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EXHIBIT 1.A.(9)(b)
VARIABLE LIFE INSURANCE
SERVICE AGREEMENT
BETWEEN
XXXXXXX XXXXX LIFE INSURANCE COMPANY
AND
ML LIFE INSURANCE COMPANY OF NEW YORK
THIS SERVICE AGREEMENT (this "Agreement") dated as of
May 22, 1992, by and between XXXXXXX XXXXX LIFE INSURANCE COMPANY, an Arkansas
insurance corporation with offices at 000 Xxxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000 ("MLLIC") and ML LIFE INSURANCE COMPANY OF NEW YORK, a New York
insurance corporation with offices at 000 0xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("ML NY").
W I T N E S S E T H:
WHEREAS, MLLIC and its affiliates have systems and
experience necessary for the servicing of variable life insurance business;
WHEREAS, ML NY desires MLLIC to perform certain
administrative and special services for ML NY for new and in-force variable
life insurance policies of ML NY (the "Policies"); and
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WHEREAS, MLLIC and ML NY wish to assure that the use
of facilities and all charges for services incurred hereunder are reasonable
and in accordance with the requirements of applicable state regulations,
including New York Insurance Department Regulation No. 33 (11 NYCRR Section 91)
("Regulation 33"); and
WHEREAS, MLLIC and ML NY wish to identify the
services to be rendered to ML NY by MLLIC and its affiliates, subject to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and
of the mutual promises set forth herein, MLLIC and ML NY agree as follows:
1. PERFORMANCE OF SERVICES.
1.1 DESCRIPTION OF SERVICES AND PERFORMANCE STANDARDS.
Subject to the terms and conditions and limitations of this Agreement, MLLIC
agrees to perform the administrative and system services described in Exhibits
A and B, respectively, annexed hereto for the Policies (collectively, the
"Services"). The Services will be performed using the same standards of care
and diligence which MLLIC exercises in the performance of its own
administrative responsibilities.
2. ACCESS TO FACILITIES.
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2.1 FACILITIES AND TRAINED PERSONNEL. MLLIC will at all times
maintain sufficient facilities and trained personnel of the kind necessary to
perform this Agreement in a manner satisfactory to ML NY.
2.2 STATUS OF EMPLOYEE AND FACILITIES. Whenever MLLIC utilizes
its employees to perform Services for ML NY pursuant to this Agreement, such
employees shall at all times remain subject to the direction and control of
MLLIC, and ML NY shall have no liability to such persons for their welfare,
salaries, fringe benefits, legally required employer contributions and tax
obligations by virtue of the relationships established under this Agreement.
No facility of MLLIC used in performing the Services for or subject to use by
ML NY shall be deemed to be transferred, assigned, conveyed or leased by such
performance or use.
2.3 EXERCISE OF JUDGMENT IN RENDERING SERVICES. In performing any
of the Services hereunder, MLLIC shall at all times act in the best interests
of ML NY and MLLIC will use its best efforts and act in good faith in a manner
designed to maintain the existing and ongoing relationship between ML NY and
its variable life policyholders.
3. FEES. ML NY Agrees to pay MLLIC for services
rendered and those charges (direct and indirect) and expenses
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incurred by MLLIC or any of its affiliates or subsidiaries which, as reasonably
determined by MLLIC and demonstrated to the reasonable satisfaction of ML NY,
reflect actual cost to MLLIC or its affiliates or subsidiaries of furnishing
such Services, provided that:
(a) charges and expenses for personnel shall be based on
a reasonable allocation of the time spent on ML NY matters relative to time
spent on other matters; and
(b) charges and expenses for property or other Services
shall be based on a reasonable allocation of the proportion of and period of
time such property or Services is utilized for ML NY matters relative to that
utilized for other matters.
4. ACCOUNTING RECORDS AND DOCUMENTS.
4.1 MAINTENANCE OF RECORDS. MLLIC shall be responsible
for maintaining full and accurate accounts and records of all Services rendered
pursuant to this Agreement and such additional information as ML NY may
reasonably request for purposes of its internal bookkeeping, accounting
operations and management. MLLIC shall keep such accounts and records
available, during all reasonable business hours, at its principal
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offices, or at such other location as required by applicable state laws and
regulations or by state regulatory authorities, for audit, inspection and
copying by ML NY and persons authorized by it or any governmental agency having
jurisdiction over ML NY. With respect to accounting and statistical records
prepared by or for MLLIC by reason of its performance under this Agreement,
summaries of such records in a form acceptable to ML NY shall be delivered to
ML NY within fifteen days from the end of the period to which the records
pertain.
4.2 INSPECTION AND AUDIT RIGHTS. In addition to rights
granted under Section 5 below, at any time during the term of this Agreement,
and for a period of seven years after termination or expiration of this
Agreement, ML NY, or its authorized independent auditors or counsel, shall have
the right to inspect and audit MLLIC's premises and facilities, accounts, books
and records relating to the Services and the Policies upon two business days'
prior written notice during MLLIC's regular business hours.
5. OTHER RECORDS AND DOCUMENTS. All books, records and
files established and maintained by MLLIC by reasons of its performance under
this Agreement in respect of Policies shall be
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the property of ML NY and shall be delivered to ML NY promptly upon request by
ML NY.
6. OWNERSHIP OF DATA. MLLIC acknowledges that ML NY has
all right, title and interest in and to all non-public data relating to all
Policies, related client information and all other related information
generated electronically, in hard copy or otherwise, in the course of
performance of this Agreement. MLLIC may use all such information for the
exclusive purpose of servicing ML NY pursuant to the terms and conditions of
this Agreement and as may be required in order to comply with applicable laws
and the rules and regulations of any governmental entity.
7. FORCE MAJEURE; DISASTER RECOVERY.
7.1 FORCE MAJEURE. MLLIC shall not be liable to ML NY or
any other party for MLLIC's inability to perform its obligations under this
Agreement if such inability is due to strike or other labor dispute, fire, war,
terrorism, insurrection, act of God, governmental intervention, or which is
otherwise unavoidable with reasonable diligence and is caused by any event not
within the reasonable control of MLLIC and without its fault or negligence, and
the time of performance by MLLIC of its obligations hereunder shall be extended
for the period for
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which such event continues. Notice of the occurrence of any such event shall be
given promptly by MLLIC to ML NY.
8. INDEMNIFICATION. Each party hereto (the
"Indemnifying Party") and its affiliates shall indemnify the other party hereto
(the "Indemnified Party") and any of its affiliates, shareholders, officers,
directors, employees or agents from and against any loss, liability, claim,
penalty or damages (including reasonable attorney's fees and expenses) arising
from or relating to any breach by the Indemnifying Party of this Agreement, or
any claims made against the Indemnified Party by any party relating to the
Indemnifying Party's willful misconduct or negligence in performing, or failure
to perform, the terms of this Agreement.
9. TERM AND TERMINATION RIGHTS.
9.1 TERM. This Agreement will commence on the effective
date of the closing of the acquisition of the Monarch Life Insurance Company
variable life service center by MLLIC and will continue in effect unless
terminated pursuant to this Section 9.
9.2 EVENTS OF DEFAULT. Any one or more of the following
shall constitute an Event of Default as to a party hereunder:
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(a) It fails to perform or observe any covenant,
term or condition contained herein, including, but not limited to, breach of
performance or payment requirements and such failure or breach shall not have
been cured within 5 days after notice by the non-defaulting party of such
failure or breach; PROVIDED, HOWEVER, that if the defaulting party reasonably
believes that the failure or breach is not curable within such 5-day period,
the defaulting party may send written notice to the non-defaulting prior to the
expiration of such 5-day period setting forth the anticipated time it believes
would be necessary to cure, and the action proposed to effectively cure, such
failure or breach, and the non-defaulting party shall not unreasonably withhold
approval of such defaulting party's proposal;
(b) Any representation of it contained herein
shall be false and misleading as of the date made or deemed to be made;
(c) Any report or record prepared or submitted by
it pursuant to the terms of this Agreement, shall be intentionally false or
misleading as of the date made or deemed to have been made;
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(d) An event to which the provisions of Section
7.1 applies shall have occurred and be continuing for a period of 30
consecutive days.
9.3. REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default as
described in Section 9.2 above, the non-defaulting party may, at its option,
terminate the Agreement by giving written notice of its intention to terminate
this Agreement.
9.4 VOLUNTARY TERMINATION. Upon 90 days notice by either
party to the other this Agreement may be terminated.
10. EFFECT OF TERMINATION OF AGREEMENT. If this
Agreement is terminated by either party pursuant to any Section of this
Agreement, MLLIC will reasonably cooperate with ML NY to facilitate the
transition of the Services to ML NY or to another service provider selected by
ML NY. Upon termination of this Agreement, or at the end of the transition
period set forth in this Section 10 (the "Transition period"), at ML NY's
option and request, MLLIC shall perform all steps necessary, at the expense of
ML NY, to transfer all ML NY property and information to ML NY or a party
designated by ML NY and ML NY shall have the right, title and interest in and
to all such property and information, including, but not limited to, insurance
policies, financial and
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technical information and data, and MLLIC shall promptly deliver all such
property and information to ML NY or ML NY's designee.
11. CONFIDENTIALITY. The parties hereto agree that the
terms of this Agreement and all documents, know-how and technical, financial,
insurance, processing data, performance and client information owned by a party
and furnished or disclosed to the other party hereunder, including, without
limitation, all of the terms of this Agreement, shall be treated as proprietary
and confidential information and shall be held in strict confidence and shall
not, without the prior written consent of the party furnishing or disclosing
such information, be made available or disclosed to any third party (unless
such party agrees to be bound by the confidentiality restrictions set forth
herein) or be used by the other party hereto other than as contemplated
hereunder. Moreover, each party hereto agrees to restrict dissemination of
particular confidential information of the other party to only those persons in
their respective organizations who must have access to such information in
order for such party to perform its obligations under this Agreement.
Notwithstanding the above restriction, neither party shall have any obligation
for any disclosure of confidential information which is, or becomes, generally
known to the public without breach of the
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terms of this Agreement, or if any disclosure of confidential information is
required by court order or by order of any governmental or administrative
agency or tribunal having jurisdiction over the party.
12. MISCELLANEOUS.
12.1 ASSIGNMENT. MLLIC shall have the right to assign any
of its rights or obligations under this Agreement to an affiliate or to an
unaffiliated third party upon ML NY's prior consent, which consent shall not be
unreasonably withheld. ML NY shall have the right to assign any of its rights
or obligations hereunder to any affiliate upon notice to MLLIC. Except as and
to the extent specifically provided in this Agreement, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto, or their respective legal successors, any rights, remedies,
obligations or liabilities that would otherwise be applicable. The
representations and agreements contained in this Agreement shall be binding
upon, extend to and inure to the benefit of the parties hereto, and each of
their respective successors and authorized assigns.
12.2 MLLIC AFFILIATE AGREEMENTS. ML NY hereby
acknowledges that MLLIC may enter into agreements with an
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affiliate to assist it in providing the Services to ML NY under this Agreement,
PROVIDED, HOWEVER, MLLIC may not enter into any such agreement without the
prior express approval of ML NY.
12.3 GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York applicable to contracts made and to be performed in that State,
without regard to principles of conflicts of law.
12.4 ARBITRATION. All differences between MLLIC and ML NY
on which agreement cannot be reached will be decided by arbitration. The
arbitrators will interpret this Agreement in accordance with the usual business
practices, rather than strict technicalities or rules of law. Three
arbitrators will decide any differences. They must be officers of life
insurance companies other than the two parties to this agreement, their
parents, subsidiaries and affiliates. One of the arbitrators is to be
appointed by ML NY and one by MLLIC and these two will select a third. If the
two are unable to agree on a third, the choice will be left to the President of
the American Council of Life Insurance or its successor organization. The
arbitrators' decision will be by majority vote and no appeal will be taken
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from it. The costs of the arbitration will be borne by the losing party unless
the arbitrators decide otherwise.
12.5 NOTICE. Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if in writing
addressed as provided below if either (i) via facsimile (delivery will be
effective upon confirmation of receipt), (ii) actually delivered at such
address or (iii) in the case of a letter, five business days shall have elapsed
after the same shall have been deposited in the United States mails, properly
addressed, postage prepaid:
(a) If to ML NY to:
ML Life Insurance Company of New York
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Administrative Officer
(b) If to MLLIC:
Xxxxxxx Xxxxx Life Insurance Company
c/o Merrill Xxxxx Insurance Group, Inc.
000 Xxxxxxxx Xxxx Xxxx
Section 1D
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
or to such other persons or places as each party may from time to time
designate by written notice sent as provided in this Section 12.5
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12.6 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and understanding between the parties and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof.
12.7 SURVIVAL. Upon the expiration or termination of this
Agreement for any reason whatsoever, the obligations set forth in Section 4.2
(Inspection Rights), Section 5 (Other Records and Documents), Section 6
(Ownership of Data), Section 8 (Indemnification), Section 10 (Effect of
Termination or Expiration of Agreement), Section 11 (Confidentiality), and
Section 12.4 (Arbitration) shall survive such termination.
12.8 SEVERABILITY. The invalidity or unenforceability of
any term or provision hereof shall not affect the validity or enforceability of
any other term or provision hereof.
12.9 SECTION HEADINGS. Section headings contained herein
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12.10 COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed in duplicate by their respective officers duly authorized so to do,
and their respective corporate seals to be affixed hereto, as of the date and
year first above written.
ML LIFE INSURANCE COMPANY OF NEW YORK
By /s/ XXXXX X. XXXXXXXX
-----------------------------------
Name: XXXXX X. XXXXXXXX
Title: SENIOR VICE PRESIDENT
XXXXXXX XXXXX LIFE INSURANCE COMPANY
BY /S/ XXXX X. XXXXXXXXX
-----------------------------------
Name: XXXX X. XXXXXXXXX
Title: VICE PRESIDENT AND SENIOR
COUNSEL
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EXHIBIT A
DESCRIPTION OF THE SERVICES FOR
ML LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE LIFE PRODUCTS
MLLIC shall provide the following Services using reasonable diligence. In the
course of performing such Services, with respect to information which is not
furnished to MLLIC by third parties, MLLIC shall provide materially correct
information to ML NY and its Policyholders:
I. SELECTION, UNDERWRITING, AND ISSUANCE SERVICES
A. Application handling - Receive application or copy of
application and evidence of premium payment, including amount
and date of payment; enter information into computer system.
B. Based on ML NY underwriting requirements as communicated to
MLLIC from time to time, request information from marketing
firm, agent, applicant,
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doctor, or inspection company and pay all applicable fees for
such information requests.
C. Furnish underwriting support and advisory services, which
include reviewing policy applications in an advisory capacity
(including M.I.B. medical review) using ML NY underwriting
standards, and recommend decisions to ML NY for ML NY's final
determination; promptly upon receipt of ML NY's final
determination, enter decision into computer system.
D. If application must be declined or closed out, forward
explanatory letter and arrange for refund drawn on a ML NY
bank account and notify ML NY of such results.
E. Assembly and mailing
1. Assemble computer-printed ML NY policies with
materials pertinent to ML NY and to the product
(wallets, issue letters, identification cards,
illustrations, etc.)
2. Forward mailing package to policyholder or to general
agent for delivery.
3. Send copy of policy face sheet to ML NY.
F. Correspondence and forms
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Use ML NY's forms and stationery in all correspondence related
to underwriting and policy issue.
G. Documents and reports
Provide ML NY, upon request, with copies of all selection,
underwriting, and issuance documents and reports processed and
produced by MLLIC in support of ML NY, in either original
paper document form or microfiche form, as deemed appropriate
by ML NY under the circumstances. All original documents and
reports are the property of ML NY.
H. To the extent there are newly issued policies or add-ons for
which reinsurance applies, take customary ministerial steps
necessary for reinsurance by third parties to cover risks
pursuant to the terms of applicable automatic or facultative
reinsurance treaties or agreements.
II. POLICY SERVICE
MLLIC will be responsible for arranging for the handling of such
requests and for maintaining all records related to them.
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A. Be prepared to provide on request on a daily basis a record
for each policyholder (i) summarizing the name and address of
the policyholder, policy number, applicable policy form and
riders; investment base, allocation among the various
investment divisions of the investment base, cash surrender
value, and (ii) providing any other information requested by
ML NY. Such records shall be delivered to ML NY promptly upon
request.
B. Billing
1. Send to the contract owner premium notices and return
envelopes bearing ML NY's name and, at direction of
ML NY, ML NY's or its lock box mailing address.
2. Implement automatic bank withdrawals, wire transfers
or similar transfers for deposit in ML NY bank
accounts.
3. Update records based on notices and accompanying
payments.
4. Provide services as needed for clarification and
maintenance of billing funds.
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5. Transfer to an ML NY bank account the amount of any
premium sent in error to MLLIC.
C. Distribute to policyholders quarterly and annual reports,
prospectuses and prospectus supplements and modifications to
policy schedule pages.
D. Follow standards in Prospectus with regard to surrender and
policyholder loans.
E. Communication, correspondence and forms There will be an 800
number, or similar telephone number made available, for
communication between policyholders and MLLIC. ML NY's forms
and stationery will be used in all correspondence related to
policy services. Any 800 number will be answered in the name
of ML NY by personnel trained by MLLIC to respond to any
questions from policyholders relating to their variable life
policies with ML NY. All correspondence, other than that
addressed to ML NY's lock box, will use a return address of ML
NY in its home state.
F. Documents and reports
Provide ML NY, upon request, with copies of all policy service
documents and reports processed and produced by MLLIC in
support of ML NY, in either original paper
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document form or microfiche form, as deemed appropriate by ML
NY under the circumstances. All documents and reports are the
property of ML NY.
G. With respect to in force policies for which third party
reinsurance applies, take customary ministerial steps
necessary to provide the policy services described above for
such policies.
III. CLAIMS
Claims service will originate with ML NY, who will authorize MLLIC to
assume responsibility for supporting all functions related to the
receipt, processing and payment of ML NY's policy claims.
A. Identify the insured.
B. Investigate and process claims based upon ML NY's claims
guidelines, and make a recommendation to ML NY as to the
disposition of the claim.
C. Give prompt notice by facsimile transmission to ML NY of each
claim with respect to a benefit payment under any of its
policies and a recommendation as to disposition of such claim.
If requested by ML NY within five business days of receipt of
a notice of
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claim, promptly provide the file, or a copy thereof, to ML NY.
ML NY shall instruct MLLIC whether to contest such claim
within five business days of receipt of such file or copy
thereof.
D. Subject to ML NY's prior approval, pay all claims, whether
settled or adjudicated.
E. Adjudicate claims based upon ML NY's claims guidelines,
PROVIDED, HOWEVER, that ML NY reserves the right to assume the
defense of any claims.
F. Audit claims processed.
G. If requested by ML NY send ML NY drafts and/or correspondence
to payee or to policyholders.
H. Upon request, send record of claim activity via facsimile
transmission to ML NY.
1. Maintain copies of all original claims on microfiche
for any future claim processing.
2. Maintain computer system records of claims
information.
I. Provide reports, perform maintenance, and assure all records
are accurate and balanced to the appropriate accounting
records.
J. Communication, Correspondence and Forms
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1. Maintain telephone service area to respond to any
claims questions or provide current status of claims.
2. ML NY will authorize the use of an 800 number for
communication between policyholders and MLLIC.
3. Use ML NY's forms and stationery in all
correspondence related to policy claims.
K. Documents and reports
Provide ML NY, upon ML NY's request, with original copies of
all policy claims documents and reports processed and produced
by MLLIC in support of ML NY, in either original paper
document form or microfiche forms, as deemed appropriate by ML
NY under the circumstances. All documents and reports are the
property of ML NY.
L. With respect to in force policies under which automatic or
facultative reinsurance treaties or agreements apply, collect
amounts due on any claims on behalf of ML NY.
IV. CASH ACCOUNTING
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All ML NY cash received at MLLIC will be deposited into ML NY's bank
accounts which will be opened by ML NY but maintained by MLLIC. If
cash is received at ML NY, checks and original documents such as
applications, etc. will be forwarded to MLLIC for deposit and records
processing. If cash is received at another ML NY bank account, funds
will be transferred into the ML NY bank account maintained by MLLIC
and copies of original documents such as applications, etc., will be
forwarded to MLLIC for records processing. All bank statements and
deposit slips are to be received directly by MLLIC which will send
copies to ML NY upon request. All withdrawals from ML NY's bank
accounts must be deposited in an ML NY account in its home state or
deposited directly in ML NY's underlying separate accounts, as may be
directed by ML NY. Unless otherwise designated by ML NY, all
disbursement checks must have the signature of an officer of ML NY.
A. Monitor transfer of funds to: (i) verify that all monies due
ML NY are deposited in ML NY's bank accounts and (ii) verify
that all monies payable by MLLIC on behalf of ML NY through
these accounts have been disbursed.
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B. Obtain information where available regarding all receipts and
disbursements flowing through ML NY's bank accounts so that ML
NY may make proper accounting entries on its books.
C. Obtain, where available, bank statements from ML NY's banks
for reconciliation and processing.
D. Handle all commission processing and payment for ML NY and
maintain all commission records.
E. With respect to in force policies for which third party
reinsurance applies, take customary ministerial steps to
perform the cash accounting services described above.
F. Perform daily calculations for policy valuations based on
information provided by the Investment Advisers and submit
daily trades for processing by the Investment Advisers.
G. MLLIC will assist ML NY with tax withholding information for
filing remittances and related tax forms to all applicable
governmental authorities.
H. MLLIC will prepare and distribute Form 1099 tax information
forms or their equivalent regarding the ML NY Policies.
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V. ACCOUNTING
Provide the following accounting services to ML NY:
A. Corporate Records
1. Maintain a complete set of ML NY's and records
relating to the variable life insurance policies
reflecting the Services provided hereunder.
2. Maintain general ledger, premium receipts journal,
cash receipts and disbursements journals, investment
records, expense records, commission records, chart
of accounts, financial reports, and any other records
and information necessary to support accounting
responsibilities for ML NY.
3. Maintain, and provide to ML NY upon request, all
accounting records necessary for the preparation and
timely filing of ML NY's financial statements as
required for compliance with applicable laws and
regulations promulgated thereunder and for generally
accepted accounting principles and/or SAP purposes as
identified by Issuer (i.e. for both internal and
external reporting purposes).
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4. Assist ML NY in the preparation of all
accounting-related forms and special filings
(including premium taxes) required by ML NY's home
state and any other regulatory bodies.
B. Reporting
Provide to ML NY sufficient information to meet the
requirements of its home state's Insurance Department, and any
other state's laws and regulations, and enable any
examinations to be conducted and fully completed within the
home state.
C. At ML NY's request, provide management information services,
including, but not limited to, loss rations, mortality
experiences, regional sales, regional lapse rates, reports and
such other information as ML NY reasonably deems necessary for
the management of its business.
D. Provide actuarial valuation services.
E. Provide assistance to ML NY in connection with any filings or
other compliance activities required by any state insurance
department, the Securities and Exchange Commission or any
other governmental agency.
F. Correspondence and forms
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Use ML NY's forms and stationery, where appropriate, in all
correspondence related to accounting.
G. Documents and reports
Provide ML NY, upon request, with copies of all accounting
documents and reports processed and produced by MLLIC in
support of ML NY, in either original paper document form or
microfiche form, as deemed appropriate by ML NY under the
circumstances. All documents and reports are the property of
ML NY.
VI. PURCHASING, PRINTING, AND MAIL SUPPORT
A. Prepare and produce all forms, stationery and other printed
material for ML NY consistent with forms currently provided.
B. Submit all forms and stationery prepared for ML NY to ML NY
for approval prior to use.
C. Maintain separate purchasing records.
D. Maintain a new Identification Number System (form numbers) to
facilitate management of a separate inventory.
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E. Prepare, handle and process all mailings associated with the
day to day administration of variable life products for ML NY.
F. Correspondence and forms
Use ML NY forms and stationery, where appropriate, in all
correspondence related to purchasing, printing, and mail
support.
G. Documents and reports
Provide ML NY, upon request, with original copies of all
purchasing, printing, and mail support documents and reports
processed and produced by MLLIC in support of ML NY, in either
original paper document form or microfiche form, as deemed
appropriate by ML NY under the circumstances. All documents
and reports are the property of ML NY.
VII. DATA PROCESSING AND SOFTWARE DEVELOPMENT
A. Maintain a distinct identification code for processing ML NY
policies.
B. MLLIC will control all systems services' applications.
C. Computer Software Development
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In the event that ML NY has particular needs for certain
software development, MLLIC, upon ML NY's request, shall
submit a proposal for developing new software or a derivative
of existing software. ML NY requests for software development
shall be handled in accordance with procedures set forth
below.
1. Step 1 - ML NY shall send a written request for
software development to MLLIC identifying specific
business needs.
2. Step 2 - MLLIC and M$ NY will jointly develop the
scope and expectations of the project. MLLIC will
develop a plan outline and high level cost estimate.
3. Step 3 - MLLIC and ML NY will jointly develop
detailed business requirements. MLLIC will produce a
projected plan with a total estimated cost.
4. Step 4 - If the project plan, projected start date
and total estimated costs are unacceptable, ML NY,
shall have the right to develop the software itself
or approach an independent third party to perform
such development work.
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5. Step 5 - MLLIC has the right to retain consultants
that satisfy ML NY requirements.
E. Provide computer-produced reports necessary to support ML NY's
variable life business.
F. Correspondence and forms
Use ML NY's forms and stationery, where appropriate, in all
correspondence related to data processing.
G. Documents and reports
Provide ML NY with copies of all data processing documents and
reports processed and produced by MLLIC in support of ML NY,
in either original paper document form or microfiche form, as
deemed appropriate by ML NY under the circumstances. All
documents and reports are the property of ML NY.
VIII. ADMINISTRATIVE SERVICES
Perform the following administrative services:
A. Effect written confirmations of transactions and prepare
quarterly statements of transactions.
B. Effect reallocations for policyholders.
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C. Prepare policy histories, including a complete accounting for
policyholders.
D. Effect loans and partial withdrawals, surrenders and premium
refunds of policies, including delivery of conservation kits,
where appropriate.
E. Effect beneficiary and ownership changes in all policies.
F. Respond to customer complaints.
G. Effect death claims.
H. Prepare general correspondence.
I. Effect processing for all declined, withdrawn, incompleted
cases.
J. Inspect all policy forms for accuracy.
IX. RECORDKEEPING SYSTEMS
Prepare the transactions files, form and reports listed in Exhibit C,
in form and substance satisfactory to ML NY:
X. OTHER SERVICES
A. Product Development Services
MLLIC will make recommendations to ML NY from time to time
with respect to new services which will enhance ML
- xvii -
33
NY's variable life business. Such recommendations will only be
adopted with the prior written consent of ML NY. ML NY shall
have the right to any new products developed by MLLIC or its
affiliates at a price to be mutually agreed upon by the
parties in good faith.
B. Marketing Services
1. Upon ML NY's request, assist ML NY in reviewing
promotional literature and advertising materials for
the marketing and promotion of ML NY's variable life
business.
- xviii -
34
EXHIBIT B
SYSTEM SERVICES
It is the intent that MLLIC shall be responsible for managing,
operating and maintaining all physical and environmental facilities (space,
electrical power, steam, HVAC, cooling water, lighting, fire safety, etc.)
("Physical and Environmental Facilities"), all physical technology devices
(processors, input and output devices, storage devices, networks,
communications devices, media, etc.) ("Physical Technological Devices"), all
logical technology components (operating systems, control programs, schedulers,
measurement systems, report generators, interface software, etc.) ("Logical
Technology; components"), all application specific logic components and all
data assets pertinent to ML NY's products ("Application Specific Logic").
- xix -
35
SERVICE AGREEMENT BETWEEN
TANDEM FINANCIAL GROUP, INC.
AND
ROYAL TANDEM LIFE INSURANCE COMPANY
Service Agreement made as of the 22nd day of June, 1987 between TANDEM
FINANCIAL GROUP, INC., a Delaware corporation ("TFG") and ROYAL TANDEM LIFE
INSURANCE COMPANY, a New York corporation ("Royal Tandem"),
W I T N E S S E T H:
WHEREAS, Royal Tandem is a wholly-owned subsidiary of TFG and desires
to utilize certain of TFG's services (including related property and personnel)
in carrying out some of its corporate functions and TFG is willing to furnish
the same on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties do hereby mutually agree as follows,
effective so long as Royal Tandem is such a subsidiary of TFG:
1. TFG will furnish, or contact with any of its affiliates or
subsidiaries for the furnishing of, as available, services as listed in Exhibit
I hereto, if and to the extent requested by Royal Tandem. Royal Tandem will
utilize such services in accordance with the Commitment Agreement (copy
attached) to the New York Insurance Department (the "Department").
2. Royal Tandem agrees to pay TFG for such services
36
(i) the amounts as may be specified in one or more
Schedules, pertaining to particular categories of services, may be executed by
the parties and attached to an incorporated into this Agreement; or
(ii) if not so specified, to pay those charges (direct and
indirect) and expenses incurred by TFG or any its affiliates or subsidiaries
which, as reasonably determined by TFG and demonstrated to the reasonable
satisfaction of Royal Tandem, reflect actual cost to TFG or its affiliates or
subsidiaries of furnishing such services, provided that
(a) charges and expenses for personnel shall be
based on a reasonable allocation of the time
spent on Royal Tandem matters relative to
time spent on other matters,
(b) charges and expenses for property or other
services shall be based on a reasonable
allocation of the proportion of and period of
time such property or services is utilized
for Royal Tandem matters relative to that
utilized for other matters, and
(c) no charges or expenses shall exceed those
charged by the service provider in the
- 2 -
37
relevant market for comparable personnel,
property or services as the case may be.
TFG will provide Royal Tandem with a xxxx for service charges and expenses
incurred within 45 days after the end of the quarter in which incurred or in
which TFG ascertains the amounts thereof, and Royal Tandem will pay for such
charges and expenses upon receipt of the xxxx.
3. The books, accounts and records of TFG and Royal Tandem as to
all transactions hereunder shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions, including such accounting
information as is necessary to support the reasonableness of the charges,
expenses or fees hereunder. Royal Tandem shall have the right, at its own
expense, and at any reasonable time, to make an audit of the services rendered
and the amount charged therefor.
4. The term of this Agreement shall commence as of the date
hereinabove indicated and continue until December 31, 1987, and thereafter
shall be deemed to be renewed automatically, upon the same terms and
conditions, for successive periods of one year each, until either party, at
least 60 days prior to the expiration of the original term or of any extended
term, shall give written notice to the other party of its intention not to
- 3 -
38
renew the Agreement, provide that, notwithstanding the foregoing, electronic
date processing services will be made available to Royal Tandem for up to six
months following any such termination, if Royal Tandem shall so request.
5. All difference between TFG and Royal Tandem on which agreement
cannot be reached will be decided by arbitration. The arbitrators will
interpret this Agreement in accordance with the usual business practices,
rather than strict technicalities or rules of law. Three arbitrators will
decide any differences. They must be officers of life insurance companies other
than the two parties to this agreement, their parents, subsidiaries and
affiliates. One of the arbitrators is to be appointed by Royal Tandem and one
by TFG, and these two will select a third. If the two are unable to agree on a
third, the choice will be left to the President of the American Council of Life
Insurance or its successor organization. The arbitrators' decision will be by
majority vote and no appeal will be taken from it. The costs of the
arbitration will be borne by the losing party unless the arbitrators decided
otherwise.
6. No assignment of this Agreement shall be made by TFG without
the consent of Royal Tandem.
- 4 -
39
7. Subject to the foregoing Section 6, this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
TANDEM FINANCIAL GROUP, INC.
BY: /s/ XXXXXXXX XXXXXX
-------------------------------
XXXXXXXX XXXXXX
ROYAL TANDEM LIFE INSURANCE COMPANY
BY: /s/ XXXXXXXX XXXXXX
-------------------------------
XXXXXXXX XXXXXX
- 5 -
40
EXHIBIT C
FINANCIAL, ACTUARIAL
AND OPERATIONAL INFORMATION
As used herein:
D = Daily
W = Weekly
P = Preliminary Monthly Reporting
M = Final Monthly Reporting
R = Monthly Reconciliation
Q = Quarterly
S = Semi Annually
A = Annually
* = Identifies Information not currently available and to be developed.
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
Financial Information
---------------------
1. Cash Trial Balance X X
2. Accrual Trial Balance X X
3. Posted Statutory Ledger X X
4. Combined Trial Balance X X
5. Separate Account Financial Statements X X
41
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
*6. Reconciliation of change in policy investment base,
including Separate Account roll-forward-dollars and counts X
7. Reconciliation of receivable for investments sold X
8. Reconciliation of payable for investments purchased X
9. Separate Account Investments by Fund X
10. Detail listing of unpaid and contested claims X
11. Analysis of balances due to/from Separate Account and/or
the General Account X
*12. Death Benefit Paid by Amt at Risk X
*13. Policies surrendered - Full - dollars and counts X
*14. Policies surrendered - Partial - dollars and counts X
15. Reconciliation of Investment Custodial Account to S/A X
16. Reconciliation of Reserve System to Ledger X
17. GAAP Trial Balance X
18. GAAP G/L Update X
*19. Analysis of Monthly Financial Information X
*20. Transfer reconciliation X
21. Suspense Reconciliation Summary Report X
*22. Reconciliation of Policy Ledger to Reporting Ledger X
- 2 -
42
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
*23. Policy Loan summary Information and general ledger to
administration systems reconciliation X
*24. Reconciliation of DPL change X
25. Reconciliation of any other policy-related receivables by type X
26. Reconciliation of any other policy-related payables by type X
*27. Reconciliation and detail listings of balances due to/from
Separate Account and/or the General Account X
28. Premiums by New Issue and Add Ons X
*29. Reconciliation of S/A Assets to S/A Reserves X
*30. Bank account reconciliations to the policy ledgers X
31. Reconciliation of Investment shares and unit records to the
Investment custodial statements X
32. SPIAR detail summarized by interest rates, issue year and
type with policy counts X
33. GID assets by Interest rate and maturity date X
34. Year-to-date premium tax reports in current format X
35. Semi-Annual Policy Holder Reports X
36. VLI financial date for annual Separate Account (green
blank) in format suitable for consolidation X
- 3 -
43
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
37. VLI financial data for annual SEC filing of N-SAR in format
suitable for consolidation X
38. Reconciliation of amount due from reinsurers on losses
incurred by reinsurer X
39. Reconciliation of amount due from reinsurers on IBNR by
reinsurer X
40. Reconciliation of amount due to reinsurers for premiums
ceded by reinsurer X
41. Detail listing by reinsurer of amount in force per Schedule
S 3A X
42. Detail listing by reinsurer of reserve credit taken per
Schedule S 3A X
43. Detail listing by reinsurer of premiums per Schedule S 3A X
44. Detail Listing of reinsurance assumed per Schedule S part 3B X
45. Preparation of Exhibit 1 part 1 & 2 by product X
46. Premiums by state and reconciliation of premiums by state
to Exhibit 1 X
47. Death by state X
48. Surrender/withdrawal benefits paid by state, by product, by
qualified, by non-qualified X
- 4 -
44
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
49. Exhibit II Parts 1 and 2 by Product X
50. Reconciliation of Life Insurance In Force between Years -
Page 15 X
51. Reconciliation of annuities - Page 16 X
52. Exhibit B - Aggregate Reserve for Life Policies and
Contracts X
53. Schedule E - Cash Deposits X
54. Schedule F X
55. Income Tax Reserves X
- 5 -
45
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
Actuarial Information
1. Separate Account Reserves summarized by account and
valuation assumptions. X
2. General Account Reserves, summarized by assumptions as
follows: X
- Split into loans and GID categories.
- Split into annual and single premium categories.
- Term Riders
- Reduced Paid Up Policies
- Extended Term Insurance Policies
- Payor Benefit
- Guaranteed Insurability Option
- ADB (Exhibit 8, Section D)
- Disability - Active Lives (Exhibit 8, Section E)
- Disability - Disabled Lives (Exhibit 8, Section F)
- VLI Minimum Death Benefit Guarantee (Exhibit 8, Section
G)
- Group Conversion Reserve (Exhibit 8, Section G)
- Annuities Certain and Lump Sums
- Reserves Ceded to Reinsurers
3. Separate Account Liabilities - Accrued Interest on Advanced
Transfers X
- 6 -
46
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
4. Due, Deferred, Advanced Premiums as follows: X
- Gross premiums due, split between first year and renewal
- Gross Premiums Deferred, split between first year and
renewal
- Net Premiums Due, split between first year and renewal
- Net Premiums Deferred, split between first year and
renewal
- Premiums Paid in Advance, split between first year and
renewal
5. Reserves based on Generally Accepted Accounting Principles
(GAAP) as follows: X
- Adjustment for Deficiency Reserve
- Adjustment for GAAP Annuity Reserve
- Accrual for Current Year Formula Adjustments
- Deferred Load (Separate And General Account)
- Accrual of Deferred Loads (Separate and General Account)
- Adjustment for Minimum Death Benefit Guarantee
- Adjustment for Increased Death Benefit Reserve
- Adjustment for Excess Interest Reserves
6. Surrender Report X
*7. Experience ceding allowance file X
8. Reinsurance Premium Report X
9. Letter certifying reserve liabilities controlled by MLLIC X
Operational Information
- 7 -
47
Designated Frequency
Description of Information/Report D W P M R Q S A
--------------------------------- -------------------------------------
1. Settlement schedule for Separate Account tradets X
2. Daily reallocations in Separate Accounts X
3. Daily cash bank reports X
4. Daily Tax Withholding Information, as necessary for Monarch
Life to file Remittances X
5. Reconciliation of Withholding Information per the Tax
System to Daily Withholding Information X
- 8 -
48
EXHIBIT I
To Service Agreement
Between TFG and Royal Tandem
Personnel, Property and Services (except as provided under separate agreements
or Schedules):
1. Electronic data processing
2. Legal
3. Corporate Secretary
4. Actuarial
5. Product design and development
6. General corporate management.
7. Storage
8. Office and general supplies
9. Financial and cash advice or management
10. Advertising and public relations
11. Printing
12. Development of software programs
- 0 -
00
Xxxxxxxxxxxxxx, Xxxxx xx Xxx Xxxx
Department of Insurance
Re: Acquisition of Control of
Royal Tandem Life Insurance Company
Dear Superintendent:
COMMITMENT AGREEMENT TO THE
NEW YORK INSURANCE DEPARTMENT
Pursuant to your request, the undersigned, The Equitable Life Assurance Society
of the United States ("Equitable"), Tandem Financial Group, Inc. ("TFG") and
Xxxxxxx Xxxxx & Co., Inc. ("Xxxxxxx Xxxxx") (collectively known as the
"Parents" and individually as a "Parent") represent and commit, effective as to
each Parent so long as it shall be deemed by the Department, under applicable
law, to control Royal Tandem Life Insurance Company ("Royal Tandem"), that it
will not on behalf of Royal Tandem do, indirectly or through the medium of
another entity, that which is prohibited to Royal Tandem by statute, or
regulation or administrative ruling of the New York Insurance Department,
including but not limited to the following:
1. No Parent nor any of its affiliates or subsidiaries will offer,
sell, give or in any way transfer or assign any securities issued by any of
such companies, or offer any options or warrants on such securities, to persons
who are officers, directors, agents or employees of Royal Tandem, except in
connection with services rendered directly to such Parent or the company
selling, offering or giving such securities, options or warrants, and after
full and appropriate disclosure to, and prior approval by the Superintendent of
the plan pursuant to which such offer, sale or gift is made and except as
permitted by the provisions of Regulation No. 54. This paragraph, however,
shall not be deemed to apply to any offer or sale made to any such person as a
part of, and on the same terms as, a general offering to stockholders or to the
public.
50
2. No Parent nor any of its affiliates or subsidiaries, nor
controlling interests thereof, other than Royal Tandem, will grant any
compensation or special advantage to officers, directors, agents or employees
of Royal Tandem except in connection with services rendered directly to such
Parent or the company making such grant as provided by but not limited to the
provisions of Section 1509 of the New York Insurance Law.
3. Royal Tandem's operations will be directed by its own management
and no agreement or arrangement will be made pursuant to which another company
will provide such management directly or indirectly. Royal Tandem shall
maintain a home office in New York which shall have at least one full-time
administrative officer who is unaffiliated with any other company in the
holding company system and who shall have full responsibility and authority for
making management and administrative decisions and carrying out established
policy. The management of Royal Tandem will be fully responsible to the
Department for the actions of, or failure to act by, Royal Tandem, pursuant to
the provisions of Section 1507 of the New York Insurance Law.
4. Royal Tandem will maintain in this state, at its home office,
officers and qualified personnel knowledgeable of and responsible for directing
and performing the daily operations of Royal Tandem, included but not limited
to the following primary insurance company functions:
(a) Policyholder services - such services shall comprise any and
all activities involving personal contact or communication
with a policyholder or beneficiary, including but not limited
to policy loan applications and payments, surrender requests
including computation and payment of benefits, determination
and payment of policy benefits, policy conversions,
beneficiary changes, policy changes, request for general
information, dividend computations, premium payments, policy
lapses and reinstatements, and consumer complaints.
(b) Recordkeeping - Royal Tandem will maintain at its home office
in New York, all records, files and other sources of
information relating to the operations of the company. Such
recordkeeping shall include but not be limited to ledgers,
journals, trial balances and adjusting journal entries,
vouchers, annual statement workpapers, and all related back-up
records including EDP printouts. If it is necessary be
transfer records in connection with the performance of
specific
- 2 -
51
services, copies of such records shall be transferred and the
originals maintained at the home office of Royal Tandem.
Persons providing services shall forward to the home office of
Royal Tandem the originals or copies all work papers, related
records and documents prepared and utilized in connection with
such services. While records which are maintained services
solely on EDP tapes, disks, etc., need not be forwarded to
Royal Tandem, the servicer, when requested, shall provide
printouts of such tapes, disks, etc. which shall be available
for inspection by the Superintendent at the home office in New
York.
(c) Accounting - Royal Tandem will perform all accounting
functions at its home office in New York. Such accounting
functions shall include but not be limited to the initiation
and preparation of all vouchers and accounting records and/or
transactions relating to the financial condition of the
subsidiary, verification that original financial data and
accounting transactions have been accurately prepared and
reflected in the subsidiary's books of account, bank
reconciliations and reconciliations of EDP printouts. this
shall not preclude Royal Tandem from the use of an outside
service for the preparation of accounting records or
processing of accounting transactions provided that (i) the
initiation of such records and/or transactions are prepared
and the final product verified by Royal Tandem at its home
office in New York and (ii) that there is within Royal
Tandem's home office in New York qualified personnel
knowledgeable of and familiar with all the details of the
services provided including but not limited to, accounting and
adjusting entries.
(d) Underwriting - Royal Tandem will establish and reduce to
writing all underwriting standards for the acceptance of new
business, make all final underwriting decisions and maintain
at its home office in New York all original papers which are
basic to the insurance contract. Within a period of five
years from the date of this Commitment Agreement, Royal Tandem
will perform at its home office in New York all underwriting
functions. Such underwriting shall include but not be limited
to the review of policy applications, assignment of policy
numbers, MIB review, medical review, and actual policy issue.
It is understood that no service agreements will be entered
- 3 -
52
into by Royal Tandem which will provide for underwriting
services beyond the above mentioned period.
(e) Claims - Royal Tandem will establish and reduce to writing
claims settlement procedures, and will exercise final approval
authority For all claim settlements and maintain at its home
office in New York all original claims investigation paper and
worksheets. Within a period of five years from the date of
this Commitment Agreement, Royal Tandem will perform at its
home office in New York all claims processing and settlement.
Such claims processing and settlement shall include but not be
limited to verification that the policy was in force and
review and investigation of claims. lt is understood that no
service agreements will be entered into which will provide for
claims processing services beyond the above-mentioned period.
(f) Marketing - Within a period of five years from the date of
this Commitment Agreement, Royal Tandem will perform at its
home office in New York the following marketing functions:
recruitment and direction of the agency field force,
validation of agents training allowances and development
allowances, and the administration of all agency matters. It
is understood that no service agreements will be entered into
by Royal Tandem which will provide for marketing services
beyond the above-mentioned period.
5. All agreements providing for the rendering of statistical,
mechanical or ministerial services on a regular or systematic basis between
Royal Tandem and either Equitable or its subsidiaries or affiliates, or any
modification thereof, will be submitted to the Department for prior review,
pursuant to the provisions of Section 1505 and 1507 of the New York Insurance
Law.
6. All reinsurance treaties between Royal Tandem and any Parent or
affiliates thereof, or any modification thereto. will be submitted to the New
York Insurance Department for prior review in accordance with the provisions of
Section 1505 of the New York Insurance Law. Any experience rating formula or
dividend formula to be used in conjunction with the agreements will be
submitted to the New York insurance Department for prior review. Expenses and
settlement data under this formula will be retained and will be furnished to
the New York Insurance Department upon request.
- 4 -
53
7. Royal Tandem will neither subsidize nor be subsidized by any Parent
or by any Parent's subsidiaries or affiliates. Subject to the foregoing, all
expenses incurred by or on its behalf, all joint expenses and the cost of
servicing functions provided Royal Tandem by such Parent or subsidiaries
affiliates or other corporate entities thereof, will be allocated equitably.
Adequate and properly documented workpapers serving as a basis for allocations
and charges shall be maintained by Royal Tandem. The books, accounts and
records of each party will be kept in a manner which clearly and accurately
discloses, inter alia, the nature and details of all transactions and
arrangements between Royal Tandem and such Parent or any subsidiary or
affiliate thereof. All of the above shall be in conformance with the provisions
of Section 1505 of the New York Insurance Law.
This section shall not be deemed to prohibit the rendering of
incidental services to and for the benefit of Royal Tandem by Equitable without
being compensated therefor.
8. Royal Tandem will operate at arm's length in relation to each
Parent, its subsidiaries and affiliates. Allocations and classifications of
expenses incurred jointly, or for services rendered or received shall be in
accordance with New York Insurance Department Regulation 33. In the event that,
in the judgment of the Insurance Department, the books, accounts and records of
Royal Tandem do not adequately reveal all transactions relevant to its
operations, the books, accounts, and records of each Parent, its subsidiaries
and or affiliates, will be made available to the Department to the extent they
relate to Royal Tandem, its officers, directors, employees or agents pursuant
to the provisions of Section 1504 of the New York Insurance Law.
9. In line with the customary practice of non-affiliated domestic life
companies, Royal Tandem's income is to be received directly at its home office
and an itemized record is to be made thereof at the time of receipt. Within
the meaning of the preceding sentence, Royal Tandem may arrange for the
collection of premiums or other income at a lock box located within or without
this state, provided that:
(a) A contract providing for the establishment and operation of
the lock box is entered into by all of the parties affected by
such arrangement and the contract is submitted to the
Superintendent for prior approval.
- 5 -
54
(b) All bank accounts maintained in connection with the operation
of the lock box shall be in the name of the subsidiary
insurer, and withdrawal therefrom shall be limited to checks
signed by authorized officials of the subsidiary insurer only.
(c) Where a bank account is maintained outside the state for
collection purposes, the account shall be in the name of the
subsidiary insurer and withdrawals from such account shall be
solely for the purpose of transferring funds to a New York
bank account. Withdrawals shall be made at periodic intervals
not to exceed ten days, so that the maximum balance in such
out of state account at the day of withdrawal will not exceed
$1,000.00 unless the Superintendent has indicated his prior
approval for the maintenance of a larger balance. Royal Tandem
is to maintain in New York (i) all bank accounts customarily
maintained in New York by non-affiliated domestic life
companies and (ii) all evidence of ownership of its assets.
Royal Tandem's obligations (including benefits and salaries)
are to be paid directly to its primary obligees by drafts or
checks on its bank accounts.
10. Agreements with agencies engaged in common by Royal Tandem and
any Parent or affiliates thereof shall not, directly or indirectly, provide for
compensation or other financial advantages which would be prohibited by Section
4228 or 4229 of the New York Insurance Law, as amended, or regulations,
circular letters and rulings relative thereto and as provided in Section 15O9
of the New York Insurance Law and this agreement.
11. Royal Tandem shall require such agents engaged in common, as
described above, to make available, on request by the Superintendent of
Insurance of the State of New York, all books and records in respect to their
insurance activities with Royal Tandem and any Parent and/or affiliates
thereof.
12. No transfer, depletion, divestment or reassignment of a
significant number of its chief management officers or personnel performing
important and/or key functions in vital departments of Royal Tandem shall be
made by or to any Parent, its affiliates, subsidiaries or controlling interests
thereof if it would result in impairing the operations of Royal Tandem. No
transactions of this type shall be entered into prior to being submitted to the
Department for review.
- 6 -
55
13. No transactions will be entered into by Royal Tandem, any
Parent or any affiliate which involves or could involve the actual or proposed
transfer, directly or indirectly, of control of Royal Tandem without prior
notice to and no objection being raised by the Department to the terms of the
transaction.
Such transactions shall include but not be limited to
(a) Pledging of shares as collateral for loans.
(b) Hypothecation of securities.
(c) Sale of new shares of such Parent or affiliate.
(d) Encumbering of shares of such Parent or affiliate.
(e) Exchange of shares.
(f) Any other disposition of shares.
14. Any director or principal officer of any Parent, who holds
office in subsidiaries or affiliates of Royal Tandem which will have dealings
with Royal Tandem, and who is found to be untrustworthy, will be removed from
these offices at the direction of the Department.
15. In keeping with the Department's requirement that the name of
a Parent or any of its affiliates not be used in Royal Tandem's name unless a
modifier is placed in front of the Parent or affiliate's name, no Parent will
change its name nor permit any of its affiliate to change their names in such a
way as to circumvent the intention of this requirement. Each Parent and Royal
Tandem further agree that they will not use any advertising or printed material
which circumvents the intention of this requirement by stressing or emphasizing
the name of the Parent or affiliate.
16. In the future, if Royal Tandem should plan to make any
significant deviation from the Plan of Operations and actuarial projections
originally submitted to the New York State Insurance Department, the Department
will be informed of such planned deviation and Royal Tandem will submit new
actuarial projections to the Department and will obtain the Department's
approval prior to entering into any new product lines or lines of business
which would cause such deviation.
- 7 -
56
It is further understood that the signing of this commitment agreement
by present management of the Parents, and of Royal Tandem, is binding not only
on present management but on any successor management which may be the result
of internal or external changes, and must be made a part of, but not limited
to, any merger, takeover, tender officer, assumption or pooling of interest
agreement voluntarily entered into.
It is further agreed that if any changes are incorporated in the New
York Insurance Law, Department Regulations, or Administrative Procedures which
alter to any material extent these commitments, these changes will be
automatically incorporated in this document, which is signed by executive
officers of the Parents and Royal Tandem. This document has or will receive
the consent and approval of the Board of Directors of each Parent.
Respectfully submitted,
Dated: June , 1987
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
BY /S/ XXXXX XXXXX
------------------------------
XXXXX XXXXX
Title: EXECUTIVE VICE PRESIDENT
TANDEM FINANCIAL GROUP, INC.
BY /S/ XXXXXXX X. XXXXXXXXX
------------------------------
XXXXXXX X. XXXXXXXXX
Title: PRESIDENT
XXXXXXX XXXXX & CO., INC.
BY /S/ XXXX X. XXXXXXXX
------------------------------
XXXX X. XXXXXXXX
- 8 -
57
Title: EXECUTIVE VICE PRESIDENT
ROYAL TANDEM LIFE INSURANCE COMPANY
By /s/ XXXXXXX X. XXXXXXXXX
------------------------------
XXXXXXX X. XXXXXXXXX
Title: PRESIDENT
- 9 -
58
SPECIAL COMMITMENT AGREEMENT TO
THE NEW YORK INSURANCE DEPARTMENT
The undersigned each agree with the New York State Insurance
Department as follows, effective for the period described below:
1. With respect to transactions between Royal Tandem Life
Insurance Company ("Royal Tandem") and The Equitable Life Assurance Society of
the United States ("Equitable Life"), Royal Tandem and Equitable Life commit
that, notwithstanding Section 1502 of the New York Insurance Law, they will
comply with all the provisions of Section 1505 thereof.
2. Royal Tandem will utilize only those marketing distribution
systems which cannot be effectively served by Equitable Life, by Equitable
Variable Life Insurance Company ("EVLICO"), by National Integrity Life
Insurance Company ("National Integrity") or any other New York licensed life
insurance company subsidiary of Equitable Life. Equitable Life and EVLICO will
utilize only traditional affiliated agency sales forces consisting of career
agents to distribute their products and services, and National Integrity will
distribute its products and services in accordance with its Special Commitment
Agreement to the New York Insurance Department, dated November 4, 1985, as
amended or supplemented, whereas Royal Tandem will distribute its products and
services only through licensed subsidiaries and affiliates of Xxxxxxx Xxxxx &
Co., Inc. ("Xxxxxxx Xxxxx"), and their registered representatives or employees
as licensed for Royal Tandem, or through such other agents or groups of agents
or other means as may be approved in writing from time to time by the Insurance
Department. Equitable Life, EVLlCO, National Integrity and Royal Tandem will
not license, directly or indirectly, agents in common. None of Equitable Life,
EVLICO or National Integrity will license any agent licensed with Royal Tandem.
Royal Tandem will not license any agent licensed with Equitable Life, EVLICO or
National Integrity. To avoid dual licensing, (a) every agent license
application received by Royal Tandem will be computer matched against Equitable
Life's Agent Data Base, which lists all Equitable Life/EVLICO Agents, and will
be matched against National Integrity's Agent Data Base and any such
applications which match against any such Agent Data Base will be denied by
Royal Tandem and (b) every agent license application received by Equitable
Life, EVLICO or National Integrity will be computer matched against Royal
Tandem's Agent Data Base, which lists all Royal Tandem Agents, and any such
applications which match against such Agent Data Base will
59
be denied by Equitable Life, EVLICO or Nationa1 Integrity, as the case may
be.
3. This Special Commitment Agreement shall be effective as to
Equitable Life, EVLICO, Royal Tandem and National Integrity, so long as
Equitable Life shall be deemed by the Department, under applicable law,
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60
to control Royal Tandem, and shall be effective as to Xxxxxxx Xxxxx so long as
Xxxxxxx Xxxxx shall be deemed by the Department, under applicable law, to
control Royal Tandem.
Dated: June , 1987
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By /s/ XXXXX XXXXX
------------------------------
XXXXX XXXXX
Title: EXECUTIVE VICE PRESIDENT
EQUITABLE VARIABLE LIFE
INSURANCE COMPANY
By /s/ XXXXXX XXXXXX
------------------------------
XXXXXX XXXXXX
Title: PRESIDENT
ROYAL TANDEM LIFE INSURANCE COMPANY
By /s/ XXXXXXX X. XXXXXXXXX
------------------------------
XXXXXXX X. XXXXXXXXX
Title: PRESIDENT
NATIONAL INTEGRITY LIFE INSURANCE
COMPANY
By /s/ XXXXXXXX XXXXXXX
------------------------------
XXXXXXXX XXXXXXX
Title: PRESIDENT
XXXXXXX XXXXX & CO., INC.
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61
By /s/ XXXX X. XXXXXXXX
------------------------------
XXXX X. XXXXXXXX
Title: EXECUTIVE VICE PRESIDENT
- 4 -
62
June , 1987
Xxxxxxxxx Xxxxx X. Xxxxxxxx
Superintendent
State of New York
Department of Insurance
000 Xxxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Acquisition of Control of
Royal Tandem Life Insurance Company
Dear Xx. Xxxxxxxx:
She undersigned each agree with the New York State Insurance
Department, effective for the period described below, that Royal Tandem Life
Insurance Company ("Royal Tandem") shall at all times maintain a minimum
capital of two million dollars and a minimum surplus of four million dollars.
This commitment letter shall be effective as to each of The Equitable Life
Assurance Society of the United States and Xxxxxxx Xxxxx & Co., Inc. so long as
it shall be deemed by the Department, under applicable law, to control Royal
Tandem.
Respectfully submitted,
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By /s/ XXXXX XXXXX
------------------------------
XXXXX XXXXX
Title: EXECUTIVE VICE PRESIDENT
XXXXXXX XXXXX & CO., INC.
By /s/ XXXX X. XXXXXXXX
------------------------------
XXXX X. XXXXXXXX
Title: EXECUTIVE VICE PRESIDENT
- 5 -
63
ROYAL TANDEM LIFE INSURANCE COMPANY
By /s/ XXXXXXX X. XXXXXXXXX
------------------------------
XXXXXXX X. XXXXXXXXX
Title: PRESIDENT
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