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REINSURANCE AGREEMENT
(hereinafter called "this Agreement")
No. MON01 YA
between
MONY LIFE INSURANCE COMPANY OF AMERICA
Phoenix, Arizona
(hereinafter called the "CEDING COMPANY")
and
XXXXXXX GLOBAL LIFE REINSURANCE COMPANY
of Los Angeles, California
(Executive Offices: Xxxxxxx, Xxxxxxx, Xxxxxx)
(hereinafter called the "REINSURER")
Effective: March 1, 2002
This Agreement consists of Articles and Exhibits which must be read in
conjunction with each other to determine the respective rights and obligations
of the contracting parties.
TABLE OF CONTENTS
PAGE
ARTICLE I - BASIS OF AGREEMENT................................................ 2
ARTICLE II - AUTOMATIC REINSURANCE............................................ 2
ARTICLE III - FACULTATIVE PROVISIONS.......................................... 4
ARTICLE IV - PROCEDURES....................................................... 5
ARTICLE V - NOTIFICATION OF REINSURANCE....................................... 5
ARTICLE VI - MINIMUM CESSION.................................................. 5
ARTICLE VII - REINSURANCE PREMIUMS, ALLOWANCES AND PREMIUM TAXES.............. 6
ARTICLE VIII - REINSURANCE ADMINISTRATION AND REPORTS......................... 7
ARTICLE IX - DAC TAX.......................................................... 8
ARTICLE X - CHANGES........................................................... 9
1. REDUCTIONS AND TERMINATIONS................................... 9
2. REINSTATEMENTS................................................ 9
3. CONTINUATIONS................... .............................10
4. CONVERSIONS...................................................10
ARTICLE XI - RECAPTURE........................................................11
ARTICLE XII - CLAIMS..........................................................12
1. NOTICE........................................................12
2. SETTLEMENTS...................................................12
3. CLAIMS WITHIN CONTESTABLE PERIOD..............................12
4. LITIGATED CLAIMS..............................................13
5. EXPENSES......................................................13
6. MISSTATEMENT OF AGE OR SEX....................................14
7. EXTRA-CONTRACTUAL DAMAGES ....................................14
ARTICLE XIII - NAIC STATEMENT OF CREDIT.......................................15
ARTICLE XIV - ERRORS AND OMISSIONS............................................15
ARTICLE XV - INSPECTION OF RECORDS............................................16
ARTICLE XVI - INSOLVENCY......................................................16
ARTICLE XVII - OFFSET.........................................................16
ARTICLE XVIII - ARBITRATION...................................................17
ARTICLE XIX - PARTIES TO AGREEMENT............................................18
ARTICLE XX - ASSIGNMENT AND TRANSFER..........................................18
ARTICLE XXI - DURATION OF THE AGREEMENT.......................................19
ARTICLE XXII - MISCELLANEOUS PROVISIONS.......................................19
ARTICLE XXIII - XXXXX-XXXXX-XXXXXX PRIVACY REQUIREMENTS.......................21
ARTICLE XXIV - EXECUTION OF AGREEMENT.........................................21
Exhibit A - Business Covered
Exhibit B - Method of Reinsurance
Exhibit C - Retention Limits of the CEDING COMPANY
Exhibit D - Reinsurance Premiums
Exhibit E - Administration Requirements
Exhibit F - The CEDING COMPANY's Guaranteed and Simplified Underwriting
Guidelines
Exhibit G - The CEDING COMPANY's Underwriting Requirements
Exhibit H - The CEDING COMPANY's Binder Agreement
ARTICLE I - BASIS OF AGREEMENT
1. Reinsurance required by the CEDING COMPANY on the coverages described in
Exhibit A will be accepted automatically by the REINSURER subject to the
provisions of Article II.
2. The CEDING COMPANY may choose to submit any coverage for facultative
review subject to the provisions described in Article III.
3. The method of reinsurance used for the various coverages will be as
stated in Exhibit B.
4. All amounts shown in this Agreement are in U.S. dollars. All cessions
and payments under this Agreement shall be effected in U.S. dollars.
5. This Agreement, together with all exhibits attached hereto or referenced
herein, represents the entire agreement between the CEDING COMPANY and
the REINSURER and supersedes, with respect to its subject matter, any
prior oral or written agreements between the parties.
6. Any alteration to this Agreement shall be null and void unless made by a
written amendment to this Agreement and signed by both parties.
7. In no event shall reinsurance under this Agreement be in force and
binding unless (i) the underlying insurance is in force, (ii) the
marketing, issuance, and delivery of such insurance are in compliance
with the laws of all applicable jurisdictions and (iii) the CEDING
COMPANY is in compliance with all applicable terms, provisions and
conditions of this Agreement.
8. This Agreement shall not apply to any liability of the CEDING COMPANY
arising from its participation or membership in any insolvency or
insurance guaranty fund.
9. Nothing in this Agreement shall prevent the REINSURER from ceding all or
any portion of its liability hereunder to another authorized reinsurer
or retrocessionaire.
ARTICLE II - AUTOMATIC REINSURANCE
1. The CEDING COMPANY shall cede and the REINSURER shall automatically
reinsure those risks described in Exhibit A that meet the requirements
listed in section(2) below.
2. Requirements for automatic reinsurance:
a. The CEDING COMPANY will keep its maximum limit of retention per
life for the age and risk classification of the insured, as
shown in Exhibit C. If the CEDING COMPANY has previous retention
on that particular life on a policy currently in force, the
maximum retention per life shall be reduced by that amount.
b. The amount ceded to the REINSURER on the life does not exceed
the automatic binding limits shown in Exhibit A.
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c. The issue age and mortality rating or its equivalent on a flat
extra premium basis of the life does not exceed the limits
stated in Exhibit A.
d. The total insurance already in force on the life in any
insurance company plus the insurance currently being applied
for, as shown on the application does not exceed the Jumbo Limit
as shown in Exhibit A.
e. The risk has been underwritten by the CEDING COMPANY according
to its regular new issue underwriting guidelines, a copy of
which guidelines has been provided to the REINSURER pursuant to
the "Procedures" Article of this Agreement. The CEDING COMPANY
affirms that the underwriting practices it employs are
consistent with the customary and usual practices of the life
insurance industry as a whole.
f. For guaranteed issue and simplified issue cases, automatic
reinsurance applies only to insurance applications underwritten
by the CEDING COMPANY according to its Guaranteed and Simplified
Issue Underwriting Guidelines as shown in Exhibit F of this
Agreement.
g. The life has not been offered on a facultative basis to the
REINSURER or any other reinsurer.
3. The liability of the REINSURER for automatic reinsurance will be as
follows:
a. Once the policy has been placed, the liability of the REINSURER
will begin and end at the same time as that of the CEDING
COMPANY, subject to the terms, conditions and limitations stated
in this Agreement.
b. Prior to placement of the policy, and provided the risk meets
the automatic requirements, the liability of the REINSURER is
limited to:
1. the CEDING COMPANY's liability under the policy's
conditional receipt or temporary insurance agreement,
less
2. the CEDING COMPANY's maximum retention for the age and
sex of the insured had it been classified as a standard
risk.
3. In no case shall the REINSURER's liability exceed the
automatic binding limit as shown in Exhibit A.
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ARTICLE III - FACULTATIVE PROVISIONS
1. The CEDING COMPANY may submit for facultative consideration any of the
coverages described in Exhibit A, that do not qualify for automatic
reinsurance, or that the CEDING COMPANY prefers to submit facultatively.
2. To apply for reinsurance on a facultative basis, the CEDING COMPANY will
complete and send all the necessary documentation available to the
REINSURER in order that the REINSURER may access the case. The REINSURER
will immediately examine the papers and promptly make a written offer to
the CEDING COMPANY.
3. If the CEDING COMPANY accepts the offer from the REINSURER and the
policy is subsequently placed, the CEDING COMPANY shall advise the
REINSURER in accordance with Article V- Notification of Reinsurance.
4. All offers of reinsurance made by the REINSURER will automatically
terminate one hundred and twenty (120) days from the date on which the
offer was made, unless the REINSURER has extended the offer in writing
for a further period.
5. The liability of the REINSURER on any facultative reinsurance shall
begin and end at the same time as that of the CEDING COMPANY, provided
that:
a. The REINSURER has given the CEDING COMPANY an unconditional
offer to reinsure, and
b. The CEDING COMPANY has notified the REINSURER in writing of its
acceptance of such offer.
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ARTICLE IV - PROCEDURES
1. The CEDING COMPANY shall submit to the REINSURER copies of the
application form for life insurance, conditional receipt or temporary
insurance agreement, policy and rider forms, premium and non-forfeiture
value manuals, underwriting guidelines and practices, reserve and cash
value tables applicable to the life reinsured, and any other document
that might affect the liability of the REINSURER under this Agreement.
2. Any change to the above documents or the underlying insurance, such as
contractual provisions or options, premium rates, benefits, underwriting
guidelines and practices that have been described to the REINSURER will
be communicated to the REINSURER. The REINSURER shall then confirm in
writing its agreement with such changes and confirm that it will
continue the reinsurance at the same terms or at new reinsurance terms
subject to negotiation and mutual agreement.
ARTICLE V - NOTIFICATION OF REINSURANCE
The CEDING COMPANY will advise the REINSURER that it is being bound as follows:
1. AUTOMATIC REINSURANCE
The CEDING COMPANY will send a report listing the new business, and
renewals, with all the relevant risk identification and reinsurance
particulars as shown in the Administration Exhibit.
2. FACULTATIVE REINSURANCE
The CEDING COMPANY shall promptly notify the REINSURER in writing that
the policy has been placed with all the relevant risk identification and
reinsurance particulars.
ARTICLE VI - MINIMUM CESSION
The minimum initial amount per cession ceded under this Agreement will be as
stated in Exhibit A. If the net amount at risk of a cession reinsured under this
Agreement falls below the Final Reinsurance Limit as stated in Exhibit A, the
CEDING COMPANY has the option to cancel such reinsurance.
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ARTICLE VII - REINSURANCE PREMIUMS, ALLOWANCES AND PREMIUM TAXES
1. For each risk ceded the CEDING COMPANY will pay to the REINSURER
reinsurance premiums as stated in Exhibit D, annually in advance, less
the allowances as stated in Exhibit D.
2. Although the REINSURER anticipates the indefinite continuation of the
reinsurance premiums at the rates shown in Exhibit D for all cessions to
which these rates apply, it guarantees only that the reinsurance premium
rates applicable to the business reinsured under this Agreement will not
exceed the greater of:
(a) the reinsurance premium rates specified in Exhibit D,
and
(b) YRT net premiums at the applicable statutory minimum
valuation mortality table and statutory maximum interest
rate for the reinsured business.
3. If the CEDING COMPANY increases the mortality charges of the underlying
insurance, it shall promptly inform the REINSURER. In this event the
REINSURER shall have the right to renegotiate the reinsurance premiums.
4. If the insured's age or sex was misstated and the amount of insurance on
the CEDING COMPANY's policy is adjusted after death, the CEDING COMPANY
and the REINSURER will share the adjustment in proportion to the amount
of liability of each at the time of issue of the policy. The reinsurance
premiums will be recalculated for the correct age or sex and new
reinsured amount and adjusted without interest. If the insured is still
alive, the method above will be adjusted for the future to the amount
that would have been correct at issue.
5. Premium tax reimbursement shall be as stated in Exhibit D.
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ARTICLE VIII - REINSURANCE ADMINISTRATION AND REPORTS
1. The CEDING COMPANY shall administer the reinsurance under this Agreement
as described in the Administration Requirements of Exhibit E.
2. Within thirty (30) days following the close of each reporting period,
the CEDING COMPANY will submit to the REINSURER the reports specified in
the Exhibit E attached to this Agreement, together with a cheque or
electronic funds transfer in payment of any balances due the REINSURER
as shown on the reports. If the balance is due to the CEDING COMPANY,
the REINSURER will pay such amount within thirty (30) days of receipt of
the reports.
3. If any reinsurance premium is not paid when due, the REINSURER may
terminate the corresponding reinsurance upon sixty (60) days prior
written notice to the CEDING COMPANY. The unpaid premiums shall earn
interest at the same rate as paid by the CEDING COMPANY on delayed
payment of claims, compounded annually, from the due date to the date of
payment. However, if all overdue premiums, plus interest, are paid
within the notice period, the reinsurance will not terminate.
4. Reinsurance terminated in accordance with the preceding paragraph, may
be reinstated by the CEDING COMPANY by paying all overdue premiums, plus
interest, within sixty (60) days from the date of termination and
provided the policies in question are in force. The REINSURER, however
shall not be liable for any claims incurred while the reinsurance was
terminated.
5. After termination, the CEDING COMPANY shall continue to be liable to the
REINSURER for all unpaid reinsurance premiums earned by the REINSURER,
less the applicable allowances, plus interest.
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ARTICLE IX - DAC TAX
1. The term "party" will refer to either the CEDING COMPANY or the
REINSURER as appropriate.
2. Pursuant to Section 1.848-2(g)(8) of the Income Tax Regulations issued
December 29, 1992, under Section 848 of the Internal Revenue Code of
1986, as amended, the party with the net positive consideration for the
Agreement for each taxable year will capitalize specified policy
acquisition expenses with respect to the Agreement without regard to the
general deductions limitation of Section 848(c)(1).
3. The parties agree to exchange information pertaining to the amount of
net consideration as determined for the Agreement each year to ensure
consistency or as may otherwise be required by the Internal Revenue
Service.
4. By May 1 of each tax year, the party administering the business under
the Agreement shall submit to the other party its calculation of the net
consideration for the preceding calendar year. This calculation shall be
accompanied by a statement signed by an officer of the submitting party
declaring that this party will report such net consideration in its tax
return for the previous calendar year.
5. The other party may contest said calculation by, within thirty (30) days
of its receipt of same, providing to the submitting party in writing an
alternative calculation. If the other party does not so notify the
submitting party, the other party shall report in its tax return for the
previous year the net consideration as determined by the submitting
party.
6. If the other party contests said calculation, the parties shall act in
good faith to reach an agreement on the correct net consideration within
thirty (30) days of the date that the other party provides its
alternative calculation. Once the parties agree with the net
consideration amount, each party shall report such amount in their
respective tax returns for the previous calendar year.
7. The parties each represents that it is subject to taxation under
subchapter L or subpart F of part III of subchapter N of Chapter I of
the Internal Revenue Code of 1986, as amended. The terms used herein are
defined by reference to Regulation Section 1.848-2 in effect as of
December 29, 1992.
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ARTICLE X - CHANGES
1. REDUCTIONS AND TERMINATIONS
a. If the face amount of the insurance with the CEDING COMPANY is
reduced, the full amount of the reduction will reduce the
reinsurance on the life. If the insurance is terminated, the
reinsurance will be terminated as of the same date.
b. If there is more than one policy on the life, the reinsurance
will be first reduced on the reduced or terminated policy and
the balance will then reduce the reinsurance on the other in
force policies on the life on a chronological basis, with the
oldest policy being reduced first.
c. If the reinsurance has been ceded to more than one reinsurer,
the reduction applied to the REINSURER's cession will be in
proportion to the reduction in the total reinsurance.
d. If reinsurance premiums have been paid for the period beyond the
reduction or cancellation date, the REINSURER will refund those
premiums, less allowances and premium taxes if applicable.
e. Reductions in the amount of insurance resulting from the
application of a non-forfeiture provision, such as extended term
insurance (ETI) or reduced paid-up insurance (RPU) will be
allocated to the REINSURER in proportion to its share of the
amount of insurance prior to the reduction.
2. REINSTATEMENTS
a. AUTOMATIC COVERAGE
The reinsurance of a policy reinstated by the CEDING COMPANY in
accordance with its terms and the CEDING COMPANY's usual
reinstatement practices and procedures, shall be automatically
reinstated as of the date of reinstatement.
b. FACULTATIVE COVERAGE
Reinstatement of the reinsurance on policies ceded to the
REINSURER on a facultative basis will require prior written
approval of the REINSURER.
Upon reinstatement the CEDING COMPANY shall pay to the REINSURER all
reinsurance premiums that would have been paid if such reinsurance had
not been terminated, plus interest at the same rate charged by the
CEDING COMPANY.
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3. CONTINUATIONS
a. Continuation will be defined as a change to or a new policy
replacing a policy issued earlier by the CEDING COMPANY (the
original policy) that:
1. was issued in compliance with the terms of the original
policy, or
2. is not subject to new business underwriting, or
3. does not have a new suicide exclusion or contestable
period, or
4. on which the CEDING COMPANY does not pay a new business
commission.
b. Continuations will be reinsured under this Agreement only if the
original policy was reinsured with the REINSURER; the amount of
reinsurance for the new or changed policy shall not exceed the
amount of reinsurance of the original policy immediately prior
to the continuation.
c. If a new policy is issued, the liability of the REINSURER under
the new policy shall begin immediately after the termination of
the liability of the REINSURER under the original policy.
4. CONVERSIONS
a. If, in accordance with the policy provisions, the plan of
insurance of a policy reinsured with the REINSURER is changed
from term to permanent life, the reinsurance shall continue with
the REINSURER as follows:
1. If reinsured on a YRT basis, the reinsurance terms on
the original plan will apply to the new plan. The
reinsurance premiums will be calculated as shown in
Exhibit D.
2. If reinsured on a coinsurance basis, the reinsurance
terms will be negotiated and mutually agreed by the
CEDING COMPANY and the REINSURER.
b. The amount reinsured for the new policy shall not exceed that of
the original policy immediately prior to the conversion.
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ARTICLE XI - RECAPTURE
1. If the CEDING COMPANY increases its regular retention limits, it has the
option of reducing reinsurance under this Agreement, provided it:
a. applies the increase in retention in a consistent manner to all
categories of its regular retention limits;
b. notifies the REINSURER in writing of its intention to start the
recapture process within ninety (90) days after the effective
date of the increase in retention; and
c. reduces all reinsurance eligible for recapture, including any
supplementary benefits.
2. If the CEDING COMPANY decides to recapture, then it can recapture those
risks where:
a. the CEDING COMPANY has kept its maximum retention limit on that
life for the plan, age and mortality rating at the time the
policy was issued as shown in Exhibit C; and
b. the reinsurance on that risk has been in force with the
REINSURER for at least the number of years stated in Exhibit D.
3. The CEDING COMPANY will effect the recapture as follows:
a. The CEDING COMPANY will reduce the reinsurance on the policy's
next anniversary following the period stated in Exhibit D.
b. The REINSURER's share of the reduction will be in proportion to
its share of the total reinsurance on the person.
c. The CEDING COMPANY will reduce the reinsurance by an amount
equal to the difference between the CEDING COMPANY's new
retention per life and the retention in existence at the time
the policy was issued or last recaptured.
d. If there is an active claim for waiver of premium disability on
that person, the life reinsurance will be recaptured, but the
claim will remain with the REINSURER until it terminates, at
which time the disability insurance will also be recaptured.
4. If the CEDING COMPANY overlooks the recapture of any reinsurance and the
REINSURER subsequently accepts reinsurance premiums on such reinsurance,
the REINSURER will only be liable for the refund of unearned premiums,
less any allowances and premium taxes if applicable, without interest.
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ARTICLE XII - CLAIMS
The CEDING COMPANY agrees to act in accord with its standard practices
applicable to all claims in enforcing the terms and conditions of the policies
and with respect to the administration, negotiation, payment, denial or
settlement of any claim or legal proceeding.
1. NOTICE
a. The CEDING COMPANY shall promptly notify the REINSURER in
writing of each claim for insurance benefits reinsured under
this Agreement and send to the REINSURER copies of all claim
papers and proofs when requesting payment.
b. For reinsurance of a risk involving more than one insured
individual, the CEDING COMPANY shall notify the REINSURER of
each death as soon as possible after it has occurred.
2. SETTLEMENTS
a. With respect to a policy reinsured under this Agreement, the
REINSURER shall be liable to the CEDING COMPANY for the
REINSURER's proportionate share of the reinsured benefits.
Payment of reinsurance benefits on a death claim, however, shall
be in one lump sum, regardless of the mode of settlement under
the policy. The REINSURER shall reimburse the CEDING COMPANY for
its share of any interest paid on claims by the CEDING COMPANY.
Participation in accrued interest by the REINSURER shall be paid
in accordance with the applicable state statutory regulations.
b. In settlement of liability on a claim for disability waiver of
premium benefits under a cession reinsured on a Yearly Renewable
Term (YRT) basis, the REINSURER shall pay to the CEDING COMPANY
its proportionate share of the gross premium waived on an annual
basis. The CEDING COMPANY will continue to pay the reinsurance
premiums, including the premium for benefits that remain in
effect during disability.
3. CLAIMS WITHIN CONTESTABLE PERIOD
When the REINSURER has more at risk than the CEDING COMPANY, or the
CEDING COMPANY has kept less than its maximum available retention under
this Agreement as shown in Exhibit C, the REINSURER shall be consulted
before admission or acknowledgement of the liability is made by the
CEDING COMPANY. In each such instance, the CEDING COMPANY shall promptly
forward to the REINSURER the notice of claim and all relevant materials
pertaining to the claim as they are received. The REINSURER shall review
the claim papers, underwriting papers and the CEDING COMPANY's proposed
decision on the claim and make a recommendation within fifteen (15)
working days from receipt of the request. The consultation shall not
impair the CEDING COMPANY's freedom to act upon its proposed decision on
the claim, and the CEDING COMPANY shall be solely responsible for the
final claims decision.
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4. LITIGATED CLAIMS
a. The CEDING COMPANY shall immediately notify the REINSURER in
writing of the CEDING COMPANY's intention to contest, compromise
or litigate a claim. If the REINSURER agrees, within fifteen
(15) business days following its receipt of the written notice
from the CEDING COMPANY, to participate in the contest,
compromise or litigation of the claim, the REINSURER agrees that
it will pay its share of any settlement up to the maximum that
would have been payable under the specified policy had there
been no controversy. The REINSURER shall have the right to
utilize legal counsel, accounting experts and such other experts
and personnel as the REINSURER in its sole discretion chooses
and, under such circumstances, the REINSURER shall not be
responsible for the payment of any "unusual expenses" (as
defined in paragraph 5 of this Article). However, if the
REINSURER does not elect to use counsel or other experts of its
choosing, then the REINSURER shall pay its proportionate share
of all "usual expenses" and "unusual expenses" (each as defined
in paragraph 5 of this Article) of the contest, compromise or
litigation.
b. The REINSURER's failure to notify the CEDING COMPANY of the
REINSURER's intent to participate in the contest, compromise or
litigation of a claim within the required fifteen (15) day
notice period shall be deemed a declination by the REINSURER to
participate. The REINSURER shall thereafter discharge all of its
liability with respect to any contested, compromised or
litigated claim by paying to the CEDING COMPANY the REINSURER's
proportionate share of the full amount then current and at risk
under the reinsurance cession with respect to such claim. Upon
such discharge, the REINSURER shall not be liable for any
portion of any usual expenses or unusual expenses incurred with
respect to such claim, nor shall the REINSURER share in any
reduced settlement thereof.
5. EXPENSES
For the purpose of this Article, the term "usual expenses" shall mean
fees, charges, costs and expenses of legal and investigative personnel
that are incurred in rescinding a policy or litigating a claim. The term
"unusual expenses" of the contest shall mean any penalties, attorney's
fees and interest imposed automatically by statute against the CEDING
COMPANY which arise solely out of any judgement rendered against the
CEDING COMPANY in a suit for policy benefits; however, "unusual
expenses" shall not include extra-contractual damages (as defined in
paragraph 7 of this Article). Notwithstanding the foregoing definitions,
the REINSURER shall not be liable for any office expenses and salaries
and expenses of employees of the CEDING COMPANY or of any subsidiary or
affiliate to the CEDING COMPANY, incurred in connection with the
administration of the business reinsured pursuant to this Agreement or
the disposition of a claim, loss, or legal proceeding (including
investigation, negotiation, legal expenses and court costs).
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6. MISSTATEMENT OF AGE OR SEX
If the amount of insurance provided by any policy or policies reinsured
hereunder is increased or reduced because of a misstatement of age or
sex which is established after the death of the insured individual, the
REINSURER shall share in the increase or reduction in the proportion
that the net liability of the REINSURER bears to the total of the net
liability of the CEDING COMPANY and the net liability of all reinsurers,
including the REINSURER, immediately prior to such increase or
reduction. The reinsurance shall be restructured from commencement on
the basis of the adjusted amount using premiums and reserves for the
correct age or sex. The adjustment for the difference in reinsurance
premiums and any associated commissions or allowances, dividends, policy
value or reserves shall be made without interest.
7. EXTRA-CONTRACTUAL DAMAGES
In no event shall the REINSURER participate in punitive or compensatory
damages which are awarded against the CEDING COMPANY as a result of an
act, omission or course of conduct committed solely by the CEDING
COMPANY, its agents or representatives in connection with the insurance
reinsured under this Agreement. The REINSURER shall not be liable under
this Agreement for any punitive damages (as defined below) or
compensatory damages (as defined below) awarded to a claimant or
assessed against the CEDING COMPANY unless the REINSURER elected to join
in the contest or litigation of the underlying claim and actively
directed or participated in the act, error, omission or course of
conduct of the CEDING COMPANY which ultimately resulted in the award or
assessment of punitive damages and/or compensatory damages. Any
resulting punitive damages and/or compensatory damages award or
assessment shall be shared by the CEDING COMPANY and the REINSURER in
equitable proportions.
The REINSURER will pay its share of statutory penalties (as defined
below) awarded against the CEDING COMPANY in connection with claims
covered under this Agreement if the REINSURER elected in writing to join
in the contest of the coverage in question.
For the purposes of this provision, the following definitions shall
apply:
a. "Punitive Damages" are those damages which are awarded as a
penalty, the amount of which is not governed, nor fixed, by
statute;
b. "Compensatory Damages" are those amounts which are awarded to
compensate for actual damages sustained, and are not awarded as
a penalty, nor fixed in amount by statute.
c. "Statutory Penalties" are those amounts awarded as a penalty,
but are fixed in amount by statute.
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ARTICLE XIII - NAIC STATEMENT OF CREDIT
1. The CEDING COMPANY will provide the REINSURER with the appropriate
statutory reserve amount for the reinsurance ceded under this Agreement
calculated in accordance with the NAIC Valuation of Life Insurance
Policies Model Regulation.
2. In the event the REINSURER is not licensed or otherwise accredited or
recognized in the CEDING COMPANY'S state of domicile, and where the
CEDING COMPANY is licensed to do business, the REINSURER agrees to
provide letters of credit or other methods of security which is or are
(i) authorized by the CEDING COMPANY's state of domicile insurance
department, and (ii) mutually acceptable to the CEDING COMPANY and the
REINSURER in favor of the CEDING COMPANY for the purpose of offsetting
ceded reinsurance policy reserves and outstanding losses.
3. Such letter of credit or other method of security shall be issued in
compliance with the statutes and/or policies of the state in which the
CEDING COMPANY is domiciled and shall be issued by a national bank
located in the United States chosen by the REINSURER.
ARTICLE XIV - ERRORS AND OMISSIONS
1. Errors and omissions on the part of either party shall not invalidate
their rights and obligations arising from this Agreement, provided that
upon discovery, the other party is immediately notified and such errors
or omissions are corrected without delay to restore each party to the
position it would have occupied had no such error or omission occurred
2. In the event, however, that a party cannot as a practical matter be
restored to the position it would have occupied had no such error or
omission occurred, the parties will attempt in good faith to find a
resolution to the situation created by the error or omission that is
fair and reasonable and most closely approximates the original intent of
the parties as evidenced by this Agreement.
3. 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 its reporting requirements, the REINSURER
may require the CEDING COMPANY to audit its records for similar errors
and to take the actions necessary to avoid similar errors in the future.
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ARTICLE XV - INSPECTION OF RECORDS
The REINSURER shall have the right, at any reasonable time, to inspect all
records, books and documents relating to or affecting reinsurance under this
Agreement, at the home office of the CEDING COMPANY.
ARTICLE XVI - INSOLVENCY
1. In the event of the insolvency of the CEDING COMPANY, any sums due from
the REINSURER under this Agreement shall be payable directly to the
CEDING COMPANY's liquidator, receiver, conservator or statutory
successor immediately upon demand, with reasonable provision for
verification, on the basis of claims allowed against the CEDING COMPANY
by any court of competent jurisdiction or by any liquidator, receiver,
conservator or statutory successor, without diminution because of the
insolvency of the CEDING COMPANY or because the liquidator, receiver,
conservator or statutory successor of the CEDING COMPANY has failed to
pay all or a portion of any claim. It is agreed, however, that the
liquidator, receiver, conservator or statutory successor of the CEDING
COMPANY shall give written notice to the REINSURER of a pending claim
against the CEDING COMPANY on a policy or policies reinsured within a
reasonable time after such claim is filed in the insolvency proceedings.
While the claim is pending, the REINSURER may investigate and interpose,
at its own expense, in the proceedings where the claim is to be
adjudicated, any defenses which it may deem available to the CEDING
COMPANY or its liquidator, receiver, or statutory successor. The
expenses thus incurred by the REINSURER shall be charged, subject to
Court approval, against the CEDING COMPANY as an expense of liquidation
to the extent of a proportionate share of the benefit that accrues to
the CEDING COMPANY as a result of the defense undertaken by the
REINSURER. Where two or more reinsurers are involved in the same claim
and a majority in interest elect to defend a claim, the expenses will be
apportioned in accordance with the terms of the reinsurance Agreement as
if the expenses had been incurred by the CEDING COMPANY.
2. If the REINSURER becomes insolvent, it shall immediately notify the
CEDING COMPANY and provide any relevant documentation. The CEDING
COMPANY shall have the right, at any time during such insolvency, to
recapture all reinsurance ceded to the REINSURER subject to a mutually
agreed recapture fee.
ARTICLE XVII - OFFSET
The CEDING COMPANY or the REINSURER may offset any balance, whether on account
of premiums, commissions, claims or expenses due from one party to the other
under this Agreement or under any other agreement entered into between the
CEDING COMPANY and the REINSURER.
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ARTICLE XVIII - ARBITRATION
1. If any dispute shall arise between the CEDING COMPANY and the REINSURER,
either before or after the termination of this Agreement, with reference
to the formation, interpretation, breach or enforcement of this
Agreement or the rights of either party with respect to any transaction
under this Agreement, the dispute shall be referred to and resolved by
three arbitrators as a condition precedent to any right of action
arising under this Agreement. The arbitrators shall be active or retired
disinterested officers, directors of life insurance or reinsurance
companies other than the parties or their affiliates, unless otherwise
agreed to by both parties in writing.
2. The party desiring arbitration ("Claimant") shall notify the other party
("Respondent") in writing of the request to arbitrate, specifying the
dispute(s) to be arbitrated. An arbitrator shall be chosen by each party
and the third by the two so chosen. If either party refuses or neglects
to appoint an arbitrator within thirty (30) days of receipt of written
notice from the other party requesting it to do so, the requesting party
may choose the second arbitrator. Following selection of the two
arbitrators, the parties shall not contact the arbitrators in any
fashion concerning the facts or merits of the dispute, unless such
contact is joint, except as specified below.
3. In the event the two arbitrators do not agree on the selection of the
third arbitrator within thirty (30) days of when the second arbitrator
is appointed, or any other period mutually agreed to by the parties in
writing, each arbitrator shall name three candidates, of whom the other
shall decline two, and the decision shall be made by drawing lots. In
the event of the death, disability or incapacity of any arbitrator, a
replacement shall be named pursuant to the process which resulted in the
selection of the arbitrator to be replaced.
4. Within thirty (30) days following completion of the arbitration panel,
or any other time agreed upon by a majority of the arbitrators or
mutually agreed upon by the parties, the arbitrators shall select a date
for the hearing of the dispute, and the parties shall exchange all
documents then reasonably available which they intend to use at the
hearing and identify all witnesses they intend to call at the hearing.
If a document or witness is not timely disclosed it shall be within the
authority of the arbitrators to exclude use of such witness or document
from the arbitration proceedings. The Claimant shall file a brief with
the arbitrators no later than thirty (30) days prior to the hearing
date, the Respondent shall file its brief no later than fifteen (15)
days prior to the hearing date, and the Claimant may file a reply brief
no later than seven (7) days prior to the hearing date. The parties
shall make a good faith effort to agree upon a joint statement of agreed
upon facts to be submitted to the arbitration panel on the hearing date.
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5. At the hearing, evidence may be introduced without following strict
rules of evidence but cross-examination and rebuttal shall be allowed.
The arbitrators shall make their decision with regard to the custom and
usage of the insurance and reinsurance business at the time of contract,
or amendment if the dispute involves an amendment. The panel shall issue
its decision in writing within sixty (60) days following the termination
of the hearing unless the parties mutually consent to an extension. The
majority decision shall be final and binding upon all parties to the
proceedings and no appeal shall be taken from it. Judgement may be
entered upon the award of the panel in any court having jurisdiction.
The jurisdiction of the arbitrators to make or render any decision or
award shall be limited by the limits of liability expressly set forth in
this Agreement.
6. Each party shall bear its own legal expenses and fees, the fee and
expense of the arbitrator it selected, one half of the fee and expenses
of the third arbitrator and one half of the other expenses of the
arbitration. The arbitration panel, by majority vote, may allocate any
or all of the winning party's costs and fees against the losing party.
7. Any such arbitration shall take place in the CEDING COMPANY's state of
domicile unless some other location is mutually agreed upon by the
parties.
ARTICLE XIX - PARTIES TO AGREEMENT
This is an indemnity reinsurance agreement solely between the CEDING COMPANY and
the REINSURER. This Agreement shall be binding upon and shall inure only to the
benefit of the CEDING COMPANY, the REINSURER and their respective conservators,
liquidators and receivers. The acceptance of reinsurance hereunder shall not
create any right or legal relationship whatsoever between the REINSURER and the
insured, owner or beneficiary or any other party to or under any policy
reinsured hereunder.
ARTICLE XX - ASSIGNMENT AND TRANSFER
Neither this Agreement nor any reinsurance under this Agreement shall be sold,
assigned or transferred by either party without prior written consent of the
other party.
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ARTICLE XXI - DURATION OF THE AGREEMENT
1. This Agreement is effective on the date set forth on the cover page once
it has been executed by both parties and is unlimited in duration.
However, it may be cancelled at any time, with respect to new
reinsurance, by either party giving ninety (90) days notice of
termination in writing to the other. The day the notice is deposited in
the mail will be the first day of the ninety (90) day period. During
this period the REINSURER shall continue to accept new reinsurance under
the terms of this Agreement.
2. Existing reinsurance will remain in force until natural termination or
expiry of the policies, unless otherwise mutually agreed.
ARTICLE XXII - MISCELLANEOUS PROVISIONS
1. A waiver by any party of any of the terms and conditions of this
Agreement in any one instance shall not be deemed or construed to be a
waiver of such term or condition for the future, or of any subsequent
breach thereof, nor shall it be deemed a waiver of performance of any
other obligation hereunder.
2. This Agreement shall be governed by and construed in accordance with the
laws of the CEDING COMPANY's state of domicile, and accepted practices
in the reinsurance industry not in conflict with such laws.
3. The titles of the Articles and paragraphs of this Agreement are for
convenience only and shall not in any way affect the interpretation of
any provision or condition of this Agreement.
3. This Agreement is the result of mutual negotiation, compromise and
agreement between the CEDING COMPANY and the REINSURER. As such, in the
event of any disagreement between the CEDING COMPANY and the REINSURER
as to the meaning or intent of any term, condition or provision of this
Agreement, ambiguities in this Agreement shall not be construed against
or resolved to the detriment of either the CEDING COMPANY or the
REINSURER.
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ARTICLE XXIII - XXXXX-XXXXX-XXXXXX PRIVACY REQUIREMENTS
The REINSURER and all of its representatives and service providers will hold all
private, non-public policyholder information furnished by the CEDING COMPANY to
the REINSURER for the purpose of providing services under this Agreement in
strict confidence. By reference to private, non-public policyholder information,
the REINSURER means all policyholder or other consumer financial or health
information furnished or obtained by the REINSURER, its representatives or its
service providers in order to carry out its duties and obligations under this
Agreement. The REINSURER will only use such information for the purpose of
performing services under this Agreement. Such information will only be
disclosed to a third party for the purpose of carrying out the REINSURER's
duties under this Agreement, to retrocessionaires or the REINSURER's service
providers, or as required or permitted by law. The REINSURER will take
reasonable steps to protect such information from unauthorized or inadvertent
disclosure.
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ARTICLE XXIV - EXECUTION OF AGREEMENT
In witness of the above, this Agreement has been signed and delivered in
duplicate on the dates indicated below.
MONY LIFE INSURANCE COMPANY OF AMERICA
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------------------- ---------------------------
Title: Asst VP Title: Secretary
----------------------------------- -------------------------
Date: 1/28/03 Date: January 28, 2003
----------------------------------- -------------------------
XXXXXXX GLOBAL LIFE REINSURANCE COMPANY
By: /s/ [to come in] By: /s/ [to come in]
------------------------------------- ----------------------------
Title: [to come in] Title: [to come in]
---------------------------------- -------------------------
Date: [to come in] Date: [to come in]
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