AUTOMATIC
REINSURANCE AGREEMENT
(hereinafter, "the Agreement")
between
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
of Newark, Delaware
(hereinafter, "Cedent")
And
of
(hereinafter, "Reinsurer")
COLI Reinsurance Agreement
EFFECTIVE JANUARY 1, 2001
[Specimen]
NYLIAC 2001 COLI REINSURANCE AGREEMENT
ARTICLES TABLE OF CONTENTS PAGE
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I Reinsurance Coverage 3
II Requirements for Automatic Reinsurance 3
III Requirements for Facultative Reinsurance 4
IV Liability 5
V Notification of Reinsurance 5
VI Types of Reinsurance 6
VII Reinsurance Premiums 6
VIII Reinsurance Accounting 7
IX Oversights 9
X Reductions, Terminations and Changes 9
XI Increase In Retention 10
XII Reinstatement 11
XIII Expenses 11
XIV Claims 11
XV Premium Tax Xxxxxxxxxxxxx 00
XXX XXX Tax Requirements 14
XVII Inspection Of Records 16
XVIII Insolvency 16
XIX Arbitration 17
XX Parties To Agreement 18
XXI Entire Agreement 18
XXII Duration Of Agreement 18
XXIII Choice of Law and Forum 19
XXIV Compliance with Privacy Laws 19
XXV Reinsurance Credit 19
SCHEDULES
---------
A Policies
B Reinsurance Premium Rates
C Cedent's Corporate Retention Limits
EXHIBITS
--------
1 DAC Tax Calculation
2 Reinsurance Questionnaire
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
ALL SCHEDULES AND EXHIBITS ATTACHED HERETO WILL BE CONSIDERED
PART OF THIS AGREEMENT.
ARTICLE I
REINSURANCE COVERAGE
1. Reinsurance under this Agreement shall be individual life insurance of
the type of business stated in Schedule A. Cedent shall automatically
reinsure and Reinsurer shall automatically accept the life insurance
for the plans and riders as stated in Schedule A that meet the
requirements of Article II below. Reinsurer's liability for the risks
ceded hereunder shall be based on the quota share specified in Schedule
A unless a greater amount is reinsured pursuant to Article III.
(Individual life insurance reinsured pursuant to Article I and II or
Article III hereinafter referred to as a "Covered Policy(ies)".)
Reinsurer shall hold policy year reserves based on 1/2Cx where the
commutation functions are based on the 1980 CSO Table (Smoker or
Non-Smoker) without select factors.
2. The effective date of this Agreement shall be January 1, 2001.
ARTICLE II
REQUIREMENTS FOR AUTOMATIC REINSURANCE
Cedent shall not cede, and Reinsurer shall not accept, any individual life
insurance for reinsurance under this Agreement unless it meets the following
requirements:
1. The individual risk must be a resident of the United States or Canada.
2. The individual risk must be underwritten by Cedent in accordance with
Cedent's usual underwriting practices and guidelines. The individual must
be classified as select preferred, preferred, non-smoker, select standard,
standard or substandard, in accordance with those guidelines.
3. The age of the individual risk at issue must be no greater than the
maximum issue age shown on Schedule A.
4. The amount of insurance issued and applied for in all insurance companies
on each life must not exceed the jumbo limits shown on Schedule A.
5. The amount of insurance issued and applied for with Cedent on each life
must not exceed the automatic binding limits shown on Schedule A.
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
6. The initial amount of life insurance on each Covered Policy must not be
less than the minimum amount at issue as shown on Schedule A.
7. The issuance of the insurance must constitute the doing of business in a
jurisdiction in which Cedent is properly licensed.
8. The policyowner has represented to Cedent that it has an insurable
interest, under applicable state law, in the life of the insured, and,
where required, has obtained a valid consent to insure from the insured.
9. On each Covered Policy, Cedent must retain % of the amount of each risk.
ARTICLE III
REQUIREMENTS FOR FACULTATIVE REINSURANCE
1. If the requirements for automatic reinsurance on an individual life are
not met, or are met but Cedent prefers to apply for facultative
reinsurance, then Cedent may apply to Reinsurer for facultative
reinsurance. In order to apply for guaranteed issue facultative
reinsurance, Cedent must submit to Reinsurer a census of proposed insureds
that includes at least full name, age or date of birth, gender, current
salary, face amount, premium and net amount at risk for each; the formula
for determining benefit amounts; a description of the eligible class of
employees; and a description of the plan design and how the insurance will
be used. In order to apply for underwritten facultative reinsurance,
Cedent must submit to Reinsurer complete copies of the original
application, medical examiner's reports, inspection reports, attending
physicians' statements plus any other papers or information that may have
a bearing on the insurability of the risk. Cedent acknowledges that
Reinsurer, during its facultative underwriting consideration, shall not
evaluate or assess any proof of insurable interest by the applicant with
respect to the proposed insured.
2. After Reinsurer has examined the underwriting information submitted in
accordance with Paragraph 1 above, Reinsurer shall promptly notify Cedent
in writing of either a final underwriting offer for facultative
reinsurance or an underwriting offer for facultative reinsurance subject
to additional requirements. Either underwriting offer of facultative
reinsurance on an individual life will automatically terminate on the
first of the following dates:
(a) The date Reinsurer receives notice from Cedent that Cedent has
withdrawn Cedent's application for facultative reinsurance;
(b) A date that is one hundred twenty (120) days after the date
Reinsurer made the offer; or
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
(c) The date specified in Reinsurer's offer.
3. If an underwriting offer made by Reinsurer in accordance with Paragraph 2
is accepted by Cedent in writing prior to the date the offer terminates,
that individual life is reinsured under the terms of this Agreement.
ARTICLE IV
LIABILITY
1. Reinsurer's liability for automatic reinsurance on each Covered Policy
will begin simultaneously with Cedent's liability.
2. Reinsurer's liability for facultative reinsurance on each Covered Policy
will begin simultaneously with Cedent's liability once Reinsurer has
accepted the application for facultative reinsurance in writing and Cedent
has accepted Reinsurer's offer.
3. Reinsurer's liability for reinsurance on each Covered Policy will
terminate when Cedent's liability terminates.
4. The initial and subsequent Reinsurance Premiums (as defined herein) must
be received by Reinsurer on a timely basis as provided in Article IX for
Reinsurer to maintain Reinsurer's liability for each individual risk.
5. Reinsurer agrees to accept policies backdated to July 1, 2000 for
reinsurance coverage under this Agreement. However, it is agreed that
Reinsurer shall not be liable for any mortality risk on such policies
until January 1 2001. Reinsurer shall be liable for proceeds paid under
Cedent's conditional receipt or temporary insurance agreement for risks
reinsured automatically pursuant to the terms of this Agreement. Reinsurer
shall not be liable for proceeds paid under Cedent's conditional receipt
or temporary insurance agreement for risks submitted on a facultative
basis, where Cedent's liability for payment under the conditional receipt
or temporary insurance is established before Reinsurer has accepted the
application for facultative reinsurance in writing and Cedent has accepted
Reinsurer's offer.
ARTICLE V
NOTIFICATION OF REINSURANCE
Within thirty-one (31) days after the end of each calendar quarter, Cedent will
send Reinsurer an in force listing of all Covered Policies reinsured under this
Agreement.
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
ARTICLE VI
TYPES OF REINSURANCE
1. Automatic reinsurance under this Agreement shall be on a yearly renewable
term basis, based on the net amount at risk. The net amount at risk shall
be the death benefit under the Covered Policy less the total cash value.
2. If requested, Cedent shall furnish Reinsurer with a copy of each policy
form, form of rider and rate book that applies to the life insurance
reinsured.
ARTICLE VII
REINSURANCE PREMIUMS
1. The premium for each Covered Policy reinsured pursuant to this Agreement
will be: (a) the quota share shown on Schedule A; multiplied by (b) the
reinsurance premium rate calculated in accordance with Schedule B applied
to the net amount at risk (hereinafter, the "Reinsurance Premium").
2. For technical reasons relating to the uncertain status of deficiency
reserve requirements, the reinsurance premium rates shown in Schedule B
cannot be guaranteed for more than one year. However, Reinsurer
anticipates continuing to accept premiums on the basis of the reinsurance
premium rates as described in Schedule B for reinsurance ceded. If
Reinsurer deems it necessary to increase reinsurance premium rates, such
increased rates shall not be higher than the valuation net premiums for
yearly renewable term insurance calculated using the minimum statutory
mortality rates and maximum statutory interest rate for each year of
issue.
3. For the reinsurance of new business, Reinsurer may change the reinsurance
premium rates following a ninety (90) day prior written notice. For the
reinsurance of in force business, Reinsurer may increase the reinsurance
premium rates in the event Cedent increases its mortality rates charged
the policyholder. The maximum reinsurance premium rates shall be the
greater of
(1) the statutory valuation premiums for yearly renewable term insurance
at the maximum interest rates and minimum mortality rates for each
year of issue;
or
(2) the then current reinsurance premium rates.
Any increases in the reinsurance premium rates shall apply as of the same date
Cedent increases its rates charged its policyholders. Cedent may immediately
recapture all of the policies for which the overall percentage increase in
reinsurance
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
premium rates is greater than the overall percentage increase in the
rates charged the policyholder. Cedent agrees to give Reinsurer prior written
notice of any intent to increase its rates charged the policyholder for new or
existing business. With respect to any notice given under this Paragraph, the
day the notice is deposited in the mail addressed to the home office or to an
officer of the party receiving such notice will be the first day of such notice
period.
ARTICLE VIII
REINSURANCE ACCOUNTING
1. PAYMENT OF REINSURANCE PREMIUMS
A. Cedent shall prepare and submit to Reinsurer a monthly statement,
either electronically or by regular U.S. postal service, which will
provide the pertinent policy premium details in a mutually agreed
upon report format, within thirty (30) days following the last day
of the same calendar month. The net monthly premiums due will be (i)
the balance of the monthly Reinsurance Premiums due on reinsurance
in force at the end of the immediately preceding calendar month plus
(ii) Reinsurance Premiums due on new business reinsured during the
current month, minus (iii) the refunds of Reinsurance Premiums due
Cedent on deaths, lapses and changes, plus or minus (iv) Reinsurance
Premiums adjustments due to a misstatement of age or sex, without
interest.
B. If the monthly statement shows a net Reinsurance Premium balance is
payable to Reinsurer, Cedent shall remit this amount due Reinsurer
within thirty (30) days. If the amount is not paid within the
prescribed period, the premiums for all of the reinsurance risks
listed on the statement will be delinquent.
C. If the monthly statement shows a net Reinsurance Premium balance is
payable to Cedent, Reinsurer shall remit Reinsurer's payment to
Cedent within thirty (30) days after receiving Cedent's statement.
D. Cedent agrees to segment/identify COLI/BOLI policies from any other
policies reported and provide Reinsurer separate reports or
identifiers for the COLI/BOLI policies in a manner consistent with
those described above.
2. TERMINATION BECAUSE OF NON-PAYMENT OF PREMIUMS
When Reinsurance Premiums are delinquent, Reinsurer shall have the right
to terminate the reinsurance risks on the statement by giving Cedent
thirty (30)
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
days' written notice. As of the close of this thirty (30) day period all
of Reinsurer's liability will terminate for:
A. The risks described in the preceding sentence, and
B. The risks where the Reinsurance Premiums became delinquent during
the thirty (30) day period.
Regardless of these terminations, Cedent will continue to be liable to
Reinsurer for all unpaid Reinsurance Premiums earned by Reinsurer. Cedent
agrees that Cedent will not force termination under this provision solely
to avoid the recapture requirements or to transfer the block of business
reinsured to another reinsurer.
3. REINSTATEMENT OF A DELINQUENT STATEMENT.
Cedent may reinstate the terminated risks within sixty (60) days after the
effective date of termination by paying the unpaid Reinsurance Premiums
for the risks in force prior to the termination. However, Reinsurer will
not be liable for any claim incurred between the date of termination and
reinstatement. The effective date of reinstatement will be the day that
Reinsurer receives the required back Reinsurance Premiums.
4. CURRENCY.
The Reinsurance Premiums and claims payable under this Agreement will be
payable in the lawful money of the United States.
5. OFFSET
Any debts or credits incurred on and after May 25, 2001 in favor of or
against either Cedent or Reinsurer with respect to this Agreement are
deemed mutual debts or credits, as the case may be, and shall be set off,
and only the balance shall be allowed or paid.
6. BALANCES IN DEFAULT
Reinsurer reserves the right to charge interest at the Prime Rate plus %
as stated in the Wall Street Journal on the first business day in January
prior to the due date of the premium when renewal premiums are not paid
within sixty (60) days of the due date or premiums for new business are
not paid within one hundred twenty (120) days of the date the policy is
issued.
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
ARTICLE IX
OVERSIGHTS
Inadvertent delays, errors or omissions made in connection with this Agreement
or any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery, and provided that the party making such error or omission or
responsible for such delay shall be responsible for any additional liability
which attaches as a result.
ARTICLE X
REDUCTIONS, TERMINATIONS AND CHANGES
1. If there is a contractual or non-contractual replacement or change in the
insurance reinsured under this Agreement where full medical underwriting
evidence according to Cedent's regular underwriting rules is not required,
the insurance will continue to be reinsured with Reinsurer.
2. If the insurance reinsured under this Agreement increases and
A. The increase is subject to new underwriting evidence, the provisions
of Article I and II or Article III shall apply to the increase in
reinsurance.
B. The increase is not subject to new underwriting evidence, Reinsurer
will accept automatically the increase in reinsurance but not to
exceed Reinsurer's automatic binding limit.
3. If the insurance reinsured under this Agreement is increased or reduced,
the reinsurance for each policy involved will be proportionately increased
or reduced on the effective date of increase or reduction.
4. If any portion of the total insurance retained by Cedent on an individual
life reduces or terminates, any reinsurance under this Agreement based on
the same life will also be reduced or terminated. Cedent will reduce
Cedent's reinsurance by applying the retention limits that were in effect
at the time the policy was issued. Cedent will not be required to retain
an amount in excess of Cedent's regular retention limit for the age,
mortality rating and risk classification at the time of issue for any
policy on which reinsurance is being reduced.
Cedent must first reduce the reinsurance of the insurance that has the
same mortality rating as the terminated insurance. If further reduction is
required, the reinsurance to be terminated or reduced will be determined
by chronological order in which the reinsurance was first reinsured.
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
5. If the insurance for a risk is shared by more than one reinsurer,
Reinsurer's percentage of the increased or reduced reinsurance will be the
same as Reinsurer's percentage of the initial reinsurance of each policy.
6. If insurance reinsured under this Agreement is terminated, the reinsurance
for the policy involved will be terminated on the effective date of
termination.
7. On facultative reinsurance, if Cedent wishes to reduce the mortality
rating, this reduction will be subject to the facultative provisions of
this Agreement.
8. Reinsurer will refund to Cedent all unearned reinsurance premiums, arising
from reductions, terminations and changes as described in this Article.
ARTICLE XI
INCREASE IN RETENTION
1. If Cedent should increase Cedent's retention limits shown in Schedule C,
Cedent shall give Reinsurer prompt written notice of this increase.
2. Cedent will have the option to recapture a portion of the reinsurance
under this Agreement when Cedent's retention limit increases. The
recapture will be effected through a proportional increase in Cedent's
Automatic Percentage as defined in Article II Section 8. The increase
in the Automatic Percentage will be proportionate to the increase in
Cedent's retention limit for the corresponding issue ages. Cedent may
exercise Cedent's option to recapture by giving Reinsurer ninety (90)
days prior written notice of such recapture.
3. If Cedent exercises this option to recapture, then
A. Cedent must reduce the reinsurance on each individual life on which
Cedent retained its Automatic Percentage that was in effect on this
treaty at the time of the increase in retention limit.
B. No recapture will be made to reinsurance on an individual life if
Cedent did not initially retain at least its Automatic Percentage.
C. If an individual life is shared by more than one reinsurer, each
Reinsurer will receive the same percentage of the ceded amount as it
had initially on the case.
4. The reduction of reinsurance will become effective on the later of the
following dates:
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
A. The policy anniversary date immediately following the effective date
of Cedent's increase in retention limits.
B. The number of years stated in Schedule A starting with the original
policy date shown on Cedent's listing.
ARTICLE XII
REINSTATEMENT
If a Covered Policy lapses for nonpayment of premium and is reinstated under
Cedent's terms and rules, the reinsurance will be reinstated by Reinsurer.
Cedent must pay Reinsurer all back Reinsurance Premiums in the same manner as
Cedent received insurance premiums under Cedent's policy. If Reinsurer is
requested to reinstate a policy that was originally ceded to Reinsurer on a
facultative basis, then Cedent must submit the policy and associated papers
concerning the individual's insurability to Reinsurer to be underwritten and
approved for the reinsurance to be reinstated if:
1. the policy lapsed for six months or longer, or
2. Cedent seeks additional underwriting information, or
3. Cedent reinsures 100% of the policy.
If the above conditions are not present, Cedent may automatically reinstate a
policy that was originally ceded to Reinsurer on a facultative basis.
ARTICLE XIII
EXPENSES
Cedent shall pay the expense of all
in connection with the issuance of the insurance.
ARTICLE XIV
CLAIMS
1. Reinsurer shall pay Reinsurer's quota share of any claim under a Covered
Policy within a reasonable time after Cedent submits the claim to
Reinsurer. Reinsurer shall make payment to Cedent in a single sum
regardless of Cedent's mode of settlement.
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
2. All reinsurance claim settlements made in accordance with Paragraph 1
above will be subject to the terms and conditions of the Covered Policy
under which Cedent is liable.
3. When Cedent is advised of a claim for insurance benefits reinsured under
this Agreement, Cedent must promptly notify Reinsurer.
4. If a claim is made under a Covered Policy reinsured under this Agreement,
Reinsurer will abide by the issue as it is settled in good faith by
Cedent. The maximum benefit payable to Cedent under each Covered Policy is
the amount specifically reinsured with Reinsurer. When Cedent requests
payment of the reinsurance proceeds, Cedent must deliver a copy of the
proof of death, proof of payment and the claimant's statement to
Reinsurer.
5. A. Cedent must promptly notify Reinsurer of Cedent's intent to contest
insurance reinsured under this Agreement or to assert defenses to a
claim for such insurance. Reinsurer shall participate in the
contest or assertion of defenses unless Reinsurer notifies Cedent
promptly that Reinsurer declines to participate. If Cedent's
contest of such insurance results in the reduction of Cedent's
liability, Reinsurer will share in this reduction. Reinsurer's
percentage of the reduction will be Reinsurer's net amount of risk
on the individual life as it relates to Cedent's total net amount at
risk on the date of the death of the insured.
B. If Reinsurer should decline to participate in the contest or assertion
of defenses, Reinsurer will then release all of Reinsurer's liability
(i) by paying Cedent the full amount of reinsurance as if there had
been no contest, compromise or litigation of a claim, and Reinsurer's
proportionate share of covered expenses incurred to the date, from the
date Reinsurer notifies Cedent that Reinsurer declined to be a party,
and (ii) by not sharing in any subsequent reduction in liability.
6. If the amount of insurance provided by a Covered Policy reinsured under
this Agreement is increased or reduced because of a misstatement of age or
sex established after the death of the insured, Reinsurer will share with
Cedent in this increase or reduction. Reinsurer's share of this increase
or reduction will be the percentage that Reinsurer's net liability relates
to Cedent's total net liability, immediately prior to this increase or
reduction.
7. Cedent shall pay the routine expenses incurred in connection with settling
claims. These routine expenses may include compensation of agents and
employees, the cost of routine investigations, expenses incurred in
connection with a dispute arising out of conflicting claims of entitlement
to proceeds of a policy that Cedent
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
admits are payable, any expenses incurred by Cedent on policies voided or
payable to a party other than the policyholder due to the lack of
insurable interest, and Cedent's equitable share of (i) any punitive
damages awarded against Cedent and (ii) any expenses incurred in
connection with such damages that are based on the acts or omissions of
Cedent or its agents.
8. Reinsurer shall share with Cedent all expenses that are not routine.
Expenses that are not routine are those directly incurred in connection
with the contest or the possibility of a contest of insurance or the
assertion of defenses. These expenses will be shared in proportion to the
net sum at risk for both parties. However, if Reinsurer has released
Reinsurer's liability under Paragraph 5 of this Article, Reinsurer will
not share in any expenses incurred after Reinsurer's date of release.
9. Reinsurer agrees to hold Cedent harmless from certain expenses and
liabilities that result from Reinsurer's own acts or omissions as provided
in this article. For this purpose, Reinsurer agrees to indemnify Cedent
for Reinsurer's equitable share of those punitive and exemplary damages
awarded against Cedent, and expenses incurred in connection with a claim
for such damages, if Reinsurer participates in a contest pursuant to
paragraphs 5.A.and 5.B. of this section.
Reinsurer's liability for such punitive and exemplary damages shall be
limited to such damages that are assessed solely as a result of a decision
to deny or contest the claim. Reinsurer shall not be liable for such
punitive and exemplary damages that arise from fraudulent or criminal
conduct of an employee of the Cedent, as determined by the appropriate
tribunal or authority, in connection with the investigation, processing
and settlement of claims under the covered policy.
The extent of such sharing between Cedent and Reinsurer is dependent upon
the good faith assessment of culpability in each case, but all factors
being equal, the parties will share in such extra-contractual damages in
the same proportion as the quota share accepted by each party under the
Agreement.
10. If either a misrepresentation or misstatement on an application or a death
of an insured by suicide results in Cedent returning the policy premiums
to the policy owner rather than paying the policy benefits, Reinsurer will
refund all of the Reinsurance Premiums Reinsurer received on that policy
to Cedent. This refund given by Reinsurer will be in lieu of all other
reinsurance benefits payable on that policy under this Agreement.
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
ARTICLE XV
PREMIUM TAX REIMBURSEMENT
Reinsurer shall not reimburse Cedent for any premium taxes Cedent may be
required to pay with respect to reinsurance hereunder.
ARTICLE XVI
DAC TAX REQUIREMENTS
1. In accordance with Treasury Regulations Section 1.848-2(g)(8), Cedent and
Reinsurer hereby elect to determine specified policy acquisition expenses
with respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1) of the Internal Revenue Code (the "IRC").
This election shall be effective for calendar year 2000 and for all
subsequent taxable years for which this Agreement remains in effect.
2. All uncapitalized terms used herein shall have the meanings set forth in
the regulations under section 848 of the IRC.
3. Any party with the net positive consideration under this Agreement for
each taxable year shall capitalize specified policy acquisition expenses
with respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1) of the IRC.
4. Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency.
5. Cedent shall submit a schedule in the format specified in Exhibit 1 to
Reinsurer by March 1 of each year of Cedent's calculations of the net
consideration under this Agreement for the preceding calendar year. This
schedule of calculations shall be accompanied by a statement signed by an
officer of Cedent stating that Cedent will report such net consideration
in its Federal income tax return for the preceding calendar year.
6. Reinsurer may contest such calculation by providing an alternative
calculation to Cedent in writing within thirty (30) days of Reinsurer's
receipt of Cedent's calculation. If Reinsurer does not notify Cedent
within such time that it contests the calculation, Reinsurer shall report
the net consideration as determined by Cedent in Reinsurer's tax return
for the previous calendar year.
7. If Reinsurer contests Cedent'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 Reinsurer submits its
alternative calculation. If the parties reach
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
an agreement on an amount of net consideration, each party will report the
agreed upon amount in its Federal income tax return for the previous
calendar year. If during such period, Cedent and Reinsurer are unable to
reach agreement, they shall promptly thereafter cause independent
accountants of nationally recognized standing, satisfactory to Cedent and
Reinsurer (who shall not have any material relationship with Cedent or
Reinsurer) promptly to review (which review shall commence no later than
five (5) days after the selection of such independent accountants), this
Agreement and the calculations of Cedent and Reinsurer for the purpose of
calculating the net consideration under this Agreement. In making such
calculation, such independent accountants shall consider only those items
or amounts in Cedent's calculation as to which Reinsurer has disagreed.
Such independent accountants shall deliver to Cedent and Reinsurer, as
promptly as practicable (but no later than sixty (60) days after the
commencement of their review), a report setting forth such calculation,
which calculation shall result in a net consideration between the amount
thereof shown in Cedent's calculation delivered pursuant to Paragraph 5
and the amount thereof in Reinsurer's calculation delivered pursuant to
Paragraph 6. Such report shall be final and binding upon Cedent and
Reinsurer. The fees, costs and expenses of such independent accountants
shall be borne (i) by Cedent if the difference between the net
consideration as calculated by the independent accountants and Cedent's
calculation delivered pursuant to Paragraph 5 is greater than the
difference between the net consideration as calculated by the independent
accountants and Reinsurer's calculation delivered pursuant to Paragraph 6,
(ii) by Reinsurer if the first such difference is less than the second
such difference; and (iii) otherwise equally by Cedent and Reinsurer.
8. Both parties agree to attach a schedule to their respective federal income
tax returns for the first taxable year ending after the date on which this
election becomes effective which identifies this Agreement as a
reinsurance agreement for which an election has been made under Treasury
Regulations Section 1.848-2(g)(8).
9. Reinsurer represents and warrants that it is subject to United States
taxation under Subchapter L of the IRC.
10. Reinsurer shall complete a Reinsurance Questionnaire in the format
specified in Exhibit 2 and submit it to Cedent by May 1st of each calendar
year.
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
ARTICLE XVII
INSPECTION OF RECORDS
Reinsurer shall have the right, at any reasonable time, to inspect Cedent's
books and documents that relate to Cedent's reinsurance under this Agreement.
ARTICLE XVIII
INSOLVENCY
1. If Cedent becomes insolvent, all of the reinsurance due Cedent will be
paid in full directly to Cedent or Cedent's liquidator (receiver or
statutory successor) on the basis of Cedent's liability under the policy
or policies reinsured, without diminution because of Cedent's insolvency.
2. If Cedent becomes insolvent, the liquidator, receiver or statutory
successor will give Reinsurer written notice of a pending claim against
Cedent for insurance reinsured under this Agreement within a reasonable
time after the claim is filed in the insolvency proceeding. During the
insolvency proceedings where the claim is to be settled, Reinsurer may
investigate this pending claim and interpose in Cedent's or Cedent's
liquidator's, receiver's or statutory successor's name, but at Reinsurer's
own expense, any defense or defenses which Reinsurer may believe available
to Cedent or Cedent's liquidator, receiver or statutory successor.
3. The expenses incurred by Reinsurer will be chargeable, subject to court
approval, against Cedent as part of the expense of liquidation, to the
extent of the proportionate share of the benefit that may accrue to Cedent
solely as a result of the defense undertaken by Reinsurer. Where two or
more reinsurers are involved in the same claim and a majority in interest
elects to interpose a defense or defenses to this claim, the expense will
be apportioned in accordance with the terms of this Agreement as though
such expense had been incurred by Cedent.
4. In the event of Reinsurer's insolvency, as determined by the department of
insurance responsible for such determination, all reinsurance ceded under
this Agreement may be recaptured immediately by Cedent without penalty
effective as of the day prior to the earlier of Reinsurer's becoming
insolvent or the date of such determination by the said department of
insurance.
5. Where two or more reinsurers are members of a pool of reinsurers
established hereby, the insolvency of one reinsurer shall not be deemed to
abrogate this Agreement with respect to the other reinsurers.
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NYLIAC 2001 COLI REINSURANCE AGREEMENT
ARTICLE XIX
ARBITRATION
1. If the parties cannot mutually resolve a dispute or claim arising out of
or in connection with this Agreement, including the formation or validity
thereof, and whether arising during or after the period of this Agreement,
the dispute or claim shall be settled by arbitration. The arbitrators
shall have the authority to interpret this Agreement and in doing so shall
consider the customs and practices of the life insurance and life
reinsurance industries. The arbitrators shall have the authority to
interpret this Agreement as an honorable engagement, and without regard to
the law of any particular jurisdiction. To initiate arbitration, either
party shall notify the other party by facsimile or by overnight delivery
of its desire to arbitrate, stating the nature of the dispute and the
remedy sought (the "Notice of Arbitration"). The party to which the notice
is sent shall respond to the notification in writing within ten (10)
business days of receipt.
2. Arbitration shall be conducted by three arbitrators who shall be current
or past officers of life insurance companies or life reinsurance
companies, other than the contracting companies or their affiliates. Each
party shall appoint one arbitrator, and serve written notice of the
appointment upon the other party, within thirty (30) business days after
the date of delivery of the Notice of Arbitration. The two arbitrators so
appointed shall select the third arbitrator within thirty (30) business
days after the date of appointment of the second arbitrator to be
appointed.
3. In the event either party fails to choose an arbitrator within thirty (30)
business days, as provided in Paragraph 2, the party which has given
written notice may choose two arbitrators who shall in turn choose a third
arbitrator before entering arbitration.
4. If the two arbitrators appointed in accordance with Paragraph 2 or
Paragraph 3 are unable to agree upon the selection of a third arbitrator
within thirty (30) business days after the appointment of the second
arbitrator to be appointed, each arbitrator shall nominate three
candidates within ten (10) business days thereafter, two of whom the other
shall decline and the decision shall be made by drawing lots.
5. Arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in effect on the
date of delivery of Notice of Arbitration.
6. Each party will pay the fees of its own attorneys, the arbitrator
appointed by that party, and all other expenses connected with the
presentation of its own case.
-17-
NYLIAC 2001 COLI REINSURANCE AGREEMENT
The two parties will share equally in the cost of the third arbitrator.
The arbitration hearing will be held in New York City.
7. The award agreed to by the arbitrators will be final and binding, and
judgment may be entered upon it in any court having jurisdiction. The
arbitrators shall not award punitive damages.
ARTICLE XX
PARTIES TO AGREEMENT
This is an Agreement solely between Cedent and Reinsurer. There will be no legal
relationship between Reinsurer and any person having an interest of any kind in
any Covered Policy.
ARTICLE XXI
ENTIRE AGREEMENT
1. This Agreement shall constitute the entire agreement between the parties
with respect to the subject matter of this Agreement and there are no
understandings between the parties other than as expressed in this
Agreement.
2. Any change or modification to this Agreement shall be null and void unless
made by amendment to this Agreement and signed by both parties.
ARTICLE XXII
DURATION OF AGREEMENT
1. This Agreement may be terminated as to new business, with respect to the
percentage participation in the risks reinsured hereunder by Reinsurer, as
set forth in Schedule A, at any time by either party giving ninety (90)
days' written notice of termination. The day the notice is deposited in
the mail addressed to the home office or to an officer of either party
will be the first day of the ninety (90) day period. During the ninety
(90) day period, new Covered Policies shall be reinsured under this
Agreement pursuant to Articles I and II or Article III. Reinsurer's
acceptance will be subject to the terms of this Agreement and Cedent's
payment of Reinsurance Premiums.
2. This Agreement may be terminated immediately as to new business by either
party if the other party materially breaches this Agreement or becomes
insolvent or financially impaired.
3. After termination, Reinsurer will be liable for all automatic reinsurance
which becomes effective prior to termination of this Agreement, and also
for all
-18-
NYLIAC 2001 COLI REINSURANCE AGREEMENT
facultative reinsurance approved by Reinsurer based upon applications
Reinsurer received prior to termination of this Agreement.
4. Pursuant to Paragraph 3 of Article VIII, Cedent may immediately recapture
all of the policies for which the overall percentage increase in
reinsurance premium rates is greater than the overall percentage increase
in the rates charged the policyholder.
ARTICLE XXIII
CHOICE OF LAW AND FORUM
New York law shall govern the terms and conditions of the Agreement.
ARTICLE XXIV
COMPLIANCE WITH PRIVACY LAWS
When Reinsurer receives information from Cedent which is subject to any state or
Federal privacy laws or regulations, or similar laws or regulations, Reinsurer
will keep such information confidential to the extent required by such state or
Federal law or regulation and otherwise comply with such state or Federal law or
regulation.
ARTICLE XXV
REINSURANCE CREDIT
It is the intention of Reinsurer and Cedent that Cedent qualify for reinsurance
credit for reinsurance ceded under this Agreement. Reinsurer, at its sole cost
and expense, shall do all that is necessary to comply with all applicable
insurance laws and regulations to enable Cedent to take credit for the
reinsurance ceded under this Agreement.
-19-
NYLIAC 2001 COLI REINSURANCE AGREEMENT
IN WITNESS WHEREOF the said
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
and
have by their respective officers executed and delivered these presents in
duplicate on the date shown below.
NEW YORK LIFE INSURANCE NEW YORK LIFE INSURANCE
AND ANNUITY CORPORATION AND ANNUITY CORPORATION
Signed at_________________________ Signed at_______________________
By _______________________________ By______________________________
Its authorized representative Its authorized representative
Title_____________________________ Title___________________________
Date______________________________ Date____________________________
Signed at_________________________ Signed at_______________________
By _______________________________ By______________________________
Its authorized representative Its authorized representative
Title_____________________________ Title___________________________
Date______________________________ Date____________________________
-20-
NYLIAC 2001 COLI REINSURANCE AGREEMENT
SCHEDULE A
POLICIES
1. Quota Share Percentage: The Quota Share Percentage for Reinsured Covered
Policies shall be %.
2. Type of Business: Corporate Owned Life Insurance (COLI) -
Universal Life policies and attached
Adjustable Term Riders COLI - Variable
Universal Life policies and attached Adjustable
Term Riders, Supplementary Term Riders and Level
Term Riders
3. Plans of Insurance: CSUL and CSVUL
Guaranteed Issue (GI) and Medical Issues (MI) of
policies issued on or after 01/01/2001 (plus
attached Adjustable Term Riders).
CEVUL
GI, MI and Simplified Issues (SI), of policies
issued on or after 01/01/2001 (plus attached
Supplementary Term Riders and Level Term
Riders).
4. Jumbo Limit: $
5. Automatic Binding Limit: $ per life for issue ages to age ;
$ per life for issue ages to ;
$ per life for issue ages and over.
These limits are for medically issued business
only. GI and SI business limits are shown in
the table below.
6. Recapture Period: Years
7. Issue Limits: GI: Minimum of Lives
SI: Minimum of Lives
-21-
NYLIAC 2001 COLI REINSURANCE AGREEMENT
Issue Ages GI and SI
---------- ----------------------------------
Initial Face Amount Limits x # of lives max
x # of lives max
x # of lives max
x # of lives max
x # of lives max
x # of lives max
- max
- max
- max
- max
- max
Ultimate Face Amount Limits x # of lives max
x # of lives max
x # of lives max
x # of lives max
x # of lives max
x # of lives max
- max
- max
- max
- max
- max
Additional requirements for GI cases issue ages 66-70
-----------------------------------------------------
1. Employee must be actively at work on a full-time basis.
2. There must be at least lives in the group.
3. Premium must be at least $ .
4. No more than % of the lives in the group can be over age .
5. No more than % of the lives in the group can be over age .
Additional requirements for SI cases
------------------------------------
HIV Testing as per following table:
No Testing HORL Testing
---------- ------------
Lives Up to $ Over $
+ Lives Up to $ Over $
-22-
NYLIAC 2001 COLI REINSURANCE AGREEMENT
SCHEDULE B
REINSURANCE PREMIUM RATES
1. REINSURANCE PREMIUMS
The reinsurance premium rates under this Agreement are payable Monthly.
The Monthly premium shall be derived from the Monthly Cost of Insurance
(COI) rates attached to this Schedule B.
Monthly Reinsurance Premium per $1,000 = Monthly COI x Duration Factor
where Duration Factor =
Year 1: %
Year 2 and beyond: %
Notes:
-
-
-
There shall be no experience refund on this arrangement.
2. FLAT EXTRA PREMIUMS
The total premium remitted to the reinsurer will include the flat extra
premium minus a % allowance.
3. RENEWAL OF INSURANCE
The renewal of insurance shall be considered as a continuation of the
original insurance for the purpose of calculating future reinsurance
premiums.
-23-
NYLIAC 2001 COLI REINSURANCE AGREEMENT
SCHEDULE C
CEDENT'S CORPORATE RETENTION LIMITS
Additional Amount
at the Discretion
of the Chief
Ages Amount Underwriter
---- ------ -----------
Single Life $
$ $
$ $
-24-
NYLIAC 2001 COLI REINSURANCE AGREEMENT
EXHIBIT 1
DAC TAX CALCULATION
CEDING COMPANY: NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
ASSUMING COMPANY: ___________________________
DATE: _______________
DAC TAX - DEDUCTIONS FROM GROSS PREMIUM
DAC TAX CALCULATION AMOUNT
GROSS PREMIUM
LESS:
DEDUCTIONS FROM GROSS PREMIUMS
Commissions
Death Claims
Claim Interest
Premium Taxes
Claim Investigation Expense
Claim Legal Expense
Waiver Claims
Surrenders
Experience Refunds
Admin Fee
Fee Income
Miscellaneous Interest
Dividends
Termination Dividends
Productions Bonus
Reserve Adjustments
Other (specify)
TOTAL DEDUCTIONS
NET CONSIDERATIONS
Please sign below confirming agreement with net considerations or provide an
alternate calculation within 30 days
-------------------------------------
Signature
-------------------------------------
Type or Print Name
-------------------------------------
Title
-------------------------------------
Date
-25-
EXHIBIT 2
REINSURANCE QUESTIONNAIRE
FOR FEDERAL INCOME TAX DETERMINATIONS
The purpose of this questionnaire is to secure sufficient information to allow
New York Life Insurance and Annuity Corporation ("NYLIAC") to account properly
under the federal income tax rules for the reinsurance transactions you have
with NYLIAC. Please provide NYL with the following information:
1. Are you either
(a) a company that is subject to U.S. taxation directly under the
provisions of subchapter L of chapter 1 of the Internal Revenue Code
(i.e., an insurance company liable for filing Form 1120L or Form
1120-PC), or
(b) a company that is subject indirectly to U.S. taxation under the
provisions of subpart F of subchapter N of chapter 1 of the Internal
Revenue Code (i.e., a "controlled foreign corporation" with the
meaning of Internal Revenue Code Section 957)?
Answer: _____ Yes _______ No
2. If your answer to 1. is no, have you entered into a closing agreement with
the Internal Revenue Service to be subject to U.S. taxation with respect
to reinsurance income pursuant to Treasury Regulation
Section 1.848-2(h)(2)(ii)(B)?
Answer: _____ Yes _______ No
(If your answer is yes, please provide a copy of the closing
agreement.)
Company Name:
Signed by:
Title:
Date:
