AUTOMATIC
ANNUITY REINSURANCE AGREEMENT
(No. )
Between
THE TRAVELERS INSURANCE COMPANY
of
Hartford, Connecticut
(referred to as the Reinsured)
and
COLOGNE LIFE REINSURANCE COMPANY
of
Stamford, Connecticut
(referred to as the Reinsurer)
EFFECTIVE OCTOBER 1, 1994
TABLE OF CONTENTS
ARTICLE PAGE No.
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I AUTOMATIC REINSURANCE 1
II LIABILITY 1
III REINSURANCE PREMIUMS 2
IV CLAIMS 2
V REPORTING & SETTLEMENT 2
VI GENERAL PROVISIONS 3
VII INSOLVENCY OF THE REINSURED 4
VIII REGULATORY COMPLIANCE 5
IX DURATION OF AGREEMENT 5
X ARBITRATION 6
XI DAC TAX - SECTION 1.848-2(g)(8) ELECTION 7
XII ENTIRE AGREEMENT 7
XIII OFFSET 8
XIX EXECUTION 9
SCHEDULE A - BUSINESS REINSURED 10
SCHEDULE B - MONTHLY REPORTING 11
SCHEDULE C - ADDITIONAL MONTHLY REPORTING 12
SCHEDULE D - QUARTERLY REPORTING 13
SCHEDULE E - ANNUAL REPORTING 14
SCHEDULE F - FUNDS OR ACCOUNTS 15
THE REINSURED AND THE REINSURER MUTUALLY AGREE TO REINSURE ON THE TERMS AND
CONDITIONS SET OUT BELOW.
ARTICLE I
AUTOMATIC REINSURANCE
1. Insurance. The Reinsured will cede and the Reinsurer will accept as
reinsurance a 25% quota share of the Mortality Net Amount at Risk as
defined in Article V, generated prior to annuitization, on the policies
written by the Reinsured on the contract forms shown in Schedule A, and as
may be amended for required state variations.
2. Coverages. The policies reinsured in Schedule A are Flexible Premium
Deferred Variable Annuity policies.
3. Accounts. Contract Values will initially be invested in the Accounts
listed in Schedule F. The Reinsured may amend, substitute, add, or delete
separate accounts or underlying funds to the contracts as described in the
contract general provisions. No such change will be made by the Reinsured
without prior notification to the Reinsurer and without prior approval by
the Securities and Exchange Commission as required by law.
ARTICLE II
LIABILITY
1. The Reinsurer's liability for reinsurance under this Agreement will begin
simultaneously with the Reinsured's liability. The Reinsurer's liability
for reinsurance will terminate when the Reinsured's liability terminates.
2. The liability of the Reinsurer shall be settled and paid to the Reinsured
monthly on the basis of the monthly reports prepared by the Reinsured in
the form of Schedule B.
3. This is an agreement solely between the Reinsured and the Reinsurer. There
will be no legal relationship between the Reinsurer and any person having
an interest of any kind in the Reinsured's insurance.
ARTICLE III
REINSURANCE PREMIUMS
1. The daily reinsurance premiums shall be equal to the sum of the day-end
account values of the annuities reinsured hereunder multiplied by the
quota share applicable to that contract and further multiplied by one of
the following daily reinsurance rate factors, depending on the Block
reinsured:
Block A Block B
Treaty Year Rate Factor Rate Factor
------------------ ------------ -----------
10/1/94-9/30/95 .0006/365 .00035/365
10/1/95-9/30/96 .0006/365 .00043/365
10/1/96-9/30/97 .0006/365 .00050/365
10/1/97-9/30/98 .0006/365 .00056/365
10/1/98 & later .0006/365 .00060/365
2. The sum of the day end account values may be estimated for the purposes of
computing reinsurance premiums using a method mutually acceptable to the
Reinsured and the Reinsurer.
3. The daily reinsurance premiums will be accumulated without interest and
paid monthly to the Reinsurer in accordance with Article V.
ARTICLE IV
CLAIMS
1. All reinsurance claim settlements are subject to the terms and conditions
of the particular contract under which the Reinsured is liable.
2. At the time of claim, the amount payable by the Reinsurer will be the
Mortality Net Amount at Risk, defined to be the difference between the
death benefit payable by the Reinsured and the cash surrender value for
the policy.
3. Payment of reinsurance proceeds will be made in a single sum regardless of
the Reinsured's mode of settlement.
ARTICLE V
REPORTING & SETTLEMENT
1. The Reinsured will provide the Reinsurer with information necessary to
properly account for the business reinsured, as specified in this section.
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2. Not later than thirty (30) days after the end of each month, the Reinsured
will submit reports substantially in accord with Schedules B and C. The
Reinsured will submit a report substantially in accord with Schedule D no
less frequently than quarterly on a schedule acceptable to both parties.
From time to time as necessary, the Reinsured will submit a report
substantially in accord with Schedule E. The Reinsured agrees to provide
or make available to the Reinsurer such documentation as may be necessary
to support the items reported.
3. Payment of any amount due to be paid by the Reinsurer or the Reinsured
shall be determined on a net basis. If the net balance is due the
Reinsurer, the amount should be remitted with the monthly reports. If the
net balance is due the Reinsured, it shall be paid within two weeks after
receipt of the monthly reports.
ARTICLE VI
GENERAL PROVISIONS
1. Reinsurance Conditions. The reinsurance is subject to the same limitations
and conditions as the insurance under the policy or policies written by
the Reinsured on which the reinsurance is based.
2. Expenses. In no event will the Reinsurer have any liability for any
extra-contractual damages which are rendered against the Reinsured as a
result of acts, omissions or course of conduct committed by the Reinsured
in connection with the annuity contracts reinsured under this Agreement.
3. Oversights. If there is an unintentional oversight or misunderstanding in
the administration of this Agreement by either company, it can be
corrected provided the correction takes place promptly after the oversight
or misunderstanding is first discovered. Both companies will be restored
to the position they would have occupied had the oversight or
misunderstanding not occured. Interest at a rate to be determined annually
will be payable on any amounts due to either party as a result of the
oversight or misunderstanding.
4. Inspection. At any reasonable time, the Reinsurer may inspect at the
Reinsured's Home Office the original papers and any and all other books or
documents relating to or affecting reinsurance under this Agreement.
It is agreed by the Reinsurer that any information that is made available
for inspection under this section of the Agreement shall be kept
confidential and under no circumstances may this information be disclosed
to, or made available for inspection by, any third party without the prior
consent of the Reinsured.
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5. Assignment or transfer. In no event shall either the Reinsured or the
Reinsurer assign any of its rights, duties or obligations under this
Agreement without the prior written approval of the other party. Such
approval shall not unreasonably be withheld.
In no event shall either the Reinsured or the Reinsurer transfer either
the policies reinsured under this Agreement or the reinsurance without the
prior written approval of the other party. Such approval shall not
unreasonably be withheld. This provision is not intended to preclude the
Reinsurer from retroceding the reinsurance on an indemnity basis.
6. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be construed
in accordance with the applicable federal law and the laws of the State of
Connecticut.
7. Premium Taxes. The Reinsurer will not be liable for premium taxes on
direct annuity premiums received by the Reinsured.
ARTICLE VII
INSOLVENCY OF THE REINSURED
1. The reinsurance amount due, when such amount is ascertained, shall be
payable upon demand by the Reinsured at the same time as the Reinsured
shall pay its net retained portion of such an obligation, with reasonable
provision for verification before payment, and the reinsurance shall be
payable by the Reinsurer on the basis of the liability of the Reinsured
under the Policies without diminution because of the insolvency of the
Reinsured. In the event of insolvency and the appointment of a
conservator, liquidator or statutory successor of the Reinsured, such
portion shall be payable to such conservator, liquidator or statutory
successor immediately upon demand, with reasonable provisions for
verification, on the basis of claims allowed against the Reinsured by any
court of competent jurisdiction or by a conservator, liquidator or
statutory successor of the Reinsured having authority to allow such
claims, without diminution because of such insolvency or because such
conservator, liquidator or statutory successor had failed to pay all or a
portion of any claims.
2. The Reinsured's conservator, liquidator, or statutory successor shall give
the Reinsurer written notice of the pendency of a claim against the
Reinsured indicating the Policy, within a reasonable time after such claim
is filed. The Reinsurer may interpose, at its own expense, in the
proceeding where such claim is to be adjudicated, any defense or defenses
which the Reinsurer may deem available to the Reinsured, or its
conservator, liquidator or statutory successor.
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3. Any expense incurred by the Reinsurer pursuant to paragraph 2, above,
shall be payable subject to court approval out of the estate of the
Reinsured as part of the expense of conservation or liquidation to the
extent of the Reinsurer's portion of the benefit which may accrue to the
Reinsured in conservation or liquidation, 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 defense to such claim, the expense shall be apportioned in
accordance with the terms of this Agreement as though such expense had
been incurred by the Reinsured.
ARTICLE VIII
REGULATORY COMPLIANCE
1. The Reinsurer agrees to maintain licenses, provide any required security,
establish reserves, and to comply with other regulations to the extent
necessary for the Reinsured to receive statutory reserve credit in all
jurisdictions in which the company is licensed on the Effective Date of
the Agreement for the reinsurance ceded under this Agreement.
2. Reinsurer Warranty. The reinsurer warrants that it will hold reserves
beginning 12/31/94 and continuing throughout the term of this reinsurance
agreement on all reinsurance assumed from the Reinsured or any other
insurer to cover variable annuity death benefit guarantees. Such reserves
shall be at least equal to an amount calculated on a basis acceptable to
the
Connecticut Insurance Department.
ARTICLE IX
DURATION OF AGREEMENT
1. This Agreement shall be unlimited as to its duration but may be reduced or
terminated as provided in this Article, below.
2. The Reinsured may reduce the reinsurance quota share ceded on new business
to any amount at its option from the percentage specified in Article I, at
any time the total Contract Values on the portion of the business ceded to
the Reinsurer exceeds 1 billion dollars.
3. Any time on or after the tenth anniversary of this Agreement, the
Reinsured may, upon 90 days written notice, elect to cancel the
reinsurance in force under the Agreement. Such recapture will take place
over a five year period and occur for each contract as it reaches a
quinquennial anniversary.
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4. The Reinsured may cancel this Agreement for new business and cancel the
inforce reinsurance previously ceded under this Agreement upon the
occurrence of either of the following events:
(a) The statutory capital and surplus of the Reinsurer falls below
the NAIC Authorized Control Level Risk Based Capital; or
(b) The Reinsured loses reserve credit in a jurisdiction in which
it was licensed on the effective date of this Agreement and
the Reinsured and the Reinsurer have not been able to correct
the loss of reserve credit within ninety (90) days after
receiving notice of the loss.
5. Upon one hundred eighty (180) days written notice, either the Reinsured or
the Reinsurer may cancel this Agreement for new business any time on or
after the fifth anniversary of this Agreement.
ARTICLE X
ARBITRATION
1. In the event of any difference arising hereafter between the contracting
parties with reference to any transaction under this Agreement, the same
shall be referred to three arbitrators who must be current or former
executive officers of life insurance or life reinsurance companies other
than the two parties to this agreement or their affiliates, each of the
contracting companies to appoint one of the arbitrators and such two
arbitrators to select the third. If either party refuses or neglects to
appoint an arbitrator within sixty (60) days after receipt of the written
request for arbitration, the other party may appoint a second arbitrator.
2. If the two arbitrators fail to agree on the selection of a third
arbitrator within sixty (60) days of their appointment, each of them shall
name three individuals, of whom the other shall decline two, and the
decision shall be made by drawing lots.
3. The arbitrators shall consider this Reinsurance Agreement not merely as a
legal document but also as a gentlemen's agreement. In resolving the
dispute, the arbitrators will give full consideration to the customs and
practices of the life insurance and life reinsurance industry, insofar as
they are not in conflict with the specific terms of this Agreement. The
arbitrators shall decide by a majority vote. There shall be no appeal from
their written decision.
4. Unless the arbitrators decide otherwise, each party shall bear the expense
of its own arbitration, including its arbitrator and outside attorney
fees, and shall jointly and equally bear with the other party the expense
of the third arbitrator. Any remaining costs of the arbitration
proceedings shall be apportioned by the Board of Arbitrators.
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ARTICLE XI
DAC TAX-SECTION 1.848-2(g)(8) ELECTION
1. The term "party" will refer to either the Reinsured or the Reinsurer as
appropriate.
2. The terms used in this Article are defined by reference to Regulation
Section 1.848-2 in effect December 1992.
3. 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)(l).
4. Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency or is
otherwise required by the Internal Revenue Service.
5. The Reinsured will submit a schedule to the Reinsurer by May 1 of each
year of 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 Reinsured stating that the Reinsured
will report such net consideration in its tax return for the preceding
calendar year.
6. The Reinsurer may contest such calculation by providing an alternative
calculation to the Reinsured in writing within thirty days of the
Reinsurer's receipt of the Reinsured's calculation. If the Reinsurer does
not so notify the Reinsured, the Reinsurer will report the net
consideration as determined by the Reinsured in the reinsurer's tax return
for the previous calendar year.
7. If the Reinsurer contests the Reinsured'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 Reinsured and the Reinsurer
reach agreement on an amount of net consideration, each party shall report
such amount in their respective tax returns for the previous calendar
year.
ARTICLE XII
ENTIRE AGREEMENT
1. This Agreement shall constitute the entire agreement between the parties
with respect to business reinsured hereunder. There are no understandings
between the parties other than as expressed in this Agreement and any
change or modification of this Agreement shall be null and void unless
made by amendment to the Agreement and signed by both parties.
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ARTICLE XIII
OFFSET
1. The Reinsured and the Reinsurer shall have, and may exercise at any time,
the right to offset any balance or balances due one party to the other,
its successors or assigns, against balances due the other party under this
Agreement. This right of offset shall not be affected or diminished
because of insolvency of either party to this Agreement.
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ARTICLE XIX
EXECUTION
In witness of the above, this Agreement is signed in duplicate at the dates and
places indicated and shall be effective as of October 1, 1994.
THE TRAVELERS INSURANCE COLOGNE LIFE REINSURANCE
COMPANY COMPANY
At Hartford,
Connecticut, At Stamford,
Connecticut,
On December 28,1994 On December 29,1994
BY: /s/ [ILLEGIBLE] BY: /s/ [ILLEGIBLE]
---------------------- --------------------
Title: Vice President Title: Vice President
BY: /s/ [ILLEGIBLE] BY: /s/[ILLEGIBLE]
---------------------- --------------------
Title: [ILLEGIBLE] Title: AVP
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SCHEDULE A
BUSINESS REINSURED
1. The insureds must purchase contracts from the Reinsured consistent with
its normal procedures and practices, and be residents at issue of the
United States, Bahamas, British Virgin Islands, Guam, Puerto Rico, or U.S.
Virgin Islands.
2. The business reinsured consists of Block A and Block B (excluding
Unallocated group accounts with no death benefit guarantee) as follows:
Block A
Variable Annuity Contracts sold under the Universal Annuity program and
issued on or after July 1, 1994, during the accumulation phase (prior to
annuitization).
Block B
Variable Annuity Contracts sold under the Universal Annuity program and
inforce as of June 30, 1994, during the accumulation phase (prior to
annuitization).
Universal Annuity Policy Forms
Individual LVA-10FPU-A plus state variations
Group LVA-FPG(u) plus state variations
with the following death benefit endorsements, where approved:
Individual 1) L-13866 2) L-12861
Group 1) L-13869 2) L-12862
3. If the Reinsured replaces this annuity within five years with another
annuity that has a different guaranteed death benefit, the Reinsurer
reserves the right of first refusal on the reinsurance for that annuity,
provided the Account Values reinsured at such time are less than 1.0
billion dollars.
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SCHEDULE B
MONTHLY REPORTING
1. Premiums due the Reinsurer
2. Claims Payable by the Reinsurer
3. Current Account Value by fund and split by issue ages 0-64 and 65 +.
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SCHEDULE C
ADDITIONAL MONTHLY REPORTING
1. Annualized unit return on each fund
2. Direct premium received by the Reinsured
3. Listing of contracts with account values in excess of $2 million.
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SCHEDULE D
QUARTERLY REPORTING
1. Current account value split by fund, sex and attained age
2. Cash Surrender value split by attained age.
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SCHEDULE E
ANNUAL REPORTING
1. Notification of any change in fund structure, e.g., addition or deletion
of fund, change in investment policy or investment manager, etc, that
would require a change to the Prospectus.
2. A schedule of outstanding guaranteed death benefit values and net amounts
at risk.
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SCHEDULE F
a. The Travelers Growth and Income Stock Account for Variable Annuities
(Account GIS)
b. The Travelers Quality Bond Account for Variable Annuities (Account QB)
c. The Travelers Money Market Account for Variable Annuities (Account MM)
d. The Travelers Timed Growth and Income Stock Account for Variable Annuities
(Account TGIS)
e. The Travelers Timed Short-Term Bond Account for Variable Annuities
(Account TSB)
f. The Travelers Timed Aggressive Stock Account for Variable Annuities
(Account TAS)
g. The Travelers Timed Bond Account for Variable Annuities (Account TAS)
h. The Travelers Fund U for Variable Annuities (Fund U), consisting of the
following underlying funds:
Capital Appreciation Fund Fidelity's High Income Portfolio
High Yield Bond Trust Fidelity's Equity-Income Portfolio
Managed Assets Trust Fidelity's Growth Portfolio
U.S. Government Securities Portfolio Fidelity's Asset Manager Portfolio
Social Awareness Stock Portfolio American Odyssey International Equity Fund
Utilities Portfolio American Odyssey Emerging Opportunities Fund
Xxxxxxxxx Bond Fund American Odyssey Core Equity Fund
Xxxxxxxxx Stock Fund American Odyssey Long-Term Bond Fund
Xxxxxxxxx Asset Allocation Fund American Odyssey Intermediate-Term Bond Fund
Dreyfus Stock Index Fund American Odyssey Short-Term Bond Fund
Xxxxx Xxxxxx Income & Growth Portfolio Alliance Growth Portfolio
Xxxxx Xxxxxx International Equity Portfolio Xxxxxx Diversified Income Portfolio
GT Global Strategic Income Portfolio Xxxxx Xxxxxx High Income Portfolio
MFS Total Return Portfolio
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LEGAL NOTICE
TREATY: T031-103
BETWEEN
THE TRAVELERS INSURANCE COMPANY
HARTFORD,
CONNECTICUT
(HEREINAFTER REFERRED TO AS THE "REINSURED")
AND
GENERAL & COLOGNE LIFE RE OF AMERICA
STAMFORD,
CONNECTICUT
(FORMERLY KNOWN AS COLOGNE LIFE REINSURANCE COMPANY)
(HEREINAFTER REFERRED TO AS THE "REINSURER")
AMENDMENT ONE
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IT IS AGREED BY THE TWO COMPANIES AS FOLLOWS:
1. WHEREAS, on August 16, 1999 The Cologne Life Re changed it's name to
General & Cologne Life Re of America.
2. NOW, THEREFORE, this agreement is deemed to be between The Travelers
Insurance Company and General & Cologne Life Re of America.
3. In accordance with Article IX of the agreement, the reinsurer,
having provided notice of termination, hereby terminates the
agreement as to new business effective October 1, 1999. Reinsurance
in force hereunder will continue to be governed by all other terms
and conditions of this agreement until the termination or expiry of
each reinsurance cession.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE
EXECUTED IN DUPLICATE ON THE DATES INDICATED BELOW, WITH AN EFFECTIVE DATE
OF: OCTOBER 1,1999.
THE TRAVELERS INSURANCE COMPANY GENERAL & COLOGNE LIFE RE OF AMERICA
(REINSURED) (REINSURER)
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------ -------------------------------
Name: [ILLEGIBLE] Name: Xxxxx X. Xxxxxxxxx
------------------------ -------------------------------
Title: [ILLEGIBLE] Title: Vice President
------------------------ -------------------------------
Date: 2/3/2000 Date: February 7, 2000
Attest: [ILLEGIBLE] Attest: [ILLEGIBLE]
------------------------ -------------------------------
[THE COLOGNE LIFE RE GRAPHIC] [GRAPHIC]
Cologne Life Reinsurance Company Xxxxx X. Xxxxxxxxx
00 Xxx Xxxxxx Vice President
Xxxxxxxx, XX 00000 Financial Reinsurance
Tel. (000) 000-0000
Fax (000) 000-0000
Internet: jgreenwo@colognerc. com
Via Facsimile 860/277-3092 and Certified Mail
March 31,1999
Xxxx Xxxxxx
Actuary
Travelers Life and Annuity
0 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Re: Notice of Termination of Variable Annuity Guaranteed Death Benefit
Reinsurance Treaty Between Travelers Life Insurance Company and Cologne
Life Reinsurance Company dated October, 1994, Cologne reference number T031
-103 - Deal 2474 (the "Treaty" as amended).
Dear Xxxx:
This letter is Cologne's notice of termination of the Treaty effective as of its
5(th) anniversary, October 1, 1999. In accordance with the termination provision
of the Treaty, Cologne will not reinsure new business issues on and after
October 1,1999. This notice is being sent 180 days in advance of the 5(th)
anniversary date as required by Article IX, Section 5 of the Treaty.
If you are interested, Cologne would be willing to review other reinsurance
options. The contact at Cologne is Xxxx Xxxxxx, Second Vice President, Market
Development at 203/000-0000.
Please call me to discuss any questions you may have.
Best regards,
-s- Xxxx Xxxxxx
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c: Xxxx Xxxxxx
Xxxx Xxxxx
Art Xxxxxxxx
[GENERAL & COLOGNE GRAPHIC]
