Exhibit 27(i)
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (this "Agreement") is made
effective as of 12:01 a.m. Eastern Standard Time, on the 1st day of October,
1998 ("Effective Date"), by and between Minnesota Life Insurance Company, a
Minnesota corporation with offices at 000 Xxxxxx Xxxxxx Xxxxx, Xx. Xxxx,
Xxxxxxxxx ("Provider") and Northstar Life Insurance Company, a New York
corporation with offices at University Corporate Centre at Amherst, 000
Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxx Xxxx ("Company"), and supersedes the agreement
between the Provider and the Company of the same title which became effective
March 17, 1997, as amended.
WHEREAS, Provider has extensive experience in the operation of life
insurance business; and
WHEREAS, Company desires Provider to perform certain administrative and
special services (collectively "services") for Company in its insurance
operations and desires further to make use in its day-to-day operations of
certain property, equipment and facilities (collectively "facilities") of
Provider and its subsidiaries as Company may request; and
WHEREAS, Provider and Company contemplate that such an arrangement will
achieve certain operating economies and improve services to the mutual benefit
of both; and
WHEREAS, Provider and Company wish to assure that all charges for services
and the use of facilities incurred hereunder are reasonable and in accordance
with the requirements of New York Insurance Department Regulation No. 33 and to
the extent practicable reflect actual costs and are arrived at in a fair and
equitable manner, and that estimated costs, whenever used, are adjusted
periodically, to bring them into alignment with actual costs; and
WHEREAS, Provider and Company wish to identify the services to be rendered
to Company by Provider and the facilities to be used by Company and to provide a
method of fixing bases for determining the charges to be made to Company:
NOW, THEREFORE, in consideration of the premises and of the mutual
promises set forth herein, and intending to be legally bound hereby, Provider
and Company agree as follows:
1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. Subject to the terms,
conditions and limitations of this Agreement, Provider agrees to the extent
requested by Company to perform diligently and in a professional manner such
services for Company as Company determines to be reasonably necessary in the
conduct of its insurance operations.
Subject to the terms, conditions and limitations of this Agreement,
Provider agrees to the extent requested by Company to make available to Company
such of its facilities as Company may determine to be reasonably necessary in
the conduct of its insurance operations, including, but not limited to, data
processing equipment, business property (whether owned or leased) and
communications equipment.
Provider agrees at all times to maintain sufficient facilities and trained
personnel of the kind necessary to perform this Agreement.
(a) CAPACITY OF PERSONNEL AND STATUS OF FACILITIES. Whenever
Provider utilizes its personnel to perform services for Company pursuant to this
Agreement, such personnel shall at all times remain subject to the direction and
control of Provider, and Company shall have no liability to such personnel for
their welfare, salaries, fringe benefits, legally required employer
contributions and tax obligations.
No Facility of Provider used in performing services for or subject
to use by Company shall be deemed to be transferred, assigned, conveyed or
leased by performance or use pursuant to this Agreement.
(b) EXERCISE OF JUDGMENT IN RENDERING SERVICES. In providing any
services hereunder which require the exercise of judgment by Provider, Provider
shall perform any such services in accordance with any standards and guidelines
Company develops and communicates to Provider. In performing any services
hereunder, Provider shall at all times act in a manner reasonably calculated to
be in or not opposed to the best interests of Company.
(c) CONTROL. The performance of services by Provider for Company
pursuant to this Agreement shall in no way impair the absolute control of the
business and operations of Provider or Company by their respective Boards of
Directors. Provider shall act hereunder so as to assure the separate operating
identity of Company.
2. SERVICES. Subject to the terms, conditions and limitations of this
Agreement, Provider shall provide to Company, at Company's request, the services
set forth below:
(a) ACCOUNTING, DATA PROCESS, TAX AUDITING. Provider shall prepare
accounting records and process accounting transactions (including, but not
limited to, financial statements, reports, annual statutory statements) provided
that (i) the initiation of such records and/or transactions are prepared and the
final product verified by Company and that (ii) Provider shall cause Company's
Chief Administrative Officer, or his or her designee to be familiar with all of
the details of the services provided, including, but not limited to, accounting
and adjusting entries.
Provider shall also provide such assistance as may be required with
respect to tax and auditing services and EDP processing of the related financial
records and transactions of Company.
(b) UNDERWRITING. Provider shall provide underwriting services,
including review of policy applications, assignment of policy numbers, MIB
review, medical review and other investigations and assist in policy issue as
needed in accordance with the underwriting standards of the Company.
(c) CLAIMS. Provider shall provide claim services including but not
limited to verification that the policy was in force and review and
investigation of claims in accordance with the claims settlement standards and
procedures of the Company.
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(d) MARKETING. Provider shall provide marketing services, including
recruitment and direction of the agency field force, validation of agents
training allowances and development allowances and the administration of all
agency matters.
(e) ADVERTISING AND SALES PROMOTIONAL SERVICES. Under the general
supervision of the Board of Directors of Company and subject to the direction,
control and prior approval of the responsible officers of Company, Provider
shall provide sales services, including sales aids, rate guides, sales
brochures, solicitation materials and such other promotional materials,
information, assistance and advice as shall assist the sales efforts of Company.
(f) FUNCTIONAL SUPPORT SERVICES. Provider shall provide (i)
actuarial services, including rate and profit share analysis, product
development, counseling on reserving requirements, work required for or in
support of rate and/or form submissions and actuarial certifications, (ii)
telecommunications services and electronic data processing services, facilities
and integration, including software programming and documentation and hardware
utilization, (iii) legal services, including representation of Company in the
prosecution or defense of actions and in the negotiation and preparation of
contracts, agreements and agency documents, product development and drafting and
filing of policies and forms, governmental relations and advising on regulatory
compliance and rendering opinions on various legal matters, and (iv) purchasing
and employee benefits and relations services, including payroll services.
3. CHARGES. Company agrees to reimburse Provider for services and
facilities provided by Provider to Company pursuant to this Agreement. The
charge to Company for such services and facilities shall include all direct and
directly allocable expenses, reasonably and equitably determined to be
attributable to Company by Provider, plus a reasonable charge for direct
overhead, the amount of such charge for overhead to be agreed upon by the
parties from time to time.
Subject to New York Insurance Department Regulation 33, the bases for
determining such charges to Company shall be those used by Provider for internal
cost distribution including, where appropriate, time records prepared at least
annually for this purpose. Such bases shall be modified and adjusted by mutual
agreement where necessary or appropriate to reflect fairly and equitably the
actual incidence of cost incurred by Provider on behalf of Company.
Cost analyses will be made from time to time by Provider to determine, as
closely as possible, the actual cost of services rendered and facilities made
available to Company hereunder. Provider shall forward to Company the
information developed by these analyses, and such information shall be used to
develop bases for the distribution of expenses which more currently reflect the
actual incidence of cost incurred by Provider on behalf of Company.
The charge to Company for marketing services, as described in section 2(d)
of this agreement, will be a proportionate share of marketing costs incurred by
Provider, based upon new premium income generated on behalf of Company as a
percentage of total new premium income generated by Provider.
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"New premium income" shall be defined as follows:
(a) For credit life and disability insurance,
(1) On single premium business, cash dollars received for
the year;
(2) On outstanding balance premium business, in-force
premium minus 60% of previous year-end premium;
(b) For mortgage, Land Bank and PCA life and disability insurance,
annualized premium (individual monthly premium x 12) on all
new insureds for the year; and
(c) For loan protection/life savings insurance, dollar volume of
loans for the year x premium rate per $1,000 of insurance x
12.
4. PAYMENT. Provider shall submit to Company within thirty (30) days of
the end of each calendar quarter a written statement of the amount estimated to
be owed by Company for services and the use of facilities pursuant to this
Agreement in that calendar quarter, and Company shall pay to Provider within
fifteen (15) days following receipt of such written statement the amount set
forth in the statement.
Within thirty (30) days after the end of each calendar year, Provider will
submit to Company a detailed written statement of the charges due from Company
to Provider in the immediately preceding year, including charges not included in
any previous statements, and any balance payable or to be refunded as shown in
such statement shall be paid or refunded within fifteen (15) days following
receipt of such written statement by Company.
5. ACCOUNTING RECORDS AND DOCUMENTS. Provider shall be responsible for
maintaining full and accurate accounts and records of all services rendered and
facilities used pursuant to this Agreement and such additional information as
Company may reasonably request for purposes of its internal bookkeeping and
accounting operations. Provider shall keep such accounts and records insofar as
they pertain to the computation of charges hereunder available at its principal
offices for audit, inspection and copying by Company and persons authorized by
it or any governmental agency having jurisdiction over Company during all
reasonable business hours.
With respect to accounting and statistical records prepared by Provider by
reason of its performance under this Agreement, summaries of such records shall
be delivered to Company within sixty (60) days from the end of the month to
which the records pertain.
6. OTHER RECORDS AND DOCUMENTS. All books, records, and files established
and maintained by Provider by reason of its performance under this Agreement
which, absent this Agreement, would have been held by Company, shall be deemed
the property of Company, and shall be subject to examination at all times by
Company and persons authorized by it or any governmental agency having
jurisdiction over Company, and shall be delivered to
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Company at least quarterly. All such books, records, and files shall be promptly
transferred to Company by Provider upon termination of this Agreement, at
Company's expense.
With respect to original documents other than those provided for under
Section 5 hereof which would otherwise be held by Company and which may be
obtained by Provider in performing under this Agreement, Provider shall deliver
such documents to Company within thirty (30) days of their receipt by Provider
except where continued custody of such original documents is necessary to
perform hereunder.
7. COMPLIANCE WITH REGULATION 152. Provider shall maintain all original
records of the Company in its custody in accordance with the requirements of New
York Insurance Regulation 152 (N.Y. Comp. Codes R & Regs, tit. 11, part 243).
8. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed to
grant Provider an exclusive right to provide services to Company, and Company
retains the right to contract with any third party, affiliated or unaffiliated,
for the performance of services or for the use of facilities as are available to
or have been requested by Company pursuant to this Agreement.
9. CONTACT PERSON(S). Company and Provider each shall appoint one or more
individuals who shall serve as contact person(s) for the purpose of carrying out
this Agreement. Such contact person(s) shall be authorized to act on behalf of
their respective parties as to the matters pertaining to this Agreement. Each
party shall notify the other, in writing, as to the name, address and telephone
number for any such designated contact person, and of any replacement thereof.
10. TERMINATION AND MODIFICATION. This Agreement shall remain in effect
until terminated by either Provider or Company upon thirty (30) days or more
advance written notice, as to services other than electronic data processing,
and upon giving one hundred eighty (180) days or more advance written notice as
to electronic data processing services. Upon termination, Provider shall
promptly deliver to Company all books and records that are, or are deemed by
this Agreement to be, the property of Company.
11. SETTLEMENT ON COMPLETE TERMINATION. No later than ninety (90) days
after the effective date of Complete Termination of this Agreement, Provider
shall deliver to Company a detailed written statement for all charges incurred
and not included in any previous statement to the effective date of termination.
The amount owed or to be refunded hereunder shall be due and payable within
fifteen (15) days of receipt of such statement.
12. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be
assignable by either party hereto, except as set forth herein or by operation of
law. 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, warranties, covenants and agreements contained in this
Agreement shall be binding upon, extend to and inure to the benefit of the
parties hereto, their, and each of their, successors and assigns respectively.
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13. GOVERNING LAW; SERVICE OF SUIT; FORUM SELECTION. 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 conflict of laws.
Provider shall submit to the jurisdiction of any Court of competent
jurisdiction within the Southern and Eastern Districts of New York and will
comply with all requirements necessary to give such Court jurisdiction. Service
of process in any suit instituted against Provider upon this Agreement may be
made upon Secretary for Provider, and the above-named is authorized and directed
to accept service of process on behalf of Provider in any such suit and/or upon
the request of Company to give a written undertaking to Company that they will
enter a general appearance on behalf of Provider in the event such a suit shall
be instituted.
Each party agrees that any suit against the other upon this Agreement
shall be instituted and prosecuted only in a Court of competent jurisdiction
within the Southern and Eastern Districts of New York, and each party agrees
that it shall not seek to remove or transfer any such suit against it by the
other to any Court outside the Southern and Eastern Districts of New York.
14. ARBITRATION. Any unresolved dispute or difference between the parties
arising out of or relating to this Agreement, or the breach thereof, except as
provided in Section 3, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and the
Expedited Procedures thereof. The award rendered by the Arbitrator shall be
final and binding upon the parties, and judgment upon the award rendered by the
Arbitrator may be entered in any Court having jurisdiction thereof. The
arbitration shall take place in New York, New York.
15. INDEMNIFICATION. Company and Provider agree to hold each other
harmless and to indemnify each other against any and all extra-contractual
liability and any related loss, damage, expense, cost, cause of action, demand,
penalty, fine or claim (including cost of litigation or administrative
proceeding and counsel fees) arising out of or related to any of the services
provided hereunder to the extent the same are caused by the act or failure to
act of the indemnifying party.
16. NOTICE. All notices, statements or requests provided for hereunder
shall be deemed to have been duly given when delivered by hand to an officer of
the other party, or when deposited with the U.S. Postal Service, as first class
certified or registered mail, postage prepaid, overnight courier service, telex
or telecopier, addressed
(a) If to Provider to:
Minnesota Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
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(b) If to Company to:
Northstar Life Insurance Company
University Corporate Center at Amherst
000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxx Xxxx 00000
or to such other persons or places as each party may from time to time designate
by written notice sent as aforesaid.
17. REPRESENTATIONS AND WARRANTIES OF PROVIDER. As a material inducement
to Company to enter into and perform this Agreement, Provider represents and
warrants to Company that: (i) Provider is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota, with
full power and authority to execute, deliver and perform this Agreement; (ii)
this Agreement is valid and binding upon Provider and enforceable against
Provider in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or similar laws and subject to general
principles of equity; and (iii) Provider has and shall maintain sufficient
qualified personnel and adequate facilities to perform this Agreement.
18. ENTIRE AGREEMENT. This Agreement, together with such amendments as may
from time to time be executed in writing by the parties, constitutes the entire
agreement and understanding between the parties in respect of the transactions
contemplated hereby and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof.
19. SECTION HEADINGS. Section headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
20. 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.
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.
Minnesota Life Northstar Life
Insurance Company Insurance Company
By: By:
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Title: Senior VP, General Counsel and Secretary Title: Vice President and Assistant Secretary
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Date: Date:
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