1
VARIABLE ANNUITY REINSURANCE AGREEMENT
Effective Date of July 1, 1997
Between
NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY
(Boston, Massachusetts)
and
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
(Hartford, Connecticut)
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NO. AMERICAN SECURITY LIFE INS. COMPANY
VENTURE VANTAGE VARIABLE ANNUITY
EFFECTIVE JULY 1, 1997
TREATY NO. 103049 -1-
2
VARIABLE ANNUITY REINSURANCE AGREEMENT
between
NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY
and
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
INDEX
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ARTICLE PAGE
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Access to Records XII 8
Amounts at Risk II 3
Arbitration XVII 11
Automatic Excess Reinsurance III 4
Claims VII 6
Currency XIV 9
DAC Tax Regulation Election XVIII 12
Delays, Errors, or Omissions XIII 9
Effective Date; Term and Termination XIX 12
Extra Contractual Obligations IX 7
Hold Harmless XV 10
Insolvency XVI 10
Liability of Connecticut General IV 4
Litigation X 8
Notices XX 15
Offset XI 8
Parties to the Agreement I 3
Premium Accounting VI 5
Reinsurance Premiums V 5
Reserves VIII 7
SCHEDULES
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A Maximum Limits of Reinsurance in Connecticut General
B Policy Forms and Funds Subject to this Reinsurance Agreement
C Limits and Rules of NASL
D Reinsurance Premium Rates and Calculation Criteria
E Quarterly Reporting Format
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NO. AMERICAN SECURITY LIFE INS. COMPANY
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EFFECTIVE JULY 1, 1997 - 2 -
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VARIABLE ANNUITY REINSURANCE AGREEMENT
(hereinafter called Agreement)
between
NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY
(hereinafter called NASL)
and
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
(hereinafter called Connecticut General or CIGNA Reinsurance)
It is agreed by the two companies as follows:
ARTICLE I - PARTIES TO THE AGREEMENT
This Agreement shall be binding upon and shall inure solely to the benefit of
NASL and Connecticut General. This Agreement shall not and is not intended to
create any right or interest in any third party and shall not and is not
intended to create any legal relationship between either party and any third
party, including, without limitation, annuitants, insureds, certificate holders,
employees, dependents, beneficiaries, policy owners, applicants or assignees
under any policy or contract issued by NASL.
ARTICLE II - AMOUNTS AT RISK
A. The reinsurance death benefit is fifty (50) percent of the excess of the
guaranteed minimum death benefit over the contract value. At issue, the
guaranteed minimum death benefit is equal to the initial contract value.
Refer to Schedule A for a detailed description of the guaranteed minimum
death benefit.
B. The contract value represents the owner's invested assets in the funds in
Schedule B as it appears in the records of NASL before application of any
surrender charges, on any given date.
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ARTICLE III - AUTOMATIC EXCESS REINSURANCE
A. On and after the Effective Date of this Agreement, subject to the limit of
Connecticut General's liability set forth in Schedule A and all other
terms, conditions and limitations set forth in this Agreement and the
Schedules attached to and made a part hereof, NASL shall cede and
Connecticut General shall accept fifty (50) percent of NASL'S guaranteed
death benefit liability under the Variable Annuity Contracts, as described
in Article II A.
B. This Agreement covers only NASL'S liability for claims paid under Variable
Annuity Contracts written on forms and investment in funds which were
reviewed by Connecticut General prior to their issuance. Forms, as
supplemented by additional materials, and funds available as of the date of
this Agreement are listed on Schedule B. If NASL intends to cede to
Connecticut General liability with respect to a new form or fund, or a
revised version of an approved form or fund, it must provide to Connecticut
General written notice of such intention together with a copy of the
proposed form, fund or revision, and a revised Schedule B.
C. NASL shall provide written notice to Connecticut General of any changes in
its published limits and rules identified on Schedule C, and Connecticut
General shall have no liability pursuant to revised limits and rules unless
and until Connecticut General provides written notice to NASL that such
revised limits and rules are acceptable.
ARTICLE IV - LIABILITY OF CONNECTICUT GENERAL
Connecticut General's liability for reinsurance under this Agreement shall
follow that of NASL in every case, and be subject in all respects to the general
stipulations, terms, clauses, conditions, waivers and modifications of the
Variable Annuity Contracts.
In no event shall Connecticut General have any reinsurance liability unless the
Variable Annuity Contract issued by NASL is in force and the underwriting and
issuance of coverage by NASL constitutes the doing of business in a state of the
United States of America in which NASL is properly licensed and authorized to do
business.
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ARTICLE V - REINSURANCE PREMIUMS
Premiums for reinsurance subject to the terms and conditions of this Agreement
shall be paid on a quarterly basis. Such premiums shall be determined by the
application of the rates set forth in Schedule D to the amount of reinsurance
coverage provided for each annuity insured by NASL as calculated based on the
criteria defined in Schedule D.
ARTICLE VI - PREMIUM ACCOUNTING
A. Reinsurance premiums shall be paid in advance on a Quarterly basis. On or
before the Due Date (as defined in Paragraph B), NASL shall forward to
Connecticut General its statement of account as set forth in Schedule E
together with its remittance for the net amount due as shown therein as
well as any premium adjustments from the prior quarter. If the statement
shows a balance due NASL, Reinsurer shall remit that amount to NASL on or
before the Remittance Date (the date occurring thirty days after the Due
Date). If the amounts described in Article VI cannot be determined by the
Due Dates set forth in Article VI, on an exact basis, such payments will be
made with a generally agreed upon formula which will approximate the actual
payments. Adjustments will then be made to reflect actual amounts when they
become available.
B. For the purposes of this Agreement the Due Date for Reinsurer's receipt of
the statement of account and premium due is the thirtieth day following the
close of any reporting period. The payment of reinsurance premiums in
accordance with the provisions herein shall be a condition precedent to the
liability of Reinsurer for reinsurance covered by this Agreement. In the
event that reinsurance premiums are not received by Reinsurer as of the Due
Date following the close of the reporting period in which they fall due,
Reinsurer will notify NASL that such premiums are due and unpaid, and NASL
will remit the premium on or before the Remittance Date. In the event that
the premiums are not paid by the Remittance Date, Reinsurer shall have the
right to give NASL notice of termination of such reinsurance immediately.
C. If reinsurance is terminated as provided in paragraph B, and if all
reinsurance premiums in default and any additional charges due in
accordance with this Agreement, including such premiums and charges which
may become in default are not paid by the Remittance Date, Reinsurer shall
thereupon be relieved automatically of future liability under all
reinsurance for which premiums and other charges remain unpaid. New and
existing Reinsurance for which premiums subsequently fall due will
terminate automatically if reinsurance premiums are not paid when due as
provided in paragraph B of this Article. The reinsurance so terminated may
be reinstated at any time within sixty days of the date of termination upon
payment of all reinsurance premiums and other charges in arrears; but in
the event of such reinstatement, Reinsurer shall have no liability in
connection with any claims incurred between the date of
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termination and the date of reinstatement of the reinsurance without prior
written consent of the Reinsurer.
D. Not withstanding termination of reinsurance as provided herein, NASL shall
continue to be liable to Reinsurer for all unpaid reinsurance premiums
earned by Reinsurer under this Agreement. Such premiums are subject to an
annual interest charge as specified in Article XIX.
ARTICLE VII - CLAIMS
NASL is solely responsible for payment of its claims under the Policies
identified on Schedule B.
NASL shall provide written notice to Connecticut General of any Claim which may
impact the reinsurance coverage under this Agreement within thirty (30) calendar
days of receipt of notification of Claim. NASL shall also provide prompt notice
to Connecticut General of all subsequent significant developments relating to
such Claim. Inadvertent oversight or omission in the provision of such notice
shall not relieve Connecticut General of liability provided NASL informs
Connecticut General of such oversight or omission promptly upon its discovery.
NASL shall provide Connecticut General with proof of claim, proof of claim
payment and any other claim documentation requested by Connecticut General in
accordance with Schedule E. Payment of reinsurance shall be made by Connecticut
General in one sum regardless of the method of payment by NASL and within thirty
(30) calendar days following receipt of required claim documentation.
NASL shall notify Connecticut General of its intention to contest or deny a
claim which may involve the reinsurance coverage under this Agreement before any
notice of contest or denial is provided to the claimant. Connecticut General
shall then have thirty (30) calendar days within which to advise NASL whether it
agrees that the claim should be contested or denied. If Connecticut General does
not agree that the claim should be contested or denied, then it shall pay to
NASL the full amount of the reinsurance on the risk reinsured, as set forth in
this Agreement, and Connecticut General shall have no further obligation in
respect to such claim. If Connecticut General agrees that the claim should be
contested or denied, then Connecticut General shall pay its share of the
following in accordance with its share of liability as set forth in this
Agreement:
- Expenses incurred by NASL in investigating, contesting litigating or
otherwise resisting the Claim, excluding salaries and expenses of
employees, officers and agents of NASL and ordinary expenses of NASL,
and costs of third party administrators acting on behalf of NASL; and
- Interest which is paid by NASL in respect of the Claim.
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If the denial of a Claim results in an award verdict or judgment against NASL,
where Connecticut General has agreed with the claim denial and NASL intends to
appeal the verdict or judgment, written notice of the intention to appeal shall
be provided to Connecticut General. Connecticut General shall be entitled at
that time to pay its share of the judgment, together with any expenses and
interest as set forth above, and to have no further obligation in connection
with such Claim. If Connecticut General does not pay its share of the judgment
and any expenses and interest due at that time, Connecticut General shall pay
its share of the expenses associated with the appeal of the judgment or verdict,
together with its share of any additional interest charges that may accrue
during the appeal.
ARTICLE VIII - RESERVES
The reserve held by Connecticut General for reinsurance of the variable annuity
death benefit will be determined in accordance with the NAIC Actuarial Guideline
XXXIV, but in no event less than the recognized statutory required reserve.
ARTICLE IX - EXTRA CONTRACTUAL OBLIGATIONS
A. In no event shall Connecticut General be liable for extra contractual
damages (whether they constitute Compensatory damages, Statutory
penalties, Exemplary or Punitive damages) which are awarded against NASL
as a result of an act, omission or course of conduct by NASL in connection
with policies subject to this Agreement, unless Connecticut General shall
have received notice in writing of and concurred with the actions taken or
not taken by NASL which led to its liability, in which case Connecticut
General shall pay its share of such liability. For this purpose,
Connecticut General's share shall be proportionate with its risk under the
business reinsured hereunder.
B. The following definitions shall apply:
(1) Punitive damages and Exemplary damages are those damages awarded as a
penalty, the amount of which is not governed nor fixed by statute.
(2) Statutory penalties are those amounts which are awarded as a penalty
but fixed in amount by statute.
(3) Compensatory damages are those amounts awarded to compensate for the
actual damages sustained and are not awarded as a penalty nor fixed in
amount by statute.
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ARTICLE X - LITIGATION
In the event of any action brought against NASL under any Underlying Annuity
Contract that is subject to the terms and conditions of this Agreement, NASL
shall provide a copy of such action and written notice of such action within ten
(10) business days to Connecticut General. If Connecticut General is a party to
action brought against NASL, NASL shall seek agreement by Connecticut General on
the selection and appointment of local counsel to represent NASL in such action.
ARTICLE XI - OFFSET
Either party shall have, and may exercise at any time and from time to time, the
right to offset any balance or amounts whether on account of premiums or on
account of losses or otherwise, due from one party to the other under the terms
of this Agreement. However, in the event of insolvency of NASL subject to the
provisions of Article XVI, offset shall only be allowed in accordance with the
statutes and/or regulations of the state having jurisdiction over the
insolvency.
ARTICLE XII - ACCESS TO RECORDS
NASL and Connecticut General, or its duly authorized representative, shall have
access at any reasonable time during regular business hours, to all records of
the other, including the right to photocopy and retain copies of such documents,
which reasonably pertain in any way to this Agreement. Books and records shall
be maintained in accordance with prudent standards of insurance company record
keeping and must be retained for a period of at least seven (7) years from the
date of creation. Within one hundred and fifty (150) days following the end of
each calendar year, NASL and Connecticut General will provide each office with
copies of their respective audited financial statements.
NASL and Connecticut General may come into the possession or knowledge of
Confidential Information of the other in fulfilling obligations under this
Agreement. Each party agrees to hold such confidential information in the
strictest confidence and to take all reasonable steps to ensure that such
Confidential Information is not disclosed in any form by any means by each of
them or by any of its employees to third parties of any kind, other than
attorneys, accountants, other consultants or retrocessionairs having an interest
in such information, except by advance written authorization by an officer of
the authorizing party; provided, however, that either party will be deemed to
have satisfied its obligations as to the Confidential Information by protecting
its confidentiality in the same manner that such party protects its own
proprietary or confidential
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information of like kind which shall be at least a reasonable manner.
"Confidential Information" means any information which (1) is not generally
available to or known by the public, or (2) has not been lawfully obtained or
developed by either party independently and not in violation of this Agreement
or from any source other than the other party, provided that such source is not
bound by a duty of confidentiality to such other party, and which consists of:
A. Information or knowledge about each party's products, processes, services,
finances, customers, research, computer programs, marketing and business
plans, claims management practices; and
B. Any medical or other personal, individually identifiable information about
people or business entities with whom the parties do business, including
customers, prospective customers, vendors, suppliers, individuals covered
by insurance plan, and each party's producers and employees.
ARTICLE XIII - DELAYS, ERRORS OR OMISSIONS
No accidental delay, errors or omissions on the part of NASL shall relieve
Connecticut General of liability provided immediate notice of such delay, errors
or omissions is provided to Connecticut General and are rectified as soon as
possible after discovery. However, Connecticut General shall not be liable with
respect to any reinsurance which may have been inadvertently included in the
premium computation but which ought not to have been included by reason of the
terms and conditions of this Agreement. Such inadvertent premium payments shall
be returned. Adjustment(s) of premiums payable and claims incurred as a result
of delay, errors or omissions shall be limited to the year in which they are
discovered and the calendar year prior to such discovery.
It is expressly understood and agreed that if failure to comply with any terms
of this Agreement is shown to be unintentional or the result of a
misunderstanding or oversight on the part of either party, both parties shall be
restored to the position they would have occupied had no such error or oversight
occurred, subject always to the correction of the error or oversight.
ARTICLE XIV - CURRENCY
All retentions and limits hereunder are expressed in United States dollars and
all premium and loss payments shall be made in United States currency. For the
purposes of this Agreement, amounts paid or received by Connecticut General in
any other currency shall be converted into United States dollars at the rates of
exchange on the date such transactions are entered on the books of Connecticut
General.
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ARTICLE XV - HOLD HARMLESS
A. Connecticut General shall indemnify and hold NASL harmless from any and all
liability, loss, damage, fines, punitive damages, penalties and costs,
including expenses and attorney's fees, which results from any negligence
or willful misconduct of Connecticut General in fulfilling its duties and
obligations under this Agreement or which results from any action which
exceeds its authority under this Agreement.
B. NASL shall indemnify and hold Connecticut General harmless from any and all
liability, loss, damage, fines, punitive damages, penalties and costs,
including expenses and attorney's fees, which results from any negligence
or willful misconduct of NASL in fulfilling its duties and obligations
under this Agreement or which results from any action which exceeds its
authority under this Agreement.
ARTICLE XVI - INSOLVENCY
In the event of insolvency of NASL, the reinsurance under this Agreement shall
be payable directly by Connecticut General to NASL or to its liquidator,
receiver, conservator or statutory successor on the basis of Connecticut
General's liability to NASL without diminution because of the insolvency of NASL
or because the liquidator, receiver, conservator or statutory successor of NASL
has failed to pay all or a portion of any claim. It is agreed, however, that the
liquidator, receiver, conservator or statutory successor of NASL shall give
prompt written notice to Connecticut General of the pendency of a claim against
NASL within a reasonable time after such claim is filed in the receivership,
conservation, insolvency or liquidation proceeding and that during the pendency
of such claim, Connecticut General may investigate such claim and interpose, at
its own expense, in the proceeding where such claim is to be adjudicated, any
defense or defenses that it may deem available to NASL or its liquidator,
receiver, conservator or statutory successor. The expense thus incurred by
Connecticut General shall be chargeable, subject to the approval of the Court,
against NASL as part of the expense of conservation or liquidation to the extent
of a pro-rata share of the benefit which may accrue to NASL solely as a result
of the defense undertaken by Connecticut General.
Where two or more reinsurers are involved in the same claim and a majority in
interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by NASL.
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ARTICLE XVII - ARBITRATION
A. As a condition precedent to any right of action hereunder, any dispute
between the parties with respect to the interpretation of this Agreement or
any right, obligation or liability of either party, whether such dispute
arises before or after termination of this Agreement, shall be submitted to
arbitration upon the written request of either party. Each party shall
select an arbitrator within thirty (30) days of the written request for
arbitration. If either party refuses or neglects to appoint an arbitrator
within thirty (30) days of the written request for arbitration, the other
party may appoint the second arbitrator. The two arbitrators shall select
an umpire within thirty (30) days of the appointment of the second
arbitrator. If the two arbitrators fail to agree on the selection of the
umpire within thirty (30) days of the appointment of the second arbitrator,
each arbitrator shall submit to the other a list of three umpire
candidates, each arbitrator shall select one name from the list submitted
by the other and the umpire shall be selected from the two names chosen by
a lot drawing procedure to be agreed upon by the arbitrators.
B. The arbitrators and the umpire all shall be active or retired,
disinterested executive officers of insurance or reinsurance companies.
C. The arbitration panel shall interpret this Agreement as an honorable
engagement rather than merely as a legal obligation and shall make its
decision considering the custom and practice of the applicable insurance
and reinsurance business. The arbitration panel is released from judicial
formalities and shall not be bound by strict rules of procedure and
evidence.
D. The decision of the arbitration panel shall be final and binding on both
parties. The arbitration panel may, at its discretion, award costs and
expenses as it deems appropriate, including, but not limited to, attorneys'
fees, interest and punitive damages. Judgment may be entered upon the final
decision of the arbitration panel in any court of competent jurisdiction.
E. All meetings and hearings before the arbitration panel shall take place in
Worcester, Massachusetts unless some other place is mutually agreed upon by
both parties or ordered by the panel.
F. In the absence of a decision to the contrary by the arbitration panel, each
party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire and of the
arbitration.
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ARTICLE XVIII - DAC TAX REGULATION ELECTION
Connecticut General and NASL hereby agree to make an election pursuant to
Internal Revenue Code Regulation Section 1.848-2(g)(8). This election shall be
effective for all taxable years for which the Reinsurance Agreement remains in
effect.
The terms used in this article are defined by reference to Regulation Section
1.848-2 promulgated on December 28, 1992.
Connecticut General and NASL agree that the entity with net positive
consideration for the reinsurance agreement for each taxable year will
capitalize specified policy acquisition expenses with respect to the reinsurance
agreement without regard to the general deductions limitation of Section
848(c)(1) of the Internal Revenue Code of 1986, as amended.
Connecticut General and NASL agree to exchange information pertaining to the
amount of net consideration under the reinsurance agreement each year to ensure
consistency. To achieve this, NASL shall provide Connecticut General with a
schedule of its calculation of the net consideration for all reinsurance
agreements in force between them for a taxable year by no later than April 30 of
the succeeding year. Connecticut General shall advise NASL if it disagrees with
the amounts provided by no later than May 31, otherwise the amounts will be
presumed correct and shall be reported by both parties in their respective tax
returns for such tax year. If Connecticut General contests NASL'S calculation of
the net consideration, the Parties agree to act in good faith to resolve any
differences within thirty (30) days of the date Connecticut General submits its
alternative calculation and report the amounts agreed upon in their respective
tax returns for such tax year.
Connecticut General represents and warrants that it is subject to U.S. taxation
under either Subchapter L or Subpart F of Part III of Subchapter N of the
Internal Revenue Code of 1986, as amended.
ARTICLE XIX EFFECTIVE DATE; TERM AND TERMINATION
A. The effective date of this Agreement is July 1, 1997. This Agreement
remains effective for all annuity contracts subject to this Agreement
written by NASL through June 30, 1998, unless terminated pursuant to the
paragraphs listed below:
B. Either Connecticut General or NASL shall have the option of terminating
this agreement with one hundred and eighty (180) days written notice to the
other party for new business anytime on or after June 30, 1998.
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C. Once each calendar year, NASL shall have the option to recapture existing
contracts beginning with the fifteenth (15) anniversary of their
reinsurance hereunder. If NASL elects to recapture, 1/3 of the contracts
can be recaptured in the first year eligible, 1/2 of the remaining
contracts can be recaptured in the second year, and the balance of the
contracts can be recaptured in the third year. Recapture must be made on an
issue year basis beginning with the earliest issue year. Recapture cannot
occur on contracts with later issue years until all contracts with earlier
issue dates have been recaptured.
D. Upon delivery of sixty (60) days written notice to NASL, Connecticut
General shall have the option of terminating this Agreement for new
business within sixty (60) days of the happening of any of the following
events:
(1) NASL's A. M. Best rating is reduced to a "C" or lower.
(2) NASL's parent company is placed upon a "watch list" by its domiciliary
state's insurance regulators;
(3) An order appointing a receiver, conservator or trustee for management
of NASL is entered or a proceeding is commenced for rehabilitation,
liquidation, supervision or conservation of NASL;
(4) NASL is merged, purchased or there is any other material change in the
NASL organization which directly impacts the reinsurance coverage
provided in this Agreement;
(5) The Securities and Exchange Commission revokes the licenses of NASL to
conduct business.
E. Connecticut General shall have the option of terminating this Agreement for
new and existing business should NASL fail to pay premium in accordance
with Article V and VI. If, during the sixty (60) days notice period, the
Reinsurer receives all premiums in arrears and all premiums which may
become due within the sixty (60) days notice period, the notice of
termination shall be deemed withdrawn. In the event of termination under
this paragraph, this Agreement may be reinstated upon the written consent
of the Reinsurer if, at any time within sixty (60) days of termination,
NASL pays and the Reinsurer receives all premiums due with interest thereon
and payable up to the date of reinstatement. (Please refer to paragraph K
below for the interest calculation description)
F. Upon delivery of sixty (60) days written notice to Connecticut General,
NASL shall have the option of terminating this Agreement for new business
within sixty (60) days of the happening of any of the following events:
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(1) Connecticut General's A. M. Best rating is reduced to a "C" or lower;
(2) Connecticut General is placed upon a "watch list" by its domiciliary
state's insurance regulators;
(3) An order appointing a receiver, conservator or trustee for management
of Connecticut General is entered or a proceeding is commenced for
rehabilitation, liquidation, supervision or conservation of
Connecticut General;
(4) Connecticut General is merged, purchased or there is any other
material change in Connecticut General's organization which directly
impacts the reinsurance coverage provided in this Agreement;
(5) Failure by Connecticut General to pay reinsurance death benefits in
accordance with Article II. If, during the sixty (60) days notice
period, NASL receives all reinsurance death benefits in arrears, the
notice of termination shall be deemed withdrawn. In the event of
termination under this paragraph, this Agreement may be reinstated
upon the written consent of NASL if, at any time within sixty (60)
days of termination, the Reinsurer pays and NASL receives all
reinsurance death benefits due with interest thereon and payable up to
the date of reinstatement. (Please refer to paragraph K below for the
interest calculation description)
G. If this Agreement is terminated for new and existing business, Connecticut
General shall be relieved of all liability to NASL for claims incurred
following the termination date of this Agreement under such Underlying
Annuity Contracts issued by NASL, and
H. If this Agreement is terminated for new business only, Connecticut General
will remain liable, after termination, in accordance with the terms and
conditions of this Agreement, with respect to all reinsurance effective
prior to termination of the Agreement.
I. Both parties shall continue to be entitled to all offset credits provided
by Article XI up to the effective date of termination.
J. NASL shall not have the right to assign or transfer any portion of the
rights, duties and obligations of NASL under the terms and conditions of
this Agreement without the written approval of Connecticut General.
K. In the event of reinstatement as described in paragraph E and F above,
there will be an interest charge at the three (3) month LIBOR Rate (as
published in the Wall Street Journal), plus .01, determined on the first
business day following the end of the 60 day notice period. The settlement
is considered overdue at the end of the 60 day notice period and interest
shall commence from the overdue date.
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ARTICLE XX - NOTICES
All notices required to be given hereunder shall be in writing and shall be
deemed delivered if personally delivered, sent via facsimile, or dispatched by
certified or registered mail, return receipt requested, postage prepaid,
addressed to the parties as follows:
Xxxxxxx X. Xxxxxx
Vice President, Treasurer
North American Security Life Insurance Company
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Phone No. (000) 000-0000 (x253) Fax No. (000) 000-0000
Xxxxx X. Xxxxxxxxxx, FSA
Assistant Vice President and Actuary
CIGNA Reinsurance
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Phone No. 000.000.0000 Fax No. 000.000.0000
Notice shall be deemed given on the date it is received in the mail or sent via
facsimile in accordance with the foregoing. Any party may change the address to
which to send notices by notifying the other party of such change of address in
writing in accordance with the foregoing.
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16
The text of this Agreement and all Exhibits, Schedules and Amendments are
considered to be the entire contract between the parties. There are no other
understandings or agreements between the parties regarding the policies
reinsured other than as expressed in this Agreement. Either party may make
changes or additions to this Agreement, but they will not be considered to be in
effect unless they are made by means of a written amendment which has been
signed by both parties.
In witness whereof, the parties hereto have caused this Agreement to be signed
in duplicate on the dates indicated to be effective as of the date specified
above.
NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY
By:______________________________
Date:______________________, 19__
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By:______________________________
Date:______________________, 19__
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NO. AMERICAN SECURITY LIFE INS. COMPANY
VENTURE VANTAGE VARIABLE ANNUITY
EFFECTIVE JULY 1, 1997 - 16 -
TREATY NO. 103049
17
SCHEDULE A
Maximum Limits of Reinsurance in Connecticut General
Connecticut General requires prior notification of any annuity purchase in
excess of $5,000,000.00 per annuitant/owner. Upon receipt of such notification,
Connecticut General then has the obligation to notify NASL within 15 days of its
decision to accept or not accept the reinsurance risk for such an annuity
purchase. Should Connecticut General not respond within 15 days, it shall be
deemed that Connecticut General does not agree to accept such risk. In no event
shall Connecticut General's share of risk exceed $5,000,000 per contract without
prior written approval from Connecticut General.
The purchase amount is the sum of all premium contributions less withdrawals in
the contract. For purchase amounts in excess of the maximum, Connecticut
General's death benefit liability will be reduced by the ratio of purchase
amounts in excess of the maximum to the total purchase amounts.
Guaranteed Minimum Death Benefit
The Guaranteed Minimum Death Benefit (GMDB) reinsured hereunder shall be limited
to 50% of all new issues and shall be determined as follows:
The death benefit will be paid if the contract owner dies during the first nine
contract years and shall be the greater of:
(A) the contract value less any payment enhancements applied in the 12
month period prior to the date of death, or
(B) the excess of (i) the sum of all purchase payments less any payment
enhancements applied in the 12 month period prior to the date of death
over (ii) the sum of any amounts deducted in connection with partial
withdrawals.
The death benefit will be paid if the contract owner dies after the ninth
contract year and shall be the greater of:
(A) the contract value less any payment enhancements applied in the 12
month period prior to the date of death or
(B) the excess of (i) the sum of all purchase payments less any payment
enhancements applied over (ii) the sum of any amounts deducted for
partial withdrawals or
(C) the death benefit on the last day of the ninth contract year, plus the
sum of all purchase payments made and any amount deducted in
connection with partial withdrawals since then and less any payment
enhancements applied in the 12 month period prior to the date of
death.
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NO. AMERICAN SECURITY LIFE INS. COMPANY
VENTURE VANTAGE VARIABLE ANNUITY
EFFECTIVE JULY 1, 1997 SCHEDULE A
TREATY NO. 103049
18
SCHEDULE B
Contracts and Funds Subject to this Reinsurance Agreement
Form
Number* Policy Description Date
------- ------------------ ----
VTG20.PRO797 Venture Vantage, Combination Fixed 7/23/97
and Variable Annuity
* Includes all state variations
Fund
Date Fund/Portfolio Description
---- --------------------------
Pacific Rim Emerging Markets Trust Equity-Income Trust
Science & Technology Trust Balanced Trust
International Small Cap Trust Aggressive Asset Allocation Trust
Emerging Growth Trust High Yield Trust
Pilgrim Xxxxxx Growth Trust Moderate Asset Allocation Trust
Small/Mid Cap Trust Conservative Asset Allocation Trust
International Stock Trust Strategic Bond Trust
Worldwide Growth Trust Global Government Bond Trust
Global Equity Trust Capital Growth Bond Trust
Growth Trust Investment Quality Bond Trust
Equity Trust U.S. Government Securities Trust
Quantitative Equity Trust Money Market Trust
Equity Index Trust Lifestyle Aggressive 1000 Trust
Blue Chip Growth Trust Lifestyle Growth 820 Trust
Real Estate Securities Trust Lifestyle Balanced 640 Trust
Value Trust Lifestyle Moderate 460 Trust
International Growth and Income Trust Lifestyle Conservative 280 Trust
Growth and Income Trust
--------------------------------------------------------------------------------
NO. AMERICAN SECURITY LIFE INS. COMPANY
VENTURE VANTAGE VARIABLE ANNUITY
EFFECTIVE JULY 1, 1997 SCHEDULE B
TREATY NO. 103049
19
SCHEDULE C
Limits and Rules of NASL
1) NASL will determine the Guaranteed Minimum Death Benefit for each deceased
within seven (7) working days of receipt of written notice of death, as
well as all required claim forms.
2) The maximum purchase payment without company approval is $1,000,000.
3) The minimum initial purchase payment is $10,000.
4) The maximum maturity date is the first day of the month following the later
of the 85th birthday of the owner or the tenth contract anniversary.
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NO. AMERICAN SECURITY LIFE INS. COMPANY
VENTURE VANTAGE VARIABLE ANNUITY
EFFECTIVE JULY 1, 1997 SCHEDULE C
TREATY NO. 103049
20
SCHEDULE D
Reinsurance Premiums
1. The reinsurance premiums shall be based on the owner's age at the end of
each quarter. NASL shall determine the owner's age at the time it prepares
the quarterly exposure data submission for the variable annuity guaranteed
death benefit, as set forth in Schedule E, attached hereto.
2. The Adjusted Aggregate Contract Value is the sum of the contract values in
all of NASL'S variable annuities subject to this Agreement, minus contract
values attributable to amounts in excess of the maximum purchase amounts
listed in Schedule A.
3. The amount at risk each quarter will be calculated as the reinsurance death
benefit for each variable annuity contract covered under this agreement.
For determining the amount at risk, the guaranteed minimum death benefit
and the contract value are calculated as the average of the values at the
end of the current quarter and the end of the prior quarter. The amount at
risk cannot fall below zero
4. The premium over each calendar quarter will be no more than fifty (50)
percent of the Age Adjusted Aggregate Contract Values times one quarter
(1/4) of the maximum premium amount. The actual quarterly premium is a
fund/exposure based charge subject to a minimum or maximum determined as
basis points (bps) of account value. Fund based charges, expressed as an
annual rate are as follows:
Reinsurance Attained Ages 0-69 Attained Ages 70+
Coverage Min. Max. Min. Max.
-------- ------------------- ------------------
Until Termination 1.2 bps - 5.2 bps 4.4 bps - 12.0 bps
Quarterly Reinsurance Premium Rates
Exposure Based - Per $1,000 Exposed
Ages Unisex
-----------
less than 35 $ 0.19
35-39 0.25
40-44 0.37
45-49 0.63
50-54 1.15
55-59 2.02
60-64 3.21
65-69 5.52
70-74 9.54
75-79 15.40
80-84 25.20
85-89 38.20
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NO. AMERICAN SECURITY LIFE INS. COMPANY
VENTURE VANTAGE VARIABLE ANNUITY
EFFECTIVE JULY 1, 1997 SCHEDULE D
TREATY NO. 103049
21
SCHEDULE E
Quarterly Reporting Format
1. Following the end of each calendar quarter, the Quarterly Input Page,
Fund/Exposure-Based exhibit (Schedule E-2) and the Quarterly Transaction
Summary (Schedule E-1) or an exhibit of similar form must be prepared for
each Qualified plan and Non-Qualified plan separately.
2. The tabulation should be on an Adjusted Basis, which requires omission of
excess contract values due to an issue amount in excess of $5 million.
3. The tabulation is on a seriatim basis, with each contract contributing
toward the totals for both exposure and aggregate contract value.
4. The tabulation is necessary to assess the correct amount at risk for
accurate calculation of reinsurance premium. NASL can choose to report
values a) as weighted averages during the quarter, or b) as of the end of
the quarter. This election must be denoted on the submission.
5. At year end reporting, a tabulation of exposures by age based on a
percentage decrease in account value by fund type as specified by the NAIC
must be submitted for reserve purposes.
--------------------------------------------------------------------------------
NO. AMERICAN SECURITY LIFE INS. COMPANY
VENTURE VANTAGE VARIABLE ANNUITY
EFFECTIVE JULY 1, 1997 SCHEDULE E
TREATY NO. 103049
