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AGREEMENT
Investors Insurance Corporation and the Arizona Department of
Insurance agree to certain minimum standards and conditions that
must be met and/or maintained, in consideration for which the
Arizona Department agrees to forbear from commencing a field
examination of Investors for the term hereof. These standards
and conditions are as follows:
1. Investors will cede to Republic-Vanguard Life, or some other
reinsurer acceptable to the Arizona Department of Insurance
within 10 business days from the date this agreement is signed
by the Arizona Department of Insurance, 100% of existing
retained business covering Arizona policyholders and cede all
new business written in Arizona, but in any event, the cession
to the selected reinsurer will occur no later than August 8,
1997.
2. Investors' RBC Ratio shall be computed as of the end of each
calendar quarter and shall not fill below 225%. The RBC Ratio
and supporting calculation shall be timely filed by Investors
with the Arizona Department of Insurance along with the
respective statutory Quarterly Statement or Annual Statement
filing. Investors' ratio of policyholder liability to capital
and surplus shall not at any time exceed 16 to 1. In no event
will Investors' Capital and Surplus be lower than $4.5 million.
Investors' Annual Statement, Quarterly Statement and RBC
computation, upon which these amounts and ratios are based,
shall continue to be subject to review and, as appropriate,
adjustments as necessary pursuant to Arizona statutes and rules
and related NAIC Accounting Practices and Procedures.
3. Asset Allocation & Management Company (AAM), or another
qualified asset manager acceptable to the Arizona Department,
will continue to invest Investors' assets. Investors' investment
strategy shall not deviate from that currently employed and as
described in Investors' 1996 "Management Discussion and
Analysis" filed with the Arizona Department of Insurance,
including that Investor's current portfolio of securities
consists primarily of readily marketable bonds, matched with
anticipated insurance liabilities, and new funds from
policyholders are invested solely in securities guaranteed by
the U.S. Government, its agencies or sponsored enterprises.
4. Investors shall continue to submit all expenditures in excess
of $10,000 to the Delaware Department of Insurance for prior
consideration; provided however, if the Delaware Department at
any time no longer requires such expenditures to be submitted
for its consideration, Investors shall immediately so notify the
Arizona Department, at which time the Arizona Department will
revisit this requirement for the purpose of either removing the
requirement or requiring an alternate mechanism for the
protection of policyholders.
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5. Investors' capital and surplus shall be increased to not less
than $10 million by no later than December 15, 1997.
Alternatively, by December 15, 1997, there shall be in existence
a binding letter of intent for the sale of Investors between a
bona fide seller and a qualified buyer willing and able to
increase Investor's capital and surplus to not less than $10
million, which includes a scheduling deadline for a Form A
hearing with the Delaware Department of Insurance by no later
than January 30, 1998. The letter of intent shall not be
conditioned upon any unresolved issues to the ownership of
Investors.
6. Investors shall continue to timely reimburse the Arizona
Department of Insurance for desk audit fees and examination
related expenses.
7. Unless this stipulation is terminated as set forth in
paragraph 8 below or there is a binding letter of intent and/or
sale as set forth in paragraph 5 above, Investors shall cede and
Republic Vanguard Lift Insurance Company agrees to accept 100%
of Investors' remaining net retained policy liabilities on an
indemnity basis, or 100% of Arizona policy liabilities and
reserves on an assumption reinsurance basis. Such reinsurance
will occur at the earliest of (1) December 15, 1997, or (2)
within ten (10) business days after Investors becomes aware of
its failure to maintain or meet one or more of the above
standards and conditions and fails to make a correction to the
standard or condition within the ten (10) business day
framework; or (3) within ten (10) business days after Investors
is notified by the Arizona Department of Insurance of Investors'
failure to maintain or meet the above standards, and Investors
fails to remedy such standard or condition within ten (10)
business days after receipt of such notification.
8. This stipulation will terminate upon transfer of ownership to
another entity and upon the new owner contributing additional
surplus to Investors to meet the conditions set forth herein.
9. The Arizona Department of Insurance reserves any and all
power and authority prescribed by Arizona law to regulate the
transaction of insurance by Investors as actual circumstances
develop, including but not limited to circumstances relating to
Investors' financial condition and its ability to continue to
transact insurance in Arizona, it being the intent that
Investors' management and shareholder be given additional
opportunity to attract additional capital and surplus into the
Company, but the time allotted to accomplish this goal shall not
extend beyond December 15, 1997 or within a finite closing
period thereafter as set forth herein.
10 This agreement maybe signed in counterparts and must be
signed by all parties no later than July 31, 1997.
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ACCEPTED this 29 day of July, 1997.
INVESTORS INSURANCE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
Title: President
ACCEPTED this 30 day of July, 1997.
ARIZONA DEPARTMENT OF INSURANCE
By: /s/ Xxxx X. Xxxxxxxxx, CFE, ALMI
Assistant Director/Chief Examiner
ACCEPTED only to paragraph 1 and to paragraph 7 only to the
issue that Republic-Vanguard Life agrees to assume, subject to
the parties entering into a reinsurance agreement, the remaining
net retained business covered under its existing treaties with
Investors this 30 day of July, 1997.
REPUBLIC-VANGUARD LIFE INSURANCE COMPANY
By: /s/ Xxxx X. Xxxxx
Senior Vice President and Treasurer