Exhibit (g)(4)
Automatic YRT
Reinsurance Agreement
between
IDS LIFE INSURANCE COMPANY
MINNEAPOLIS, MINNESOTA
(hereinafter referred to as the "Ceding Company")
and
[NAME OF REINSURANCE COMPANY]
[CITY AND STATE OF REINSURANCE COMPANY]
(hereinafter referred to as the "Reinsurer")
Effective June 29, 2001
Treaty # 0094-2849
2
TABLE OF CONTENTS
Page
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ARTICLE 1 - PREAMBLE. 5
1.1 Parties to the Agreement
1.2 Construction
1.3 Entire Agreement
ARTICLE 2 - AUTOMATIC REINSURANCE.......................................... 6
ARTICLE 3 - FACULTATIVE REINSURANCE........................................ 7
ARTICLE 4 - COMMENCEMENT OF LIABILITY...................................... 8
4.1 Automatic Reinsurance
4.2 Facultative Reinsurance
4.3 Conditional Receipt or Temporary Insurance
ARTICLE 5 - REINSURED RISK AMOUNT.......................................... 9
ARTICLE 6 - PREMIUM ACCOUNTING............................................ 10
6.1 Premiums
6.2 Payment of Premiums
6.3 Overpayment of Premiums
6.4 Delayed Payment
6.5 Underpayment of Premiums
6.6 Failure to Pay Premiums
6.7 Premium Rate Guarantee
ARTICLE 7 - REDUCTIONS, TERMINATIONS AND CHANGES.......................... 13
7.1 Reductions and Terminations
7.2 Increases
7.3 Risk Classification Changes
7.4 Reinstatement
7.5 Nonforfeiture Benefits
ARTICLE 8 - CONVERSIONS AND REPLACEMENTS.................................. 15
8.1 Conversions
8.2 Exchanges and Replacements
8.3 Policy Split Option
ARTICLE 9 - CLAIMS........................................................ 16
9.1 Notice
9.2 Proofs
9.3 Amount and Payment of Reinsurance Benefits
9.4 Contestable Claims
9.5 Claim Expenses
9.6 Misrepresentation or Suicide
9.7 Misstatement of Age or Sex
9.8 Extra-Contractual Damages
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ARTICLE 10 - CREDIT FOR RESERVES........................................... 19
10.1 Reserve Methodology and Reporting
ARTICLE 11 - RETENTION LIMIT CHANGES....................................... 20
ARTICLE 12 - RECAPTURE..................................................... 21
ARTICLE 13 - GENERAL PROVISIONS............................................ 23
13.1 Currency
13.2 Premium Tax
13.3 Minimum Cession
13.4 Inspection of Records
13.5 Interest Rate
13.6 Good Faith; Financial Solvency
ARTICLE 14 - DAC TAX....................................................... 24
ARTICLE 15 - OFFSET........................................................ 25
ARTICLE 16 - INSOLVENCY.................................................... 26
16.1 Insolvency of a Party to this Agreement
16.2 Insolvency of the Ceding Company
16.3 Insolvency of the Reinsurer
ARTICLE 17 - ERRORS AND OMISSIONS.......................................... 28
ARTICLE 18 - DISPUTE RESOLUTION............................................ 29
ARTICLE 19 - ARBITRATION................................................... 30
ARTICLE 20 - CONFIDENTIALITY............................................... 32
ARTICLE 21 - SEVERABILITY.................................................. 33
ARTICLE 22 - DURATION OF AGREEMENT......................................... 34
ARTICLE 23 - EXECUTION..................................................... 35
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EXHIBITS
A - RETENTION LIMITS OF THE CEDING COMPANY
B - PLANS COVERED AND BINDING LIMITS
C - FORMS, MANUALS, AND ISSUE RULES
D - REINSURANCE PREMIUMS
E - SELF-ADMINISTERED REPORTING
F - APPLICATION FOR FACULTATIVE REINSURANCE FORM
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ARTICLE 1
PREAMBLE
1.1 PARTIES TO THE AGREEMENT
This is a YRT agreement for indemnity reinsurance (the "Agreement") solely
between IDS Life Insurance Company (the "Ceding Company"), and [name of
reinsurance company] of [city and state of reinsurance company] (the
"Reinsurer"), collectively referred to as the "parties".
The acceptance of risks under this Agreement will create no right or legal
relationship between the Reinsurer and the insured, owner or beneficiary
of any insurance policy or other contract of the Ceding Company. The
Ceding Company agrees that it will not make the Reinsurer a party to any
litigation between any third party and the Ceding Company. The Ceding
Company and the Reinsurer will not disclose the other's name to these
third parties with regard to the agreements or transactions that are
between the Ceding Company and the Reinsurer, unless the Ceding Company or
the Reinsurer gives prior written approval for the use of its own name.
The terms of this Agreement are binding upon the parties, their
representatives and assigns. The parties to this Agreement are bound by
ongoing and continuing obligations and liabilities until this Agreement
terminates pursuant to Article 22. This Agreement shall not be bifurcated,
partially assigned or partially assumed.
1.2 CONSTRUCTION
This Agreement will be construed in accordance with the laws of the state
of Minnesota.
1.3 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the business reinsured hereunder. There are no understandings
between the parties other than as expressed in this Agreement. Any change
or modification to this Agreement will be null and void unless made by
amendment to this Agreement and signed by both parties.
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ARTICLE 2
AUTOMATIC REINSURANCE
2.1 On and after the effective date of this Agreement, the Reinsurer will
automatically accept a portion of the life insurance policies,
supplementary benefits, and riders directly written by the Ceding Company
and listed in Exhibit B - Plans Covered and Binding Limits. Any policies
acquired through merger with another company, reinsurance, or purchase of
another company's policies are not included under the terms of this
Agreement. The Reinsurer will automatically accept its share of the
above-referenced policies within the limits shown in Exhibit B, provided
that:
(a) the Ceding Company keeps its retention, as shown in Exhibit A -
Retention Limits of the Ceding Company, and
(b) the Ceding Company applies its normal underwriting guidelines, as
stated in Exhibit C - Forms, Manuals and Issue Rules, and
(c) the sum of all amounts in force and applied for on the joint lives
with the Ceding Company, excluding amounts being internally
replaced, does not exceed the Automatic Binding Limits set out in
Exhibit B, and
(d) the amount of life insurance in force in all companies, including
any coverage to be replaced plus the amount currently applied for on
that life in all companies, does not exceed the Jumbo Limit stated
in Exhibit B, and
(e) the application is on a life that has not been submitted
facultatively to the Reinsurer or any other reinsurer within the
last 2 years, unless the reason for any prior facultative submission
was solely for capacity that may now be accommodated within the
terms of this Agreement.
The Ceding Company may cede reinsurance automatically on international
clients underwritten in accordance with the agreed upon guidelines in
Exhibit B. This Agreement applies only to the issuance of insurance by the
Ceding Company in a jurisdiction in which it is properly licensed.
If the Ceding Company already holds its full retention on a life under
previously issued policies, the Reinsurer will automatically accept
reinsurance up to the limits shown in Exhibit B.
The Ceding Company may not reinsure the amount it has retained on the
business covered under this Agreement on any basis without the Reinsurer's
written consent.
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ARTICLE 3
FACULTATIVE REINSURANCE
3.1 The Ceding Company may submit any application on a plan or rider
identified in Exhibit B - Plans Covered and Binding Limits, to the
Reinsurer for its consideration on a facultative basis.
The Ceding Company will apply for reinsurance on a facultative basis by
sending to the Reinsurer an Application for Facultative Reinsurance,
providing information similar to the example outlined in Exhibit F -
Application for Facultative Reinsurance. Accompanying this Application
will be copies of all underwriting evidence that is available for risk
assessment including, but not limited to, copies of the application for
insurance, medical examiners' reports, attending physicians' statements,
inspection reports, and any other information bearing on the insurability
of the risk. The Ceding Company also will notify the Reinsurer of any
outstanding underwriting requirements at the time of the facultative
submission. Any subsequent information received by the Ceding Company that
is pertinent to the risk assessment will be immediately transmitted to the
Reinsurer.
After consideration of the Application for Facultative Reinsurance and
related information, the Reinsurer will promptly inform the Ceding Company
of its underwriting decision. The Reinsurer's offer will expire at the end
of 120 days, unless otherwise specified by the Reinsurer.
If the Ceding Company accepts the Reinsurer's offer, then the Ceding
Company will note its acceptance in its underwriting file and submit all
relevant individual policy information in its next statement to the
Reinsurer.
The relevant terms and conditions of the Agreement will apply to those
facultative offers made by the Reinsurer which are accepted by the Ceding
Company.
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ARTICLE 4
COMMENCEMENT OF LIABILITY
4.1 AUTOMATIC REINSURANCE
For automatic reinsurance, the Reinsurer's liability will commence at the
same time as the Ceding Company's liability.
4.2 FACULTATIVE REINSURANCE
For facultative reinsurance, the Reinsurer's liability will commence once
the Ceding Company has accepted the Reinsurer's offer and the policy has
been issued.
4.3 CONDITIONAL RECEIPT OR TEMPORARY INSURANCE
The Reinsurer will not be liable for benefits under the Ceding Company's
conditional receipt or temporary insurance agreement unless all the
conditions for automatic reinsurance coverage under Article 2 of this
Agreement are met. The Reinsurer's liability under the Ceding Company's
conditional receipt or temporary insurance agreement is limited to the
least of i., ii. or iii., below:
i. The Automatic Binding Limits with the Reinsurer shown in Section B.3
of Exhibit B.
ii. The amount for which the Ceding Company is liable, less the amount
retained, as set forth in Exhibit A, less any amount of reinsurance
with other reinsurers.
iii. The Reinsurer's proportionate share of [dollar amount], or the
Reinsurer's proportionate share of [dollar amount], if the Ceding
Company is ordered to pay such higher amount by a court of competent
jurisdiction.
The pre-issue liability applies only once on any given life regardless of
how many receipts were issued or initial premiums were accepted by the
Ceding Company. After a policy has been issued, no reinsurance benefits
are payable under this pre-issue coverage provision.
In the event that the Ceding Company's rules with respect to cash handling
and the issuance of conditional receipt or temporary insurance are not
followed, the Reinsurer will participate in the liability if the
conditions for automatic reinsurance are met and the Ceding Company does
not knowingly allow such rules to be violated or condone such a practice.
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ARTICLE 5
REINSURED RISK AMOUNT
5.1 Reinsured risk amounts will be calculated on each policy anniversary;
during a policy year, reinsured risk amounts are adjusted if and only if
there is an increase or decrease in policy specified amount.
If the net amount at risk on a reinsured policy drops below the Ceding
Company's limit of retention as defined in Exhibit A - Retention Limits of
the Ceding Company, then the Ceding Company will terminate the reinsurance
on the policy. If the net amount at risk subsequently increases above the
Ceding Company's retention, then the excess amounts over the retention
limit will continue to be retained by the Ceding Company, unless the
increase is due to an underwritten, noncontractual increase. In the event
of such a non- contractual increase, the Ceding Company may reinsure the
total net amount at risk in excess of the retention limit.
Option 1, Base Policy: The Net Amount at Risk is equal to the Death
Benefit minus the Policy Value, where the Death Benefit is the greater of
the Specified Amount or the Policy Value multiplied by the tax corridor.
The Reinsured Net Amount at Risk is defined as the net amount at risk at
the most recent policy anniversary, or subsequent policy change date if
applicable, less the Ceding Company's retention on the policy, and for
automatic policies, multiplied by the Reinsurer's percentage share as
shown in Exhibit B - Plans Covered and Binding Limits.
Option 2, Base Policy: The Net Amount at Risk is equal to the Death
Benefit minus the Policy Value, where the Death Benefit is the greater of
the Specified Amount plus the Policy Value or the Policy Value multiplied
by the tax corridor. The Reinsured Net Amount at Risk is defined as the
net amount at the most recent policy anniversary, or subsequent policy
change date if applicable, less the Ceding Company's retention on the
policy, and for automatic policies, multiplied by the Reinsurer's
percentage share as shown in Exhibit B.
Other Insured Riders: For Survivor Term Rider and Four-Year Term Rider,
the Net Amount at Risk is the Specified Amount of the Rider. The Policy
Split Option rider does not contribute to total risk amount. The Reinsured
Net Amount at Risk is defined as the Specified Amount of the Rider at the
most recent policy anniversary, or subsequent policy change date if
applicable, less the Ceding Company's retention, and for automatic
policies, multiplied by the Reinsurer's percentage share as shown in
Exhibit B.
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ARTICLE 6
PREMIUM ACCOUNTING
6.1 PREMIUMS
Reinsurance premium rates for life insurance and other benefits reinsured
under this Agreement are shown in Exhibit D - Reinsurance Premiums. The
rates will be applied to the reinsured net amount at risk.
The Reinsurer will pay to the Ceding Company the allowances shown in
Exhibit D.
Premium adjustments due either party will be calculated and paid in the
event of mid-year policy increases, terminations, death claims, and other
changes as appropriate.
6.2 PAYMENT OF PREMIUMS
Reinsurance premiums are payable annually in advance. The Ceding Company
will calculate the amount of reinsurance premium due and, within 30 days
after the end of the month, will send the Reinsurer a statement that
contains the information shown in Exhibit E - Self-Administered Reporting,
showing reinsurance premiums due for that period. If an amount is due the
Reinsurer, the Ceding Company will remit that amount together with the
statement. If an amount is due the Ceding Company, the Reinsurer will
remit such amount within 15 days of receipt of the statement.
6.3 OVERPAYMENT OF PREMIUMS
If the Ceding Company overpays a reinsurance premium and the Reinsurer
accepts the overpayment, the Reinsurer's acceptance will not constitute
nor create a reinsurance liability nor result in any additional
reinsurance. Instead, the Reinsurer will be liable to the Ceding Company
for a credit in the amount of the overpayment, without interest.
6.4 DELAYED PAYMENT
Premium balances that remain unpaid for more than 30 days after the
Remittance Date will incur interest from the end of the reporting period.
The Remittance Date is defined as 30 days after the end of the reporting
period. Interest will be calculated using the index specified in Article
13.5 - Interest Rate.
6.5 UNDERPAYMENT OF PREMIUMS
If the Ceding Company fails to make a full premium payment for a policy or
policies reinsured hereunder, due to an error or omission as described in
Article 17, the amount of reinsurance coverage provided by the Reinsurer
shall not be reduced. However, once the
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underpayment is discovered, the Ceding Company will be required to pay to
the Reinsurer the difference between the full premium amount and the
amount actually paid, without interest. If payment of the full premium is
not made within 60 days after the discovery of the underpayment, the
underpayment shall be treated as a failure to pay premiums and will be
subject to Article 6.6, below.
6.6 FAILURE TO PAY PREMIUMS
The payment of reinsurance premiums is a condition precedent to the
liability of the Reinsurer for reinsurance covered by this Agreement. In
the event that reinsurance premiums are not paid within sixty (60) days of
the Remittance Date, the Reinsurer will have the right to terminate the
reinsurance under this Agreement. If the Reinsurer elects to exercise its
right of termination, it will give the Ceding Company 30 days written
notice of its intention. Such notice will be sent by certified mail.
If all reinsurance premiums in arrears, including any that become in
arrears during the 30 day notice period, are not paid before the
expiration of the notice period, the Reinsurer will be relieved of all
liability under those policies as of the last date of the 30-day notice
period.
Terminated reinsurance may be reinstated, subject to written approval by
the Reinsurer, and upon payment of all reinsurance premiums in arrears
including any interest accrued thereon. The Reinsurer will have no
liability for any claims incurred between the date of termination and the
date of the reinstatement of the reinsurance. The right to terminate
reinsurance will not prejudice the Reinsurer's right to collect premiums
for the period during which reinsurance was in force prior to the
expiration of the 30 days notice. It is further understood that, if this
Agreement terminates under the terms of this Article, the Reinsurer will
return to the Ceding Company any unearned premiums due. The refund will be
on a prorated basis without interest from the date of the termination of
the policy to the date through which a reinsurance premium had been paid.
The Ceding Company will not force termination under the provisions of this
Article solely to avoid the provisions of Article 12 - Recapture, or to
transfer the reinsured policies to another reinsurer.
6.7 PREMIUM RATE GUARANTEE
The Ceding Company agrees to notify the Reinsurer of any intent to
increase current cost of insurance rates charged for new or existing
business.
For the reinsurance of new business, the Reinsurer reserves the right to
change reinsurance rates after 90 days written notice.
For the ongoing reinsurance of existing in force business, the Reinsurer
will accept YRT reinsurance at the current reinsurance premium rates, as
shown in Exhibit D, unless the Ceding Company increases the current cost
of insurance rates charged to the policyholder. The Reinsurer reserves the
right to increase the current reinsurance
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premium rates in the event the Ceding Company increases the current cost
of insurance rates charged on the underlying policies.
[terms of rate guarantee redacted]
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ARTICLE 7
REDUCTIONS, TERMINATIONS AND CHANGES
[terms of rate guarantee redacted]
7.1 REDUCTIONS AND TERMINATIONS
In the event of the reduction, lapse, or termination of a policy or
policies reinsured under this Agreement or any other agreement, the Ceding
Company will, in order to maintain its full retention, reduce or terminate
reinsurance on that life. The reinsured amount will be reduced, effective
on the same date, by the full amount of the reduction of the affected
policies. The reinsurance reduction will apply first to the policy or
policies being reduced and then, on a chronological basis, to other
reinsured policies on the life, beginning with the most recent policy. If
the amount of reduction exceeds the risk amount reinsured, the reinsurance
on the policy or policies will be terminated.
If the reinsurance for a policy has been placed with more than one
reinsurer, the reduction will be applied to all reinsurers pro rata to the
amounts originally reinsured.
If a fully retained policy on a life that is reinsured under this
Agreement is terminated or reduced, the Ceding Company will reduce the
existing reinsurance on that life by a corresponding amount, with the
reinsurance on the most recent policy being reduced first.
7.2 INCREASES
Noncontractual Increases
If the amount of insurance is increased as a result of a noncontractual
change, the increase will be underwritten by the Ceding Company in
accordance with its customary standards and procedures. The policy will be
reinsured under this Agreement using the adjusted risk amount. For the
purposes of reinsurance, the original age and duration of the policy will
be used for the new adjusted risk amount. The underwriting class, however,
will be based on the most recent assessment and may differ for the
original amount and any subsequent increases. The Reinsurer's approval is
required if the original policy was reinsured on a facultative basis or if
the new amount will cause the total amount on the lives to exceed either
the Automatic Binding Limits or the Jumbo Limits shown in Exhibit B -
Plans Covered and Binding Limits.
Contractual Increases
There are no contractual increases applicable to the policies covered
under this Agreement.
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7.3 RISK CLASSIFICATION CHANGES
If the policyholder requests a Table Rating reduction or removal of a Flat
Extra, such change will be underwritten according to the Ceding Company's
normal underwriting practices. Risk classification changes on facultative
policies will be subject to the Reinsurer's approval.
7.4 REINSTATEMENT
If a policy is reinstated in accordance with its terms and in accordance
with Ceding Company rules and procedures, the Reinsurer will, upon
notification of reinstatement, reinstate the reinsurance coverage. If the
policy was facultatively reinsured, approval by the Reinsurer will only be
required prior to the reinstatement of the reinsurance if the Ceding
Company's regular reinstatement rules indicate that more evidence than a
Statement of Good Health is required or if the policy has been lapsed for
more than 90 days. Upon reinstatement of the reinsurance coverage, the
Ceding Company will pay the reinsurance premiums that would have accrued
had the policy not lapsed, together with interest at the same rate as the
Ceding Company receives under its policy, and for the period for which the
Ceding Company received premiums in arrears and interest.
7.5 NONFORFEITURE BENEFITS
Nonforfeiture benefits are not applicable to policies reinsured under this
Agreement.
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ARTICLE 8
CONVERSIONS AND REPLACEMENTS
If a policy reinsured under this Agreement is exchanged or replaced, the Ceding
Company will promptly notify the Reinsurer. Unless mutually agreed otherwise,
policies that are not reinsured with the Reinsurer and that exchange or convert
to a plan covered under this Agreement will not be reinsured hereunder.
8.1 CONVERSIONS
Conversions are not applicable to policies reinsured under this Agreement.
8.2 EXCHANGES AND REPLACEMENTS
A policy resulting from an internal exchange or replacement will be
underwritten by the Ceding Company in accordance with its underwriting
guidelines, standards and procedures for exchanges and replacements. All
internal exchanges to Succession Select from the current joint life last
survivor product that are over 120 days old will be fully underwritten and
will be treated as new business under this Agreement. Additionally,
policies that are 120 days old or less may be exchanged without penalty to
Succession Select within 120 days of the product's introduction in the
state in which the original policy was signed. All such exchanges will be
treated as new business for reinsurance purposes.
8.3 POLICY SPLIT OPTION
The Reinsurer will continue to reinsure the two policies ("Opted
Policies") resulting from exercise of any policy split option rider
reinsured under this Agreement. If the original policy was ceded
automatically, Ceding Company will continue reinsurance (using the
original proportionate share under this Agreement) on the Opted policy as
necessary to bring retained risk on the life, whether on the Opted policy
or another policy, to 50% of the retention limit shown in Exhibit A for
the original policy. If the original policy was ceded facultatively, on
each Opted Policy Ceding Company will continue reinsurance consistent with
the original cession. If the plan of the Opted Policy is reinsured by the
Reinsurer, either under this Agreement or under a different Agreement,
reinsurance premium rates for the Opted Policy will be those contained in
the Agreement that covers the new plan. However, if the new plan is not
reinsured by the Reinsurer, reinsurance premiums for the Opted Policy will
be agreed between the parties. Reinsurance premiums and any allowances for
Opted Policies will be on a point-in-scale basis from the original issue
age of the policy.
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ARTICLE 9
CLAIMS
Claims covered under this Agreement include only death claims, which are those
due to the death of the insured on a policy reinsured under this Agreement, and
any additional benefits specified in Exhibit B - Plans Covered and Binding
Limits, which are provided by the underlying policy and are reinsured under this
Agreement.
9.1 NOTICE
The Ceding Company will notify the Reinsurer, as soon as reasonably
possible, after it receives a claim on a policy reinsured under this
Agreement. The Ceding Company, if notified, will also notify the Reinsurer
at time of the first death.
9.2 PROOFS
The Ceding Company will promptly provide the Reinsurer with proper claim
proofs, including a copy of the proof of payment by the Ceding Company,
and a copy of the insured's death certificate. In addition, for
contestable claims, the Ceding Company will send to the Reinsurer a copy
of all papers in connection with the claim.
9.3 AMOUNT AND PAYMENT OF REINSURANCE BENEFITS
As soon as the Reinsurer receives proper claim notice and proof of the
claim, the Reinsurer will promptly pay the Reinsurer's share of the
reinsurance benefits due the Ceding Company. The Ceding Company's
contractual liability for policies reinsured under this Agreement is
binding on the Reinsurer, provided that generally accepted industry
practices are followed in the adjudication of the claim. When a death
occurs within the contestable period and reinsurance was ceded
facultatively, then all papers connected with the claim furnished to the
Ceding Company by the Beneficiary/Owner will be submitted to the Reinsurer
for comment before the Ceding Company admits liability or makes any
settlement with its claimant. The Reinsurer will review all the claim
papers and respond within 5 working days after the receipt of all
necessary papers. However, such consultation will not impair the Ceding
Company's freedom to determine the proper action on the claim and the
settlement made by the Ceding Company will still be unconditionally
binding on the Reinsurer.
The total reinsurance recoverable from all companies will not exceed the
Ceding Company's total contractual liability on the policy, less the
amount retained. The maximum reinsurance death benefit payable to the
Ceding Company under this Agreement is the risk amount specifically
reinsured with the Reinsurer. The Reinsurer will also pay its
proportionate share of interest that the Ceding Company pays on the death
proceeds until the date of settlement.
Death benefit payments will be made in a single sum, regardless of the
Ceding Company's settlement options.
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9.4 CONTESTABLE CLAIMS
The Ceding Company will promptly notify the Reinsurer of its intention to
contest, compromise, or litigate a claim involving a reinsured policy. The
Ceding Company will also promptly and fully disclose all information
relative to the claim. If the Reinsurer accepts participation, the
Reinsurer will promptly notify the Ceding Company in writing. The Ceding
Company will then promptly advise the Reinsurer of all significant
developments in the claim investigation, including notification of any
legal proceedings against it in response to a denial of a claim.
If the Reinsurer does not accept participation, the Reinsurer will then
fulfill its obligation by paying the Ceding Company its full share of
reinsurance and will not share in any subsequent reduction or increase in
liability.
If the Reinsurer accepts participation and the Ceding Company's contest,
compromise, or litigation results in a reduction or increase in liability,
the Reinsurer will share proportionately in any such reduction or
increase, subject to the terms of Article 9.8.
9.5 CLAIM EXPENSES
The Reinsurer will pay its share of reasonable claim investigation and
legal expenses connected with the litigation of contractual liability
claims unless the Reinsurer has discharged its liability pursuant to
Section 9.4 above. If the Reinsurer has so discharged its liability, the
Reinsurer will not participate in any expenses incurred thereafter.
The Reinsurer will not reimburse the Ceding Company for routine claim and
administration expenses, including the Ceding Company's home office
expenses and any legal expenses other than third party expenses incurred
by the Ceding Company. Claim investigation expenses do not include
expenses incurred by the Ceding Company as a result of a dispute or
contest arising out of conflicting claims of entitlement to policy
proceeds or benefits.
9.6 MISREPRESENTATION OR SUICIDE
If the Ceding Company returns premium to the policyowner or beneficiary as
a result of misrepresentation or suicide of the insured, the Reinsurer
will refund all reinsurance premiums received on that policy without
interest to the Ceding Company in lieu of any other form of reinsurance
benefit payable under this Agreement.
9.7 MISSTATEMENT OF AGE OR SEX
In the event of a change in the amount of the Ceding Company's liability
on a reinsured policy due to a misstatement of age or sex, the Reinsurer's
liability will change proportionately. Reinsurance premiums will be
adjusted from the inception of the policy, and any difference will be
settled without interest.
9.8 EXTRA-CONTRACTUAL DAMAGES
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The Reinsurer will not participate in and shall not be liable to pay the
Ceding Company or others for any amounts in excess of the Reinsurer's
share of the net amount at risk on the mortality risk reinsured hereunder.
Extracontractual damages or liabilities and related expenses and fees are
specifically excluded from the reinsurance coverage provided under this
Agreement. Extracontractual damages are any damages awarded against the
Ceding Company, including, for example, those resulting from negligence,
reckless or intentional conduct, fraud, oppression, or bad faith committed
by the Ceding Company in connection with the mortality risk insurance
reinsured under this Agreement.
The excluded extracontractual damages shall include, by way of example and
not limitation:
i. Actual and consequential damages;
ii. Damages for emotional distress or oppression;
iii. Punitive, exemplary or compensatory damages;
iv. Damages or fines;
v. Amounts in excess of the risk reinsured hereunder that the Ceding
Company pays to settle a dispute or claim;
vi. Third-party attorney fees, costs, and expenses.
[terms of extra-contractual damages redacted]
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ARTICLE 10
CREDIT FOR RESERVES
10.1 RESERVE METHODOLOGY AND REPORTING
The Parties intend that the Ceding Company will receive statutory reserve
credit in its state of domicile for the insurance risks ceded to the
Reinsurer. The Parties agree to make all reasonable efforts to ensure that
this is accomplished.
Deficiency reserves are not applicable to the plans reinsured under this
Agreement.
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ARTICLE 11
RETENTION LIMIT CHANGES
11.1 If the Ceding Company changes its retention limits as shown in Exhibit A -
Retention Limits of the Ceding Company, it will provide the Reinsurer with
written notice of the intended changes thirty (30) days in advance of
their effective date.
A change to the Ceding Company's retention limits will not affect the
reinsured policies in force except as specifically provided elsewhere in
this Agreement. Furthermore, unless agreed between the parties, an
increase in the Ceding Company's retention schedule will not effect an
increase in the total risk amount that it may automatically cede to the
Reinsurer.
IDS VUL JLLS Generic Master Treaty
21
ARTICLE 12
RECAPTURE
12.1 Whenever the Ceding Company increases its maximum retention limits over
the maximum retention limits set forth in Exhibit A - Retention Limits of
the Ceding Company, the Ceding Company has the option to recapture certain
risk amounts. If the Ceding Company has maintained its maximum stated
retention (not a special retention limit) for the plan and the insured's
age, sex, and mortality classification, it may apply its increased
retention limits to reduce the amount of reinsurance in force as follows:
(a) The Ceding Company must give the Reinsurer 90 days written notice
prior to its intended date of recapture.
(b) The reduction of reinsurance on affected policies will become
effective on the policy anniversary date immediately following the
notice of election to recapture; however, no reduction will be made
until a policy has been in force for at least 10 years.
(c) If any reinsured policy is recaptured, all reinsured policies
eligible for recapture under the provisions of this Article must be
recaptured up to the Ceding Company's new maximum retention limits
in a consistent manner and the Ceding Company must increase its
total amount of insurance on each reinsured life. The Ceding Company
may not revoke its election to recapture for policies becoming
eligible at future anniversaries.
If portions of the reinsured policy have been ceded to more than one
reinsurer, the Ceding Company must allocate the reduction in reinsurance
among all the reinsurers so that the relationship of the total reinsurance
among the reinsurers in any given layer does not change due to the
recapture.
The amount of reinsurance eligible for recapture is based on the net
amount at risk as of the date of recapture. For a policy issued as a
result of a fully-underwritten exchange, the policy date and the current
duration of the new policy and the recapture provisions under this
Agreement will be used.
After the effective date of recapture, the Reinsurer will not be liable
for any reinsured policies or portions of such reinsured policies eligible
for recapture that the Ceding Company has overlooked.
If the Ceding Company transfers business that is reinsured under this
Agreement to a successor ceding company, then the successor ceding company
has the option to recapture the reinsurance in accordance with the
recapture criteria outlined in this Article, but only if the successor
ceding company has or adopts a higher retention limit than that applicable
to the block of business subject to recapture.
IDS VUL JLLS Generic Master Treaty
22
The terms and conditions for the Ceding Company to recapture reinsured
policies, as made necessary by the insolvency of the Reinsurer, are set
forth in Article 16.3 - Insolvency of the Reinsurer.
No recapture will be permitted if the Ceding Company has either obtained
or increased stop loss reinsurance coverage as justification for the
increase in retention limits.
IDS VUL JLLS Generic Master Treaty
23
ARTICLE 13
GENERAL PROVISIONS
13.1 CURRENCY
All payments and reporting by both parties under this Agreement will be
made in United States dollars.
13.2 PREMIUM TAX
The Reinsurer will not reimburse the Ceding Company for premium taxes.
13.3 MINIMUM CESSION
There are no minimum initial cession limits under this Agreement. The
Ceding Company will retain up to an additional [percentage] over its
maximum retention in order to avoid trivial amounts of reinsurance.
13.4 INSPECTION OF RECORDS
The Reinsurer and the Ceding Company, or their duly authorized
representatives, will have the right to inspect original papers, records,
and documents relating to the business reinsured under this Agreement.
Such access will be provided during regular business hours at the office
of the inspected party.
13.5 INTEREST RATE
If, under the terms of this Agreement, interest is accrued on amounts due
either party, such interest will be calculated using the 90 Day Federal
Government Treasury Xxxx rate as reported in the Wall Street Journal in
the month following the end of the billing period plus 50 basis points.
The method of calculation will be simple interest "Bankers' Rule" (or 360
day year).
13.6 GOOD FAITH; FINANCIAL SOLVENCY
This Agreement is entered into in reliance on the utmost good faith of the
parties including, for example, their warranties, representations and
disclosures. It requires the continuing utmost good faith of the parties,
their representatives, successors, and assigns. This includes a duty of
full and fair disclosure of all information respecting the formation and
continuation of this contract and the business reinsured hereunder. Each
party represents and warrants to the other party that it is solvent on a
statutory basis in all states in which it does business or is licensed.
Each party agrees to promptly notify the other if it is subsequently
financially impaired.
In addition, the Ceding Company affirms that it has disclosed and will
continue to disclose to the Reinsurer all matters material to this
Agreement, such as its underwriting and policy issues (rules,
philosophies, practices, and management personnel), its financial
condition, studies and reports on the business reinsured, and any change
in its ownership or control.
IDS VUL JLLS Generic Master Treaty
24
ARTICLE 14
DAC TAX
14.1 The parties to this Agreement agree to the following provisions pursuant
to Section 1.848-2(g)(8) of the Income Tax Regulations effective December
29, 1992, under Section 848 of the Internal Revenue Code of 1986, as
amended:
(a) The term `party' refers to either the Ceding Company or the
Reinsurer, as appropriate.
(b) The terms used in this Article are defined by reference to
Regulation Section 1.848-2, effective December 29, 1992.
(c) The party with the net positive consideration for this Agreement for
each taxable year will capitalize specified policy acquisition
expenses with respect to this Agreement without regard to the
general deductions limitation of Section 848(c)(1).
(d) Both parties agree to exchange information pertaining to the amount
of net consideration under this Agreement each year to ensure
consistency, or as otherwise required by the Internal Revenue
Service.
(e) The Ceding Company will submit a schedule to the Reinsurer by April
1 of each year with its calculation of the net consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an officer of the Ceding
Company stating that the Ceding Company will report such net
consideration in its tax return for the preceding calendar year. The
Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company in writing within thirty (30) days
of the Reinsurer's receipt of the Ceding Company's calculation. If
the Reinsurer does not so notify the Ceding Company within the
required timeframe, the Reinsurer will report the net consideration
as determined by the Ceding Company in the Reinsurer's tax return
for the previous calendar year.
(f) If the Reinsurer contests the Ceding Company's calculation of the
net consideration, the parties will act in good faith to reach an
agreement as to the correct amount within thirty (30) days of the
date the Reinsurer submits its alternative calculation. If the
Ceding Company and the Reinsurer reach an agreement on an amount of
net consideration, each party will report the agreed upon amount in
its tax return for the previous calendar year.
(g) Both the Ceding Company and the Reinsurer represent and warrant that
they are subject to United States taxation under either Subchapter L
or Subpart F of Part III of Subchapter N of the Internal Revenue
Code of 1986, as amended.
IDS VUL JLLS Generic Master Treaty
25
ARTICLE 15
OFFSET
15.1 Any debts or credits, in favor of or against either the Reinsurer or the
Ceding Company with respect to this Agreement or any other reinsurance
agreement between the parties, are deemed mutual debts or credits and will
be offset and only the balance will be allowed or paid.
The right of offset will not be affected or diminished because of the
insolvency of either party.
IDS VUL JLLS Generic Master Treaty
26
ARTICLE 16
INSOLVENCY
16.1 INSOLVENCY OF A PARTY TO THIS AGREEMENT
A party to this Agreement will be deemed insolvent when it:
(a) applies for or consents to the appointment of a receiver,
rehabilitator, conservator, liquidator or statutory successor of its
properties or assets; or
(b) is adjudicated as bankrupt or insolvent; or
(c) files or consents to the filing of a petition in bankruptcy, seeks
reorganization or an arrangement with creditors or takes advantage
of any bankruptcy, dissolution, liquidation or similar law or
statute; or
(d) becomes the subject of an order to rehabilitate or an order to
liquidate as defined by the insurance code of the jurisdiction of
the party's domicile.
16.2 INSOLVENCY OF THE CEDING COMPANY
In the event of the insolvency of the Ceding Company, all reinsurance
payments will be payable directly to the liquidator, rehabilitator,
receiver, or statutory successor of the Ceding Company, without diminution
because of the insolvency, for those claims allowed against the Ceding
Company by any court of competent jurisdiction or by the liquidator,
rehabilitator, receiver or statutory successor having authority to allow
such claims.
In the event of insolvency of the Ceding Company, the liquidator,
rehabilitator, receiver, or statutory successor will give written notice
to the Reinsurer of all pending claims against the Ceding Company on any
policies reinsured within a reasonable time after such claim is filed in
the insolvency proceeding. While a claim is pending, the Reinsurer may
investigate and interpose, at its own expense, in the proceeding where the
claim is adjudicated, any defense or defenses that it may deem available
to the Ceding Company or its liquidator, rehabilitator, receiver, or
statutory successor.
The expense incurred by the Reinsurer will be chargeable, subject to court
approval, against the Ceding Company as part of the expense of liquidation
to the extent of a proportionate share of the benefit that may accrue to
the Ceding Company solely as a result of the defense undertaken by the
Reinsurer. Where two or more reinsurers are participating in the same
claim and a majority in interest elect to interpose a defense or defenses
to any such claim, the expense will be apportioned in accordance with the
terms of this Agreement as though such expense had been incurred by the
Ceding Company.
The Reinsurer will be liable only for its proportionate share of the
amounts reinsured and will not be or become liable for any amounts or
reserves to be held by the Ceding Company on policies reinsured under this
Agreement.
IDS VUL JLLS Generic Master Treaty
27
16.3 INSOLVENCY OF THE REINSURER
In the event of the Reinsurer's insolvency and upon giving written notice
to the Reinsurer, the Ceding Company may recapture all of the business
reinsured by the Reinsurer under this Agreement.
Any Recapture Fee applicable will be mutually agreed upon by the Company
and the Reinsurer, its rehabilitator, conservator, liquidator or statutory
successor.
IDS VUL JLLS Generic Master Treaty
28
ARTICLE 17
ERRORS AND OMISSIONS
17.1 If through unintentional error, oversight, omission, or misunderstanding
(collectively referred to as "errors"), the Reinsurer or the Ceding
Company fails to comply with the terms of this Agreement and if, upon
discovery of the error by either party, the other is promptly notified,
each thereupon will be restored to the position it would have occupied if
the error had not occurred, including interest. It is understood, however,
that interest will not be included when routine underpayments or
overpayments of reinsurance premiums are discovered and promptly corrected
according to the terms of this Agreement.
If it is not possible to restore each party to the position it would have
occupied but for the error, the parties will endeavor in good faith to
promptly resolve the situation in a manner that is fair and reasonable,
and most closely approximates the intent of the parties as evidenced by
this Agreement.
However, the Reinsurer will not provide reinsurance for policies that do
not satisfy the parameters of this Agreement, nor will the Reinsurer be
responsible for negligent or deliberate acts or for repetitive errors in
administration by the Ceding Company. If either party discovers that the
Ceding Company has failed to cede reinsurance as provided in this
Agreement, or failed to comply with its reporting requirements, the
Reinsurer may require the Ceding Company to audit its records for similar
errors and to take the actions necessary to rectify the situation and
avoid similar errors in the future.
IDS VUL JLLS Generic Master Treaty
29
ARTICLE 18
DISPUTE RESOLUTION
18.1 In the event of a dispute, the parties agree to the following process of
dispute resolution. Within fifteen (15) days after the Reinsurer or the
Ceding Company has first given the other party written notification of a
specific dispute, each party will appoint a designated company officer to
attempt to resolve the dispute. The officers will meet at a mutually
agreeable location as soon as possible and as often as necessary, in order
to gather and furnish the other with all appropriate and relevant
information concerning the dispute. The officers will discuss the problem
and will negotiate in good faith without the necessity of any formal
arbitration proceedings. During the negotiation process, all reasonable
requests made by one officer to the other for information will be honored.
The designated officers will decide the specific format for such
discussions.
If the officers cannot resolve the dispute within sixty (60) days of their
first meeting, the dispute will be submitted to formal arbitration, unless
the parties agree in writing to extend the negotiation period for an
additional sixty (60) days.
IDS VUL JLLS Generic Master Treaty
30
ARTICLE 19
ARBITRATION
19.1 It is the intention of the Reinsurer and the Ceding Company that the
customs and practices of the life insurance and reinsurance industry will
be given full effect in the operation and interpretation of this
Agreement. The parties agree to act in all matters with the highest good
faith. However, if the Reinsurer and the Ceding Company cannot mutually
resolve a dispute that arises out of or relates to this Agreement, and the
dispute cannot be resolved through the dispute resolution process
described in Article 18 - Dispute Resolution, the dispute will be decided
through arbitration as a precedent to any right of action hereunder.
To initiate arbitration, either the Ceding Company or the Reinsurer will
notify the other party in writing of its desire to arbitrate, stating the
nature of its dispute and the remedy sought. The party to which the notice
is sent will respond to the notification in writing within fifteen (15)
days of its receipt.
There will be three arbitrators who will be current or former officers of
life insurance or life reinsurance companies other than the parties to
this Agreement, their affiliates or subsidiaries. Each of the parties will
appoint one of the arbitrators and these two arbitrators will select the
third. If either party refuses or neglects to appoint an arbitrator within
sixty (60) days of the initiation of the arbitration, the other party may
appoint the second arbitrator. If the two arbitrators are unable to agree
upon the selection of a third arbitrator within 30 days following their
appointment, each arbitrator shall nominate three candidates within 10
days thereafter, two of whom the other shall decline and the decision
shall be made by drawing lots.
Once chosen, the arbitrators are empowered to select the site of the
arbitration and decide all substantive and procedural issues by a majority
of votes. As soon as possible, the arbitrators will establish arbitration
procedures as warranted by the facts and issues of the particular case.
The arbitrators will have the power to determine all procedural rules of
the arbitration including but not limited to inspection of documents,
examination of witnesses and any other matter relating to the conduct of
the arbitration. The arbitrators may consider any relevant evidence; they
will weigh the evidence and consider any objections. Each party may
examine any witnesses who testify at the arbitration hearing.
The arbitrators will base their decision on the terms and conditions of
this Agreement and the customs and practices of the life insurance and
reinsurance industries rather than on strict interpretation of the law.
The decision of the arbitrators will be made by majority rule and will be
submitted in writing. The decision will be final and binding on both
parties and there will be no appeal from the decision. Either party to the
arbitration may petition any court having jurisdiction over the parties to
reduce the decision to judgment. Unless the arbitrators decide otherwise,
each party will bear the expense of its own arbitration activities,
including its appointed arbitrator and any outside attorney and
IDS VUL JLLS Generic Master Treaty
31
witness fees. The parties will jointly and equally bear the expense of the
third arbitrator and other costs of the arbitration.
IDS VUL JLLS Generic Master Treaty
32
ARTICLE 20
CONFIDENTIALITY
20.1 The Ceding Company and the Reinsurer agree that Customer and Proprietary
Information will be treated as confidential. Customer Information
includes, but is not limited to, medical, financial, and other personal
information about proposed, current, and former policyowners, insureds,
applicants, and beneficiaries of policies issued by the Ceding Company.
Proprietary Information includes, but is not limited to, business plans
and trade secrets, mortality and lapse studies, underwriting manuals and
guidelines, applications and contract forms, and the specific terms and
conditions of this Agreement.
Customer and Proprietary Information will not include information that:
(a) is or becomes available to the general public through no fault of
the party receiving the Customer or Proprietary Information (the
"Recipient");
(b) is independently developed by the Recipient;
(c) is acquired by the Recipient from a third party not covered by a
confidentiality agreement; or
(d) is disclosed under a court order, law or regulation.
The parties will not disclose such information to any other parties unless
agreed to in writing, except as in accordance with the fulfillment of the
terms of this Agreement, including but not limited to the Reinsurer's
retrocessionaires and the Reinsurer's affiliates, or as requested by
external auditors, as required by court order, or as required or allowed
by law or regulation.
The Ceding Company acknowledges that the Reinsurer can aggregate data with
other companies reinsured with the Reinsurer as long as the data cannot be
identified as belonging to the Ceding Company.
IDS VUL JLLS Generic Master Treaty
33
ARTICLE 21
SEVERABILITY
21.1 If any provision of this Agreement is determined to be invalid or
unenforceable, such determination will not impair or affect the validity
or the enforceability of the remaining provisions of this Agreement. In
addition, if any provision or term is held invalid, illegal or
unenforceable, the parties will attempt in good faith to renegotiate this
Agreement to carry out the original intent of the parties.
IDS VUL JLLS Generic Master Treaty
34
ARTICLE 22
DURATION OF AGREEMENT
22.1 This Agreement is unlimited as to its duration. The Ceding Company or the
Reinsurer may terminate this Agreement with respect to the reinsurance of
new business by giving 90 days written notice of termination to the other
party, sent by certified mail. The first day of the notice period is
deemed to be the date the document is postmarked.
During the notification period, the Ceding Company will continue to cede
and the Reinsurer will continue to accept policies covered under the terms
of this Agreement. Reinsurance coverage on all reinsured policies will
remain in force until the termination or expiry of the policies or until
the contractual termination of reinsurance under the terms of this
Agreement. The Reinsurer's acceptance will be subject to both the terms of
this Agreement and the Ceding Company's payment of applicable reinsurance
premiums.
In addition, this Agreement may be terminated immediately for the
acceptance of new reinsurance by either party if one of the parties
materially breaches this Agreement, or becomes insolvent or financially
impaired.
IDS VUL JLLS Generic Master Treaty
35
ARTICLE 23
EXECUTION
23.1 This Agreement is effective as of June 29, 2001, and applies to all
eligible policies with issue dates on or after such date, and to eligible
policies applied for on or after such date that were backdated for up to
six (6) months. This Agreement has been made in duplicate and is hereby
executed by both parties.
IDS Life Insurance Company [name of reinsurance company]
By: /s/ Xxxxx X. Xxxxxx By: [signature]
------------------------------------ ---------------------------------------
(signature) (signature)
Xxxxx X. Xxxxxx [name]
------------------------------------ ---------------------------------------
(print or type name) (print or type name)
Title: Reinsurance Officer Title: [title]
------------------------------------ ---------------------------------------
Date: 12/18/2001 Date: 12/27/01
------------------------------------ ---------------------------------------
Location: Mpls. MN Location: [city and state of reinsurance company]
------------------------------------ ---------------------------------------
Attest: /s/ Xxxxxxx X. Xxxxxxxx Attest: [signature]
------------------------------------ ---------------------------------------
(signature) (signature)
Title: President Title: [title]
------------------------------------ ---------------------------------------
IDS VUL JLLS Generic Master Treaty
A-1
EXHIBIT A
RETENTION LIMITS OF THE CEDING COMPANY
A.1 LIFE INSURANCE
--------------------------------------
Retention Limit
Issue Age* (All Ratings)
--------------------------------------
[ages] [dollar amount]
--------------------------------------
[ages] [dollar amount]
--------------------------------------
[ages] [dollar amount]
--------------------------------------
[ages] [dollar amount]
--------------------------------------
*Issue Age of the Oldest of the two joint lives will be used in the
determination of the Ceding Company's retention.
The Ceding Company will maintain its full available retention on the
policies issued automatically under this Agreement, to the maximums shown
in the table above. Prior retained amounts on all inforce single life and
joint life coverages issued by the Ceding Company other than on the VUL
III plan will be added together to determine the Ceding Company's
available retention for new Succession Select policies. The Ceding
Company's retention will be filled in the following order: existing
inforce policies other than VUL III, Base Succession Select policy,
Survivor Term Rider, Four-Year Term Rider.
It is understood that the Ceding Company's retention on facultative
policies will be determined on a case-by-case basis.
IDS VUL JLLS Generic Master Treaty
B-1
EXHIBIT B
PLANS COVERED AND BINDING LIMITS
The business reinsured under this Agreement is defined as follows:
B.1 PLANS, RIDERS AND BENEFITS
Policies issued on plans with effective dates within the applicable period
shown below may qualify for reinsurance under the terms of this Agreement.
It is understood that policies may be backdated by up to six months from
the date shown below.
COMMENCEMENT TERMINATION
PLAN IDENTIFICATION DATE DATE
--------------------------------------------------------------
Succession Select June 29, 2001
(Variable JLLS UL)
Benefit & Riders:
-Survivor Term Rider June 29, 2001
-Policy Split Option June 29, 2001
Rider
-Four-Year Term Rider June 29, 2001
B.2 BASIS
The Ceding Company will reinsure 100% of the excess over its retention
stated in Exhibit A. Only mortality risk will be reinsured. Cessions may
be automatic, capacity facultative or non-capacity facultative.
IDS VUL JLLS Generic Master Treaty
B-2
B.3 AUTOMATIC BINDING LIMITS
Life
----------------------------------------
Oldest Issue Maximum Pool Autobind
Age
----------------------------------------
[ages] [dollar amount]
----------------------------------------
[ages] [dollar amount]
----------------------------------------
[ages] [dollar amount]
----------------------------------------
[ages] [dollar amount]
----------------------------------------
The Ceding Company may not cede reinsurance automatically if the sum of
all amounts in force and applied for on the joint lives with the Ceding
Company, excluding amounts being internally replaced, exceed the above
Automatic Binding Limits.
The above automatic binding limits are also subject to the Ceding
Company's age and insurability procedures for the Succession Select
product, as outlined in subsection B.6 of this Exhibit.
B.4 JUMBO LIMITS
The Ceding Company will not cede any risk automatically if, according to
information available to the Ceding Company, the total amount in force and
applied for on the joint lives with all insurance companies, including any
amount to be replaced, exceeds the applicable amounts shown below.
Life
---------------------------------
Oldest Issue Jumbo Limit
Age
---------------------------------
[ages] [dollar amount]
---------------------------------
[ages] [dollar amount]
---------------------------------
[ages] [dollar amount]
---------------------------------
[ages] [dollar amount]
---------------------------------
B.5 CESSION LIMITS
Minimum Initial Cession: None. The Ceding Company will retain up to an
additional 10% over its maximum retention in order to avoid trivial
amounts of reinsurance.
IDS VUL JLLS Generic Master Treaty
B-3
B.6 AUTOMATIC CESSIONS
a) Issue age and rating restrictions are shown in the following table.
The youngest insured must be between the ages of 15 - 85. The
minimum life expectancy for each of the two lives is one year.
--------------------------------------------------------------------
MAXIMUM TABLE RATING AVAILABLE TO
THE YOUNGEST APPLICANT IF
THE OLDEST APPLICANT'S CLASSIFICATION IS:
--------------------------------------------------------------------
YOUNGEST APPLICANT'S
AGE GROUP* STANDARD SUBSTANDARD UNINSURABLE
---------- -------- ----------- -----------
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
*If both applicants are in the same age group, use the lower rated
applicant as the youngest applicant. For example, if both applicants
are ages 81 - 85, the Ceding Company can issue up to D/D or
Standard/Uninsurable.
b) Definition of substandard (as opposed to uninsurable):
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
[ages]
--------------------------------------------------------------------
c) Definition of (acceptable) uninsurable:
For the purposes of this Agreement, a risk will be classed as
uninsurable if it is assessed at a table rating higher than the
substandard limits above and if the life expectancy is at least one
year.
d) The Reinsurer's share of the total automatic pool will be
[PERCENTAGE]
IDS VUL JLLS Generic Master Treaty
B-4
B.7 FACULTATIVE CESSIONS
For facultative policies, the Reinsurer's share will be determined on a
case-by-case basis, subject to the terms of the Reinsurer's facultative
offer.
B.8 INTERNATIONAL CLIENTS
The Ceding Company may cede reinsurance automatically on international
clients who meet the financial and medical criteria listed in the Ceding
Company's "Guidelines for Underwriting International Clients" and are
standard or preferred based on [name of reinsurance company]'s Foreign
Risk Guidelines for individual countries.
If an international client meets the Ceding Company's financial and
medical criteria, but requires a flat extra based on [name of reinsurance
company]'s Foreign Risk Guidelines, the Ceding Company may cede
reinsurance automatically only after consultation with an [name of
reinsurance company] International Team underwriter. The consultation must
be documented in the underwriting file.
If an international client does not meet the Ceding Company's financial or
medical criteria or requires individual consideration under [name of
reinsurance company]'s Foreign Risk Guidelines, reinsurance may not be
ceded automatically.
IDS VUL JLLS Generic Master Treaty
C-1
EXHIBIT C
FORMS, MANUALS, AND ISSUE RULES
C.1 The Ceding Company affirms that its retention schedule, underwriting
guidelines, issue rules, premium rates and policy forms applicable to the
Reinsured Policies and in use as of the effective date, have been supplied
to the Reinsurer.
Some examples of non-customary underwriting practices that are not
accepted for automatic reinsurance under this Agreement are table-shaving
programs, guaranteed issue, any form of simplified underwriting,
short-form applications, any form of non- customary non-medical
underwriting limits, or internal or external policy exchanges, other than
as described in Article 8.2 of this Agreement. An example of an
unacceptable issue practice that is not accepted for automatic reinsurance
under this Agreement is the issuance of a policy that has contestability
or suicide clauses with time limitations that are shorter than the maximum
allowed by state law.
The Ceding Company will promptly notify the Reinsurer of any proposed
material changes in its underwriting guidelines. This Agreement will not
extend to policies issued pursuant to such changes unless the Reinsurer
has consented in writing to accept policies subject to such changes.
It is the Ceding Company's responsibility to ensure that its practice and
applicable forms are in compliance with current Medical Information Bureau
(MIB) guidelines.
IDS VUL JLLS Generic Master Treaty
D-1
EXHIBIT D
REINSURANCE PREMIUMS
D.1 LIFE
a) Plans covered under this Agreement will be reinsured on a YRT basis.
YRT reinsurance premiums for the Base Plan, Survivor Term Rider, and
Four-Year Term Rider will be frasierized joint premiums based on the
individual ALB Annual Cost of Insurance (COI) rates, attached to
this Exhibit D, less allowances. After allowances are applied, YRT
reinsurance premiums are subject to a minimum rate of $0.12 per $
1,000 of reinsured risk amount in years 2 +.
SUCCESSION SELECT REINSURANCE ALLOWANCES FOR BASE PLAN AND SURVIVOR TERM RIDER
(YEAR 1 ALLOWANCE IS ALWAYS 100%)
Year 2 +
------------------------------------------------------------
2 Preferred [percentage]
------------------------------------------------------------
Preferred, Standard Non-Tobacco [percentage]
------------------------------------------------------------
Preferred, Tobacco [percentage]
------------------------------------------------------------
2 Standard Non-Tobacco [percentage]
------------------------------------------------------------
Standard Non-Tobacco, Tobacco [percentage]
------------------------------------------------------------
2 Tobacco [percentage]
------------------------------------------------------------
SUCCESSION REINSURANCE ALLOWANCES FOR FOUR-YEAR TERM RIDER
(YEAR 1 ALLOWANCE IS ALWAYS 100%)
Year 2 +
------------------------------------------------------------
2 Preferred [percentage]
------------------------------------------------------------
Preferred, Standard Non-Tobacco [percentage]
------------------------------------------------------------
Preferred, Tobacco [percentage]
------------------------------------------------------------
2 Standard Non-Tobacco [percentage]
------------------------------------------------------------
Standard Non-Tobacco, Tobacco [percentage]
------------------------------------------------------------
2 Tobacco [percentage]
------------------------------------------------------------
D.2 AGE BASIS
Age Last Birthday
IDS VUL JLLS Generic Master Treaty
D-2
D.3 POLICY FEES
The Reinsurer will not participate in any policy fees.
D.4 SUBSTANDARD RATINGS
Where a substandard table rating is applied, or on an uninsurable life,
the underlying COI rates will be multiplied by the amount shown in the
following table, and then reinsurance allowances applied after
frasierizing.
----------------------------------------------------------------
RATING MULTIPLIER RATING MULTIPLIER
----------------------------------------------------------------
A [percentage] N [percentage]
----------------------------------------------------------------
B [percentage] O [percentage]
----------------------------------------------------------------
C [percentage] P [percentage]
----------------------------------------------------------------
D [percentage] Q [percentage]
----------------------------------------------------------------
E [percentage] R [percentage]
----------------------------------------------------------------
F [percentage] T [percentage]
----------------------------------------------------------------
G [percentage] U [percentage]
----------------------------------------------------------------
H [percentage] V [percentage]
----------------------------------------------------------------
I [percentage] W [percentage]
----------------------------------------------------------------
J [percentage] X [percentage]
----------------------------------------------------------------
K [percentage] Y [percentage]
----------------------------------------------------------------
L [percentage] Z [percentage]
----------------------------------------------------------------
M [percentage]
----------------------------------------------------------------
Premium rates for facultative cessions will be the same as for automatic
cessions.
D.5 FLAT EXTRAS
Temporary and permanent flat extras are not used directly for joint
coverages; rather, they are converted using an internal table to a
substandard table rating.
D.6 RIDERS AND BENEFITS
Premium for the Policy Split Option Rider is [dollar amount] per [dollar
amount] of the sum of the ceded specified amount of the Base Plan and
Survivor Term Rider. Allowances for the Policy Split Option Rider are 100%
in the first year and 0% in subsequent years.
IDS VUL JLLS Generic Master Treaty
D-3
SUCCESSION SELECT CURRENT INDIVIDUAL COI--FOR FRASIERIZED JOINT COI CALCULATION
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
IDS VUL JLLS Generic Master Treaty
D-4
SUCCESSION SELECT CURRENT INDIVIDUAL COI--FOR FRASIERIZED JOINT COI CALCULATION
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
IDS VUL JLLS Generic Master Treaty
D-5
SUCCESSION SELECT CURRENT INDIVIDUAL COI--FOR FRASIERIZED JOINT COI CALCULATION
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
86
87
88
89
90
91
92
93
94
95
96
97
98
99
IDS VUL JLLS Generic Master Treaty
E-1
EXHIBIT E
SELF-ADMINISTERED REPORTING
E.1 The Ceding Company will self-administer all reinsurance reporting. The
Ceding Company will send the Reinsurer the reports listed below at the
frequency specified.
MONTHLY TRANSACTION REPORTS
1. New Business
2. First Year - Other than New Business
3. Renewal Year
4. Changes and Terminations
5. Accounting Information
QUARTERLY PERIODIC REPORTS
6. Statutory Reserve Information
7. Policy Exhibit Information
8. Inforce
A brief description of the data requirements follows below.
TRANSACTION REPORTS
The Ceding Company will report policy data using the Quasar (R2) system.
1. NEW BUSINESS
This report will include new issues only, the first time the policy
is reported to the Reinsurer. Automatic and Facultative business
will be identified separately.
2. FIRST YEAR - OTHER THAN NEW BUSINESS
This report will include policies previously reported on the new
business detail and still in their first duration, or policies
involved in first year premium adjustments.
3. RENEWAL YEAR
All policies with renewal dates within the Accounting Period will be
listed.
4. CHANGES AND TERMINATIONS
Policies affected by a change during the current reporting period
will be included in this report. Type of change or termination
activity must be clearly identified for each policy.
The Ceding Company will identify the following transactions either
by separate listing or unique transaction codes: Terminations,
Reinstatements, Changes, Conversions, and Replacements. For
Conversions and Replacements, the Ceding Company will report the
original policy date, as well as the current policy date.
IDS VUL JLLS Generic Master Treaty
E-2
5. ACCOUNTING INFORMATION
Premiums and allowances will be summarized for Life coverages,
Benefits, and Riders by the following categories: Automatic and
Facultative, First Year and Renewals.
PERIODIC REPORTS
6. STATUTORY RESERVE INFORMATION
Statutory reserves will be summarized for Life coverages, Benefits
and Riders. The Ceding Company will specify the reserve basis used.
7. POLICY EXHIBIT INFORMATION
This is a summary of transactions during the current period and on a
year-to-date basis, reporting the number of policies and reinsured
amount.
8. INFORCE
This is a detailed report of each policy in force.
IDS VUL JLLS Generic Master Treaty
F-1
EXHIBIT F
APPLICATION FOR FACULTATIVE REINSURANCE
SUBMITTED TO:
--------------- --------------- --------------- ---------------
(Reinsurers)
FROM: DATE:
---------------------------------------- ------------------------
(Ceding Company)
POLICY NUMBER: INCREASING AMOUNT: YES NO
------------------- ------ ------
PLAN NAME: IF INCREASING, ULTIMATE AMOUNT:
------------------- -----------
BIRTH DATE TOBACCO PREF
LAST NAME FIRST MIDDLE M/D/Y SEX USE CLASS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
JOINT INSURED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-------------------------------------------------------------------
LIFE SPECIFY OTHERS, E.G. SECOND LIFE, WAIVER, ADB, ETC.
--------------------------------------------------------------------------------------------------
PREVIOUS INFORCE WITH CO.:
--------------------------------------------------------------------------------------------------
OF WHICH WE RETAIN:
--------------------------------------------------------------------------------------------------
NOW APPLYING FOR:
--------------------------------------------------------------------------------------------------
OF WHICH WE WILL RETAIN:
--------------------------------------------------------------------------------------------------
REINS. AMOUNT APPLIED FOR:
--------------------------------------------------------------------------------------------------
IN EXCESS OF JUMBO: YES NO IF REPLACEMENT: INTERNAL EXTERNAL
------ ------ ------- -------
OUR MORTALITY ASSESSMENT: SPECIAL RISK FEATURES: AVIATION
(TABLE &/OR FLAT EXTRA) ------------------ ------
FOREIGN/TRAVEL
------
OCCUPATION/AVOCATION
------
--------------------------------------- ---------------------------------------
ENCLOSED REQUIREMENTS REQUIREMENTS TO FOLLOW
--------------------------------------- ---------------------------------------
--------------------------------------- ---------------------------------------
--------------------------------------- ---------------------------------------
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REMARKS
--------------------------------------------------------------------------------
UNDERWRITING CONTACT: TEL #:
---------------------- -----------------------
E-MAIL:
-----------------------
IDS VUL JLLS Generic Master Treaty
