MANAGEMENT SERVICES AGREEMENT
This Agreement is made by and between Northwestern National Life Insurance
Company , an insurance corporation organized and existing under the laws of the
State of Minnesota, herein called "NWNL", and Bankers Security Life Insurance
Society, an insurance corporation organized and existing under the laws of the
State of New York, herein called "BSL".
WHEREAS, NWNL provides management and policy services and goods for itself;
and
WHEREAS, BSL desires to obtain from NWNL certain management and policy
services and goods,
NOW, THEREFORE, it is agreed as follows:
1. SERVICES. NWNL shall undertake and provide the management services and
functions requested by BSL and described in Exhibit A and the appendices
thereto.
2. LIMITATIONS. This Agreement covers only those services and functions
specifically described in Exhibit A and the appendices thereto. Any
amendment or addition to the Agreement, Exhibits or appendices will not be
effective until such amendment or addition is filed with, and non-objected
to by, the New York Insurance Department ("Department"). In the event any
services provided hereunder require the exercise of judgment by BSL, NWNL
will perform such services in accordance with written standards and
guidelines developed by BSL.
3. EXPENSE ALLOCATION.
a. Unless included within 3.c. herein, services provided for BSL by
NWNL's corporate officers or staff shall be reimbursed by application
of a reimbursement charge to the product of the employee's scheduled
work hours during a servicing period and the percentage of time,
approximated as precisely as practicable based on servicing records,
spent by the employee during such period on BSL services. The
reimbursement charge shall be the aggregate of the hourly equivalent
dollar amount of the employee's total annualized compensation and the
employee's pro rata share of corporate overhead costs, provided that
corporate overhead costs shall not exceed 30% of total annualized
compensation. "Total annualized compensation" means salary, incentive
compensation and the dollar value of employee benefits provided by
NWNL during the servicing year to the employee.
b. Direct costs incurred by NWNL in providing the services and the cost
of all materials purchased by NWNL for the benefit of BSL shall be
reimbursed by BSL at such cost.
c. Costs incurred by NWNL's service areas, including, but not limited to,
accounting, computer services, corporate management, and data
processing units collectively, which allocate cost among the various
users of such services in proportion to the services actually rendered
to each user, shall be determined monthly by the appropriate NWNL
servicing unit based on the assessment of a mutually agreed upon
operational or maintenance servicing unit cost multiplied by the
number of hours billed to, or the volume of activity incurred by, BSL
during the month for services rendered.
d. No cost will be included in any billing to BSL unless NWNL documents,
based on company records, that the function resulted in a specific
service or benefit to BSL during the calendar period involved and that
the billable amount is reasonable in relation to the service or
benefit provided to BSL.
e. The determination of charges hereunder by NWNL shall be presented to
BSL, and if BSL objects to any such determination, it shall so advise
NWNL within thirty (30) days of receipt of notice of said
determination. Unless the parties can reconcile any such objection,
they shall agree to the selection of a firm of independent certified
public accountants which shall determine the charges properly
allocable to BSL and shall, within a reasonable time, submit such
determination, together with the basis therefor, in writing to NWNL
and BSL, whereupon such determination shall be binding. The expenses
of such a determination by a firm of independent certified accountants
shall be borne equally by NWNL and BSL. Determination of charges
hereunder shall be in accordance with New York Insurance Department
Regulation No. 33 to the extent applicable.
4. PAYMENT. NWNL shall submit to BSL monthly a written itemized statement
together with supporting documentation of the amount owed by BSL for
services and the use of facilities provided pursuant to this Agreement
during the preceding period; and BSL shall pay to NWNL within fifteen (15)
days following receipt of such written statement the amount set forth in
the statement.
5. ACCOUNTING RECORDS AND DOCUMENTS. NWNL shall be responsible for maintaining
full and accurate accounting records of all services rendered and
facilities used pursuant to this Agreement and such additional information
as BSL may reasonably request for purposes of its internal bookkeeping and
accounting operations. NWNL shall keep such accounting records, insofar as
they pertain to the computation of charges hereunder, available at its
principal
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offices for audit, inspection and copying by BSL or any governmental agency
having jurisdiction over BSL during all reasonable business hours.
6. OTHER RECORDS AND DOCUMENTS. All books, records, and files established and
maintained by NWNL by reason of its performance under this Agreement which,
absent this Agreement, would have been held by BSL, shall be deemed the
property of BSL, and shall be subject to examination by BSL and persons
authorized by it at all times. All such books, records and files shall be
promptly transferred to BSL by NWNL upon termination of this Agreement at
the expense of NWNL.
7. BSL CONTROL. BSL will maintain at its Home Office in the State of New York
qualified personnel, including an Officer, knowledgeable of and responsible
for the functions which will be performed for it by NWNL.
8. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed to
grant NWNL an exclusive right to provide services to BSL, and BSL retains
the right to contract with any third party, affiliated or unaffiliated, for
the performance of services or for the use of facilities as are available
to or have been requested by BSL pursuant to this Agreement.
9. TERMINATION. This Agreement shall take effect as of January 1, 1996, and
shall remain in force until terminated by either NWNL or BSL upon giving
thirty (30) days or more advance written notice. Upon termination, NWNL
shall at its expense promptly deliver to BSL all books and records that
are, or are deemed by this Agreement to be, the property of XXX.
00. SETTLEMENT ON TERMINATION. No later than sixty (60) days after the
effective date of termination of this Agreement, NWNL shall deliver to BSL
a detailed written statement for all charges incurred prior to the
effective date of termination and not included in any previous statement.
The amount owed thereunder shall be due and payable within fifteen (15)
days of receipt of such statement.
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11. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be
assignable by either party ___________ hereto, without the other party's
prior written consent. Except as, and to the extent, specifically provided
in this Agreement, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto, or their
respective legal successors, any rights, remedies, obligations or
liabilities, or to relieve any person other than the parties hereto, or
their respective legal successors, from any obligations or liabilities that
would otherwise be applicable. The covenants and agreements contained in
this Agreement shall be binding upon, extend to and inure to the benefit of
the parties hereto, and each of their successors and assigns respectively.
12. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by,
interpreted under, and the rights of the parties determined in accordance
with, the laws of the State of New York.
13. ARBITRATION. Any unresolved difference of opinion between the parties
arising out of or relating to this Agreement, or the breach thereof, except
as provided in Section 3, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association and the Expedited Procedures thereof, and judgment upon the
award rendered by the Arbitrator may be entered in any Court having
jurisdiction thereof. The arbitration shall take place in the State of New
York and the arbitrator(s) shall be unaffiliated with the parties hereto.
14. COMMITMENT AGREEMENT. It is understood that NWNL and BSL have certain
obligations under a Commitment Agreement with the New York Insurance
Department dated January 1, 1996 and it is agreed that no services will be
provided under this Agreement in violation of the aforementioned Commitment
Agreement, except for those allowed hereunder.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the 1st day of January 1996.
NORTHWESTERN NATIONAL LIFE BANKERS SECURITY LIFE
INSURANCE COMPANY INSURANCE SOCIETY
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxxx
-------------------------------- --------------------------------
By: Xxxxxxx X. Xxxxx By: Xxxxx X. Xxxxxx
Its: Vice President & Its: Vice President &
Associate General Counsel General Counsel
/s/ Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
-------------------------------- --------------------------------
By: Xxxxx X. Xxxxxx By: Xxxxx X. Xxxxxx
Its: Senior Vice President Its: Assistant Secretary
Chief Financial Officer
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BANKERS SECURITY LIFE INSURANCE SOCIETY
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY
HOLDING COMPANY AGREEMENT - SCHEDULE OF SERVICES
GENERAL SERVICES
COMPANY PROVIDING
NUMBER SERVICE SERVICE
A-1 BSL Financial Services and As Needed NMO Central
Systems Accounting Services NWNL
A-2 BSL Actuarial Services NWNL
A-3 Interior Design Services NWNL
A-4 Employee Benefits and 401(k) Business NWNL
A-5 Informational Service Support Functions NWNL
A-6 Legal Services NWNL
A-7 Personnel, Compensation Design, Benefits and Training NWNL
A-8 Printing Services NWNL
A-9 Sales Promotional Materials NWNL
SPECIALIZED SERVICES
COMPANY PROVIDING
NUMBER SERVICE SERVICE
A-10 Corporate Management Services NWNL
A-11 Medical Advice for Underwriting and Claims Support NWNL
SERVICES TO BE PERFORMED ON A "NEED" BASIS
COMPANY PROVIDING
NUMBER SERVICE SERVICE
A-12 Claims Processing and Support Services NWNL
A-13 Policy Holder Services NWNL
A-14 New Business and Administration NWNL
A-15 Underwriting Services NWNL
EXHIBIT A
BSL Financial Services and As Needed NMO Central Systems Accounting Services
NWNL will provide the following Accounting and Financial Services to BSL:
The preparation and filing of premium tax returns, preparation and
processing of accounting and financial records and transactions,
investment accounting, treasury services, general ledger, cost and
related areas, bank reconciliation, cashiers services including income
receipts and disbursements, assistance in accounting services for
commission processing, assistance in the preparation of and planning
relative to financial quarterly and annual statements, assistance in
accounting and financial services for budget preparation and planning,
and accounting and financial support.
The above services will be performed for BSL operations other than the
National Marketing Organization ("NMO") except that the NMO is eligible
to benefit from these financial services to achieve efficiencies
resulting from the use of central systems and processes, to achieve
economies of scale or when required because of overflow situations.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in xxxxxxxx to BSL for Accounting Services. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-1
BSL Actuarial Services
NWNL will provide the following Actuarial Services to BSL:
Actuarial services including clerical, technical and product actuarial
support.
The Actuarial Services provided by NWNL to BSL, and also to that part of
BSL known as the NMO, shall not be duplications of actuarial services which
USL provides to BSL or the NMO.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in xxxxxxxx to BSL for Actuarial Services. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-2
Interior Design Services
NWNL will provide Interior Design Services to BSL.
All final decisions related to these services shall be under the control of BSL
and it appropriate personnel.
A-3
Employee Benefits and 401(k) Business
NWNL shall provide clerical, technical and professional staff support services
for business activities related to employee benefits and 401(k) businesses.
Included in such support shall be informational and data base services, issuance
of new business and servicing of existing business, underwriting and payment of
claims.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-4
Informational Service Support Functions
NWNL will provide Informational services to BSL. An example of a service NWNL
would provide would be programmers knowledgeable in the Vantage (policy
administration) System. Services would include:
professional, technical, supervisory, programming and clerical support for
Informational services.
Informational and computer services provided by NWNL may be in the nature
of applications and programming support, enhancing existing systems, help
in installing new systems and centralized computer systems. A procedure
will be in place to prevent duplications in xxxxxxxx to BSL for information
data services it receives from affiliated companies.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and it appropriate personnel.
A-5
Legal Services
NWNL will provide the following Legal services functions to BSL:
Legal and legal related technical, paralegal and clerical services, including
general representation, legal opinions and advice, compliance, industry and
government relations, policy filing support.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-6
Personnel, Compensation Design, Benefits and Training
NWNL will provide compensation design and benefit services to BSL and training
where it has expertise. Services will be related to the following functions:
1. NWNL will provide BSL with benefit and compensation design services,
payroll services and related functions.
2. BSL will be a participating employer under various employee benefit plans
maintained by NWNL, which will also provide administrative support
services.
3. Training functions and on a when needed basis, personnel recruiting.
A procedure will be in place to prevent duplications in xxxxxxxx to BSL for
Personnel Matters. Such services will be under the control of BSL.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-7
Printing Services
NWNL will provide printing services functions to BSL when economy of scale can
be achieved and if requested by BSL. Example of printed materials might be
Compliance Manuals and Personnel Handbooks. A procedure will be in place to
prevent duplications in xxxxxxxx to BSL for printing services it receives from
affiliated companies.
BSL may purchase printing services from NWNL under the control of BSL.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-8
Sales Promotional Materials
If requested by BSL, and in those cases where NWNL has expertise, NWNL will
provide Sales promotional services to BSL. An example of such services would be
advertising, announcements and related communications.
A procedure will be in place to prevent duplications in xxxxxxxx to BSL for
sales promotional services. All final decisions related to these services shall
be under the control of BSL and it appropriate personnel.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A-9
Corporate Management Services
Upon the request of the appropriate officers of BSL, NWNL will provide the
following Corporate Management Services functions to BSL:
NWNL through its Chairman and Chief Executive Officer; President and Chief
Operating Officer; Senior Vice President, General Counsel and Secretary; Senior
Vice President, Financial Management; Senior Vice President, Strategic Marketing
and Technology; Senior Vice President, Investments; Senior Vice President and
Chief Financial Officer; or through other officers and/or the staff of NWNL,
shall provide to BSL the following services:
1. Consultative and advisory services to BSL's senior executive officers and
staff with respect to the conducting of BSL's business operations and the
execution of directives and resolutions of BSL's Board of Directors pertaining
to business operations and functions.
2. Consultation and participation in BSL's strategic planning process; the
development of business goals, objectives and policy; the development of
operational, administrative and quality programs; and the coordination of such
processes, goals, objectives, policy and programs with those of the Holding
Company system.
3. Management reporting services, both with respect to internal and external
reports, including the completion of peer company review analysis, coordination
of the annual planning process, consolidation of monthly operation results,
management and policyholder information reports, e.g., annual report,
maintenance of reporting systems and provision of cost account reports and
services.
4. Advice and assistance with respect to the maintaining of BSL's capital and
surplus, the development and implementation of financing strategies, plans and
the production of financial reports and records, and in all matters relating to
corporate financing, cash management, financial analysis and specialized
financial systems and programming.
5. Representation of BSL's interests at government affairs and insurance
industry meetings; participation in the deliberation and affairs of trade
associations and promotion of BSL's products provided that all promotional
materials shall receive BSL's prior approval before use.
6. Consultative advisory and administrative services to BSL's senior executive
officers and staff in respect to the development, implementation and
administration of human resource programs and policies; the delivery of
communications and information to employees regarding enterprise plans,
objectives and results; and the maintenance of employee relations, morale, and
developmental opportunities.
7. Consultation and participation in press releases and other public
announcements related to BSL.
8. Advice and strategies with regard to matching assets and liabilities.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. All final decisions related to these services
shall be under the control of BSL and its appropriate personnel.
A procedure will be in place to prevent duplications in xxxxxxxx to BSL for
Corporate Management Services.
A-10
Medical Advice for Underwriting and Claims Support
At present BSL does not have a medical doctor in its employment. It will
typically request medical advice from USL but as a back-up NWNL will provide
Medical advice for underwriting and claims support services functions to BSL. A
procedure will be in place to prevent duplications in xxxxxxxx to BSL for
Medical Advice. All final decisions related to these services shall be under the
control of BSL and its appropriate personnel.
A-11
Claims Processing and Support Services
NWNL will provide Claims processing services on an as needed basis with BSL
officers and appropriate personnel who are resident in New York having overall
operational responsibility and control. Such services will be provided in
overflow situations and where NWNL has the expertise.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in xxxxxxxx to BSL for claims processing. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-12
Policy Holder Services
NWNL will provide, on a when needed basis, Policy holder services to BSL with
BSL officers and appropriate personnel who are resident in New York having
overall operational responsibility and control. Such services will be performed,
if requested, in overflow situations where the Agreement between USL and BSL
does not provide sufficient overload capacity and where expertise is available
at NWNL.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in xxxxxxxx to BSL for policy holder service. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-13
New Business and Administration
NWNL will provide, on a when needed basis, New business and administration
services to BSL with BSL officers and appropriate personnel who are resident in
New York having overall operational responsibility and control. Such assistance,
if requested, will be available in overflow situations where the Agreement
between BSL and USL does not provide sufficient overload capacity and where NWNL
has expertise.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in xxxxxxxx to BSL for New Business and Administration. All final
decisions related to these services shall be under the control of BSL and it
appropriate personnel.
A-14
Underwriting Services
NWNL will provide, on a when needed basis, Underwriting services to BSL with BSL
officers and appropriate personnel who are resident in New York having overall
operational responsibility and control. Such assistance, if requested, will be
available in overflow situations where the agreement between USL and BSL does
not provide sufficient overload capacity where NWNL has the expertise.
For the above functions, BSL will establish procedures and have final authority
for their promulgation, will exercise final approval and have control over the
final product, and maintain a qualified employee at BSL familiar with the
services being performed for it. A procedure will be in place to prevent
duplications in xxxxxxxx to BSL for Underwriting Services. All final decisions
related to these services shall be under the control of BSL and it appropriate
personnel.
A-15
