Exhibit (g)(8)
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 #____________
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
9.6 Claim Expenses
9.7 Misrepresentation or Suicide
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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
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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
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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 it may
increase reinsurance premium rates as shown in Exhibit D, or any agreed
upon amendment thereto, only as provided for in the next paragraph.
[terms of rate guarantee redacted]
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[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 Risk 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 all
such
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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 premiums 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 recommendation from or
consultation with the Reinsurer.
(b) For all contestable claims covered by Automatic Reinsurance with
total death benefits exceeding four [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], and (ii) any
contestable claim covered by Automatic Reinsurance with death
benefits exceeding [dollar amount] where the conditions in 9.2
(b) are not met, 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.
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(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. For all non-contestable
Facultative claims, the Ceding Company will send the Reinsurer(s)
claim proofs after the claim has been reviewed and settled in
accordance with Article 9.3 below.
(e) For any claim covered 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 the
Reinsurer 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.
(f) The Reinsurer reserves the right to request and review
documentation on any claim paid by the Ceding Company pursuant to
(a) and (b) above.
Notwithstanding the foregoing, the Ceding Company's only obligation
under subsections (b), (c), (d) and (e) 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 (5) business days of receiving all relevant claim
documentation from the Ceding Company shall be considered as
Reinsurer's concurrence in the Ceding Company's settlement of the
claim, except for claims subject to Article 9.5 below. For claims
falling under (b), (c), (d) and (e) above, the required consultation
will not impair the Ceding Company's freedom to determine the proper
action on the claim.
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. 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.
With respect to the five (5) business day periods described in
subsections (b), (c), (d), and (e) above, as well as the five (5)
business day period described in Article 9.4 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 Coding 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), (c), and (e) above shall be
applied on a per life basis to total death benefits covered by policies
reinsured under this Agreement.
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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 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 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.
IDSL VUL4/LP Select Treaty 14
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.
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 ten (10) 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.
With respect to the ten (10) business day period described above, the
Reinsurer may request within the ten (10) business day period an
extension of an additional twenty (20) business days (up to thirty (30)
business days in total) to provide its decision to accept participation
in the contest, compromise, or litigation or to fulfill its obligation
by paying the Ceding Company its full share of reinsurance. 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.
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.
IDSL VUL4/LP Select Treaty 15
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
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 the Extra Contractual Obligations of the
Ceding Company. [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, but only to the extent that such obligations are not
covered under any Errors and Omissions or similar policy of insurance
issued to the Ceding Company. 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.
IDSL VUL4/LP Select Treaty 16
"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 17
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 18
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 19
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.
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.
IDSL VUL4/LP Select Treaty 20
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 21
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:
(a) The Ceding Company:
[name]
Reinsurance Officer
50806 AXP Financial Center
Xxxxxxxxxxx, XX 00000
IDSL VUL4/LP Select Treaty 22
(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
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 1 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.
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 30
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 31
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 32
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 33
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: 12/23/03 Date: 12/29/03
------------------------- -------------------------------
Location: Minneapolis, MN Location: [city and state of reinsurance
------------------------- company]
-------------------------------
Attest: /s/ Xxxxx X. Xxxxxx Attest: [signature]
------------------------- -------------------------------
(signature) (signature)
Title: Reinsurance Officer Title: [title]
------------------------- -------------------------------
IDSL VUL4/LP Select Treaty 34
EXHIBIT A
RETENTION LIMITS OF THE CEDING COMPANY
A.1 LIFE INSURANCE
-------------------------------------------
Issue Age Per Life Retention
Limit (All Ratings)
-------------------------------------------
[ages] [percentage]
-------------------------------------------
[ages] [percentage]
-------------------------------------------
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 (6) months from the date shown below.
COMMENCEMENT
PLAN IDENTIFICATION DATE
---------------------------------------------------------------------
VUL-IV (Form 30061 with endorsement Nov. 25, 2002
132024, and Form F0061C)
LP Select (Form 30080C) Nov. 25, 2002
BENEFIT & RIDERS:
Automatic Increasing Benefit Rider Nov. 25, 2002
(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
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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
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67
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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
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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-1
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:
-------------------------- -----------------------------
LAST NAME FIRST MIDDLE BIRTH DATE SEX TOBACCO PREF
M/D/Y 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: SPECIAL RISK FEATURES: AVIATION
----------------------- ----------
(TABLE &/OR FLAT EXTRA) FOREIGN/TRAVEL
----------
OCCUPATION/AVOCATION
----------
IDSL VUL4/LP Select Treaty F-1
------------------------------------------------------- -----------------------------------------------------------
ENCLOSED REQUIREMENTS REQUIREMENTS TO FOLLOW
------------------------------------------------------- -----------------------------------------------------------
------------------------------------------------------- -----------------------------------------------------------
------------------------------------------------------- -----------------------------------------------------------
------------------------------------------------------- -----------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
REMARKS
--------------------------------------------------------------------------------------------------------------------
UNDERWRITING CONTACT: TEL #:
--------------------- --------------------------
E-MAIL:
------------------------------------------
IDSL VUL4/LP Select Treaty F-2
