_
Automatic Reinsurance Agreement
on a Monthly Renewable Term Basis
effective
1/1/00
between
American National Insurance Company
(hereinafter referred to as the "Ceding Company")
and
Allianz Life Insurance Company of North America
General & Cologne Life Re of America
Swiss Re Life & Health America
Munich American Reassurance Company
Xxxxxxx Global Life Reinsurance Company
(hereinafter referred to as the "Pool")
Treaty ID: UL2000
T a b l e o f C o n t e n t s
Article I Basis of Reinsurance
Article II Mode of Notification and Cession
Article III Liability of the Pool
Article IV Plan of Reinsurance
Article V Consideration
Article VI Tax Procedures
Article VII Claims
Article VIII Change of Original Policy
Article IX Accounting
Article X Expenses of Original Policy
Article XI Errors and Omissions
Article XII Changes in Retention Limits
Article XIII Inspection of Records
Article XIV Insolvency
Article XV Agreement to Arbitrate
Article XVI Parties to Agreement
Article XVII Duration of Agreement; Termination
Article XVIII Construction
Article XIX Effective Date; Execution
Exhibit I Reinsurance Application Form
Exhibit II Limits and Special Conditions for
the First Excess
Exhibit III Retention Limits of the Ceding
Company
Exhibit IV Reinsurance Discounts
Exhibit V Reinsurance Premiums - Life
Insurance
Exhibit VI List of Risks Reinsured
Exhibit VII List of Amendments
Article I
Basis of Reinsurance
1. On and after the effective date of this Agreement, the Ceding Company
shall automatically cede to the Pool
90% of its First Excess on policy plans covered by this Agreement.
Exhibit II describes the policy plans
and riders covered by this Agreement, defines the First Excess,
and sets out certain reinsurance
limitations. The Pool shall automatically accept such First Excess,
within the limits indicated in Exhibit
II, provided that the Ceding Company retains its regular retention,
as delineated in exhibit III, and has
applied its normal underwriting standards. Underwriting risk
classification will be determined by use of
the Ceding Company's Underwriting Manual or a mutually agreed upon
alternative method. The Ceding Company
will advise the Pool of any changes in underwriting standards,
underwriting requirements or other
underwriting criteria prior to implementation. Members of the Pool
shall have the right, at any reasonable
time, to review risk classification information relating to
reinsurance ceded under this Agreement either
at the office of the Ceding Company or by periodic requests for
such underwriting information.
2. If the Ceding Company is already on the risk for its regular retention
under policies previously issued, it may cede automatically to the Pool,
within the limits specified in Exhibit II, on the terms on which it would
have been willing to accept the risk for its retention.
3. If the Ceding Company retains for its own account less than its regular
retention for such risk, it may not bind the Pool automatically.
4. Amounts in excess of the automatic cover outlined in Exhibit II, or
amounts on any risk otherwise eligible
for coverage hereunder on which the Ceding Company does not care to
bind the Pool, may be submitted to any
members of the Pool for facultative reinsurance using the reinsurance
application attached as Exhibit I.
In such case, the Ceding Company shall forward to all Pool Members copies
of the original applications, all
medical examinations or reports, inspection reports and all other
information which the Ceding Company may
have pertaining to the insurability of such risk, together with a
Reinsurance Application (Exhibit I). The
members of the Pool, upon receipt of such information, shall
promptly notify the Ceding Company of their
respective underwriting action.
Article II
Mode of Notification and Cession
There will be no individual cessions for risks reinsured hereunder. Instead,
each quarter the Ceding Company shall supply the Pool Members with lists
containing information for each month of the preceding quarter as shown in
Exhibit VI List of Risks Reinsured and Exhibit VII List of Amendments. All
quarterly lists shall be submitted to the Pool Members no later than the
thirtieth (30th) day of the following quarter.
Article III
Liability of the Pool
The liability of the Pool shall begin and terminate simultaneously with that of
the Ceding Company, provided that, in the case of a facultative submission, the
Pool has notified the Ceding Company of its acceptance of the risk and the
Ceding Company has included such risk in the quarterly List of Risks Reinsured.
The liability of a Pool Member, for a particular policy under which the Company
is liable, shall begin and terminate simultaneously with that of the Ceding
Company, provided that, in the case of a facultative submission, the Pool Member
has notified the Ceding Company of its acceptance. The liability of the Pool
Member shall be restricted to its share of the Company's liability as limited by
the terms and conditions of the particular policy under which the Company is
liable.
The amount of coverage provided by the Pool under a Conditional Receipt (or
Interim Receipt) will not exceed the lesser of:
1. The Automatic Acceptance Limits; or
2. The Pool's share of the difference between the amount of insurance provided
by the Conditional Receipt (or Interim Receipt) and the Company's maximum
retention assuming the life had been underwritten as standard. The Company's
retention will include any amounts retained under any in force policies on the
life.
Article IV
Plan of Reinsurance
1. Life reinsurance ceded to the Pool under this Agreement shall be on a
yearly renewable term basis for the Reinsurance Death Benefit under the
policies shown in Exhibit II, issued by the Ceding Company.
2. Specimen copies of application, policy and rider forms, and any tables of
rates and reserves which may be required for the proper administration of
business reinsured under this Agreement shall be attached to and form an
integral part of this Agreement. The Ceding Company shall inform the Pool
of any changes that would entail a significant alteration of the risk for
the Pool.
3. Reinsurance placed with the Pool shall follow the conditions of insurance
contained in the respective policy or policies of the Ceding Company for
the benefits reinsured hereunder.
4. The Pool shall not participate in the gross premium paid by the
policyholder, policy fees, cost of insurance charges, expense charges,
cash values, accumulation fund, dividends, nor any benefits not expressly
referred to herein.
Article V
Consideration
1. The consideration to be paid by the Ceding Company to the Pool for the
first month and each renewal month shall be the excess of Item a. over
Item b. below:
a. Reinsurance premiums equal to the rates shown in Exhibit V for the
amount reinsured hereunder. The reinsurance premiums shall include
appropriate substandard extra charges, flat extra premiums, and
premiums for Waiver of Premium Disability benefits, if any.
b. First year and subsequent discounts, in accordance with Exhibit IV.
2. Any annual reinsurance rates shown in Exhibits V and VI shall be
multiplied by one-twelfth (1/12) in order to determine monthly reinsurance
rates. Such monthly rates shall be rounded to four decimal places.
3. All reinsurance premiums payable by the Ceding Company to the Pool under
this Agreement shall be paid on a policy year basis in arrears at the end
of the quarter in which they become due regardless of the mode of premium
payment of the particular policies reinsured.
4. For reasons relating to deficiency reserve requirements by the various
state insurance departments, the premium rates cannot be guaranteed for
more than one year. After one year, the Reinsurer may increase the
reinsurance premium rates if the Ceding Company increases its COI's due to
mortality deterioration. The Reinsurer may not increase premiums in excess
of the valuation net premium. The Ceding Company agrees to notify the
Reinsurer of any intent to raise rates on new or existing business.
Article VI
Tax Procedures
1. The Ceding Company and the Pool hereby enter into an election under
Treasury Regulations Section 1.848-4(g)(8) whereby:
a. For each taxable year under this reinsurance agreement, the party
with net positive consideration, as defined in the regulations
promulgated under Treasury Code Section 848, will capitalize
specified policy acquisition expenses with respect to this
reinsurance agreement without regard to the general deductions
limitation of Section 848(c)(1).
b. The Ceding Company and the Pool agree to exchange information
pertaining to the amount of net consideration for all reinsurance
agreements in force between them to ensure consistency for purposes
of computing specified policy acquisition expenses.
c. This election shall be effective as of the beginning of the taxable
year, which includes the effective date of this Agreement and shall
remain in effect for all subsequent taxable years for which this
Agreement remains in effect.
2. The Pool will not reimburse the Ceding Company for any premium taxes.
Article VII
Claims
1. In the case of claims on any policy reinsured, the Pool shall pay to the
Ceding Company the Reinsurance Death Benefit, provided that the Ceding
Company pays the amount of the claim in full.
2. In cases where less than the full amount is paid or where any special
expenses are involved in the settlement of claims (such as court and
arbitration costs, special investigations, etc., but excluding salaries
for employees of the Ceding Company), the Pool and the Ceding Company
shall share proportionally in the risk insured and any special expenses,
such proportion to be that determined in accordance with Exhibit II.
3. The Pool and the Ceding Company shall share in any increase or reduction
resulting from the insured's misstatement of age or sex in proportion to
their respective shares in the risk insured, such proportion to be that
determined in accordance with Exhibit II.
4. The following claim paying procedures shall be applied to contestable
claims of policies issued by the Ceding Company:
CLAIMS UP TO $200,000: These claims shall be adjudicated and paid by the
Ceding Company without consultation with any Pool Reinsurers. Pool
Reinsurers will receive an initial claim notification. Requests for
payment will include a death certificate and proof of payment only.
CLAIMS FROM $200,001 TO $999,999: All Pool Reinsurers shall receive an
initial claim notification, which will identify the Lead Reinsurer on the
claim. If the claim is contestable, the Ceding Company shall send
underwriting and investigation data to the assigned Lead Reinsurer. The
Ceding Company shall only consult with the Lead Reinsurer before making a
decision. If the Lead Reinsurer and the Ceding Company agree that the
claim is payable, then the claims will be paid. The Ceding Company will
then submit their claim to the remaining Pool Reinsurers along with the
death certificate, the proof of payment, and a copy of the communication
between the Lead Reinsurer and the Ceding Company that the claim is
payable.
CLAIMS OF $1,000,000 AND OVER: All Pool Reinsurers shall be involved in
the review of the claim and will receive copies of all documents. Each
Reinsurer shall be consulted prior to payment of the claim.
CLAIM DENIALS OR REDUCED BENEFITS DUE TO SUICIDE: In either of these
situations, each member of the Pool will be advised of the planned action.
Each Pool Member will make the decision of either going with the
prevailing claims decision, or will ask for copies of the claim file for
their own review.
Lead Claim Reinsurers may need to confer with the other Pool Reinsurers on
unusually complex claim situations.
LEAD CLAIM REINSURERS
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Lead Quota Lead Claim
Reinsurer Share Alpha Split
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Allianz 20% A-F
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General & Cologne Re 20% G-K
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Swiss Re 20% L-P
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Munich 20% Q-U
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Xxxxxxx 20% V-Z
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The Pool's liability shall include indemnification of the Proportionate Share of
any expenses incurred by the Ceding Company in defending or investigating a
Policy claim except for:
(1) salaries of employees or other internal expenses of the Ceding Company
(2) routine investigative or administrative expenses;
(3) expenses incurred in connection with a dispute arising out of conflicting
claims of entitlement to proceeds of a Policy which the Ceding Company
admits are payable;
(4) any gratuitous payments made by the Ceding Company and
(5) any punitive damages awarded against the Ceding Company, and expenses
incurred in connection with such damages, which are based on the acts or
omissions of the Ceding Company or its agents.
The Pool agrees to hold the Ceding Company harmless from certain expenses and
liabilities that result from The Pool's own acts or omissions as provided in
this paragraph. For this purpose, The Pool agrees to indemnify the Ceding
Company for The Pool's equitable share of those punitive and exemplary damages
awarded against the Ceding Company, and expenses incurred in connection with a
claim for such damages, if:
(1) The Pool actively participated in the acts or omissions, including the
decision to deny a claim for Policy benefits; and
(2) those acts or omissions serve as a material basis for the punitive or
exemplary damages. The Pool equitable share shall be determined by an
assessment of The Pool's participation in the particular case.
Article VIII
Change of Original Policy
1. If the face amount of the policy is increased, according to the procedures
in the policy, the Reinsurance Death Benefit will be redetermined as of
the date of the increase and the proportion of the risk reinsured per
Exhibit II will be recalculated based on the revised amounts. Such
increases in the amount of coverage are subject to the submission of
satisfactory evidence of insurability and to the limitations shown in
Exhibit II.
2. If the face amount of the policy is decreased, the reduction in the
Reinsurance Death Benefit will be shared in accordance with the proportion
reinsured per Exhibit II.
3. If a policy of the Ceding Company lapses and is later approved for
reinstatement by the Ceding Company in accordance with its usual
underwriting standards, reinsurance of the excess over the Ceding
Company's original retention resulting from said reinstatement shall be
automatically reinstated by the Pool for an amount not exceeding that part
of said policy originally reinsured with the Pool. Notice of such
reinstatement shall be given to the Pool promptly, and the Pool shall
receive copies of the reinstatement papers and its proportionate share of
any adjustment, on the same terms as the Ceding Company has received under
its policy.
4. Premiums and interest on reinstated reinsurance shall be payable only to
the extent that the Company collects premiums and interest on such
insurance.
Article IX
Accounting
1. Within the first thirty (30) days after the end of each calendar quarter
the Ceding Company shall forward to the Pool a statement with the
information described in Article II.
2. Should the amount owing be in favor of the Pool, the Ceding Company shall
remit it simultaneously with the statement. Should the amount owing be in
favor of the Ceding Company, the Pool shall remit same to the Ceding
Company within twenty (20) working days from receipt of the statement.
3. The Pool shall examine the statement and notify the Ceding Company of any
errors; these shall be rectified as soon as possible.
4. Claim payments shall be settled on an individual basis when they become
due.
Article X
Expenses of Original Policy
The Ceding Company shall bear the expense of all medical examinations,
inspection fees and other charges incurred in connection with the original
policy.
Article XI
Errors and Omissions
1. The liability of the Pool in regard to any reinsurance under this
Agreement shall not be affected by erroneous omissions from or entries on
any monthly statement or reinsurance record. Any error affecting
reinsurance premiums shall be rectified in the respective list subsequent
to discovery.
2. If failure of either party to comply with any provision of this Agreement
is shown to be unintentional and the result of misunderstanding or
oversight, both parties shall be restored to the positions they would have
occupied had no such error or oversight occurred.
Article XII
Changes in Retention Limits
1. The reinsurance under this Agreement shall be maintained in force as long
as the original policy carried by the Ceding Company shall be maintained
in force without reduction except for reductions in amount otherwise
covered in this Agreement and except as hereinafter provided.
2. In case the Ceding Company shall increase its regular limit of retention
above the amounts shown in Exhibit III, a corresponding reduction may be
made, at the option of the Ceding Company, in the reinsurance then in
force under this Agreement. This reduction may be made after such policies
have been in force for the minimum number of years indicated in Exhibit V.
3. In order to effect such reduction, the Ceding Company shall give written
notice to the Pool requesting the reinsurance to be reduced in each case
as will increase the amount of total insurance to be carried by the Ceding
Company at its own risk to its then maximum, but if any policy of
reinsurance shall be so reduced, all policies of reinsurance issued
hereunder on such risks shall be similarly reduced subject to the
restrictions herein. Such reductions shall take effect upon the next
policy anniversary of the reinsured policies after the giving of notice to
the Pool of the increase in retention or, if later, on the respective
policy anniversary dates in accordance with Paragraph 2 above.
4. In the event that the Ceding Company overlooks any reductions or
cancellations of reinsurance which should be made on account of such an
increase in its retention limit, the acceptance by the Pool of reinsurance
premiums under such circumstances and after the effective dates of the
reductions or cancellations shall not constitute or determine a liability
on the part of the Pool for such reinsurance, and the Pool shall be liable
only for a refund of the premium so received.
5. Reinsurance of other risks, including risks of which no part is retained
by the Ceding Company or where the Ceding Company does not retain its
regular retention limit at issue, shall not be subject to reduction.
Article XIII
Inspection of Records
Members of the Pool shall have the right, at any reasonable time, to inspect, at
the office of the Ceding Company, all books, records and documents relating to
the reinsurance under this Agreement.
Article XIV
Insolvency
1. In the event of insolvency of the Ceding Company, all reinsurance shall be
payable directly to the liquidator, receiver or statutory successor of
said Ceding Company, without diminution because of the insolvency of the
Ceding Company.
2. In the event of insolvency of the Ceding Company, the liquidator, receiver
or statutory successor shall give the Pool written notice of the pendency
of a claim on a policy reinsured hereunder within a reasonable time after
such claim is filed in the insolvency proceeding. During the pendency of
any such claim, the Pool may investigate such claim and interpose in the
name of the Ceding Company (its liquidator, receiver or statutory
successor), but at its own expense, in the proceeding where such claim is
to be adjudicated, any defense or defenses which the Pool may deem
available to the Ceding Company or its liquidator, receiver or statutory
successor.
3. The expense thus incurred by the Pool shall be chargeable, subject to
court approval, against the Ceding Company as part of the expense of
liquidation to the extent of a proportionate share of the benefit which
may accrue to the Ceding Company solely as a result of the defense
undertaken by the Pool. Where two or more Pools are participating in the
same claim and a majority in interest elect to interpose a defense or
defenses to any such claim, the expense shall be apportioned in accordance
with the terms of the reinsurance agreements as though such expense had
been incurred by the Ceding Company.
4. American National Insurance Company shall have the option, but not the
obligation, to terminate this agreement for new business and existing
reinsurance, and place the business with the remaining pool members, upon
the occurrence of the following events:
a) Pool Member becomes subject to insolvency or similar proceeding; or
b) Pool Member applies for or consents to the appointment of a
rehabilitator, conservator, liquidator or statutory successor of its
properties or assets; or
c) Pool Member becomes the subject of an order to rehabilitate or an
order to liquidate as defined by the insurance code of the
jurisdiction of the domicile of the company; or
d) Pool Member's RBC ratio falls below 300% of the authorized control
level; or
e) ANICO is denied reserve credit taken pursuant to this agreement by
any state in which ANICO is licensed.
ANICO must give written notice of intent to recapture. The effective date
of recapture will be determined by ANICO, but will be no earlier than 30
days after the happening of any of the preceding events. The effective
date of recapture must be within 120 days of the date that the Pool Member
receives written notice.
Upon receiving the notice, members of the Pool may appeal your decision,
but this must be done no later than seven business day after their receipt
of notice from ANICO.
If any reinsurer is removed from participation in the pool due to this
article, the remaining pool members will assume an equal share of the
reinsurance that was in force with said reinsurer and any new business
written after such removal up to a maximum pool share of 50%.
Article XV
Agreement to Arbitrate
1. It is specifically agreed that, whether or not this reinsurance Agreement
has been terminated for new business, any dispute or difference of opinion
between the members of the Pool and the Ceding company arising out of or
concerning the validity of this Agreement shall, in the absence of an
amicable resolution between the parties, be submitted to and settled by a
Panel of Arbitration.
2. Arbitration shall be initiated upon receipt by one party of written
request from the other invoking the terms of this Article.
3. The Panel of Arbitration shall consist of three members unless the parties
agree in writing to appoint and abide by the decision of a single
Arbitrator.
a. The single Arbitrator shall be named by the parties within thirty (30)
days of their mutual agreement to use a one-member Panel of Arbitration.
b. Under a three-member Panel of Arbitration, each of the two parties shall,
within 30 days of the provisions of this Article being invoked, appoint an
Arbitrator.
c. An arbitrator shall be an active or retired executive from the life
insurance industry. Each Arbitrator must be knowledgeable about life
insurance and life reinsurance and the aspect thereof, which is the basis
of the dispute or difference of opinion.
d. Within thirty (30) days after the second of the foregoing appointments is
made, the two Arbitrators shall, by mutual agreement, appoint a third
Arbitrator. If a third Arbitrator cannot be agreed on within such time, a
list of at least five qualified and available Arbitrators will be obtained
from the American Arbitration Association (AAA) or its successor
organization, and the third Arbitrator will, within 15 days thereafter, be
selected from such list by mutual agreement of the two appointed
Arbitrators. If mutual agreement is again not reached within the
prescribed time, the appointment of the third Arbitrator shall be made as
soon as possible thereafter by the AAA.
4. The Panel of Arbitration shall not be bound by formal rules of legal
procedure and shall regard this Agreement from the standpoint of equity
and the customary practices of the life insurance and life reinsurance
industries rather than from a strict interpretation of the applicable law.
5. The Panel of Arbitration shall decide the issue by majority vote and shall
render a written decision within sixty (60) days after completion of the
Panel of Arbitration unless the Pool and the Ceding Company both agree to
extend the period of deliberation. The arbitration proceedings will be
held in Galveston, Texas. The decision of the Panel of Arbitration shall
be accepted by the Pool and the Ceding Company without right of appeal.
6. Expenses of each Arbitrator selected by the Pool and the Ceding Company
individually shall be the responsibility of the relevant appointing party.
Expenses of the single or the third Arbitrator, as applicable, and all
other costs of the process of Arbitration, including any fees due the
American Arbitration Association, shall be shared equally by the Pool and
the Ceding Company.
Article XVI
Parties to Agreement
This is an Agreement solely between the Ceding Company and the Pool. The
acceptance of reinsurance hereunder shall not create any right or legal relation
whatever between the Pool and the insured or the beneficiary under any policy of
the Ceding Company, which may be reinsured hereunder.
Article XVII
Duration of Agreement; Termination
1. This Agreement shall be unlimited as to its duration, but may be
terminated at any time, for new reinsurances only, by either party giving
thirty (30) days notice of termination in writing to the other. The Pool
shall continue to accept reinsurance during the thirty (30) days aforesaid
and shall remain liable on all reinsurance already placed in force under
the terms of this Agreement until such contracts are terminated between
the original insured and the Ceding Company.
2. In the event of non-payment of any amounts due hereunder by either party,
except as provided by Article XII Errors and Omissions, the other party
shall have the right to cancel all reinsurance in force under this
Agreement by giving thirty (30) days written notice.
Article XVIII
Construction
This written Agreement represents the entire Agreement between the parties. This
Agreement shall be construed and administered in accordance with the laws of the
State of Texas and the rights and obligations of this Agreement shall, at all
times, be regulated under the laws of the State of Texas.
Article XIX
Effective Date; Execution
American National Insurance Company and members of the Pool declare that this
Agreement and all its terms shall be effective as of April 1, 2000 and shall
apply to eligible policies applied for on and after such date, notwithstanding
that such policies may have been backdated for up to six (6) months to save age.
In witness whereof, they have, by their respective officers, executed and
delivered this Agreement in duplicate.
For American National Insurance Company
By: Attest:
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Title: Date:
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For Allianz Life Insurance Company of North America
By: Attest:
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Title: Date:
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For General Cologne Re
By: Attest:
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Title: Date:
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For Swiss Re Life & Health America
By: Attest:
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Title: Date:
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For Munich American Reassurance Company
By: Attest:
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Title: Date:
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For Xxxxxxx Global Life Insurance Company
By: Attest:
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Title: Date:
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Exhibit II
Limits and Special Conditions for the First Excess
1. Policy Plans Covered: All UL forms currently being issued.
2. First Excess
The First Excess of the Ceding Company to be automatically covered under
this Agreement, including previous reinsurances ceded by the Ceding
Company on the same life, is defined as follows:
a. Life Insurance
The First Excess of Life Insurance for any policy is defined as the
amount of Death Benefit provided by the policy minus the Accumulation
value at issue which is included in the Death Benefit and minus the
Ceding Company's retention as shown in Exhibit III. The proportion of
the policy reinsured is defined as the First Excess divided by the
sum of the First Excess and the Ceding Company's retention. Such
First Excess shall be limited as follows:
(i) Standard and Substandard risks written by the Ceding Company
in the U.S., up to and including Table 16 (500% total
mortality), or corresponding flat extras.
(ii) 10 X the retention of the Ceding Company, but not more than
$7,000,000 on any one life.
(iii) The minimum initial amount of coverage will be $100,000. The
minimum amount for reinsurance to continue will be $25,000.
Coverage provided hereunder is limited to reinsurance of Death
Benefit Insurance provided by the policy, and excludes participation
in cash values or any other benefits.
Automatic reinsurance is provided for increases resulting from
changes in existing insurance coverage as provided in the policy
subject, however, to the automatic coverage limit defined herein.
Increases above the automatic coverage limit will be ceded
facultatively.
b. Waiver of Premium Disability Benefits
Same as for Life Insurance, subject to age and substandard issue
limits imposed by the Ceding Company on such risks.
c. Accidental Death Benefits
Premiums for accidental death shall be as shown in Exhibit V.
Exhibit II
(Continued)
3. Supplementary Benefit Forms
Supplementary benefits to be covered automatically under this Agreement
shall be those provided in the following policy forms issued by the Ceding
Company:
Waiver of Premium Disability Benefits, Form No. ULDW91
Accidental Death Benefit, Form No. ULADB83
4. Overall Limits
Automatic coverage of any risk for Life Insurance with or without Waiver
of Premium Disability benefits shall be granted under this Agreement only
if, according to the Ceding Company's papers, the overall sum in force and
applied for on the same life with all insurance companies does not exceed
$10,000,000 of Life Insurance with or without Waiver of Premium Disability
benefits.
Automatic coverage of any risk for Accidental Death benefits shall be
granted under this Agreement only if, according to the Ceding Company's
papers, the overall sum in force and applied for on the same life with all
insurance companies does not exceed $250,000 of Accidental Death benefits.
5. For the purpose of this Agreement, the Reinsurance Death Benefit shall be
rounded to the nearer dollar and shall be equal to the Death Benefit on
the reinsured policy less the total accumulation value on the reinsured
policy less the Ceding Company's retention on the reinsured policy.
Exhibit III
Retention Limits
American National will retain 10% of the face amount. Maximum retention for any
one life will be $700,000 for American National.
Waiver of Premium Disability Benefits
Same as for Life Insurance
Accidental Death Benefits
$250,000
Exhibit IV
Reinsurance Discounts
As percent of `75-80' Select & Ultimate Table(Male & Female)
Standard Risks
All
All Plans, All Ratings Years
Tobacco Non-User Prefered 72%
Standard 52%
Tobacco User 2%
Substandard Risks
For substandard risks where the monthly cost of insurance is determined as a
multiple of the standard monthly cost of insurance corresponding to the total
mortality of the risk, the same commissions as above shall apply
Exhibit V
Reinsurance Premiums - Life Insurance
A. Premiums for reinsurance per life
Life reinsurance premium rates shall be the 75-80 Select and Ultimate
Insurance rates attached, and life reinsurance premiums shall be
calculated in accordance with Article V. Any increases with evidence of
insurability will be treated as a new issue. Any increases without
evidence of insurability in accordance with the policy provisions shall be
based on the attained age and duration since issue of the original policy.
Exhibit V
B. Life reinsurance premiums shall be calculated as follows:
1. For standard risks, by multiplying the Reinsurance Death Benefit
by the appropriate premium rates from the respective schedules
attached.
2. For substandard risks accepted subject to Table Ratings, by
adding the Table extra premiums to the corresponding standard
premiums calculated from Paragraph a. above. Table extra
premiums are determined as the products of the Reinsurance
Death Benefit and the appropriate Extra Premiums from the
respective schedules attached, multiplied by the applicable
Rating Factor from the Table below Times 25%.
3. Life reinsurance premiums for substandard risks accepted
subject to a flat extra premium shall be the sum of:
(i) The applicable standard or substandard reinsurance
premiums, calculated from Paragraphs 2.a. and 2.b.
preceding, and
(ii) The following percentages of the policy annual flat
extra premiums applicable to the initial Reinsurance
Death Benefit hereunder on such risks on a monthly
basis:
Term of Flat
Extra Premium First Year Renewal Years
More than five years 25% 90%
Five years or less 90% 90%
C. The reinsurance premiums for Waiver of Premium Disability benefits shall
be the following percentages of the premium which the Ceding Company
charges the insured on the Reinsurance Death Benefit:
First Year Renewal Years
0% 90%
D. Reinsurance Premiums ADB (rates per $1,000)
First year .25
Renewal .90
E. Periodic listings to be forwarded to the Pool by the Ceding Company in
accordance with Article II Mode of Notification and Cession, shall
identify "Smoker", "Nonsmoker", or "Composite" risks separately.
F. Reinsurances ceded on these rate schedules shall be eligible for reduction
in accordance with Article XIII Changes in Retention Limits, after they
have been in force for at least five (5) years.
Exhibit VI
List of Risks Reinsured
Universal Life
A List of Risks Reinsured, showing all renewing policies, should be prepared and
submitted monthly, quarterly or annually according to the terms of the
Agreement. At least once a year, at the end of each year, a list must be
submitted by the Ceding Company to the Pool including ALL risks reinsured under
this Agreement. Premiums due should be included only for the period being
reported. The information required to be shown on such lists is set out below.
A. Policy Number
B. Name of Insured (Minimum is Surname and First Initial; prefer to have
First Name and Middle Initial as well.)
C. Sex
D. Date of Birth (Month, Day, Year) E. Issue Age F.* Attained Age
G. Policy Date (Month, Day, Year) or Date of Increase/Decrease in Specified
Amount H. Transaction Code (In Force)
1. First Year, Newly Reported (i.e., New Business)
2. First Year, Previously Reported (i.e., Renewal Business in First Policy
Year) 3. Renewal
I. Substandard Rating (Table, Mortality Percentage, Flat Extra Amount and
Duration; Show Multiple of Standard for ADB or WP.)
J. Plan or Plan Code (If more than one plan is covered by the Agreement) K.
Underwriting Class (Smoker, Nonsmoker, Preferred, etc.)
L. Specified Amount Issued (Life, ADB, WP)
M. Death Benefit Option (i.e., cash value is included in Specified Amount or
additional to Specified Amount)
N.* Current Death Benefit (under original policy)
O.* Cost of Insurance (under original policy)
P. Proportion Reinsured This Policy
Q. Reinsurance Death Benefit (or Amount Reinsured if ADB or WP)
R. Reinsurance Premium (Life, ADB, WP)
S. Reinsurance Commission (Life, ADB, WP)
T.* Net Cash Amount Due the Pool (Life, ADB, WP)
U.* Automatic or Facultative
* Desirable but not required
Exhibit VI
(Continued)
There should be separate subtotals for all items listed below. Each subtotal
should include:
Policy Count (Life - separately for New Business, Renewals and Combined)
Reinsurance Death Benefit (separately for New Business, Renewals and Combined)
Reinsurance Premium (separately for First Year, Renewals and Combined)
Reinsurance Commission (separately for First Year, Renewals and Combined) Net
Amount Due the Pool (separately for First Year, Renewals and Combined).
It is not necessary to adhere strictly to the set of transaction codes shown
above as long as the appropriate subtotals and totals can be provided.
The various policy details including Reinsurance Death Benefit and Proportion
Reinsured This Policy shown on the List of Risks Reinsured should correspond to
the in force after any changes reported concurrently on the List of Amendments.
A grand total each reporting period for Policy Count in force and Reinsurance
Death Benefit in force (separately for New Business, Renewals and Combined)will
be provided. A separate total of ADB in force will be provided, however, the
total will not be broken down into New Business and Renewals.
A grand total of Reinsurance Premium, Reinsurance Commission and Net Amount Due
the Pool, including all in force and amendments, should be shown (separately for
First Year, Renewals and Combined categories). Separate totals should be
provided for Life, ADB and WP. This may be shown on the List of Risks Reinsured
or may be included in a separate summary.
Where premiums for more than one period are being reported on a single list, the
basic identification (Policy Number, Name of Insured, Sex, Date of Birth, Age
and Policy Date) need be shown only one time on the first line for the policy.
Subsequent lines should each relate to a different period and the period
involved should be indicated.
Although an increase or decrease in Specified Amount will not, as a rule, result
in the issuance of a new policy, the amount of such increase or decrease should
be reported separately from the base Specified Amount so that differences in
premium or commission rates can be reflected. For example, the amount of
increase in specified Amount might involve a substandard rating that differs
from the rating for the base Specified Amount. In any such case, a separate
policy number suffix will be assigned.
Any significant deviations from these reporting guidelines must be agreed to by
the Pool.
Exhibit VII
List of Amendments
Universal Life
Each List of Amendments (monthly, quarterly or annual) should show details for
each policy for which any transaction (see codes 4-12 below) occurred which has
an effect on either the Reinsurance Death Benefit, Reinsurance Premium or
Reinsurance Commission. The basic policy details to be shown include the
following:
a. Policy Number
b. Name of Insured
c.* Date of Birth
d. Transaction Code (Changes to In Force) 4. Termination Without Value 5.
Policy Not Placed (NTO) 6. Surrender (Full or Partial) 7. Reinstatement 8.
Increase in Specified Amount 9 Decrease in Specified Amount
10.Conversion or Change of Plan (e.g., Option A to Option B)
11.Death
12.Other (Please Describe)
e. Effective Date of Transaction
f. Net Increase or Decrease in Reinsurance Death Benefit from the Reinsurance
Death Benefit last reported to the Pool before the change
g. Reinsurance Premium Adjustment (separately for First Year/Renewal) h.
Reinsurance Commission Adjustment (separately for First Year/Renewal) i.
Net Adjustment Due the Pool (separately for First Year/Renewal)
Subtotals of policy count and Reinsurance Death Benefit should be provided for
each transaction code where the transaction is such that the Life policy count
in force is altered by the transaction. For items g, h and i only grand totals
are required (separately for First Year/Renewal/Combined).
The premium and commission adjustments should include adjustments up to the
current reporting period (e.g., month, quarter). Premiums and commissions for
the current reporting period should appear on the List of Risks Reinsured.
It is not necessary to adhere strictly to the set of transaction codes shown
above as long as the amendments are clearly identified and appropriate subtotals
and totals can be provided.
* Desirable but not required
