POLICY ADMINISTRATION AND DATA PROCESSING
SERVICES AGREEMENT
American Capitol Insurance Company, hereinafter referred to as
Administrator, and South Texas Bankers Life Insurance Company, hereinafter
referred to as Client, agree as follows:
During the term of this agreement ("Agreement"), Administrator will
perform for Client in respect to Client's policies the policy
administration and data processing services hereinafter designated in this
Agreement and exhibits attached hereto and made a part hereof for all
purposes. The policies that are the subject of this Agreement consist of
all of Client's inforce policies as of, and from the date of, June 1,
1996.
Administrator and Client acknowledge and confirm that Client is a wholly
owned subsidiary of World Service Life Insurance Company of America
("World Service"); that World Service and Administrator have entered into
an administration agreement similar to this Agreement in respect to World
Service's policies ("World Service Administration Agreement") (except that
Client does not engage in marketing of new policies and therefore no
marketing and underwriting guidelines or services are involved in the case
of this Agreement); that, in addition, Administrator entered into a
coinsurance agreement ("Coinsurance Agreement") with World Service
covering its policies in force which has a provision for monthly
settlement which includes the fees and expenses payable by World Service
to Administrator (for services pursuant to the World Service
Administrative Agreement) as a part of the monthly settlement pursuant to
the Coinsurance Agreement; that World Service is in the process of
assuming all of Client's policies, subject to required approval by
regulatory authorities, following which Client is to be dissolved and
liquidated into World Service; that, upon consummation of such assumption,
the policies that are the subject of this Agreement will become a part of
World Service's policies and thereby become subject to the World Service
Administration Agreement (as well as the aforesaid Coinsurance Agreement,
and which are being treated on an interim basis as though the subject
policies are a part of World Service's policies for purposes of the
Coinsurance Agreement); that this Agreement is intended to have the effect
on the parties hereto as though the subject policies were included in the
World Service Administration Agreement; that the fees and expenses payable
by Client to Administrator pursuant to this Agreement will be accounted
for in the settlement between World Service and Administrator in the
monthly settlement pursuant to the Coinsurance Agreement; that
Administrator is authorized to commingle the premiums received in respect
to the subject policies with the premiums received in respect to the World
Service policies; and that World Service is accountable to Client for
settling the financial interests between Client and World Service that are
involved in the aforementioned monthly settlement.
Client shall designate the person or persons to whom Administrator will
report. Client will keep Administrator informed of its corporate policy
or changes in policy to enable Administrator to carry out the subject
services for Client in an efficient manner. Client shall appoint one or
more of Administrator's officers as its attorney-in-fact to act for Client
Page 1 of 9 (including Exhibits)
in performing routine functions in the course of administering Client's
policies and performing data processing services as called for by this
Agreement. At any time during the term of this Agreement, Administrator
may enter into a consulting agreement with one or more employees of Client
to provide consulting services to Administrator regarding the
administration of the subject policies and the related marketing
operation, and Administrator shall be solely responsible for fees relating
thereto.
Administrator shall safeguard all data and information relating to
Client's business to the same extent that Administrator safeguards such
data and information relating to its own business, provided, however, if
such data or information is available to the general public, is known or
in the possession of Administrator prior to the date of this Agreement, or
is known or in the possession of Administrator prior to actual receipt by
Administrator of such information or data from client or is rightfully
obtained from third parties, Administrator shall bear no responsibility
for its disclosure, inadvertently or otherwise.
Client agrees that all systems, including data processing programs, discs,
tapes, documentations, manuals, specifications, ideas, applications,
routines, formulas, and techniques relating to the subject services
furnished, owned, licensed or developed by Administrator shall and may be
used by Administrator during the term of this Agreement and at any time
thereafter and shall be and remain the sole property of Administrator. If
Client furnished Administrator with any system related to its business,
said system shall remain the sole property of Administrator, and
Administrator may use such system or any other system to administer the
subject policies.
Administrator acknowledges that it received the policy files and related
documents and data in respect to the subject policies from Client and has
been administering same since June 1, 1996.
In the event of termination of this Agreement, Administrator may, at its
option, retain any property or data in its possession that belongs to
Client until all sums due Administrator pursuant to this Agreement are
paid, including such additional charges as may be determined by
Administrator and Client to be reasonable and necessary to effect an
orderly termination of the work and services then being performed by
Administrator and to assure and protect the orderly and timely
perpetuation of the Client's business as affected by such work and
services. Upon termination of this Agreement, Client shall instruct
Administrator in writing as to the disposition of all such property or
data within ninety (90) days.
Administrator shall use due care and diligence in performing the work and
services to be performed hereunder and agrees that it will correct any
errors which are caused solely by Administrator, its authorized agents,
employees, programs, or data processing equipment and machines, and its
liability for such errors shall be limited to the correction of same
within a reasonable time as full compensation for any and all damages
which may result from such error or errors and in any event, the liability
of Administrator to Client or any other party for any and all losses or
damages directly or indirectly arising out of this Agreement or the
performance hereof, shall not exceed the performance of the particular
task which gives rise to such loss or damages and such amount shall
Page 2 of 9 (including Exhibits)
constitute an agreed amount of liquidated damages for such losses and
damages. The parties recognize the liability that Administrator has in
respect to the subject policies in its capacity as Reinsurer under the
Reinsurance Agreement and, except as hereinabove stated, Administrator
shall not incur any additional liability by virtue of its role and
responsibilities as Administrator pursuant to this Agreement.
Client warrants that it is duly authorized to enter into this Agreement
and that Administrator has in no way caused or induced Client to breach
any contracted obligation and Client agrees to indemnify and hold harmless
Administrator from any claim or claims. Notwithstanding the foregoing,
this Agreement is subject to the approval of the Texas Department of
Insurance.
This Agreement and the exhibits attached hereto or made a part hereof
constitute the entire agreement of the parties on the subject of policy
administration and data processing services. Any modifications or
amendments must be in writing signed by both parties.
The parties hereto expressly agree that each will comply with all
applicable federal, state and local laws, the violation of which may
adversely affect the performance of this Agreement.
Client agrees that in the event of default in any of the covenants or
agreements contained herein or in payment of the charges provided herein
and in exhibit or exhibits attached hereto or made a part hereof, that it
will pay all costs and expenses of enforcement or collection, including
reasonable attorney's fees, which may arise or accrue.
This Agreement may not be terminated by either party during the existence
of the Coinsurance Agreement, and shall automatically terminate when the
Coinsurance Agreement terminates, unless the parties agree otherwise in
writing.
This Agreement is effective as of June 1, 1996.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, their successors and legal representatives, and shall not
be assigned by either party without the prior written consent of the other
party.
This Agreement shall be construed under the Laws of the State of Texas and
should any portion be invalid or unenforceable, for any reason, it shall
not affect the remainder of this Agreement which shall be valid and
binding. This Agreement is entered into and is performable in Xxxxxx
County, Texas.
IN WITNESS WHEREOF, the parties execute and deliver this Agreement.
American Capitol Insurance Company, Administrator
By: /s/Xxxxxxx X. Guest, Chairman
South Texas Bankers Life Insurance Company, Client
By: /s/Xxxx X. Xxxxxxxxxx, Vice Chairman
Page 3 of 9 (including Exhibits)
EXHIBIT A
MANAGEMENT
The Client's responsibility shall be:
1. To provide from its Board of Directors or an Officer instructions
regarding its corporate policy, products, growth and general operations of
the Company and such other instructions as are called for herein. To
select one or more officers of the Client to whom the Administrator is to
report and from whom the Administrator is to receive instructions. To
designate and appoint not less than two officers of Administrator to act
as Client's attorney-in-fact to perform in Client's place and stead the
routine policy transactions, such as policy issuance and claims payments
and such other functions as the parties may deem appropriate.
2. To provide financial interface and receive the financial reports from
Administrator.
3. To provide marketing interface and receive the marketing reports from
Administrator.
The Administrator's responsibilities shall be:
1. To perform the subject services in keeping with corporate policy of
the Client as communicated by the Client to Administrator.
2. To provide financial information relating to the subject policies
sufficient to enable Client to complete requirements of the various state
insurance departments, file premium tax, advertising and miscellaneous
reporting forms as required by the states.
CLAIMS SERVICE
The Client's responsibilities shall be:
To inform Administrator of its claims-paying policies and guidelines
respecting routine claims processing. To issue instructions to
Administrator in respect to claims that are other than routine or in
respect to which Administrator requests instructions. To inform
Administrator of all notices of claims when notice thereof is not sent
directly to Administrator.
The Administrator's responsibility shall be:
To verify and pay all claims in accordance with Client's policies,
guidelines and, when applicable, instructions.
POLICYHOLDER SERVICE
The Client's Responsibilities shall be:
To inform Administrator of its policies and guidelines respecting routine
policyholder service. To issue instructions to Administrator in respect
to policyholder service matters that are other than routine or in respect
to which Administrator requests instructions. To inform Administrator of
Page 4 of 9 (including Exhibits)
all communication received from policyholders when such communication is
not received directly by Administrator.
The Administrator's Responsibility shall be:
To answer and process all inquiries received, including cash surrenders,
policy loans, reinstatement requests and policy changes, in keeping with
Client's guidelines.
BILLING/COLLECTION
The Client's responsibility shall be: None, except to remit to
Administrator promptly any premiums or other payments in respect to the
subject policies received by the Client.
The Administrator's responsibilities:
To provide billing notices either through pre-authorized check or direct
bills for modal premiums when due. To provide late notices and lapse
notices in the event mode premiums are not received when due. To collect
and deposit in the Client's account all premiums received and reconcile on
a daily basis premium collections and deposits. In this regard, the
Client hereby authorizes the Administrator to establish one or more bank
accounts in the name of the Client in respect to which the Administrator's
officers are hereby authorized to sign and transact business in the same
manner that it operates banking accounts in its own name. The Client will
provide in a timely manner appropriate resolutions by its Board of
Directors and certifications by its officers to facilitate the above.
INVESTMENTS
The Client's responsibility shall be:
The Client as the Company in the Reinsurance Agreement is solely
responsible for the assets covering its share of policy liabilities as set
forth in the Reinsurance Agreement and the Client shall be solely
responsible for the investments relating to such assets, as well as its
other assets.
The Administrator's responsibility shall be:
The Administrator as the Reinsurer in the Reinsurance Agreement is solely
responsible for the assets covering its share of policy liabilities as set
forth in the Reinsurance Agreement and the Administrator shall be solely
responsible for the investments relating to such assets, as well as its
other assets.
ACTUARIAL
The Client's responsibility shall be:
To be responsible for its share of the costs of actuarial services
selected by Administrator as set forth below. Client shall be solely
responsible for any actuarial services that it may require for matters not
Page 5 of 9 (including Exhibits)
related to the subject policies or any actuarial services that are for the
exclusive benefit of the Client.
The Administrator's responsibility shall be:
To select a qualified actuary to perform all actuarial work, reviews and
certifications required in respect to the subject policies for the benefit
of the Client and Administrator in their roles as the Company and the
Reinsurer, respectively, in the Reinsurance Agreement. The costs thereof
shall be borne by the Company and the Reinsurer as a part of the monthly
accounting as provided in the Reinsurance Agreement, except that in any
instance in which such actuarial services are performed for the exclusive
benefit of either the Company or the Reinsurer, as the case may be, such
party shall bear the entire cost of the subject services.
ACCOUNTING, TAXES, REPORTING AND REGULATORY COMPLIANCE
The Client's responsibility shall be:
To inform Administrator of the Officer to whom Administrator is to report
and to inform Administrator of any specific format required to interface
with Company in respect to accounting procedures, taxes and tax reporting,
financial reporting and regulatory compliance. Client shall be solely
responsible for its accounting functions, taxes and tax reporting,
financial reporting and regulatory compliance.
The Administrator's responsibility shall be:
To provide sufficient policy data and information to Client to enable
client to record all accounting entries on Client's books to properly
account for all transactions implemented by Administrator in respect to
the subject policies.
COMMISSIONS
The Client's responsibility shall be:
Subject to the provisions and limitations in the Reinsurance Agreement, to
make all commission and other compensation arrangements with its agents.
The Administrator's responsibility shall be:
To prepare agent commission statements and disburse funds to agents based
on the results of the commission statements.
POLICY DIVIDENDS
The Client's responsibility shall be:
To determine and declare all dividends to be paid in respect to the
subject policies and to instruct Administrator accordingly.
The Administrator's responsibility shall be:
To pay or otherwise credit dividends to the subject policies in accordance
with Client's instructions. The Administrator shall be entitled to rely
Page 6 of 9 (including Exhibits)
upon and implement the dividend scales and practices of the Client that
exist as of the Effective Date of this Agreement and continuing thereafter
until changed in writing by the Client. When changed in writing by the
Client, the Administrator shall implement the change or changes in respect
thereto until a subsequent change in writing by the Client.
Page 7 of 9 (including Exhibits)
EXHIBIT B
DATA PROCESSING SERVICES
The Client's responsibility shall be:
To furnish data to Administrator in a timely manner where data is not
directly received by Administrator.
The Administrator's responsibilities shall be:
To provide all data processing services necessary to the normal
administration of the subject policies as called for by this Agreement.
Page 8 of 9 (including Exhibits)
Exhibit C
FEES
Client will be charged monthly according to the following schedule. Said
charges will be allocated between Client and Administrator in their
respective capacities as Company and Reinsurer as part of the monthly
accounting as set forth in the Reinsurance Agreement.
Maintenance
Monthly Fee Per Policy
Policy Status In Force (Beginning of Month)
Premium Paying ............................. $2.19
Fully Paid Up ............................. 1.36
Reduced Paid Up............................. .84
Policy Issue
Fee per policy issued...................... $35.00
Inflation
On each anniversary of the Effective Date of this Agreement, the per
policy fees will increase 3% (compounded).
Direct Expenses of Client
The Client will be solely responsible for actual costs incurred in
marketing new business and for fees of attorneys, accountants, tax
advisers and other consultants or professionals, if any (unless
specifically otherwise provided for elsewhere in this Agreement). Client
will also be solely responsible for any fees incurred by Administrator to
obtain and maintain a Third Party Administrator's license (if such license
is required).
Page 9 of 9 (including Exhibits)
