Exhibit (g)(4)
AUTOMATIC YRT
REINSURANCE AGREEMENT
BETWEEN
IDS LIFE INSURANCE COMPANY
MINNEAPOLIS, MINNESOTA
(HEREINAFTER REFERRED TO AS THE "CEDING COMPANY")
AND
[NAME OF REINSURANCE COMPANY]
[CITY AND STATE OF REINSURANCE COMPANY]
(HEREINAFTER REFERRED TO AS THE "REINSURER")
EFFECTIVE NOVEMBER 25, 2002
TREATY # 3007
Table of Contents
ARTICLE 1 - PREAMBLE
1.1 Parties to the Agreement
1.2 Entire Agreement
1.3 Compliance
1.4 Good Faith
ARTICLE 2 - AUTOMATIC REINSURANCE
ARTICLE 3 - FACULTATIVE REINSURANCE
ARTICLE 4 - COMMENCEMENT OF LIABILITY
4.1 Automatic Reinsurance
4.2 Facultative Reinsurance
4.3 Conditional Receipt or Temporary Insurance
ARTICLE 5 - REINSURED RISK AMOUNT
ARTICLE 6 - PREMIUM ACCOUNTING
6.1 Premiums
6.2 Payment of Premiums
6.3 Delayed Payment
6.4 Failure to Pay Premiums
6.5 Premium Rates
ARTICLE 7 - REDUCTIONS, TERMINATIONS AND CHANGES
7.1 Reductions and Terminations
7.2 Noncontractual Increases
7.3 Contractual Increases
7.4 Risk Classification Changes
7.5 Reinstatement
ARTICLE 8 - REPLACEMENTS AND CONVERSIONS
8.1 Internal Replacements
8.2 Conversions
ARTICLE 9 - CLAIMS
9.1 Notice
9.2 Claim Settlement Process
9.3 Amount and Payment of Reinsurance Benefits
9.4 Lead Reinsurer
9.5 Contested Claims
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9.6 Claim Expenses
9.7 Misrepresentation or Suicide
9.8 Misstatement of Age or Sex
9.9 Extra Contractual Obligations
ARTICLE 10 - CREDIT FOR RESERVES
ARTICLE 11 - RETENTION LIMIT CHANGES
ARTICLE 12 - RECAPTURE
ARTICLE 13 - GENERAL PROVISIONS
13.1 Currency
13.2 Premium Tax
13.3 Minimum Cession
13.4 Inspection of Records
13.5 Interest Rate
13.6 Notices
13.7 Governing Law
13.8 Survival
13.9 Non-Waiver
13.10 Non-Transferability
ARTICLE 14 - DAC TAX
ARTICLE 15 - OFFSET
ARTICLE 16 - INSOLVENCY
16.1 Insolvency of a Party to this Agreement
16.2 Insolvency of the Ceding Company
16.3 Insolvency of the Reinsurer
ARTICLE 17 - ERRORS AND OMISSIONS
ARTICLE 18 - DISPUTE RESOLUTION
ARTICLE 19 - ARBITRATION
ARTICLE 20 - CONFIDENTIALITY
ARTICLE 21 - SEVERABILITY
ARTICLE 22 - DURATION OF AGREEMENT
ARTICLE 23 - EXECUTION
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EXHIBITS
A - RETENTION LIMITS OF THE CEDING COMPANY
B - PLANS COVERED AND BINDING LIMITS
C - FORMS, MANUALS, AND ISSUE RULES
D - REINSURANCE PREMIUMS
E - SELF-ADMINISTERED REPORTING
F - APPLICATION FOR FACULTATIVE REINSURANCE FORM
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ARTICLE 1
PREAMBLE
1.1 PARTIES TO THE AGREEMENT
This is a Yearly Renewable Term (YRT) agreement for indemnity reinsurance
(the "Agreement") solely between IDS Life Insurance Company (the "Ceding
Company"), an insurance company domiciled in the State of Minnesota, and
[name of reinsurance company], an insurance company domiciled in the State
of [state] (the "Reinsurer"), collectively referred to as the "parties".
The acceptance of risks under this Agreement will create no right or legal
relationship between the Reinsurer and the insured, owner or beneficiary
of any insurance policy of the Ceding Company.
1.2 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the business reinsured hereunder. There are no understandings
between the parties other than as expressed in this Agreement. Any change
or modification to this Agreement will be null and void unless made by
amendment to this Agreement and signed by both parties.
1.3 COMPLIANCE
This Agreement applies only to the issuance of insurance by the Ceding
Company in a jurisdiction in which it is properly licensed.
1.4 GOOD FAITH
This Agreement is entered into in reliance on the utmost good faith of the
parties and requires the continuing utmost good faith of the parties,
their representatives, successors and assigns. This includes a duty of
full and fair disclosure of any material information respecting the
formation and continuation of this contract and the business reinsured
hereunder. This also includes a duty to provide prompt notice to the other
party in the event the notifying party becomes insolvent as described in
Article 16. Each party represents and warrants to the other party that it
is solvent on a statutory basis in all states in which it does business or
is licensed.
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ARTICLE 2
AUTOMATIC REINSURANCE
2.1 On and after the effective date of this Agreement, the Reinsurer will
automatically accept a portion of the mortality risk on life insurance
policies and riders directly issued by the Ceding Company and listed in
Exhibit B - Plans Covered and Binding Limits. The Reinsurer will
automatically accept its share of mortality risk on the above-referenced
policies and riders within the limits shown in Exhibit B, provided that:
(a) the Ceding Company keeps its retention, as shown in Exhibit A -
Retention Limits of the Ceding Company, and
(b) the Ceding Company applies its normal underwriting guidelines, as
stated in Exhibit C - Forms, Manuals and Issue Rules, and
(c) the sum of all amounts in force and applied for on the life with the
Ceding Company, excluding amounts being internally replaced, does
not exceed the Automatic Binding Limits set out in Exhibit B, and
(d) the amount of life insurance in force in all companies, including
any coverage to be replaced plus the amount currently applied for on
that life in all companies, does not exceed the Jumbo Limit stated
in Exhibit B, and
(e) the application is on a life that has not been submitted
facultatively to the Reinsurer or any other reinsurer within the
last two (2) years, including the current application, unless the
reason for any prior facultative submission was solely for capacity
that may now be accommodated within the terms of this Agreement.
The Ceding Company may cede reinsurance automatically on international
clients underwritten in accordance with the agreed upon guidelines in
Exhibit B.
If the Ceding Company already holds its full retention on a life under
previously issued policies, the Reinsurer will automatically accept
reinsurance up to the limits shown in Exhibit B.
The Ceding Company may not reinsure the amount it has retained on the
business covered under this Agreement, as provided for in Exhibit A, on
any basis without the Reinsurer's written consent.
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ARTICLE 3
FACULTATIVE REINSURANCE
3.1 The Ceding Company may submit any application on a plan or rider
identified in Exhibit B - Plans Covered and Binding Limits, to the
Reinsurer for its consideration on a facultative basis. The Ceding Company
will provide to Reinsurer the rules or methods used by the Ceding Company
to select reinsurers for Facultative Reinsurance in cases where more than
one reinsurer offers coverage on a risk.
The Ceding Company will apply for reinsurance on a facultative basis by
sending to the Reinsurer an Application for Facultative Reinsurance,
providing information similar to the example outlined in Exhibit F -
Application for Facultative Reinsurance. Accompanying this Application
will be copies of all underwriting evidence that is available for risk
assessment including, but not limited to, copies of the application for
insurance, medical examiners' reports, attending physicians' statements,
inspection reports, and any other information bearing on the insurability
of the risk. The Ceding Company also will notify the Reinsurer of any
outstanding underwriting requirements at the time of the facultative
submission. Any subsequent information received by the Ceding Company that
is pertinent to the risk assessment will be immediately transmitted to the
Reinsurer.
After consideration of the Application for Facultative Reinsurance and
related information, the Reinsurer will promptly inform the Ceding Company
of its underwriting decision. The Reinsurer's offer will expire at the end
of one hundred twenty (120) days, unless otherwise specified by the
Reinsurer.
If the Ceding Company accepts the Reinsurer's offer, then the Ceding
Company will note its acceptance in its underwriting file and submit all
relevant individual policy information in its next statement to the
Reinsurer. Reinsurer agrees the reinsurance offer will be deemed accepted
by Ceding Company at the point in time Ceding Company makes such notation
in its underwriting file in accordance with the Ceding Company's standard
facultative placement procedures.
The relevant terms and conditions of the Agreement will apply to those
facultative offers made by the Reinsurer which are accepted by the Ceding
Company.
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ARTICLE 4
COMMENCEMENT OF LIABILITY
4.1 AUTOMATIC REINSURANCE
For automatic reinsurance, the Reinsurer's liability will commence at the
same time as the Ceding Company's liability, including liability under any
conditional receipt or temporary insurance provision.
4.2 FACULTATIVE REINSURANCE
For facultative reinsurance, the Reinsurer's liability will commence at
the same time as the Ceding Company's liability, including liability under
any conditional receipt or temporary insurance provision, provided that
the Reinsurer has made a facultative offer and that offer was accepted in
accordance with the terms of this Agreement.
4.3 CONDITIONAL RECEIPT OR TEMPORARY INSURANCE
Reinsurance coverage under a conditional receipt or temporary insurance
provision is limited to the Reinsurer's share of amounts within the
conditional receipt or temporary coverage limits shown in Exhibit B -
Plans Covered and Binding Limits.
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ARTICLE 5
REINSURED RISK AMOUNT
5.1 Reinsured risk amounts will be calculated on each policy anniversary;
during a policy year, reinsured risk amounts are adjusted if and only if
there is an increase or decrease in policy specified amount. Reinsured
risk amounts consist of the Reinsured Net Amount at Risk on each policy or
rider as defined below.
Option 1, Base Policy: The Net Amount at Risk is equal to the Death
Benefit minus the Policy Value, where the Death Benefit is the greater of
the Specified Amount or the Policy Value multiplied by the tax corridor.
The Reinsured Net Amount at Risk is defined as the Net Amount at Risk at
the most recent policy anniversary, or subsequent policy change date if
applicable, less the Ceding Company's Retained Share multiplied by the
Reinsurer's Percentage Share as defined in Exhibit B - Plans Covered and
Binding Limits.
Option 2, Base Policy: The Net Amount at Risk is equal to the Death
Benefit minus the Policy Value, where the Death Benefit is the greater of
the Specified Amount plus the Policy Value or the Policy Value multiplied
by the tax corridor. The Reinsured Net Amount at Risk is defined as the
Net Amount at Risk at the most recent policy anniversary, or subsequent
policy change date if applicable, less the Ceding Company's Retained Share
multiplied by the Reinsurer's Percentage Share as defined in Exhibit B.
Riders: For Base Insured Rider and Other Insured Rider, the Net Amount at
Risk is the face value of the Rider, which shall be considered the
Specified Amount for purposes of this Agreement. The Reinsured Net Amount
at Risk is defined as the Specified Amount of the Rider at the most recent
policy anniversary, or subsequent policy change date if applicable, less
the Ceding Company's Retained Share multiplied by the Reinsurer's
Percentage Share as defined in Exhibit B.
Increases in the Net Amount at Risk of the Base Policy due to an Automatic
Increasing Benefit Rider, and fluctuations in the Net Amount at Risk of
the Base Policy caused by the normal workings of the Policy Value, will be
shared by the Ceding Company and the Reinsurer on the same basis as
described in Exhibit B.
Terms used in this Article 5, including Option 1 and Option 2, shall be
interpreted in a manner consistent with the policies.
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ARTICLE 6
PREMIUM ACCOUNTING
6.1 PREMIUMS
Reinsurance premium rates for life insurance and other benefits reinsured
under this Agreement are shown in Exhibit D - Reinsurance Premiums.
Reinsurance premiums will be determined by applying the reinsurance
premium rates to the Reinsured Net Amount at Risk. The reinsurance premium
rates shall be calculated net of allowances as shown in Exhibit D.
Reinsurance premium rates, including allowances, may not be changed by the
Reinsurer over the duration of this Agreement except as provided in
Article 6.5 below.
Premium adjustments due either party will be calculated and paid in the
event of mid-year policy increases, terminations, death claims, and other
changes as appropriate.
6.2 PAYMENT OF PREMIUMS
Reinsurance premiums are payable annually in advance. The Ceding Company
will calculate the amount of reinsurance premium due and, within thirty
(30) days after the end of the month, will send the Reinsurer a statement
that contains the information shown in Exhibit E - Self-Administered
Reporting, showing reinsurance premiums due for that period. If an amount
is due the Reinsurer, the Ceding Company will remit that amount together
with the statement. If an amount is due the Ceding Company, the Reinsurer
will remit such amount within fifteen (15) days of receipt of the
statement.
If the Ceding Company overpays a reinsurance premium and the Reinsurer
accepts the overpayment in error, the Reinsurer's acceptance in and of
itself will not create reinsurance liability beyond what is provided for
in this Agreement. If the Ceding Company fails to make a full premium
payment for a policy or policies reinsured hereunder, due to an error or
omission as described in Article 17, the amount of reinsurance coverage
provided by the Reinsurer shall not be reduced. However, once the
underpayment is discovered, the Ceding Company will be required to pay to
the Reinsurer the difference between the full premium amount and the
amount actually paid, without interest. If payment of the full premium is
not made within sixty (60) days after the discovery of the underpayment,
the underpayment shall be treated as a failure to pay premiums and will be
subject to Article 6.4 below.
6.3 DELAYED PAYMENT
Premium balances that remain unpaid for more than thirty (30) days after
the Remittance Date will incur interest from the end of the reporting
period. The Remittance Date is defined as thirty (30) days after the end
of the reporting period. Interest will be calculated using the index
specified in Article 13.5 - Interest Rate.
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6.4 FAILURE TO PAY PREMIUMS
The payment of reinsurance premiums is a condition precedent to the
liability of the Reinsurer for reinsurance covered by this Agreement. In
the event that reinsurance premiums are not paid within sixty (60) days of
the Remittance Date, the Reinsurer will have the right to terminate the
reinsurance under all policies having reinsurance premiums in arrears. If
the Reinsurer elects to exercise its right of termination, it will give
the Ceding Company thirty (30) days written notice of its intention. Such
notice will be sent by certified mail in the manner specified in Article
13.6.
If all reinsurance premiums in arrears, including any that become in
arrears during the thirty (30) day notice period, are not paid before the
expiration of the notice period, the Reinsurer will be relieved of all
liability under those policies as of the last date for which premiums have
been paid for each policy. Reinsurance on policies on which reinsurance
premiums subsequently fall due will automatically terminate as of the last
date for which premiums have been paid for each policy, unless reinsurance
premiums on those policies are paid before their Remittance Dates.
Terminated reinsurance may be reinstated, subject to approval by the
Reinsurer, and upon payment of all reinsurance premiums in arrears
including any interest accrued thereon. The Reinsurer will have no
liability for any claims incurred between the date of termination and the
date of the reinstatement of the reinsurance. The right to terminate
reinsurance will not prejudice the Reinsurer's right to collect premiums
for the period during which reinsurance was in force prior to the
expiration of the thirty (30) days notice.
The Ceding Company will not force termination under the provisions of this
Article solely to avoid the provisions of Article 12 - Recapture, or to
transfer the reinsured policies to another reinsurer.
6.5 PREMIUM RATES
The Ceding Company agrees to provide Reinsurer with sixty (60) days
advance notice of its intent to increase cost of insurance rates charged
for new or existing business. Nothing herein shall be construed to limit
the Ceding Company's ability to change cost of insurance rates in its own
discretion.
For reinsurance of new business, Reinsurer reserves the right to change
reinsurance premium rates after ninety (90) days written notice is
provided to the Ceding Company.
For reinsurance on existing business, Reinsurer agrees that its right to
increase reinsurance premium rates as shown in Exhibit D, or any amendment
thereto, is subject to the following conditions.
Reinsurer represents that the reinsurance premium rates charged for
existing business under this treaty are intended to remain in force for an
indefinite period and that Reinsurer has no
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current plans to raise such rates. Reinsurer will use commercially
reasonable efforts to maintain the existing reinsurance premium rates but
reserves the right to change rates if necessary to maintain the financial
stability of the company or the block of reinsured business.
[terms of rate guarantee redacted]
In any event, the maximum reinsurance premium rates which may be charged
by the Reinsurer shall be the statutory valuation premiums for yearly
renewable term insurance at the maximum interest rates and minimum
mortality rates for each year of issue as prescribed by law.
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ARTICLE 7
REDUCTIONS, TERMINATIONS AND CHANGES
Whenever a change is made in the status, plan, amount or other material feature
of a policy reinsured under this Agreement, the Reinsurer will, upon receipt of
notification of the change, provide adjusted reinsurance coverage in accordance
with the provisions of this Agreement. The Ceding Company will advise the
Reinsurer of any such change within sixty (60) days of its effective date.
7.1 REDUCTIONS AND TERMINATIONS
In the event of the reduction, lapse, or termination of a policy or
policies reinsured under this Agreement or any other agreement, the Ceding
Company will, in order to maintain its full retention, reduce or terminate
reinsurance on that life. If the reduction is on a policy reinsured under
this Agreement, the Ceding Company's Retained Share will be adjusted, and
Reinsured Net Amount at Xxxx will be recalculated, using the new Specified
Amount.
If the reduction is on a policy not reinsured under this Agreement, the
reinsurance reduction will apply first to the policy or policies being
reduced and then, on a chronological basis, to other reinsured policies on
the life, beginning with the oldest policy. As a result of such
reductions, to the extent necessary, the Ceding Company will recalculate
the full available retention defined in Exhibit A for each policy
reinsured under this Agreement and recalculate Ceding Company's Retained
Share and Reinsured Net Amount at Risk for the policy.
If the reinsurance for a policy has been placed with more than one
reinsurer, the reduction will be applied to all reinsurers pro rata to the
amounts currently reinsured under this Agreement.
7.2 NONCONTRACTUAL INCREASES
If the amount of insurance is increased as a result of a noncontractual
change, the increase will be underwritten by the Ceding Company in
accordance with its customary standards and procedures. The policy will be
reinsured under this Agreement using the total risk amount as adjusted in
accordance with Article 5. For purposes of reinsurance, the original age
and duration of the policy will be used for the total risk amount; however
the underwriting class will be based on the most recent assessment and may
differ from the underwriting classification in effect prior to the
increase. The Reinsurer's approval is required if the original policy was
reinsured on a facultative basis or if the new amount will cause the total
amount on the life to exceed either the Automatic Binding Limits or the
Jumbo Limits shown in Exhibit B - Plans Covered and Binding Limits.
7.3 CONTRACTUAL INCREASES
Increases in the Net Amount at Risk of the Base Policy caused by an
Automatic Increasing Benefit Rider shall be reinsured automatically as
described in Article 5 without regard to the Automatic Binding Limits or
the Jumbo Limits shown in Exhibit B, provided that the total of
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all such increases to the Specified Amount of a single policy does not
exceed [dollar amount].
7.4 RISK CLASSIFICATION CHANGES
If the policyholder requests a table rating reduction, removal of a flat
extra, or change in smoking status, such change will be underwritten
according to the Ceding Company's normal underwriting practices. Risk
classification changes on facultative policies will be subject to the
Reinsurer's approval.
7.5 REINSTATEMENT
If a policy is reinstated in accordance with its terms and in accordance
with Ceding Company rules and procedures, the Reinsurer will, upon
notification of reinstatement, reinstate the reinsurance coverage. If the
policy was facultatively reinsured, approval by the Reinsurer will only be
required prior to the reinstatement of the reinsurance if the Ceding
Company's regular reinstatement rules indicate that more evidence than a
Statement of Good Health is required. Upon reinstatement of the
reinsurance coverage, the Ceding Company will pay the reinsurance premiums
that would have accrued had the policy not lapsed, together with interest
at the same rate as the Ceding Company receives under its policy, and for
the period for which the Ceding Company received premium in arrears and
interest.
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ARTICLE 8
REPLACEMENTS AND CONVERSIONS
8.1 INTERNAL REPLACEMENTS
A policy issued as an internal exchange or replacement of a policy not
reinsured under this Agreement and underwritten by the Ceding Company in
accordance with its underwriting guidelines, standards and procedures for
exchanges and replacements will be treated as new business under this
Agreement. Reinsurance may be ceded automatically or facultatively
according to the same terms and conditions as apply to other new business.
Reinsurance premium rates will be based on the issue age, issue date, and
underwriting classification of the new policy.
If a policy reinsured under this Agreement is internally exchanged or
replaced, reinsurance will continue under this Agreement or any future
agreement between the parties to the extent applicable. Reinsurance
premium rates will be based on issue age and duration of the original
policy and on the underwriting classification of the new policy.
8.2 CONVERSIONS
Contractual term conversions from Ceding Company's term insurance policies
to a policy otherwise reinsured under this Agreement will be administered
according to the provisions outlined in the term reinsurance treaty
applicable at the time of the original policy issue rather than under this
Agreement; except that a policy issued as a result of a contractual term
conversion will be eligible for reinsurance under this Agreement if the
converted term policy was less than one year old at the time of
conversion. In that event, reinsurance premium rates will be based on the
issue age, issue date, and underwriting classification of the new policy.
In the event a term insurance policyholder seeks to convert to a policy
reinsured under this Agreement and at the same time increase the face
value or specified amount of the policy, if the exchange is agreed to by
the Ceding Company, such exchange shall be treated as an internal
replacement as described in the first paragraph of Article 8.1, above, for
purposes of reinsurance; such that the new policy shall be considered new
business and reinsurance premium rates will be based on the issue age,
issue date, and underwriting classification of the new policy.
In the event of a contractual conversion of an Other Insured Rider that is
issued in connection with a policy reinsured under this Agreement, such
conversion shall be treated as an internal replacement as described in the
second paragraph of Article 8.1 above, for purposes of reinsurance; such
that reinsurance shall continue for the new policy under the terms of this
Agreement or any future agreement between the parties, as applicable, and
reinsurance premium rates shall be based on issue age and duration of the
original policy and on the underwriting classification of the new policy.
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ARTICLE 9
CLAIMS
Claims covered under this Agreement include only death claims, which are those
due to the death of the insured on a policy or rider reinsured under this
Agreement, and any additional benefits specified in Exhibit B - Plans Covered
and Binding Limits, which are provided by the underlying policy and are
reinsured under this Agreement.
9.1 NOTICE
The Ceding Company will advise the Reinsurer, as soon as reasonably
possible, after it receives a notice of a claim on a policy reinsured
under this Agreement. Upon receiving a notice of claim, Ceding Company
shall provide the Reinsurer with a Notice of Reinsurance Claim. The Notice
of Reinsurance Claim will include the insured's name and date of birth,
the policy number, the policy issue date, the Specified Amount, the risk
amount reinsured with the Reinsurer, and the cause and date of death.
9.2 CLAIM SETTLEMENT PROCESS
The Ceding Company will review and settle claims in accordance with the
following process:
(a) For all non-contestable claims, and for all contestable claims
covered by Automatic Reinsurance with a total death benefit less
than or equal to [dollar amount] the Ceding Company will review and
settle such claims without prior approval from or consultation with
the Reinsurer.
(b) For all contestable claims covered by Automatic Reinsurance with
total death benefits [dollar amount] but less than or equal to
[dollar amount] the Ceding Company will provide a copy of the
underwriting file and all claims investigation information only to
the Lead Reinsurer assigned in Article 9.4, provided all of the
following criteria are met: (a) the insured was a resident of the
United States or Canada at the time of death, (b) in the judgment of
the Ceding Company there is no evidence of misrepresentation, fraud
or other circumstances that would require special claims handling or
investigation, (c) the Ceding Company has not decided to deny or
contest the claim, (d) legal proceedings have not been initiated
against the Ceding Company in connection with the claim. The Ceding
Company will wait at least five (5) business days for the Lead
Reinsurer's recommendation before admitting liability or proceeding
to settle the claim.
(c) For (i) all contestable claims covered by Automatic Reinsurance with
death benefits exceeding [dollar amount], (ii) any contestable claim
covered by Automatic Reinsurance with death benefits exceeding
[dollar amount] where the conditions in 9.2 (b) are not met, and
(iii) any claim, whether
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contestable or non-contestable, covered by Automatic Reinsurance
with death benefits exceeding [dollar amount] in which the death of
the insured occurred in a country other than the United States or
Canada (notwithstanding anything to the contrary stated above), the
Ceding Company will send all reinsurers the full underwriting and
claims investigation information prior to payment or admission of
liability on the claim. The Ceding Company will wait at least five
(5) business days for the reinsurers' recommendations before
admitting liability or proceeding to settle the claim.
(d) For all contestable Facultative claims, the Ceding Company will send
the Reinsurer(s) on the Facultative risk a copy of the full
underwriting file and claims investigation information prior to the
payment or admission of liability on the claim. The Ceding Company
will wait at least five (5) business days for the Reinsurer's
recommendation prior to admitting liability or proceeding to settle
the claim.
Notwithstanding the foregoing, the Ceding Company's only obligation under
subsections (b), (c), and (d) above, shall be to consult with the
Reinsurer or the Lead Reinsurer, as the case may be. The Reinsurer's or
Lead Reinsurer's failure to provide a recommendation within five business
days of receiving claim notification from the Ceding Company shall be
deemed ratification of any action taken by the Ceding Company on the
claim. For claims falling under (b), (c) and (d) above, the required
consultation will not impair the Ceding Company's freedom to determine the
proper action on the claim and any adjudication of the claim or settlement
made by the Ceding Company will be unconditionally binding on the
Reinsurer.
It is understood and agreed the ultimate authority to pay or deny a claim
will rest solely with the Ceding Company; failure to follow any
reinsurer's recommendation will not relieve the Reinsurer of its
reinsurance liability.
With respect to the five (5) business day periods described in subsections
(b), (c), and (d) above, as well as the five (5) business day periods
described in Articles 9.4 and 9.5 below, the Reinsurer may request within
the five (5) business day period an extension of an additional ten (10)
business days (up to fifteen (15) business days in total) to provide its
recommendation or decision, as the case may be, in which case the Ceding
Company shall not unreasonably withhold approval of such request unless an
extension would cause the Ceding Company to violate any statutory time
limit on claims settlement.
Dollar amounts specified in 9.2 (a), (b), and (c) above shall be applied
on a per life basis to total death benefits covered by policies reinsured
under this Agreement.
9.3 AMOUNT AND PAYMENT OF REINSURANCE BENEFITS
As soon as the Ceding Company receives proper claim notice and proof of
claim from a claimant or beneficiary, and the claim has been reviewed and
settled in accordance with the process described in Article 9.2, the
Ceding Company may seek reinsurance benefits by submitting Proof of Claim
to the Reinsurer. Proof of Claim shall mean proof of payment by the Ceding
Company, an itemized statement of benefits paid by the Ceding Company, and
a
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copy of the insured's death certificate Upon receipt of Proof of Claim,
the Reinsurer will promptly pay the reinsurance benefits due the Ceding
Company The Ceding Company's contractual liability for policies reinsured
under this Agreement is binding on the Reinsurer, provided that the claim
was paid in good faith and the company's standard practices were followed
in the adjudication of the claim.
The total reinsurance recoverable from all companies will not exceed the
Ceding Company's total contractual liability on the policy, less the
amount retained; provided such limitation shall not relieve Reinsurer from
any liability under Article 9.9 below. The maximum reinsurance death
benefit payable to the Ceding Company under this Agreement is the risk
amount specifically reinsured with the Reinsurer; provided such maximum
shall not relieve Reinsurer from any liability under Article 9.9 below.
The Reinsurer will also pay its proportionate share of interest that the
Ceding Company pays on the death proceeds until the date of settlement.
Death benefit payments will be made in a single sum, regardless of the
Ceding Company's settlement options.
9.4 LEAD REINSURER
In the interest of expediting the claim settlement process and
streamlining the amount of information sent to all reinsurers, the parties
agree to use the Lead Reinsurer process described above in Article 9.2
(b). For claims falling under Article 9.2(b) above, consultation on
Automatic Reinsurance contestable claims will be determined by the
following schedule:
---------------------------------------------------------
Claimant Last Name Lead Reinsurer
---------------------------------------------------------
A-D [name of reinsurance company]
---------------------------------------------------------
E-H [name of reinsurance company]
---------------------------------------------------------
I-L [name of reinsurance company]
---------------------------------------------------------
M-P [name of reinsurance company]
---------------------------------------------------------
Q-Z [name of reinsurance company]
---------------------------------------------------------
The Lead Reinsurer will act in a consultative role only and will not make
any claim decisions concerning payment of a claim, nor will the Lead
Reinsurer act as a third party administrator of claim materials required
by other reinsurers under this Agreement.
If the Ceding Company and Lead Reinsurer do not agree concerning the
payment of a claim or any action to be taken relative to the claim, the
Ceding Company will submit all relevant claims documentation to all
reinsurers on the risk for their consideration. The Ceding Company will
wait at least five (5) business days for the reinsurers' comments before
proceeding to settle the claim.
IDSL VUL4 / LP Select Treaty 14
In no event will the Lead Reinsurer be granted the authority to act on
behalf of the other reinsurers with respect to any decision regarding
being a party to a contest, compromise, or litigation of a claim involving
reinsurance.
9.5 CONTESTED CLAIMS
The Ceding Company will promptly advise the Reinsurer of its intention to
contest, compromise, or litigate any claim involving a reinsured policy.
In that event the Ceding Company will also promptly and fully disclose to
the Reinsurer all relevant claim documentation. Once notified, the
Reinsurer will have five (5) business days to notify the Ceding Company in
writing of its decision to accept participation in the contest,
compromise, or litigation.
If the Reinsurer does not accept participation, the Reinsurer must then
fulfill its obligation by paying the Ceding Company its full share of
reinsurance and will not share in any subsequent reduction or increase in
liability arising out of or in connection with the claim.
If the Reinsurer accepts participation in the Ceding Company's contest,
compromise, or litigation of a claim, the Reinsurer will share
proportionately in any resulting reduction or increase arising out of or
in connection with the claim. The Ceding Company will keep the Reinsurer
apprised of all significant developments in the claim investigation,
including notification of any legal proceedings against it in response to
a denial of a claim. If litigation has commenced or claimant has made a
demand for an amount exceeding the contract benefits, the Reinsurer may
discharge its liability only by tendering payment of reinsurance proceeds
to the Ceding Company in an amount proportionate to a pending settlement
offer made by the claimant to the Ceding Company.
9.6 CLAIM EXPENSES
The Reinsurer will pay its share of reasonable claim investigation and
legal expenses connected with the investigation, settlement, or litigation
of claims unless the Reinsurer has discharged its liability pursuant to
Article 9.5 above. If the Reinsurer has so discharged its liability, the
Reinsurer will not participate in any expenses incurred thereafter in
connection with the claim.
The Reinsurer will not reimburse the Ceding Company for routine claim and
administration expenses, including the Ceding Company's home office
expenses and any legal expenses other than third party expenses incurred
by the Ceding Company. Claim investigation expenses do not include
expenses incurred by the Ceding Company as a result of a dispute or
contest arising out of conflicting claims of entitlement to policy
proceeds or benefits.
9.7 MISREPRESENTATION OR SUICIDE
If the Ceding Company returns premium to the policyowner or beneficiary as
a result of misrepresentation or suicide of the insured, the Reinsurer
will refund all reinsurance premiums received on that policy without
interest to the Ceding Company in lieu of any other form of
IDSL VUL4 / LP Select Treaty 15
reinsurance benefit payable under this Agreement; however the Reinsurer
remains liable to the Ceding Company under the terms of this Agreement in
the event there is litigation, settlement, or other disposition of a claim
in connection with the policy.
9.8 MISSTATEMENT OF AGE OR SEX
In the event of a change in the amount of the Ceding Company's liability
on a reinsured policy due to a misstatement of age or sex, the Reinsurer's
liability will change proportionately. Reinsurance premiums will be
adjusted from the inception of the policy, and any difference will be
settled without interest.
9.9 EXTRA CONTRACTUAL OBLIGATIONS
The Reinsurer will not participate in Punitive Damages or Compensatory
Damages that 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 claims covered under this
Agreement.
However, the parties recognize that circumstances may arise in which
equity would require the Reinsurer, to the extent permitted by law, to
share proportionately in Extra Contractual Obligations. [terms of
extra-contractual damages redacted]
For purposes of this Agreement, Extra Contractual Obligations includes
Punitive Damages, Compensatory Damages, Statutory Penalties and any other
damages or penalties other than or in addition to payment of policy
benefits. The foregoing terms are defined as follows:
"Punitive Damages" are those damages awarded as a penalty, the amount of
which is neither governed nor fixed by statute.
"Compensatory Damages" are those amounts awarded to compensate for the
actual damages sustained, and are not awarded as a penalty, nor fixed in
amount by statute.
"Statutory Penalties" are those amounts awarded as a penalty, but are
fixed in amount by statute.
IDSL VUL4 / LP Select Treaty 16
ARTICLE 10
CREDIT FOR RESERVES
10.1 The Parties intend that the Ceding Company will receive statutory reserve
credit in its state of domicile for the insurance risks ceded to the
Reinsurer. The Parties agree to make all reasonable efforts to ensure that
this is accomplished. The Ceding Company does not expect to receive
statutory reserve credit for any necessary deficiency reserves.
IDSL VUL4 / LP Select Treaty 17
ARTICLE 11
RETENTION LIMIT CHANGES
11.1 The Ceding Company reserves the right to change its retention limits as
shown in Exhibit A - Retention Limits of the Ceding Company, in which case
it will provide the Reinsurer with written notice of the intended changes
thirty (30) days in advance of their effective date. The Ceding Company
may increase the percentage used to determine its Retained Share under
this Agreement, its Per Life Retention Limit, or both.
A change to the Ceding Company's retention limits will not affect the
reinsured policies in force except as provided for in Article 12.
IDSL VUL4 / LP Select Treaty 18
ARTICLE 12
RECAPTURE
12.1 Whenever the Ceding Company, pursuant to Article 11, increases its
retention limits over the retention limits set forth in Exhibit A -
Retention Limits of the Ceding Company, the Ceding Company has the option
to recapture certain risk amounts. If the Ceding Company has maintained
its maximum stated retention for the plan and the insured's age, sex, and
mortality classification or at least the lesser of its Per Life Retention
Limit or [percentage] on a facultative risk, it may apply its increased
retention limits to reduce the amount of reinsurance in force as follows:
(a) The Ceding Company must give the Reinsurer ninety (90) days written
notice prior to its intended date of recapture.
(b) The reduction of reinsurance on affected policies will become
effective on the policy anniversary date immediately following the
notice of election to recapture; however, no reduction will be made
until a policy has been in force for a duration of at least [number]
years.
(c) If any reinsured policy is recaptured, all reinsured policies
eligible for recapture under the provisions of this Article must be
recaptured up to the Ceding Company's new retention limits in a
consistent manner and the Ceding Company must increase its total
amount of insurance retained on each reinsured life. The Ceding
Company may not revoke its election to recapture for policies
becoming eligible at future anniversaries.
Recapture for a policy may occur at different times because of different
duration requirements under various reinsurance agreements. For a policy
subject to recapture from the Reinsurer that has met the duration
requirement in clause (b) above, the revised Reinsured Net Amount at Risk
shall be determined using Ceding Company's Retained Share as if the policy
were eligible for recapture from all reinsurers who have a share of the
risk on that policy (or who had a share of risk on that policy prior to an
earlier recapture). For a policy not yet subject to recapture from the
Reinsurer because of an unattained duration requirement, Reinsured Net
Amount at Risk will continue being determined using Ceding Company's
Retained Share as provided for in Exhibit A as if the policy were not
eligible for recapture by any of the reinsurers who have or had a share of
the risk on the policy.
The amount of reinsurance eligible for recapture is based on the Net
Amount at Risk as of the date of recapture. For a policy issued as a
result of a fully-underwritten exchange, the policy date and current
duration of the new policy and the recapture provisions under this
Agreement will be used.
IDSL VUL4 / LP Select Treaty 19
Following the effective date of recapture, the Reinsurer will not be
liable for any reinsured policies or portions of such reinsured policies
eligible for recapture that the Ceding Company has overlooked
inadvertently.
If the Ceding Company transfers business that is reinsured under this
Agreement to a successor ceding company, then the successor ceding
company has the option to recapture the reinsurance in accordance with
the recapture criteria outlined in this Article, but only if the
successor ceding company has or adopts a higher maximum retention limit
than that applicable to the block of business subject to recapture.
The terms and conditions for the Ceding Company to recapture reinsured
policies, as made necessary by the insolvency of the Reinsurer, are set
forth in Article 16.3 - Insolvency of the Reinsurer. The terms and
conditions for the Ceding Company to recapture reinsured policies as a
result of rate actions taken by the Reinsurer are set forth in Article
6.5 - Premium Rates.
No recapture will be permitted if the Ceding Company has either obtained
or increased stop loss reinsurance coverage as justification for the
increase in retention limits.
IDSL VUL4 / LP Select Treaty 20
ARTICLE 13
GENERAL PROVISIONS
13.1 CURRENCY
All payments and reporting by both parties under this Agreement will be
made in United States dollars.
13.2 PREMIUM TAX
The Reinsurer will not reimburse the Ceding Company for premium taxes.
13.3 MINIMUM CESSION
There are no minimum initial automatic cession limits under this
Agreement.
13.4 INSPECTION OF RECORDS
The Reinsurer and the Ceding Company, or their duly authorized
representatives, will have the right to inspect original papers, records,
and documents relating to the business reinsured under this Agreement.
Such access will be provided during regular business hours at the office
of the inspected party.
13.5 INTEREST RATE
If, under the terms of this Agreement, interest is accrued on amounts due
either party, such interest will be calculated using the ninety (90) day
Federal Government Treasury Xxxx rate as reported in the Wall Street
Journal in the month following the end of the billing period plus fifty
(50) basis points. The method of calculation will be simple interest
"Bankers' Rule" (or three hundred sixty (360) day year).
13.6 NOTICES
Notices made by either party for purposes of Articles 6, 11, 12, 16, 18,
19, and 22 (or for the purpose of changing the address or addressee
information contained in this Article 13.6) shall be in writing and signed
by an authorized officer of the notifying party. Such notices shall be
deemed to have been duly given on the date of delivery, if delivered
personally, or on the date postmarked if sent by certified mail. Notice
must be properly addressed as follows:
IDSL VUL4 / LP Select Treaty 21
(a) The Ceding Company:
[name]
Reinsurance Officer
50806 AXP Financial Center
Xxxxxxxxxxx, XX 00000
(b) The Reinsurer:
[name]
[name of reinsurance company]
[address, city and state of reinsurance company]
All other communications between the parties under this Agreement may be
effected by authorized personnel by telephone, electronic mail, facsimile
transmission, Written correspondence or other commercially reasonable and
customary means of communication.
13.7 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Minnesota notwithstanding any state's choice of law
rules to the contrary. In the event it should become necessary for the
Ceding Company to seek enforcement of its rights under this Agreement
through litigation, the Reinsurer agrees to submit to the jurisdiction of
any court of competent jurisdiction within the United States and will
comply with all requirements necessary to give such court jurisdiction
with respect to the matters arising hereunder.
13.8 SURVIVAL
All provisions of this Agreement will survive its termination to the
extent necessary to carry out the purposes of this Agreement or to
ascertain and enforce the parties' rights and obligations hereunder
existing at the time of termination.
13.9 NON-WAIVER
No waiver by either party of any violation or default by the other party
in the performance of any promise, term, or condition of this Agreement
will be construed to be a waiver by such party of any other or subsequent
default in performance of the same or any other promise, term or
condition of this Agreement. No prior transactions or dealing between the
parties will be deemed to establish any custom or usage waiving or
modifying any provision hereof. The failure of either party to enforce
any part of this Agreement will not constitute a waiver by such party of
its right to do so, nor will it be deemed to be an act of ratification or
consent.
13.10 NON-TRANSFERABILITY
IDSL VUL4 / LP Select Treaty 22
Reinsurer may not sell, transfer or assign its rights or obligations
under this Agreement to any other person or entity without the prior
written consent of the Ceding Company. The foregoing shall not be
construed to limit the ability of the Reinsurer to retrocede reinsurance
on an indemnity basis.
IDSL VUL4 / LP Select Treaty 23
ARTICLE 14
DAC TAX
14.1 The parties to this Agreement agree to the following provisions pursuant
to Section 1.848- 2(g) (8) of the Income Tax Regulations effective
December 29, 1992, under Section 848 of the Internal Revenue Code of
1986, as amended:
(a) The term `party' refers to either the Ceding Company or the
Reinsurer, as appropriate.
(b) The terms used in this Article are defined by reference to
Regulation Section 1.848-2, effective December 29, 1992.
(c) 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).
(d) Both parties 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.
(e) The Ceding Company will submit a schedule to the Reinsurer by April
I of each year with its calculation of the net consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an officer of the Ceding
Company stating that the Ceding Company will report such net
consideration in its tax return for the preceding calendar year. The
Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company in writing within thirty (30) days
of the Reinsurer's receipt of the Ceding Company's calculation. If
the Reinsurer does not so advise the Ceding Company within the
required timeframe, the Reinsurer will report the net consideration
as determined by the Ceding Company in the Reinsurer's tax return
for the previous calendar year.
(f) If the Reinsurer contests the Ceding Company's calculation of the
net consideration, the parties will act in good faith to reach an
agreement as to the correct amount within thirty (30) days of the
date the Reinsurer submits its alternative calculation. If the
Ceding Company and the Reinsurer reach an agreement on an amount of
net consideration, each party will report the agreed upon amount in
its tax return for the previous calendar year.
(g) Both the Ceding Company and the Reinsurer represent and warrant that
they are subject to United States taxation under either Subchapter L
or Subpart F of Part III of Subchapter N of the Internal Revenue
Code of 1986, as amended.
IDSL VUL4 / LP Select Treaty 24
ARTICLE 15
OFFSET
15.1 Any debts or credits, in favor of or against either the Reinsurer or the
Ceding Company with respect to this Agreement or any other reinsurance
agreement between the parties, are deemed mutual debts or credits and will
be offset and only the balance will be allowed or paid.
The right of offset will not be affected or diminished because of the
insolvency of either party.
IDSL VUL4 / LP Select Treaty 25
ARTICLE 16
INSOLVENCY
16.1 INSOLVENCY OF A PARTY TO THIS AGREEMENT
A party to this Agreement will be deemed insolvent when it:
(a) applies for or consents to the appointment of a receiver,
rehabilitator, conservator, liquidator or statutory successor of its
properties or assets; or
(b) is adjudicated as bankrupt or insolvent; or
(c) files or consents to the filing of a petition in bankruptcy, seeks
reorganization or takes advantage of any bankruptcy, dissolution,
liquidation or similar law or statute; or
(d) becomes the subject of an order to rehabilitate or an order to
liquidate as defined by the insurance code of the jurisdiction of
the party's domicile.
16.2 INSOLVENCY OF THE CEDING COMPANY
In the event of the insolvency of the Ceding Company, all reinsurance
payments will be payable directly to the liquidator, rehabilitator,
receiver, or statutory successor of the Ceding Company, without diminution
because of the insolvency, for those claims allowed against the Ceding
Company by any court of competent jurisdiction or by the liquidator,
rehabilitator, receiver or statutory successor having authority to allow
such claims.
In the event of insolvency of the Ceding Company, the liquidator,
rehabilitator, receiver, or statutory successor will give written notice
to the Reinsurer of all pending claims against the Ceding Company on any
policies reinsured within a reasonable time after such claim is filed in
the insolvency proceeding. While a claim is pending, the Reinsurer may
investigate and interpose, at its own expense, in the proceeding where the
claim is adjudicated, any defense or defenses that it may deem available
to the Ceding Company or its liquidator, rehabilitator, receiver, or
statutory successor.
The expense incurred by the Reinsurer will 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 that may accrue to
the Ceding Company solely as a result of the defense undertaken by the
Reinsurer. Where. two or more reinsurers are participating in the same
claim and a majority in interest elect to interpose a defense or defenses
to any such claim, the expense will be apportioned in accordance with the
terms of this Agreement as though such expense had been incurred by the
Ceding Company.
The Reinsurer will be liable only for its proportionate share of the
amounts reinsured and will not be or become liable for any amounts or
reserves to be held by the Ceding Company on policies reinsured under this
Agreement.
IDSL VUL4 / LP Select Treaty 26
16.3 INSOLVENCY OF THE REINSURER
In the event of the Reinsurer's insolvency and upon giving written notice
to the Reinsurer, the Ceding Company may, at its option, immediately
terminate this Agreement with respect to the reinsurance of new business
and may recapture all of the business reinsured by the Reinsurer under
this Agreement.
Any recapture fee will be mutually agreed upon by the Ceding Company and
the Reinsurer, its rehabilitator, conservator, liquidator or statutory
successor.
IDSL VUL4 / LP Select Treaty 27
ARTICLE 17
ERRORS AND OMISSIONS
17.1 If through unintentional error, oversight, omission, or misunderstanding
(collectively referred to as "errors"), the Reinsurer or the Ceding
Company fails to comply with the terms of this Agreement and if, upon
discovery of the error by either party, the other is promptly notified and
corrective action is promptly taken, each thereupon will be restored to
the position it would have occupied if the error had not occurred,
including interest. It is understood, however, that interest will not be
included when routine underpayments or overpayments of reinsurance
premiums are discovered and promptly corrected according to the terms of
this Agreement.
If it is not possible to restore each party to the position it would have
occupied but for the error, the parties will endeavor in good faith to
promptly resolve the situation in a manner that is fair and reasonable,
and most closely approximates the intent of the parties as evidenced by
this Agreement.
However, 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 in administration by the
Ceding Company. If either party discovers that the other party has failed
to cede or accept reinsurance as provided in this Agreement, or failed to
comply with its reporting requirements, the party at fault may be
requested to audit its records for similar errors and to take the actions
necessary to rectify the situation and avoid similar errors in the future.
IDSL VUL4 / LP Select Treaty 28
ARTICLE 18
DISPUTE RESOLUTION
18.1 In the event of a dispute, the parties agree to the following process of
dispute resolution. Within fifteen (15) days after the Reinsurer or the
Ceding Company has first given the other party written notification of a
specific dispute, each party will appoint a designated company officer to
attempt to resolve the dispute. The officers will meet at a mutually
agreeable location as soon as possible and as often as necessary, in order
to gather and furnish the other with all appropriate and relevant
information concerning the dispute. The officers will discuss the problem
and will negotiate in good faith without the necessity of any formal
arbitration proceedings. During the negotiation process, all reasonable
requests made by one officer to the other for information will be honored.
The designated officers will decide the specific format for such
discussions.
If the officers cannot resolve the dispute within thirty (30) days of
their first meeting, the dispute will be submitted to formal arbitration,
unless the parties agree in writing to extend the negotiation period for
an additional thirty (30) days.
IDSL VUL4 / LP Select Treaty 29
ARTICLE 19
ARBITRATION
19.1 It is the intention of the Reinsurer and the Ceding Company that the
customs and practices of the life insurance and reinsurance industry will
be given full effect in the operation and interpretation of this
Agreement. The parties agree to act in all matters with the highest good
faith. However, if the Reinsurer and the Ceding Company cannot mutually
resolve a dispute that arises out of or relates to this Agreement, and the
dispute cannot be resolved through the dispute resolution process
described in Article 18 - Dispute Resolution, the dispute will be decided
through arbitration as a precedent to any right of action hereunder.
To initiate arbitration, either the Ceding Company or the Reinsurer will
notify the other party in writing of its desire to arbitrate, stating the
nature of its dispute and the remedy sought. The party to which the
notice is sent will respond to the notification in writing within fifteen
(15) days of its receipt.
There will be three arbitrators who will be current or former officers of
life insurance or life reinsurance companies other than the parties to
this Agreement, their affiliates or subsidiaries. Each of the parties
will appoint one of the arbitrators and these two arbitrators will select
the third. If either party refuses or neglects to appoint an arbitrator
within sixty (60) days of the initiation of the arbitration, the other
party may appoint the second arbitrator. If the two arbitrators do not
agree on a third arbitrator within thirty (30) days of the appointment of
the second arbitrator, then the appointment of the third arbitrator will
be left to the XXXXX-U.S (the XXXX Reinsurance & Insurance Arbitration
Society).
Once chosen, the arbitrators are empowered to select the site of the
arbitration and decide all substantive and procedural issues by a
majority of votes. As soon as possible, the arbitrators will establish
arbitration procedures as warranted by the facts and issues of the
particular case. The arbitrators will have the power to determine all
procedural rules of the arbitration including but not limited to
inspection of documents, examination of witnesses and any other matter
relating to the conduct of the arbitration. The arbitrators may consider
any relevant evidence; they will weigh the evidence and consider any
objections. Each party may examine any witnesses who testify at the
arbitration hearing.
The arbitrators will base their decision on the terms and conditions of
this Agreement and the customs and practices of the life insurance and
reinsurance industries rather than on strict interpretation of the law.
The decision of the arbitrators will be made by majority rule and will be
submitted in writing. The decision will be final and binding on both
parties and there will be no appeal from the decision. Either party to
the arbitration may petition any court having jurisdiction over the
parties to reduce the decision to judgment.
IDSL VUL4 / LP Select Treaty 30
Unless the arbitrators decide otherwise, each party will bear the expense
of its own arbitration activities, including its appointed arbitrator and
any outside attorney and witness fees. The parties will jointly and
equally bear the expense of the third arbitrator and other costs of the
arbitration.
IDSL VUL4 / LP Select Treaty 31
ARTICLE 20
CONFIDENTIALITY
20.1 The Ceding Company and the Reinsurer agree that Customer and Proprietary
Information belonging to the other party will be treated as confidential.
Customer Information includes, but is not limited to, medical, financial,
and other personal information about proposed, current, and former
policyowners, insureds, applicants, and beneficiaries of policies issued
by the Ceding Company. Proprietary Information includes, but is not
limited to, business plans and trade secrets, mortality and lapse studies,
underwriting manuals and guidelines, applications and contract forms, and
the specific terms and conditions of this Agreement.
Customer and Proprietary Information will not include information that:
(a) is or becomes available to the general public through no fault of
the party receiving the Customer or Proprietary Information (the
"Recipient");
(b) is independently developed by the Recipient;
(c) is acquired by the Recipient from a third party not covered by a
confidentiality agreement; or
(d) is disclosed under a court order, law or regulation.
The parties will not disclose Customer and Proprietary Information
belonging to or received from the other party, to any other parties unless
agreed to in writing, except as necessary for retrocession purposes, as
requested by external auditors, as required by court order, or as required
or allowed by law or regulation. In no event will information pertaining
to the policyholders, insureds and clients of the Ceding Company be
disclosed to a third party by Reinsurer if such disclosure would
constitute or cause a violation of state or federal privacy laws.
The Ceding Company acknowledges that the Reinsurer can aggregate data with
other companies reinsured with the Reinsurer as long as the data cannot be
identified as belonging to the Ceding Company.
IDSL VUL4 / LP Select Treaty 32
ARTICLE 21
SEVERABILITY
21.1 If any provision of this Agreement is determined to be invalid or
unenforceable, such determination will not impair or affect the validity
or the enforceability of the remaining provisions of this Agreement.
IDSL VUL4 / LP Select Treaty 33
ARTICLE 22
DURATION OF AGREEMENT
22.1 This Agreement is unlimited as to its duration. The Ceding Company or the
Reinsurer may terminate this Agreement with respect to the reinsurance of
new business by giving ninety (90) days written notice of termination to
the other party, sent by certified mail. The first day of the notice
period is deemed to be the date the document is postmarked.
During the notification period, the Ceding Company will continue to cede
and the Reinsurer will continue to accept policies covered under the terms
of this Agreement. Reinsurance coverage on all reinsured policies will
remain in force until the termination or expiry of the policies or until
the contractual termination of reinsurance under the terms of this
Agreement.
IDSL VUL4 / LP Select Treaty 34
ARTICLE 23
EXECUTION
23.1 This Agreement is effective as of November 25, 2002, and applies to all
eligible policies with issue dates on or after such date, and to eligible
policies applied for on or after such date that were backdated for up to
six (6) months. This Agreement has been made in duplicate and is hereby
executed by both parties.
IDS LIFE INSURANCE COMPANY [NAME OF REINSURANCE COMPANY]
By: /s/ Xxxxxxx X. Xxxxxxxx By: [signature]
-------------------------------------------- ---------------------------------------------
(signature) (signature)
Xxxxxxx X. Xxxxxxxx [name]
-------------------------------------------- ---------------------------------------------
(print or type name) (print or type name)
Title: VP - Insurance Title: [title]
-------------------------------------------- ---------------------------------------------
Date: 12/19/03 Date: Dec 23, 2003
-------------------------------------------- ---------------------------------------------
Location: Minneapolis, MN Location: [city and state of reinsurance company]
-------------------------------------------- ---------------------------------------------
[signature]
Attest: /s/ Xxxxx X. Xxxxxx Attest:
(signature) (signature)
Title: Reinsurance Officer Title: [title]
-------------------------------------------- ---------------------------------------------
IDSL VUL4 / LP Select Treaty 35
EXHIBIT A
RETENTION LIMITS OF THE CEDING COMPANY
A.1 LIFE INSURANCE
-----------------------------------------------
Issue Age Per Life Retention
Limit (All Ratings)
-----------------------------------------------
[ages] [dollar amount]
-----------------------------------------------
[ages] [dollar amount]
-----------------------------------------------
For purposes of determining Per Life Retention on automatically ceded
business, Ceding Company will retain [percentage] of the specified amount
of any base policy or rider up to the Per Life Retention Limit as
specified in the above chart. Amounts in excess of the Per Life Retention
Limit are factored into the calculation of Retained Share as explained
below.
In determining whether the Per Life Retention Limit has been reached for
any insured life, retained amounts on all in force single life coverages
(and one-half of the retained amounts on joint life coverages) issued by
the Ceding Company, except for the VUL III plan, will be added together
to determine the Ceding Company's available retention for policies
reinsured under this Agreement; such retained amounts to be determined
based on records maintained by the Ceding Company. The Ceding Company's
retention will be filled in the following order: (i) in force policies
other than VUL III issued prior to the issuance of the Base Policy (the
policy reinsured under this Agreement); (ii) the Base Policy; (iii) Base
Insured Rider, if any; (iv) policies issued subsequent to the issuance of
the Base Policy. The Per Life Retention Limit applies to risk retained by
the Ceding Company regardless of whether the policies on the life are
reinsured on an automatic or facultative basis.
Retained Share means that portion of the Net Amount at Risk which is not
ceded to reinsurers. Retained Share for automatic business shall mean the
amount produced by the following formula: [(a divided by b) times c]
where:
"a" equals [percentage] of the Specified Amount up to the amount that
would cause Ceding Company to exceed its Per Life Retention Limit;
"b" is the Specified Amount; and
"c" is the Net Amount at Risk.
Retained Share for facultative cessions will be determined by the same
formula but the percentage used in the calculation shall be determined on
a case-by-case basis. It is understood
IDSL VUL4/LP Select Treaty A-1
the Ceding Company may at its option retain an amount less than the
available retention on facultative policies, unless otherwise specified
in the Reinsurer's facultative offer.
IDSL VUL4/LP Select Treaty A-2
EXHIBIT B
PLANS COVERED AND BINDING LIMITS
The business reinsured under this Agreement is defined as follows:
B.1 PLANS, RIDERS AND BENEFITS
Policies issued on plans with effective dates on or after the
Commencement Date shown below qualify for reinsurance under the terms of
this Agreement. It is understood that policies may be backdated by up to
six months from the date shown below.
COMMENCEMENT
PLAN IDENTIFICATION DATE
-----------------------------------------------------------
VUL-IV (Form 30061 with Nov. 25, 2002
endorsement 132024, and Form
F0061C)
LP Select (Form 30080C) Nov. 25, 2002
BENEFIT & RIDERS:
Automatic Increasing Benefit Nov. 25, 2002
Rider (AIBR) (Form 30965)
Base Insured Rider (BIR) (Form Nov. 25, 2002
132023)
Other Insured Rider (OIR) (Form Nov. 25, 2002
30450 and Form 30976C)
B.2 BASIS
Cessions may be automatic, capacity facultative, or non-capacity
facultative. Only mortality risk will be reinsured under this Agreement.
Automatic cessions shall be on a first dollar quota share basis with the
Ceding Company retaining its Retained Share as described in Exhibit A.
Net Amount at Risk in excess of the Retained Share will be ceded to
reinsurers, a percentage of which is assumed by Reinsurer as the
Reinsured Net Amount at Risk, determined as of the last policy
anniversary or subsequent policy change date if applicable.
IDSL VUL4/LP Select Treaty B-1
Reinsurer's Percentage Share for purposes of calculating the Reinsured Net
Amount at Risk is [percentage].
Facultative cessions will be negotiated on a case-by-case basis. Ceding
Company at its discretion may submit any policy for facultative
consideration rather than automatic cession or in cases where automatic
capacity has been exhausted. For facultative cessions, the Ceding
Company's Retained Share and the Reinsurer's Percentage Share of the
Reinsured Net Amount at Risk shall be determined based on terms offered by
Reinsurer and accepted by Ceding Company at the time the policy or rider
is applied for.
B.3 AUTOMATIC BINDING LIMITS
Life
------------------------------------------------------------------------
Issue Age Standard - Table D Table E - H Table I - P
------------------------------------------------------------------------
[ages] [dollar amount] [dollar amount] [dollar amount]
------------------------------------------------------------------------
[ages] [dollar amount] [dollar amount] [dollar amount]
------------------------------------------------------------------------
[ages] [dollar amount] [dollar amount] [dollar amount]
------------------------------------------------------------------------
[ages] [dollar amount] [dollar amount] [dollar amount]
------------------------------------------------------------------------
The Ceding Company may not cede reinsurance automatically if the sum of
all amounts in force and applied for on the same life with the Ceding
Company, excluding amounts being internally replaced, exceeds the above
Automatic Binding Limits. These Automatic Binding Limits include any
amounts within the Ceding Company's retention.
Increased policy amounts elected under the terms of the Automatic
Increasing Benefit Rider will not be taken into account for automatic and
jumbo limits, provided that the total of all increases to the Specified
Amount of a single policy cannot exceed [dollar amount].
If an applicant has existing joint life coverage inforce with Ceding
Company, the full face amount of the joint life policy will be included in
the total inforce risk on the life for the purposes of the application of
automatic and jumbo limits.
B.4 JUMBO LIMITS
-----------------------------------------------
Issue Age Jumbo Limit
-----------------------------------------------
[ages] [dollar amount]
-----------------------------------------------
[ages] [dollar amount]
-----------------------------------------------
IDSL VUL4/LP Select Treaty B-2
The Ceding Company will not cede any risk automatically if, according to
information available to the Ceding Company, the total amount in force
and applied for on the life with all insurance companies, including any
amount to be replaced, exceeds the applicable amounts shown above.
B.5 CONDITIONAL RECEIPT OR TEMPORARY INSURANCE AGREEMENT
The Reinsurer's liability will not exceed its proportionate share of
a) [dollar amount], or
b) [dollar amount] if the amount is ordered by a court of competent
jurisdiction or the result of a settlement with the applicant.
B.6 CESSION LIMITS
Minimum Initial Cession: None.
B.7 INTERNATIONAL RISKS
The Ceding Company may cede reinsurance automatically on international
clients who (1) meet the financial and medical criteria listed in the
Ceding Company's "Guidelines for Underwriting International Clients", (2)
are standard or preferred based on [name of reinsurance company]'s
Foreign Risk Guidelines for individual countries, and (3) are between
the ages of 18 and 70, inclusively, at point of issue.
If an international client meets the Ceding Company's medical and
financial criteria, but requires a flat extra based on [name of
reinsurance company]'s Foreign Risk Guidelines, the Ceding Company
may cede the risk automatically only after consultation with a member
of [name of reinsurance company]'s International Underwriting Team.
The consultation must be documented in the underwriting file. If an
international client does not meet the Ceding Company's medical or
financial criteria or requires individual consideration under [name
of reinsurance company]'s Foreign Risk Guidelines, reinsurance may
not be ceded automatically.
The Ceding Company will promptly notify the Reinsurer of any proposed
material changes in its international client guidelines. This Agreement
will not extend to policies issued pursuant to such changes unless the
Reinsurer has consented in writing to accept policies subject to such
changes.
IDSL VUL4/LP Select Treaty B-3
EXHIBIT C
FORMS, MANUALS, AND ISSUE RULES
C.1 The Ceding Company affirms that its retention schedule, underwriting
guidelines, facultative placement rules, issue rules, premium rates and
policy forms applicable to the Reinsured Policies and in use as of the
effective date, have been supplied to the Reinsurer.
The Ceding Company will promptly notify the Reinsurer of any proposed
material changes in its underwriting guidelines or facultative placement
rules. This Agreement will not extend to policies issued pursuant to such
changes unless the Reinsurer has consented in writing to accept policies
subject to such changes.
It is the Ceding Company's responsibility to ensure that its practices
and applicable forms are in compliance with current Medical Information
Bureau (MIB) guidelines.
IDSL VUL4/LP Select Treaty C-1
EXHIBIT D
REINSURANCE PREMIUMS
D.1 PREMIUMS AND ALLOWANCES
Plans covered under this Agreement will be reinsured on a YRT basis.
Reinsurance premium rates shall equal the Ceding Company's original
annual Band 4 COI premium rates for the VUL-III plan, as shown in
Schedule D-1 attached hereto, less the following allowances:
--------------------------------------------------------------
UNDERWRITING CLASS YEARS 1-10 YEARS 11+
--------------------------------------------------------------
Preferred Non-Smoker [percentage] [percentage]
--------------------------------------------------------------
Standard Non-Smoker [percentage] [percentage]
--------------------------------------------------------------
Smoker [percentage] [percentage]
--------------------------------------------------------------
To determine the amount of reinsurance premium to be paid by the Ceding
Company to the Reinsurer, these reinsurance premium rates will be applied
to the Reinsured Net Amount at Risk for each policy determined as of the
last policy anniversary or subsequent policy change date if applicable.
D.2 AGE BASIS
Age Last Birthday
D.3 POLICY FEES
The Reinsurer will not participate in any policy fees.
D.4 SUBSTANDARD PREMIUMS
Substandard multiple ratings will be applied to increase the underlying
COI rates by [percentage] per table of assessed rating, and the normal
base allowances will be paid on the entire amount.
When flat extras are applied, the following allowances will be paid on
the extra premium portion:
IDSL VUL4/LP Select Treaty D-1
Temporary (five years or less): [percentage] for first year and all
renewal years Permanent (over five years): [percentage] for first year and
[percentage] for all renewal years
D.5 RIDERS AND BENEFITS
AIBR (Automatic Increase Benefit Rider) - Elected increases will be
proportionately reinsured using the premiums for the base coverage, at
point-in-scale.
BIR (Base Insured Rider) and OIR (Other Insured Rider) - These riders will
be Proportionately reinsured using the same premium rates scale as used
for the base coverage.
ACCELERATED DEATH BENEFIT - If IDS Life pays an accelerated death benefit
under the terms of the policy contract, the reinsurance coverage will
continue unaffected until the death of the insured.
The following benefits are not reinsured under this Agreement:
Waiver of Monthly Deduction Rider (WMD)
Children's Insurance Rider (CIR)
Accidental Death Benefit Rider (ADB)
IDSL VUL4/LP Select Treaty D-2
--------------------------------------------------------------------------------------------------------------------
SCHEDULE D- 1
--------------------------------------------------------------------------------------------------------------------
Basis for Reinsurance Premiums
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
ALB ANNUAL COST OF INSURANCE RATES PER $1000 (BEFORE ALLOWANCES)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Male Male Male Female Female Female
--------------------------------------------------------------------------------------------------------------------
Attained Preferred Standard Standard Preferred Standard Standard
--------------------------------------------------------------------------------------------------------------------
Age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
0
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1
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2
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3
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4
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5
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6
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7
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8
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9
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10
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11
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12
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13
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14
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15
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16
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17
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18
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19
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20
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21
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22
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23
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24
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25
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26
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27
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28
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29
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IDSL VUL4/LP Select Treaty D-3
--------------------------------------------------------------------------------------------------------------------
Male Male Male Female Female Female
--------------------------------------------------------------------------------------------------------------------
Attained Preferred Standard Standard Preferred Standard Standard
--------------------------------------------------------------------------------------------------------------------
Age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
30
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31
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32
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33
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34
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35
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36
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37
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38
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39
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40
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41
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42
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43
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44
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45
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46
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47
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48
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49
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50
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51
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52
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53
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54
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55
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56
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57
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58
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59
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60
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61
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62
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63
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64
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65
--------------------------------------------------------------------------------------------------------------------
IDSL VUL4/LP Select Treaty D-4
--------------------------------------------------------------------------------------------------------------------
Male Male Male Female Female Female
--------------------------------------------------------------------------------------------------------------------
Attained Preferred Standard Standard Preferred Standard Standard
--------------------------------------------------------------------------------------------------------------------
Age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
66
--------------------------------------------------------------------------------------------------------------------
67
--------------------------------------------------------------------------------------------------------------------
68
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69
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70
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71
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72
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73
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74
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75
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76
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77
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78
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79
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80
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81
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82
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83
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84
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85
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86
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87
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88
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89
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90
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91
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92
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93
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94
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95
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96
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97
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98
--------------------------------------------------------------------------------------------------------------------
99
--------------------------------------------------------------------------------------------------------------------
IDSL VUL4/LP Select Treaty D-5
EXHIBIT E
SELF-ADMINISTERED REPORTING
E.1 The Ceding Company will self-administer all reinsurance reporting. The
Ceding Company will send the Reinsurer the reports listed below at the
frequency specified.
MONTHLY TRANSACTION REPORTS
1. New Business
2. First Year - Other than New Business
3. Renewal Year
4. Changes and Terminations
5. Accounting Information
QUARTERLY PERIODIC REPORTS
6. Statutory Reserve Information
7. Policy Exhibit Information
8. Inforce
A brief description of the data requirements follows below.
TRANSACTION REPORTS
The Ceding Company will report policy data using the Quasar (R2) system.
1. NEW BUSINESS
This report will include new issues only, the first time the policy
is reported to the Reinsurer. Automatic and Facultative business
will be identified separately.
2. FIRST YEAR - OTHER THAN NEW BUSINESS
This report will include policies previously reported on the new
business detail and still in their first duration, or policies
involved in first year premium adjustments.
3. RENEWAL YEAR
All policies with renewal dates within the Accounting Period will
be listed.
4. CHANGES AND TERMINATIONS
Policies affected by a change during the current reporting period
will be included in this report. Type of change or termination
activity must be clearly identified for each policy.
The Ceding Company will identify the following transactions either
by separate listing or unique transaction codes: Terminations,
Reinstatements, Changes, Conversions, and Replacements. For
Conversions and Replacements, the Ceding Company will report the
original policy date, as well as the current policy date.
IDSL VUL4/LP Select Treaty E-2
5. ACCOUNTING INFORMATION
Premiums and allowances will be summarized for Life coverages,
Benefits, and Riders by the following categories: Automatic and
Facultative, First Year and Renewals.
PERIODIC REPORTS
6. STATUTORY RESERVE INFORMATION
Statutory reserves will be summarized for Life coverages, Benefits
and Riders. The Ceding Company will specify the reserve basis used.
7. POLICY EXHIBIT INFORMATION
This is a summary of transactions during the current period and on
a year-to-date basis, reporting the number of policies and
reinsured amount.
8. INFORCE
This is a detailed report of each policy in force.
IDSL VUL4/LP Select Treaty E-2
EXHIBIT F
APPLICATION FOR FACULTATIVE REINSURANCE
SUBMITTED TO:
(Reinsurers) --------------- ----------------- ----------------- -------------
FROM: DATE:
------------------------------ ----------------------------
(Ceding Company)
POLICY NUMBER: INCREASING AMOUNT: YES NO
--------- ---------- --------
PLAN NAME: IF INCREASING, ULTIMATE AMOUNT:
--------- ----------------
BIRTH DATE TOBACCO PREF
LAST NAME FIRST MIDDLE M/D/Y SEX USE CLASS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
JOINT INSURED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
LIFE SPECIFY OTHERS, E.G. SECOND LIFE, WAIVER, ADB,
ETC.
------------------------------------------------------------------------------------------------------------------
PREVIOUS INFORCE WITH
CO.:
------------------------------------------------------------------------------------------------------------------
OF WHICH WE RETAIN:
------------------------------------------------------------------------------------------------------------------
NOW APPLYING FOR:
------------------------------------------------------------------------------------------------------------------
OF WHICH WE WILL RETAIN:
------------------------------------------------------------------------------------------------------------------
REINS. AMOUNT APPLIED
FOR:
------------------------------------------------------------------------------------------------------------------
IN EXCESS OF JUMBO: YES NO IF REPLACEMENT: INTERNAL EXTERNAL
-------- -------- -------- --------
OUR MORTALITY ASSESSMENT:
(TABLE &/OR FLAT EXTRA) -------------------- SPECIAL RISK FEATURES: AVIATION
------
FOREIGN/TRAVEL
------
OCCUPATION/AVOCATION
------
--------------------------------------- ---------------------------------------
ENCLOSED REQUIREMENTS REQUIREMENTS TO FOLLOW
--------------------------------------- ---------------------------------------
IDSL VUL4/LP Select Treaty F-1
--------------------------------------- ---------------------------------------
--------------------------------------- ---------------------------------------
--------------------------------------- ---------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
REMARKS
--------------------------------------------------------------------------------
UNDERWRITING CONTACT: TEL #:
---------------- ----------------
E-MAIL:
---------------------------------
IDSL VUL4/LP Select Treaty F-2
