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Reinsurance Agreement
No. 5090-02
for
NORTH AMERICAN SECURITY
LIFE INSURANCE COMPANY
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Automatic Yearly Renewable Term (YRT) Reinsurance Agreement
(No. 5090-02)
Between
NORTH AMERICAN SECURITY
LIFE INSURANCE COMPANY
of Boston, Massachusetts
(Reinsured referred to as you, your)
and
TRANSAMERICA OCCIDENTAL
LIFE INSURANCE COMPANY
of Los Angeles, California
(Reinsurer referred to as we, us, our)
Effective November 1, 1995
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CONTENTS
ARTICLES
I Basis of Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . 1
II Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III Formal Cession . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IV Plans of Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . 3
V Reinsurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . 3
VI Premium Accounting . . . . . . . . . . . . . . . . . . . . . . . . . 4
VII Oversights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
VIII Reductions, Terminations and Changes . . . . . . . . . . . . . . . . 5
IX Increase In Retention . . . . . . . . . . . . . . . . . . . . . . . . 6
X Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
XI Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
XII Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
XIII Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . 9
XIV Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
XV Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
XVI Parties to Agreement . . . . . . . . . . . . . . . . . . . . . . . 10
XVII DAC Tax - Section 1.848-2(g)(8) Election . . . . . . . . . . . . . 10
VIII Duration of Agreement . . . . . . . . . . . . . . . . . . . . . . . 11
XIX Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SCHEDULES
A Specifications
B Benefits
C Definitions
EXHIBITS
I Retention Limits
II Reinsurance Premiums
III YRT Rate Schedules
All schedules and exhibits attached will be considered part of this agreement.
TRANSAMERICA REINSURANCE
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ARTICLE I
BASIS OF REINSURANCE
Reinsurance under this Agreement must be life insurance as stated in Schedule
A. You must automatically reinsure the life insurance for the plans as stated
in Schedule A and any additional benefits listed in Schedule B.
1. REQUIREMENTS FOR AUTOMATIC REINSURANCE:
A. Each individual risk must be a resident of the United States.
B. Each individual risk must be underwritten according to your standard
underwriting practices and guidelines.
C. Any risk offered on a facultative basis by you to us or any other
company will not qualify for automatic reinsurance.
D. The maximum issue age on any risk will be age 80.
E. The mortality rating on each individual risk must not exceed Table 16,
Table P, 500% or its equivalent on a flat extra premium basis.
F. The maximum amount of insurance issued and applied for in all
companies on each risk must not exceed the jumbo limits as stated in
Schedule A.
G. On each individual risk, you must retain the amounts of insurance as
stated in Exhibit I.
H. The maximum amounts of insurance to be reinsured on each individual
risk must not exceed the automatic binding limits as stated in
Schedule A.
2. REQUIREMENTS FOR FACULTATIVE REINSURANCE:
A. Plan of Insurance Listed in Schedule A:
(1) If the Requirements for Automatic Reinsurance are met but you
prefer to apply for facultative reinsurance, then you must submit
to us all the papers relating to the insurability of the
individual risk for facultative reinsurance.
(2) If Requirements for Automatic Reinsurance are not met, then you
must submit to us all the papers relating to the insurability of
the individual risk for facultative reinsurance.
B. Plan of Insurance Not Listed in Schedule A:
You may submit an application for facultative reinsurance on any of
your other plans of insurance.
3. Copies of all the papers relating to the insurability of the individual
risk must be sent to us for facultative reinsurance. After we have
examined the papers sent, we will promptly notify you of our
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final underwriting offer or our underwriting offer subject to additional
requirements. Our final underwriting offer on the individual risk will
automatically terminate when one of the following situations occurs:
(1) The date we receive notice from you of the withdrawal of your
application, or
(2) 120 days after we made our offer or
(3) The date specified in our approval to extend our offer.
4. In no event will we be liable for reinsurance unless the issuance of the
insurance, issued directly by you, constituted the doing of business in a
jurisdiction in which you are properly licensed.
ARTICLE II
LIABILITY
1. Our liability for automatic reinsurance will begin simultaneously with your
liability.
2. Our liability for facultative reinsurance on the individual risk will begin
simultaneously with your liability once we have accepted the application in
writing for facultative reinsurance and you have accepted our offer.
3. Our liability for reinsurance on the individual risk will terminate when
your liability terminates.
4. The initial and subsequent reinsurance premiums must be received by us on a
timely basis for us to maintain our liability of each individual risk.
ARTICLE III
FORMAL CESSION
You will inform us of any reinsurance by submitting a monthly accounting
statement as described in Article VI.
ARTICLE IV
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PLANS OF REINSURANCE
1. Life reinsurance will be on the basis as stated in Schedule B.
2. When requested, you must furnish us with a copy of each policy, rider, rate
book and cash value table which applies to the life insurance reinsured.
ARTICLE V
REINSURANCE PREMIUMS
1. Life Reinsurance Premiums.
A. Life Reinsurance Premiums Paid on a Yearly Renewable Term Basis.
The life reinsurance premium on the net amount at risk will be
determined from Exhibit II.
B. Deficiency Reserves of the Yearly Renewable Term Premiums.
We anticipate that the premium rates in Exhibit III will be continued
indefinitely for all of the life reinsurance to which such rates will
apply.
However, because of technical questions in some states regarding
deficiency reserves, if any one or more of such premium rates for any
policy year or years after the third will be less than the net premium
rate or rates based on the 1980 CSO Table for the applicable mortality
rating with interest at the rate specified in the Standard Valuation
Law, then, in that event, only the latter rate will be guaranteed by
us.
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ARTICLE VI
PREMIUM ACCOUNTING
1. Payment of Reinsurance Premiums
A. The reinsurance premiums will be paid to us on the basis stated in
Exhibit II.
B. Within twenty-five (25) days after the close of each month, you will
send us a copy of a statement listing first year and renewal
reinsurance premiums less refunds and allowances (dividends and cash
values, if applicable) and other data mutually agreed upon by both
parties.
C. If the net reinsurance premium balance is payable to us, you must
include this payment with your statement. If the net reinsurance
premium balance is not received by us or a statement is not prepared
and sent to us within twenty-five (25) days after the close of the
month, the reinsurance premiums for all of the reinsurance risks
listed on the statement will be delinquent.
D. If the net reinsurance premium balance is payable to you, we must
remit our payment to you within thirty days after receiving your
statement.
2. Termination Because of Non-Payment of Premium.
When reinsurance premiums are delinquent, we have the right to terminate
the reinsurance risks on the statement by giving you thirty (30) days'
written notice. As of the close of this thirty (30) day period, all of our
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, you will continue to be liable to us for
all unpaid reinsurance premiums earned by us.
3. Reinstatement of a Delinquent Statement.
You 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, we will not be
liable for any claim incurred between the date of termination and
reinstatement. The effective date of reinstatement will be the day we
receive the required back premiums.
4. Currency.
The reinsurance premiums and benefits payable under this Agreement will be
payable in the lawful money of the United States.
5. Within sixty (60) days following the close of each calendar year, you will
send us an inforce listing of all policies reinsured under this Agreement.
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ARTICLE VII
OVERSIGHTS
If there is an unintentional oversight or misunderstanding in the
administration of this Agreement by either company, it can be corrected
provided the correction takes place promptly after the time the oversight or
misunderstanding is first discovered. Both companies will be restored to the
position they would have occupied had the oversight or misunderstanding not
occurred. Interest at a rate to be determined annually will be payable on any
premiums or allowances due as a result of the oversight or misunderstanding.
ARTICLE VIII
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 underwriting evidence
according to your regular underwriting rules is not required, the insurance
will continue to be reinsured with us under this Agreement.
2. If the insurance reinsured under this Agreement increases and
A. The increase is subject to new underwriting evidence, the provisions
of Article I shall apply to the increase in reinsurance.
B. The increase is not subject to new underwriting evidence, we will
accept automatically the increase in reinsurance but not to exceed our
automatic binding limit.
3. If the insurance reinsured under this Agreement is increased or reduced,
the reinsurance for the individual risk involved will be increased or
reduced by the same amount on the effective date of increase or reduction.
If an individual life is shared by more than one reinsurer, our share of
the increase or decrease will be the same percentage as our initial
reinsurance on the individual risk.
4. If any portion of the total insurance retained by you on an individual life
reduces or terminates, any reinsurance under this Agreement based on the
same life will also be reduced or terminated. You will reduce your
reinsurance by applying the retention limits which were in effect at the
time the policy was issued. You will not be required to retain an amount
in excess of your 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.
You must first reduce the reinsurance of the insurance which 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.
5. If the insurance for a risk is shared by more than one reinsurer, our
percentage of the increased or reduced reinsurance will be the same as our
initial percentage of reinsurance of the individual risk.
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6. If insurance reinsured under this Agreement is terminated, the reinsurance
for the individual risk involved will be terminated on the effective date
of termination.
7. On facultative reinsurance, if you wish to reduce the mortality rating,
this reduction will be subject to the facultative provisions of this
Agreement.
8. If at the time of a contractual or non-contractual change, you elect not to
continue to reinsure the risk with us, you must pay us an early recapture
charge as negotiated with us.
9. We will refund to you all unearned reinsurance premiums not including
policy fees, less applicable allowances, arising from reductions,
terminations and changes as described in this Article.
10. Changes as a result of extended term or reduced paid-up will be handled
like reductions.
ARTICLE IX
INCREASE IN RETENTION
1. If you should increase the retention limits as listed in Exhibit I, prompt
written notice of the increase must be given to us.
2. You will have the option of recapturing the reinsurance under this
Agreement when your retention limit increases, and following the number of
policy years until recapture as stated in Schedule A. You may exercise
your option to recapture by giving written notice to us within ninety days
after the effective date of the increase.
3. If you exercise your option to recapture, then
A. You must reduce the reinsurance on each individual life on which you
retained your maximum retention limit for the age and mortality rating
that was in effect at the time the reinsurance was ceded to us.
B. No recapture will be made to reinsurance on an individual life if (a)
you retained a special retention limit less than your maximum
retention limit for the age and mortality rating in effect at the time
the reinsurance was ceded to us, or if (b) you did not retain
insurance on the life.
C. You must increase your total amount of insurance on the individual
life up to your new retention limit by reducing the reinsurance. If
an individual life is shared by more than one reinsurer, our
percentage of the reduced reinsurance will be the same percentage as
our initial reinsurance on the individual risk.
D. The reduction of reinsurance will become effective on the policy
anniversary date immediately following the effective date of your
increase in retention limits.
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ARTICLE X
REINSTATEMENT
If insurance lapses for nonpayment of premium and is reinstated under your
terms and rules, the reinsurance will be reinstated by us. You must pay us all
back reinsurance premiums in the same manner as you received insurance premiums
under your policy.
ARTICLE XI
EXPENSES
You must pay the expense of all medical examinations, inspection fees and other
charges in connection with the issuance of the insurance.
ARTICLE XII
CLAIMS
1. Our liability for the insurance benefits reinsured under this Agreement
will be the same as your liability for such benefits. All reinsurance
claim settlements will be subject to the terms and conditions of the
particular contract under which you are liable.
2. When you are advised of a claim, you must promptly notify us.
3. If a claim is made under incontestable insurance reinsured under this
Agreement and if you retained fifty percent or more of the insurance at the
time of issue, we will abide the issue as it is settled by you. When you
request payment of the reinsurance proceeds, you must deliver a copy of the
proof of death and the claimant's statement to us.
4. If a claim is made under either (a) incontestable insurance and if you
retained less than fifty percent of the insurance at the time of issue, or
(b) contestable insurance reinsured under this Agreement, you must submit a
copy of all papers connected with the claim to us. After reviewing all the
claim papers, we will give our opinion as to how we would handle the claim
had it been ours. We must give our opinion within ten working days after
we receive a copy of all papers connected with the claim. If we do not
respond within this ten (10) day period, it will be presumed we are
agreeable to the payment of the claim. However, given your relationship
with your claimant, you are not obligated to follow our opinion.
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5. Payment of reinsurance proceeds will be made in a single sum regardless of
your mode of settlement.
6. A. You must promptly notify us of your intent to contest insurance
reinsured under this Agreement or to assert defenses to a claim for
such insurance. If your contest of such insurance results in the
reduction of your liability, we will share in this reduction. Our
percentage of the reduction will be our net amount of risk on the
individual life as it relates to your total net amount at risk on the
date of the death of the insured.
B. If we should decline to participate in the contest or assertion of
defenses, we will then release all of our liability by paying you the
full amount of reinsurance and not sharing in any subsequent reduction
in liability.
7. If the amount of insurance provided by the policy or policies reinsured
under this Agreement is increased or reduced because of a misstatement of
age or sex established after the death of the insured, we will share with
you in this increase or reduction. Our share of this increase or reduction
will be the percentage that our net liability relates to your total net
liability and that of other reinsurers, immediately prior to this increase
or reduction. In the case of reinsurance on the yearly renewable term
basis, our reinsurance will be calculated from the inception date of the
policy on the adjusted amounts using the premiums and reserves applicable
to the correct age or sex. Any adjustment in reinsurance premiums will be
made without interest.
8. If a claim is approved for disability waiver of premium insurance reinsured
under this Agreement, you will continue to pay the reinsurance premiums to
us. We will reimburse you for our share of the annual liability, less any
commissions not paid to your agent.
9. You must pay the routine expenses incurred in connection with settling
claims. These expenses may include compensation of agents and employees
and the cost of routine investigations.
10. We will share with you 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
of us. However, if we have released our liability under Section 6. of this
Article, we will not share in any expenses incurred after our date of
release.
11. In the case of a claim described under:
A. Section 3 of this Article, in no event will we have any liability for
any Extra-Contractual Damages which are rendered against you as a
result of acts, omissions or course of conduct committed by you in
connection with the insurance reinsured under this Agreement.
B. Section 4 of this Article and if you followed our opinion, we
recognize that circumstances may arise under which we, in equity,
should share, to the extent permitted by law, in paying certain
assessed damages. Such circumstances are difficult to define in
advance, but involve those situations in which we were an active party
in the act, omission or course of conduct which ultimately resulted in
the assessment of such damages. The extent of such sharing is
dependent on good faith assessment of culpability in each case, but
all factors being equal, the division of any such assessment would be
in proportion to what impact our opinion had on such damages.
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ARTICLE XIII
INSPECTION OF RECORDS
We will have the right, at any reasonable time, to inspect your books and
documents which relate to your reinsurance under this Agreement.
ARTICLE XIV
INSOLVENCY
1. If you become insolvent, all of the reinsurance due you will be paid
immediately upon demand directly to your liquidator (receiver or statutory
successor), without decrease.
2. If you become insolvent, the liquidator will give us written notice of a
pending claim against you 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, we may investigate this pending claim and mediate in your or your
liquidator's name, but at our own expense, with any defense or defenses
which we may believe available to you or your liquidator.
3. The expenses incurred by us will be chargeable, subject to court approval,
against you as part of the expense of liquidation. The benefit which you
may accumulate solely as a result of the defense undertaken by us will be
shared proportionately. Where two or more reinsurers are involved in the
same claim and a majority in interest elect to mediate a defense or
defenses to this claim, the expense will be shared as though such expense
had been incurred by you.
ARTICLE XV
ARBITRATION
1. Any controversy or claim arising out of or relating to this Agreement will
be settled by arbitration.
2. There must be three arbitrators who will be active, prior or retired
officers of life insurance companies other than the contracting companies
or their subsidiaries or affiliates. Each of the contracting companies
will appoint one of the arbitrators and these two arbitrators will select
the third.
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In the event either contracting company fails to choose an arbitrator
within thirty (30) days after the other contracting company has given
written notice of its arbitrator appointment, the contracting company which
has given written notice may choose two arbitrators who shall in turn
choose a third arbitrator before entering arbitration. If the two
arbitrators are unable to agree upon the selection of a third arbitrator
within thirty (30) days following their appointment, each arbitrator shall
nominate three candidates within ten (10) days thereafter, and the final
selection shall be made a court of competent jurisdiction from among the
submitted names (three each) or any other persons the court finds to be a
qualified and impartial arbitrator.
3. With regard to (2) above, arbitration must be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association
which will be in effect on the date of delivery of demand for arbitration.
4. Each contracting company shall pay its arbitrator and its arbitration
expenses and the two companies shall share equally the third arbitrator's
expenses.
5. The award made by the arbitrators will be final, and judgment may be
entered upon it in any court having jurisdiction.
ARTICLE XVI
PARTIES TO AGREEMENT
This is an Agreement solely between you and us. There will be no legal
relationship between us and any person having an interest of any kind in any of
your insurance.
ARTICLE XVII
DAC TAX
SECTION 1.848-2(G) (8) ELECTION
If applicable, both of us agree to the following pursuant to Section 1.848-2(g)
(8) of the Income Tax Regulations issued December 1992, under Section 848 of
the Internal Revenue Code of 1986, as amended. This election will be effective
for all subsequent taxable years for which this Agreement remains in effect.
1. The term "party" will refer to either you or us as appropriate.
2. The terms used in this Article are defined by reference to Regulation
Section 1.848-2 in effect December 1992.
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3. The party with the net positive consideration for this Agreement for each
taxable year will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1).
4. Both of us agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency or as
otherwise required by the Internal Revenue Service.
5. You will submit a schedule to us by May 1 of each year of your calculation
of the net consideration for the preceding calendar year. This schedule of
calculations will be accompanied by a statement signed by one of your
officers stating that you will report such net consideration in your tax
return for the preceding calendar year.
6. We may contest such calculation by providing an alternative calculation to
you in writing within thirty (30) days of our receipt of your calculation.
If we do not so notify you, we will report the net consideration as
determined by you in our tax return for the previous calendar year.
7. If we contest your calculation of the net consideration, both of us will act
in good faith to reach an agreement as to the correct amount within thirty
(30) days of the date we submit our alternative calculation. If both of us
reach agreement on an amount of net consideration, each of us will report
such amount in their respective tax returns for the previous calendar year.
ARTICLE XVIII
DURATION OF AGREEMENT
1. This Agreement may be terminated at any time by either company after
December 31, 1998, by 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 company will be the first day of the
ninety (90) day period.
2. During the ninety (90) day period, this Agreement will continue to be in
force.
3. After termination, you and we are both liable under the terms of this
Agreement for all automatic reinsurance which becomes effective prior to
termination of this Agreement. After termination we are both liable for
all automatic and facultative reinsurance which has an application date on
or before the effective date of the termination.
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ARTICLE XIX
EXECUTION
In witness of the above, this Agreement is signed in duplicate at the dates and
places indicated and shall be effective as of November 1, 1995.
Executed in duplicate by Executed in duplicate by
NORTH AMERICAN SECURITY LIFE TRANSAMERICA OCCIDENTAL
INSURANCE COMPANY LIFE INSURANCE COMPANY
at Boston, Massachusetts, at Charlotte, North
Carolina,
on April 15, 1996 on April 15, 1996
------------------------------- -------------------------------
By: Xxxx XxXxxxxx By:
------------------------------- -------------------------------
Title: Vice President & Vice President
Product Actuary
By: Xxxxxxx Xxxxxx By: Xxxxx Xxxxxxxx
------------------------------- -------------------------------
Title: Senior Vice President Second Vice President
& CFO
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SCHEDULE A
SPECIFICATIONS
# TYPE OF BUSINESS Individual and last survivor life
insurance issued by you. The insureds
must be residents of the United States
and issue age 80 or under.
# PLANS OF INSURANCE Venture Life (all policy form numbers
beginning with "VENLIFE")
# BASIS OF REINSURANCE 80% Quota Share of Net Amount at Risk in
Excess of your Retention Limit as stated
in Exhibit I.
# JUMBO LIMIT Life $10,000,000
# BINDING LIMIT Life $3,500,000
# POLICY YEARS
UNTIL RECAPTURE Yearly Renewable Term 20 years
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SCHEDULE B
BENEFITS
The following benefits are reinsured under this Agreement:
LIFE (Level) Life reinsurance will be on the yearly renewable term basis
for the net amount at risk. The net amount at risk will be
the insurance face amount less the cash surrender value, and
will be determined on a monthly basis.
The Reinsured's total net amount at risk is equal to the
following:
80% of {(TDB - FAV - VCSV) - 50% of (VDB - VCSV) -
Retention Limit as defined in Exhibit I}
where:
TDB = Total Death Benefit
VDB = Variable Death Benefit
FDB = Fixed Death Benefit
TCSV = Total Cash Surrender Value
VCSV = Variable Cash Surrender Value
VCSV = Fixed Cash Surrender Value
TAV = Total Account Value, including loan collateral account
VAV = Variable Account Value, sum of all separate account
investment options
FAV = Fixed Account Value, including loan collateral account
DEBT = Total Outstanding Debt under the contract
VDB = TDB times (VAV / TAV)
FDB = TDB times (FAV / TAV)
VCSV = TCSV times (VAV / TAV)
FCSV = TCSV times (FAV / TAV).
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SCHEDULE C
DEFINITIONS
1. AUTOMATIC Insurance which must be ceded by the
Reinsured in accordance with the terms of
the Agreement and must be accepted by the
Reinsurer.
2. EXCESS The Reinsurer agrees to reimburse the
Reinsured for all losses or a large
portion of the losses over the
Reinsured's retention. The Reinsurer
becomes involved in a loss only after the
loss has exceeded the Reinsured's
retention.
3. FACULTATIVE Insurance which the Reinsured has the
option to cede and the Reinsurer has the
option to accept or decline individual
risks. The agreement merely reflects how
individual facultative reinsurance shall
be handled.
4. INITIAL
MINIMUM AMOUNT The smallest amount of reinsurance
permitted at the inception of the
reinsurance transaction.
5. LIFE PREMIUMS Yearly Renewable Term (YRT) - Under the
YRT method, the Reinsured transfers to
the Reinsurer the mortality risk on
either a net amount at risk basis or on
an approximation of the net amount at
risk basis.
Flat Extra - Flat extra ratings usually
apply to applicants in hazardous
occupations or avocations or with certain
physical impairments of a temporary
nature.
Substandard Table Extra - Substandard
table extra ratings usually apply to
physically impaired lives.
6. NET AMOUNT AT RISK For permanent insurance, the difference
between the face amount and the policy
mean valuation reserve. For term
insurance, the full face amount of the
term insurance.
7. POINT-IN-SCALE Based on the issue age and duration of
the original policy reinsured.
8. POLICY DATE The effective date shown on the actual
policy.
9. QUOTA SHARE A form of reinsurance indemnifying the
Reinsured against a fixed percentage of
loss on each risk covered in the
Agreement.
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10. RECAPTURE The right to not reinsure business
previously reinsured, up through your
standard retention limits, following the
twentieth policy anniversary. Exercising
right or not exercising right applies
uniformly to all business submitted on an
automatic basis.
11. REINSURED (YOU, YOUR) A company which transfers all or part of
the insurance it has written to another
company.
12. REINSURER
(WE, US, OUR) A company which assumes all or part of
the insurance written by another company.
13. REPLACEMENT Contractual - An option provided in the
policy which allows for replacement of
one policy for another without evidence
of insurability.
Non-Contractual - An option not provided
in the policy. However, replacement of
one policy for another must be with new
evidence of insurability.
14. RETENTION The amount of insurance which the
Reinsured keeps for its own account and
does not reinsure in any way.
15. RISK Insurance on an individual life or joint
lives for last survivor insurance.
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EXHIBIT I
RETENTION LIMITS
1. LIFE: Minimum of {50% of (VDB - VCSV) + 100% of (FDB - FAV);
$100,000}
where VDB, VCSV, FDB, and FAV are defined as in Schedule B.
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EXHIBIT II
REINSURANCE PREMIUMS
1. Reinsurance premiums under this Agreement will be payable on a monthly
basis regardless of how you receive premiums from your insured. The YRT
reinsurance premiums are guaranteed for the first three policy years.
2. STANDARD AND SUBSTANDARD
TABLE EXTRA PREMIUMS The substandard table extra premium will
be an additional 25% per table rating of
the rates set forth in Exhibit III.
3. RENEWAL AND
CONVERSION OF
INSURANCE The renewal and conversion of insurance
shall be considered as a continuation of
the original insurance. Future premiums
will be calculated on a point-in-scale
basis using the applicable rates in the
Agreement.
4. PREMIUM TAX We will pay the you 2.25% of reinsurance
premiums to provide reimbursement for any
premium taxes which you will be required
to pay on the reinsurance premiums
payable under this Agreement.
22
EXHIBIT III
YRT RATE SCHEDULES
