holder;
(v) explain that to be excluded from
the Class, a written exclusion
request must be submitted no later
than 40 days before the date of the
Fairness Hearing;
(vi) state that any one Policy Holder's
request for exclusion will exclude
all Holders of the Policy;
(vii) inform Class Members that, if they
do not exclude themselves from the
Class with respect to a particular
Policy, they will be eligible to
receive one
60
or more forms of relief under the
proposed settlement;
(viii) state that any Class Member who has
not submitted a written request for
exclusion may, if he or she
desires, object to the proposed
settlement by filing and serving a
written statement of objection no
later than 40 days before the
Fairness Hearing;
(ix) state that any Class Member who has
filed and served written objections
to the proposed settlement may, if
he or she so requests, enter an
appearance at the Fairness Hearing
either personally or through
counsel by providing the Court and
counsel for the Parties with a
notice of intention to appear;
(x) explain the impact of accepting or
rejecting the benefits available to
them under the Settlement Agreement
on any existing litigation, claim,
arbitration or other proceeding;
(xi) state that any judgment entered
with respect to the Settlement
Agreement shall include, and be
binding on, all Class Members who
have not been excluded from the
Class, even if they have objected
to the proposed Settlement
Agreement and even if they have any
other claim, lawsuit or proceeding
pending against the Defendant;
(xii) provide the terms of the Release;
(xiii) explain the disposition of unknown
claims; and
(xiv) state that any relief to Class
Members is contingent on the
Court's final approval of the
proposed settlement.
b. The Class Notice shall be reviewed and
approved by the Department, in form and substance, prior to issuance.
61
4. The Statement of Benefits
a. The Statement of Benefits will be included
only in the Class Notice Packages of Holders of Database Policies. A Statement
of Benefits shall also be provided upon request to any Eligible Holder who
submits a Claim Form identifying the number of a Policy for which information is
available on the Company's electronic records, or whose policy has been
confirmed to be a Policy.
b. The Statement of Benefits shall provide the
Holder of the Policy with a simplified summary of certain information in the
Class Notice and also shall inform him or her, to the extent feasible and
reflected in the Company's electronic records, of
(i) the Class Member's name;
(ii) the policy number of the Policy
making the Class Member eligible
for relief;
(iii) the status of the Policy as of the
Eligibility Date;
(iv) the form(s) and, to the extent
practicable, percentages of relief
for which the Class Member may be
eligible; and
(v) the need, if any, of the Class
Member to submit a Claim Form to
become an Eligible Holder.
5. Address Updating for Holders of Database Policies
a. Prior to the mailing of the Class Notice
Package to Holders of Database Policies described in Section XII.A.1 above, the
Company shall conduct research to confirm or update the addresses of Holders of
Database Policies that are
62
currently available on the Company's electronic databases, as described in this
Section XII.A.5.
b. Using its Trilium software, the Company
shall reformat as necessary its address information for Holders of Database
Policies that is currently available on the Company's electronic databases so
that it is in a form conducive to searching for updated addresses through the
National Change of Address Register.
c. Once the Company has taken steps to reformat
its current address information, the Company shall utilize the National Change
of Address Register to confirm or update its current electronic addresses for
Holders of Database Policies.
d. Once it has taken the above steps, the
Company shall provide its updated electronic address information for Holders of
Database Policies to the Administrator, which shall use ChoicePoint to further
update such address information to the extent practicable prior to the mailings
contemplated by Section XII.A.1 above.
B. PUBLICATION NOTICE AND OTHER MEDIA NOTICE
1. As soon as is practicable after the Court's entry of
the Hearing Order, but no later than 55 days before the Fairness Hearing, the
Company will publish on at least one occasion the Publication Notice, in a form
substantially similar to that attached as Exhibit B and in the newspapers agreed
to by the Department and the Company. The Company shall pay all of the costs
associated with the Publication Notice.
2. Lead Counsel and the Company shall retain a media
consultant to provide advice concerning the methods for providing the best
notice practicable to the
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Class. Based on the media consultant's recommendations, the Company shall
arrange to provide notice to the Class through such media, and in such form and
frequency, as to which the Department and the Company shall agree. Such media
may include, without limitation, print media, television, radio, community
outreach, and use of the Internet. All such media notification shall be
completed as soon as is practicable following the Court's entry of the Hearing
Order, but no later than 55 days prior to the Fairness Hearing. The Company
shall pay all of the costs associated with the media notification described in
this Section XII.B.2.
C. REMAILING AND ADDITIONAL NOTICE
The Company, through the Administrator, shall at its cost remail any
notice returned by the Postal Service with a forwarding address that is received
by the Administrator at least 50 days before the Fairness Hearing. With respect
to Class Notices that are returned without a forwarding address, the
Administrator shall immediately provide a copy of any returned notice to an
address research firm retained for the purpose of researching updated addresses
of Class Members, or conduct such research itself; provided however, that the
Company shall not be obligated to duplicate the efforts of an address research
firm that undertook a search for the Class Member's address prior to the initial
mailing. In addition, the Hearing Order shall provide that any retained address
research firm(s) shall provide to the Administrator in connection with each
returned notice, as soon as is possible, either an updated address or a
statement that, following due research (including, but not limited to, using the
National Change of Address Register and Social Security Numbers) it has been
unable to obtain an updated address. The
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Administrator shall remail the notice to any Class Member for whom it obtains or
the address research firm provides an updated address, so long as the updated
address is obtained by or provided to the Administrator at least 50 days before
the Fairness Hearing.
D. POST-SETTLEMENT MAILING
Starting at the commencement of the Implementation Period, the Company
shall send a mailing to each person or entity eligible under Sections III.B
through III.E above to receive a cash payment under this Regulatory Settlement
Agreement by virtue of the Enhanced Past Death/Maturity Benefit (Section V
above) or the Enhanced Past Termination Benefit (Section VI.A above). The
mailing shall include a check in the amount of the cash payment for which the
Policy is eligible.
E. RETENTION OF ADMINISTRATOR
1. The Company shall at its cost retain one or more
Administrators (including subcontractors) to help implement the terms of the
proposed Regulatory Settlement Agreement.
a. The Administrator(s) may assist with various
administrative tasks, including, without limitation, (i) mailing or arranging
for the mailing of the Class Notice to Class Members, (ii) arranging for
publication of the Publication Notice, (iii) arranging for or assisting in
dissemination of the Publication Notice; (iv) handling returned mail not
delivered to Class Members, (v) attempting to obtain updated address information
for any Class Notices returned without a forwarding address or an expired
forwarding address, (vi) making any additional mailings required under the terms
of this Regulatory Settlement Agreement, (vii) arranging for and staffing
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a toll-free telephone number to assist the Parties in responding to inquiries
from Class Members and others, (viii) assisting Class Members with the
completion of Claim Forms under the terms and conditions set forth above in
Section X.F above; (ix) answering written inquiries from Class Members, (x)
receiving and maintaining on behalf of the Court any Class Member correspondence
regarding requests for exclusion and objections to the settlement, (xi)
establishing and administering a Web site with information on the settlement and
the ability to submit Claim Form data; and (xii) otherwise assisting the Company
with the administration of the Regulatory Settlement Agreement. The Company will
pay the reasonable fees and expenses of the Administrator(s), as well as any
other fees and expenses incurred in performing all of the tasks described in
this Section XII.E.1.a.
b. The Department shall be entitled to observe
and monitor the performance of the Administrator to assure compliance with this
Regulatory Settlement Agreement.
c. The contract between the Company and the
Administrator shall obligate the Administrator to abide by the following
performance standards:
(i) The Administrator shall accurately
and neutrally describe, and shall train and instruct its employees and agents to
accurately and objectively describe, the provisions of this Regulatory
Settlement Agreement in communications with Class Members;
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(ii) The Administrator shall provide
prompt, accurate and neutral responses to inquiries from the Department or its
designee, or the Company and/or the Company's Counsel.
2. Lead Counsel and the Company, in consultation with
the Department, will establish a settlement administration center for the
purpose of facilitating and providing information to Class Members regarding the
settlement and their rights under it. The settlement administration center shall
include, among other things, a telephone bank with a toll-free telephone number
for responding to inquiries from Class Members and others about the proposed
settlement and any issues related thereto. The Administrator shall direct all
callers with general product questions, product status requests, or complaints
unrelated to the settlement of the Action to call the Company's toll-free
customer service number.
a. The settlement administration center shall
commence operations beginning no later than the day after the first Class Notice
Package is mailed and ending on a date to be agreed to by the Parties.
b. The Administrator will be responsible for
(i) staffing the telephone bank with telephone representatives, (ii) educating
the telephone representatives about the general background of the Action, the
product concepts relevant to the proposed settlement, the notice, terms and
chronology of the proposed settlement, (iii) training the telephone
representatives to explain to Class Members the benefits available to them under
the Settlement Agreement and Regulatory Settlement Agreement, including that the
telephone representatives shall be instructed to advise all eligible Class
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Members who call the telephone bank of their need, if any, to complete and
return a Claim Form to become Eligible Holders, (iv) training the telephone
representatives to answer inquiries from Class Members and others, (v) providing
scripts and model questions and answers for the telephone representatives to use
in answering inquiries from Class Members and other policyowners, (vi) training
the telephone representatives to refer Class Member inquiries to appropriate
sources, including, but not limited to Lead Counsel or its designee if the Class
Member so requests or where otherwise appropriate, (vii) training telephone
representatives to refer callers with general product questions, product status
requests, or complaints unrelated to the settlement of this Action to call the
Company's toll-free customer service number, (viii) training telephone
representatives to advise policyowners how to inquire if they own Policies
within the Class, (ix) providing for a translation service for non-English
speaking Class Members who call the toll-free number, (x) providing callers
access to a terminal for the hearing-impaired, (xi) maintaining records
reflecting communications with Class Members; (xii) providing on-site facilities
for the Department, the Company's Counsel and Company representatives; and
(xiii) taking any other steps, in consultation with the Department and the
Company, to promote accurate and efficient communications with Class Members and
others.
c. The Department and the Company and/or its
counsel may monitor and participate in the education and training of telephone
representatives.
(i) The Department and the Company
and/or its counsel may participate in all training sessions, speak with
telephone representatives and
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supervisors, and provide additional comment and/or instruction to telephone
representatives and/or supervisors as they deem necessary. The Department or the
Company or its designee may request and obtain a pause or cessation in any
training session or other communication with a telephone representative or
supervisor to confer regarding the content of the communication or training. All
training and other written communications between the Parties and telephone
representatives and/or supervisors must be agreed upon by the Parties.
(ii) The Department may observe any
communications between the Company or its designee and the telephone
representatives and supervisors of telephone representatives regarding training
issues.
(iii) The Company and the Department
shall consult in advance and agree on the form and content of all telephone
scripts to be used by the telephone representatives, and all training materials
and presentations, whether written or oral, provided to telephone
representatives. The Department shall be provided with complete drafts of all
telephone scripts, written materials or written presentations as soon as
possible but no later than 10 days prior to their use in training. Any proposed
changes, modifications or additions to the telephone scripts or written training
materials by either Party must be provided to the other Party with sufficient
time to permit meaningful comment prior to use. The Parties shall negotiate in
good faith concerning any such changes, modifications or additions to facilitate
providing clear, understandable and accurate information to Class Members.
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(iv) The Department or its designee may
be present on-site at the telephone bank to monitor telephone representatives'
handling of Class Members' telephone inquiries. The Company and its designees
may also be present on-site at the telephone bank to monitor telephone
representatives' handling of Class Members' telephone inquiries.
F. COMMUNICATION WITH CLASS MEMBERS, POLICYOWNERS AND PRODUCERS
1. The Company expressly reserves the right to
communicate with and respond to inquiries from policyowners and Class Members
orally and/or in writing, consistent with the provisions of the Regulatory
Settlement Agreement. The Company shall make and maintain a note in its
administrative systems reflecting any telephone call between representatives at
the Company's toll-free customer service number and any potential Class Member
relating to the settlement.
2. Any communications between the Company and Class
Members concerning the terms of the settlement shall be consistent with scripted
information that is provided to the Department for its comments prior to use.
The Parties shall confer in good faith to resolve any differences concerning
such scripts. In addition, upon request, the Department shall be provided with
copies of all correspondence from the Company to Class Members concerning the
terms of the settlement.
3. The Company's Producers may respond to inquiries
from, and/or communicate with, present or former Company policyowners about the
proposed settlement. However, the Company shall (a) instruct its Producers to
encourage Class Members with inquiries regarding the proposed settlement to call
the toll-free number
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established to respond to such inquiries; (b) make available to its Producers
copies of the Notice Card attached as Exhibit F hereto to give to such inquiring
Class Members; and (c) provide its Producers with copies of an Agent Script and
instruct them that any answers to Class Member questions regarding the
settlement shall be consistent with such Agent Script. The Company may also
respond to Producer questions regarding the proposed settlement.
4. Mass and/or generalized communications with Class
Members regarding the proposed settlement, whether by the Company or its current
Producers, and whether by mail, the establishment or encouragement of Internet
websites or other Internet communications, telephone scripts, or any other
means, shall be made only after approval by the Department.
XIII. ORDER OF DISMISSAL
The Plaintiffs and the Company will seek and obtain from the Court a
Final Judgment and Order Approving Settlement (for which, as a condition of
settlement, the time for appeal has expired without any modifications in the
Final Judgment or Order Approving Settlement) as further described below in
Section XV. The Final Judgment and Order Approving Settlement shall, among other
things, (i) approve the Settlement Agreement in the Action as fair, reasonable
and adequate, and (ii) dismiss the Action with prejudice and on the merits.
XIV. ORDER OF NOTICE, FAIRNESS HEARING AND ADMINISTRATION
A. The Company, Plaintiffs, and the Department have agreed to the
form of the following documents: the Class Notice Package (Exhibit A), the
Publication Notice
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(Exhibit B), the Unclaimed Benefits Protocols (Exhibit C), the Hearing Order
(Exhibit D), the Identifying Information (Exhibit E), the Notice Card (Exhibit
F), the Stipulation of Confidentiality (Exhibit G), the SDB Certificate (Exhibit
H), the Small Estate Declaration (Exhibit I), the Cash Payment Option Election
Letter (Exhibit J), the Confirmatory Letter (Exhibit K), the Industrial Weekly
Substandard Enhancement Factors (Exhibit L), the Cost Factors and Assumptions
(Exhibit M) and the Covered Met Series Policies (Exhibit N). These documents are
incorporated into, are an integral part of, and are material terms of this
Regulatory Settlement Agreement.
B. Plaintiffs and the Company will submit the Settlement
Agreement in the Action, including all attached exhibits, to the Court and seek
and obtain preliminary approval thereof. If the Court preliminarily approves the
Settlement Agreement, the Plaintiffs and the Company shall move the Court to set
a Fairness Hearing, and shall seek and obtain a proposed Hearing Order.
XV. FINAL APPROVAL, AND FINAL JUDGMENT AND ORDER APPROVING SETTLEMENT
After the Fairness Hearing, and upon the Court's approval of the
Settlement Agreement in the Action, the Plaintiffs and the Company shall seek
and obtain from the Court a Final Judgment and Order Approving Settlement in the
Action.
XVI. NEW ENGLAND MUTUAL
A. Each New England Mutual Affected Policy shall be provided with
the Adjustment Amount, in the form, and on the terms and conditions, described
in this Section XVI.
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B. On the Automatic Adjustment Date, the Adjustment Amount shall
automatically be applied to purchase paid-up additional insurance coverage on
the policy, unless the owner of a New England Mutual Affected Policy has
previously notified the Company of an election to receive the cash payment
option described in Section XVI.C.2 below.
C. No later than 30 days preceding the Automatic Adjustment Date,
the Company shall mail a letter to the owner of each New England Mutual Affected
Policy, the form and content of which shall be approved by the Department prior
to mailing.
1. The letter shall describe both the Adjustment Amount
and the amount of additional paid-up insurance coverage purchasable for the
policy using the Additional Amount.
2. The letter shall advise the owner of the New England
Mutual Affected Policy that he or she may elect to receive the Adjustment Amount
in the form of a cash payment, instead of in the form of additional paid-up
insurance coverage.
3. The letter shall advise that unless the Company
receives notification of the owner's election to receive the Adjustment Amount
in the form of a cash payment on or before the Automatic Adjustment Date, the
Adjustment Amount will automatically be applied to purchase paid-up additional
insurance coverage.
4. If the owner of a New England Mutual Affected Policy
timely elects to receive the Adjustment Amount in the form of a cash payment,
the Company shall mail such cash payment no later than 10 days following the
Automatic Adjustment Date.
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D. If the person insured under any New England Mutual Affected
Policy dies before the benefit described in this Section XVI is provided by the
Company, then the Company shall provide the policy's contractual beneficiary
with a cash payment equal to the amount of additional paid-up insurance coverage
that would have been purchasable using the policy's Adjustment Amount.
E. If any New England Mutual Affected Policy is surrendered or
otherwise lapses or terminates before the benefit described in this Section XVI
is provided by the Company, then the Company shall increase the cash value of
the policy at the time of surrender or termination by the Adjustment Amount.
F. No later than 20 days following the Automatic Adjustment Date,
the Company, through one of its officers who is a member in good standing of the
American Academy of Actuaries, shall deliver a written certification to the
Department describing in detail the benefits provided by the Company for each
New England Mutual Affected Policy under this Section XVI.
G. The costs to the Company of providing the benefits described
in this Section XVI shall not be considered in calculating the minimum/maximum
cost of benefits pursuant to Section XI hereof.
XVII. REGULATORY RESOLUTION
A. Each person signing on behalf of a Participating Regulator
gives his/her express assurance that under applicable state laws, regulations
and judicial rulings, he/she has the authority to enter into this Regulatory
Settlement Agreement on behalf of the Participating Regulator.
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B. Each Participating Regulator shall execute and deliver this
Regulatory Settlement Agreement to the Lead Regulatory Negotiator within sixty
(60) days following the receipt of this Regulatory Settlement Agreement from the
Lead Regulatory Negotiator. If a Participating Regulator finds that, under
applicable state law, regulation or procedure, the preparation and execution of
a consent order is necessary to carry out the terms of this Regulatory
Settlement Agreement, such a consent order (the "Applicable Consent Order")
shall be prepared by such Participating Regulator within sixty (60) days
following the receipt of this Regulatory Settlement Agreement from the Lead
Regulatory Negotiator.
C. For purposes of this Regulatory Settlement Agreement, an
"Applicable Consent Order" shall be satisfactory to the Company if it: (1)
incorporates by reference and attaches via exhibit a copy of this Regulatory
Settlement Agreement; (2) expressly adopts and agrees to the provisions of this
Regulatory Settlement Agreement; and (3) includes only those other terms that
may be legally required in the state of the applicable Participating Regulator.
However, nothing in this Regulatory Settlement Agreement shall be construed to
require any state to execute and deliver an Applicable Consent Order if such
State elects instead to sign this Regulatory Settlement Agreement.
D. Upon execution of this Regulatory Settlement Agreement, the
Department and the Participating Regulators release and forever discharge the
Company from all liability for, and from all civil or administrative causes,
actions, claims, damages, losses and demands of any nature whatsoever, that
arise from acts or omissions related to the subject matter of the Report on
Examination, the Stipulation of Settlement and this
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Regulatory Settlement Agreement, and relate to the marketing, solicitation,
application, underwriting, risk classification, issuance, change issuance,
re-issuance, reinstatement, design, type, structure, terminology, pricing,
premiums, charges, rates, premium mode, acceptance, purchase, sale, operation,
retention, administration, debit or home service, collection, servicing,
performance, dividends, cash values, benefits (including non-forfeiture
benefits), or provision of demutualization shares, relating to any Policy.
E. Any material violation of this Regulatory Settlement Agreement
may be deemed to constitute a violation of an Order issued by the Department or
the Participating Regulators to the Company.
XVIII. MODIFICATION OR TERMINATION OF THIS AGREEMENT
A. The terms and provisions of this Regulatory Settlement
Agreement may be amended, modified or expanded by agreement of the Department
and the Company.
B. The Company, in consultation with the Department and Lead
Counsel and without approval of the Court, may implement the terms of this
Regulatory Settlement Agreement after entry of the Final Judgment and Order
Approving Settlement but before the Final Settlement Date, in which case all
provisions in this Regulatory Settlement Agreement that specify actions to be
taken on or after the Final Settlement Date shall, to the extent necessary, be
deemed to provide that those actions shall be taken on or after the date on
which the Company elects to implement the Regulatory Settlement Agreement.
C. This Regulatory Settlement Agreement will terminate at the
sole option and discretion of the Department or the Company if (i) the Court, or
any appellate
76
court(s), rejects, modifies or denies approval of any portion of the Settlement
Agreement in the Action or the proposed settlement that the terminating Party in
its (or their) sole judgment and discretion reasonably determine(s) is material,
including, without limitation, the terms of relief, the findings of the Court,
the provisions relating to notice, the definition of the Class and/or the terms
of the Release set forth in the Settlement Agreement, or (ii) the Court, or any
appellate court(s), does not enter or completely affirm, or alters or expands,
any portion of the Final Judgment or Order Approving Settlement, or any of the
Court's findings of fact or conclusions of law as proposed by the Company's
Counsel and Lead Counsel, that the terminating Party in its (or their) sole
judgment and discretion believe(s) is material. The terminating Party must
exercise the option to withdraw from and terminate this Regulatory Settlement
Agreement, as provided in this Section no later than 20 days after receiving
notice of the event prompting the termination.
1. The Company may unilaterally withdraw from and
terminate this Regulatory Settlement Agreement if the Company properly withdraws
from and terminates the Settlement Agreement.
D. If an option to withdraw from and terminate this Regulatory
Settlement Agreement arises under Section XVIII.C, (i) neither the Department
nor the Company will be required for any reason or under any circumstance to
exercise that option, and (ii) any exercise of that option shall be made in good
faith.
E. If this Regulatory Settlement Agreement is terminated pursuant
to Section XVIII.C then:
77
1. this Regulatory Settlement Agreement shall be null
and void and shall have no force or effect, and no Party to this Regulatory
Settlement Agreement nor the Participating Regulators shall be bound by any of
its terms, except for the terms of this Section XVIII.E;
2. this Regulatory Settlement Agreement, all of its
provisions, and all negotiations, statements and proceedings relating to it
shall be without prejudice to the rights of the Department, the Participating
Regulators or the Company, all of which shall be restored to their respective
positions existing immediately before the execution of this Regulatory
Settlement Agreement;
3. the Company and its current and former directors,
officers, Producers, employees, agents, attorneys and representatives expressly
and affirmatively reserve all defenses, arguments and motions as to all claims
that have been or might later be asserted with respect to the subject matter of
this Regulatory Settlement Agreement; and
4. neither this Regulatory Settlement Agreement, nor the
fact of its having been made, shall be offered into evidence for any purpose.
XIX. GENERAL MATTERS AND RESERVATIONS
A. The obligation, although not the ability, of the Parties to
conclude this proposed settlement is and will be contingent upon each of the
following:
1. authorization by the Board of Directors of
Metropolitan Life Insurance Company to enter into this Regulatory Settlement
Agreement;
78
2. entry by the Court of the Final Judgment and Order
Approving Settlement in the Action, from which order the time to appeal has
expired or which has remained unmodified after any appeal(s); and
3. any other conditions stated in this Regulatory
Settlement Agreement.
B. The Company and its counsel agree to keep the existence and
contents of this Regulatory Settlement Agreement and the Stipulation of
Settlement and all related negotiations confidential until the earlier of the
date of the first public announcement by the Department or the signing of the
order granting preliminary approval of the Settlement Agreement pursuant to
Section XIV.B; provided however, that this Section shall not prevent earlier
disclosure of such information to regulators, rating agencies, insurers or
reinsurers, financial analysts, Producers, or any other person or entity (such
as experts, courts, and/or Administrators) to whom the Parties agree disclosure
must be made to effectuate the terms and conditions of this Regulatory
Settlement Agreement or the Stipulation of Settlement.
C. The Company shall not issue any written statements, written
press releases or other written media notices in connection with the proposed
settlement which has not first been provided to the Department sufficiently in
advance of public release to provide the Department with adequate time to review
and comment on the proposed statement, press release or notice, and to prepare
its own statement.
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D. The Company shall ensure that any comments about or
descriptions of the proposed settlement or its value or cost in the media or in
any other public forum are balanced, fair, accurate, and consistent with the
terms and intent of the settlement.
E. Xxxxxxxx X. Xxxxxx represents that he is authorized to enter
into this Regulatory Settlement Agreement on behalf of the Company.
F. This Regulatory Settlement Agreement sets forth the entire
agreement among the Parties and the Participating Regulators with respect to its
subject matter, and it may not be altered or modified except by written
instrument executed by the Department and the Company. This Regulatory
Settlement Agreement supercedes any prior agreement, understanding, or
undertaking (written or oral) by or among the Parties and the Participating
Regulators regarding the subject matter of this Regulatory Settlement Agreement.
G. This Regulatory Settlement Agreement and any ancillary
agreements shall be governed by and interpreted according to the law of the
State of New York, excluding its conflict-of-laws provisions.
H. All time periods set forth herein shall be computed in
calendar days unless otherwise expressly provided. In computing any period of
time prescribed or allowed by this Regulatory Settlement Agreement or by order
of court, the day of the act, event, or default from which the designated period
of time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a Saturday, a Sunday or a legal
holiday, or, when the act to be done is the filing of a paper in court, a day on
which weather or other conditions have made the office of the clerk of the court
inaccessible, in
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which event the period shall run until the end of the next day that is not one
of the aforementioned days. As used in this Section, "legal holiday" includes
New Year's Day, Birthday of Xxxxxx Xxxxxx Xxxx, Xx., Presidents' Day, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day,
Christmas Day and any other day appointed as a holiday by the President or the
Congress of the United States, or by the State of New York, where the Court is
located.
I. The Department and the Company reserve the right, subject to
the Court's approval, to make any reasonable extensions of time that might be
necessary to carry out any of the provisions of this Regulatory Settlement
Agreement.
J. All Parties agree that this Regulatory Settlement Agreement
was drafted during extensive arm's-length negotiations, and that no parol or
other evidence may be offered to explain, construe, contradict or clarify its
terms, the intent of the Parties or their counsel, or the circumstances under
which the Regulatory Settlement Agreement was made or executed.
K. In no event shall the Regulatory Settlement Agreement, any of
its provisions or any negotiations, statements or court proceedings relating to
its provisions in any way be offered by the Parties or Participating Regulators
as evidence in any action or any judicial, administrative, regulatory or other
proceeding, except a proceeding to enforce this Regulatory Settlement Agreement.
Without limiting the foregoing, neither this Regulatory Settlement Agreement nor
any related negotiations, statements or court proceedings shall be offered by
the Parties or Participating Regulators as evidence of or an admission or
concession of any liability or wrongdoing whatsoever on the part of any
81
person or entity, including but not limited to the Company, or as a waiver by
the Company of any applicable defense, including without limitation any
applicable statute of limitations or statute of frauds.
L. The Company does not admit or concede any actual or potential
fault, wrongdoing or liability in connection with any facts or claims that have
been or could have been alleged against it, but considers it desirable for this
matter to be resolved because this Agreement will provide substantial benefits
to the Company's present and former policyowners, insureds and beneficiaries.
M. Neither this Regulatory Settlement Agreement nor any of the
relief to be offered under the proposed settlement shall be interpreted to alter
in any way the contractual terms of any Policy, or to constitute a novation of
any Policy.
N. No opinion concerning the tax consequences of the proposed
settlement to individual Class Members is being given or will be given by the
Company, the Company's Counsel, the Department or the Participating Regulators
nor is any representation or warranty in this regard made by virtue of this
Regulatory Settlement Agreement. The Class Notice will direct Class Members to
consult their own tax advisors regarding the tax consequences of the proposed
settlement, including any payments, contributions or credits provided hereunder,
and any tax reporting obligations they may have with respect thereto. Each Class
Member's tax obligations, and the determination thereof, are the sole
responsibility of the Class Member, and it is understood that the tax
consequences may vary depending on the particular circumstances of each
individual Class Member.
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O. The Parties, their successors and assigns, and their attorneys
undertake to oversee and implement the terms of this Regulatory Settlement
Agreement in good faith, and to use good faith in resolving any disputes that
may arise in the implementation of the terms of this Regulatory Settlement
Agreement.
P. This Settlement Agreement may be signed in counterparts, each
of which shall constitute a duplicate original.
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Agreed to this 29th day of August, 2002.
APPROVED AND AGREED TO BY AND ON BEHALF OF THE STATE
OF NEW YORK INSURANCE DEPARTMENT
By: /s/ Xxxxxxx Xxxxx
--------------------------------------------------
XXXXXXX XXXXX
SUPERINTENDENT OF INSURANCE
APPROVED AND AGREED TO BY AND ON BEHALF OF
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Xxxxxxxx X. Xxxxxx
--------------------------------------------------
XXXXXXXX X. XXXXXX
VICE PRESIDENT
METROPOLITAN LIFE INSURANCE COMPANY
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