EXHIBIT (8)(f)
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (hereinafter called "Agreement") dated
December 1, 1995, by and between AMERICAN ANNUITY GROUP, INC.(hereinafter
called "AAG") and ANNUITY INVESTORS LIFE INSURANCE COMPANY (hereinafter
called "AILIC").
WHEREAS, AAG has extensive experience in the administration of
annuity business; and
WHEREAS, AILIC is a subsidiary of AAG, and desires that AAG
perform certain administrative, accounting and other services (hereinafter
called "Services") for AILIC in its business operations and desires
further to make use in its day-to-day operations of certain property,
equipment, and facilities (hereinafter called "Facilities") of AAG and its
subsidiaries as AILIC may request; and
WHEREAS, AAG and AILIC contemplate that such an arrangement will
achieve certain operating economies and improve Services to the benefit of
AAG, AILIC and AILIC's policyholders; and
WHEREAS, AAG and AILIC wish to assure that all charges for
Services and the use of Facilities incurred hereunder are reasonable and
in accordance with the requirements of applicable law and regulations 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, AAG and AILIC wish to identify the Services to be
rendered to AILIC and AAG and its subsidiaries and the Facilities to be
used by AILIC and to provide a method for determining the charges to be
made to AILIC.
NOW, THEREFORE, in consideration of the premises and of the
promises set forth herein, and intending to be legally bound hereby, AAG
and AILIC agree as follows:
1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. AAG agrees to the
extent requested by AILIC to perform such Services for AILIC as AILIC
determines to be reasonably necessary in the conduct of its business and
operations.
AAG agrees to the extent requested by AILIC to make available its
personnel and Facilities to AILIC as AILIC may determine to be reasonably
necessary in the conduct of its business and operations, including but not
limited to the following functions: policy administration; accounting and
auditing services; actuarial; marketing; legal; administrative and other
regulatory matters; general corporate matters; contract matters; use of
data processing and computer equipment; use of business property, whether
owned or leased; and use of communications equipment. It is the intent of
the parties that AAG will perform all services which AILIC requires in
connection with its business of marketing, issuing and servicing fixed and
variable annuities and provide all Facilities needed in connection with
such business. Notwithstanding the foregoing, this Agreement is not
intended to cover investment services or policy distribution which may be
the subject of separate agreements.
AAG agrees at all times to use its best efforts to maintain
sufficient personnel and Facilities of the kind necessary to perform the
Services sent forth in this Agreement. AAG shall have the right upon
thirty (30) days prior written notice to and non-disapproval by the Ohio
Department of Insurance to subcontract with those subsidiaries, affiliates
or unrelated third parties (hereinafter "Subcontractors") accepted in
writing by AILIC to perform any Services and provide any personnel and
Facilities which AAG is obligated to provide to AILIC pursuant to this
Agreement and in strict accordance with the terms, conditions and
limitations contained in this Agreement; provided, however, AAG shall not
be relieved of its obligations, or of any liability hereunder to AILIC
arising as a result of any failures of SUBCONTRACTORS to perform. Until
changed in accordance with the foregoing, Services shall be provided by
AAG.
(a) CAPACITY OF PERSONNEL; STATUS OF FACILITIES, Whenever
AAG utilizes its personnel to perform Services for AILIC pursuant to this
Agreement, such personnel shall at all times remain employees of AAG
subject solely to its direction and control and AAG shall alone retain
full liability to such employees for their welfare, salaries, fringe
benefits, legally required employer contributions and tax obligations.
No facility of AAG used in performing Services for or subject to
use by AILIC 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 AAG, AAG
shall perform any such Services in accordance with any standards and
guidelines AILIC develops and communicates to AAG. In performing any
Services hereunder, AAG shall at all times act in a manner reasonably
calculated to be in, or not opposed to, the best interests of AILIC. AAG
shall have no liability for any action taken or omitted by it in
furnishing Services and Facilities under this Agreement, in good faith and
without gross negligence or willful misconduct.
(c) CONTROL. The performance of Services by AAG for AILIC
pursuant to this Agreement shall in no way impair the absolute control of
the business and operations of AAG or AILIC by their respective Boards of
Directors. AAG shall act hereunder so as to assure the separate operating
identity of AILIC as required pursuant to the laws of the State of Ohio.
2. SERVICES. The performance of services by AAG under this
Agreement with respect to the business and operations of AILIC shall at
all times be subject to the direction and control of the Board of
Directors of AILIC.
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Subject to the foregoing and to the terms and conditions of this
Agreement, AAG shall provide to AILIC the Services set forth below.
(a) POLICY ADMINISTRATION. Under the general supervision of
the Board of Directors of AILIC, AAG shall provide all services in
connection with policy administration and policyholder services including:
policy issuance, premium processing, loan processing, surrender and
annuity processing and policyholder services.
(b) ACCOUNTING AND AUDITING. Under the general supervision
of the Board of Directors of AILIC, AAG shall provide the following
accounting services: preparation and maintenance of the financial
statements and reports including annual and quarterly statements on both
statutory and GAAP bases and tax returns, and processing of the related
financial records and transactions of AILIC. AAG shall also provide such
assistance as may be required with respect to tax and auditing services.
(c) ACTUARIAL. Under the general supervision of the Board of
Directors of AILIC, AAG shall provide all actuarial services needed in
connection with AILIC's business including policy design and development
and reserve valuation.
(d) MARKETING. Under the general supervision of the Board of
Directors of AILIC, AAG shall provide all marketing services needed in
connection with AILIC's business including market research, development of
marketing materials and campaigns and recruitment of agents.
(e) LEGAL. Under the general supervision of the Board of
Directors of AILIC, AAG shall provide all legal services and compliance
services needed in connection with AILIC's business including company
licensing, product approval and other regulatory matters.
(f) ADMINISTRATIVE AND OTHER REGULATORY MATTERS. Under the
general supervision of the Board of Directors of AILIC, AAG shall provide
all administrative and regulatory services needed in connection with
AILIC's business.
(g) CORPORATE MATTERS. Under the general supervision of the
Board of Directors of AILIC, AAG shall provide services with respect to
general corporate matters involving AILIC.
(h) POLICY MATTERS. Under the general supervision of the
Board of Directors of AILIC, AAG shall provide all services in connection
with the development of policies and products to be marketed by AILIC.
(i) DATA PROCESSING AND COMPUTER EQUIPMENT. Under the general
supervision of the Board of Directors of AILIC, AAG shall provide
telecommunications services and electronic data processing services,
Facilities and integration, including software programming and
documentation and hardware utilization.
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3. CHARGES. AILIC shall not be charged by AAG for the Services and
Facilities provided by AAG until such time as AILIC becomes an operating
entity issuing annuity contracts. All expenses incurred prior to such time
in the development of the annuity contracts shall be borne by AAG under
the general supervision of the Board of Directors of AILIC.
After such time, the charge to AILIC for such Services and
Facilities shall be at a rate as mutually agreed upon 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 and reported annually.
The bases for determining such charges for Services and
Facilities to AILIC shall be those used by AAG for internal cost
distribution including, where appropriate, Activity Based Costing records.
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 AAG and/or SUBCONTRACTORS on behalf of
AILIC.
4. PAYMENT. AAG and/or SUBCONTRACTORS shall submit to AILIC within
thirty (30) days of the end of each calendar month a written statement of
the amount estimated to be owed by AILIC for Services and the use of
personnel or Facilities pursuant to this Agreement in that calendar month
and AILIC shall pay to the party rendering the statement within thirty
(30) days following receipt of such written statement the amount set forth
in the statement.
Within thirty (30) days after the end of each calendar quarter,
AAG and/or SUBCONTRACTORS will submit to AILIC a detailed written
statement of the charges due from AILIC to AAG and/or SUBCONTRACTORS in
the preceding calendar quarter, including charges not included in any
previous statements, and any balance payable as shown in such statement
shall be paid within fifteen (15) days following receipt of such written
statement by AILIC.
5. ACCOUNTING RECORDS AND DOCUMENTS. AAG and/or SUBCONTRACTORS
shall be responsible for maintaining full and accurate accounting records
of all Services rendered and Facilities used pursuant to this Agreement
and such additional information as AILIC may reasonably request for
purposes of its internal bookkeeping and accounting operations. The
accounting records to be maintained by AAG shall include any records
required to be maintained by AILIC under applicable laws. AAG and/or
SUBCONTRACTORS shall keep such accounting records insofar as they pertain
to the computation of charges hereunder available at its principal offices
for audit, inspection and copying by AILIC or any governmental agency
having jurisdiction over AILIC during all reasonable business hours. With
respect to accounting and statistical records prepared by AAG by reason of
its performance under this Agreement, summaries of such records shall be
delivered to AILIC within thirty (30) days from the end of the month to
which the records pertain.
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6. OTHER RECORDS AND DOCUMENTS. All books, records, and files
established and maintained by AAG and/or SUBCONTRACTORS by reason of its
performance under this Agreement which, absent this Agreement, would have
been held by AILIC shall be deemed the property of AILIC, and shall be
subject to examination by AILIC and persons authorized by it at all times,
and shall be delivered to AILIC at least quarterly. With respect to
original documents other than those provided for in Section 5 hereof which
would otherwise be held by AILIC and which may be obtained by AAG in
performing under this Agreement, AAG shall deliver such documents to AILIC
within thirty (30) days of their receipt by AAG except where continued
custody of such original documents is necessary to perform hereunder
7. LICENSING. AAG shall be responsible for obtaining any licenses
or permits needed to provide the services described herein and shall be
responsible for providing personnel who have any required license or
permit.
8. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be
deemed to grant AAG an exclusive right to provide Services to AILIC, and
AILIC 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 AILIC pursuant to this
Agreement. Similarly, AAG retains the right to contract with any third
party, affiliated or unaffiliated, to perform services or to provide
facilities, identical or similar to those being performed or provided
herein.
9. TERMINATION AND MODIFICATION. This Agreement shall remain in
effect until terminated by either AAG or AILIC upon giving thirty (30)
days or more advance written notice, provided that AILIC shall have the
right to elect to continue to receive data processing Services and/or to
continue to utilize data processing Facilities and related software for up
to one year from the date of such notice. Upon termination, AAG shall
promptly deliver to AILIC all books and records that are, or are deemed by
this Agreement to be, the property of AILIC.
10. SETTLEMENT ON TERMINATION. No later than ninety (90) days after
the effective date of termination of this Agreement, AAG shall deliver to
AILIC a detailed written statement for all charges incurred and not
included in any previous statement to the effective date of termination.
The amount owned hereunder shall be due and payable within thirty(30) days
of receipt of such statement.
11. EFFECTIVE DATE. This Agreement shall become effective upon the
later of (i) the date hereof, or (ii) the receipt of any required approval
of the Ohio Department of Insurance or the expiration of any waiting
period provided for by the laws or regulations of the State of Ohio.
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
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intended to confer on any person other than the parties hereto, or their
respective legal successors, any rights, remedies, obligations or
liabilities, or to relieve any person other than the parties hereto, or
their respective legal successors, from any obligations or liabilities
that would otherwise be applicable. The covenants and agreements
contained in this Agreement shall be binding upon, extend to and inure to
the benefit of the parties hereto, their, and each of their, successors
and assigns respectively.
13. GOVERNING LAW. This Agreement is made pursuant to and shall be
governed by, interpreted under, and the rights of the parties determined
in accordance with, the laws of the State of Ohio.
14. ARBITRATION. Any unresolved difference of opinion between the
parties arising out of or relating to this Agreement, or the breach
thereof, except as provided in Section 3, shall be settled by arbitration
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and the Expedited Procedures thereof, and judgment
upon the award rendered by the Arbitrator may be entered in any Court
having jurisdiction thereof. The arbitration shall take place in
Cincinnati, Ohio.
15. 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 certified or registered mail, postage prepaid, addressed or to
such other person or place as each party may from time to time designate
by written notice sent as aforesaid.
If to AAG:
AMERICAN ANNUITY GROUP, INC.
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Phone Number (000) 000-0000
Fax Number (000) 000-0000
If to AILIC:
ANNUITY INVESTORS LIFE INSURANCE COMPANY
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Phone Number (000) 000-0000
Fax Number (000) 000-0000
16. 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 between the parties with respect to the
subject matter hereof.
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In witness whereof, the parties hereunto set their hands as of
the date first above written.
AMERICAN ANNUITY GROUP, INC.
By: /s/ Xxxx X. Xxxxxxxx
_____________________________
Its: Senior Vice President
ANNUITY INVESTORS LIFE INSURANCE
COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxxx
_____________________________
Its: Senior Vice President
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