Exhibit 27(g)(i)
Reinsurance Treaty dated April 1, 2001 with Xxxxxxx Global Life
Reinsurance Company and Amendments Thereto
[LOGO]
REINSURANCE AGREEMENT
(hereinafter called “this Agreement”)
No. LII08YA
between
LIFE INVESTORS INSURANCE COMPANY OF AMERICA
Cedar Rapids, Iowa
(hereinafter called the “CEDING COMPANY”)
and
XXXXXXX GLOBAL LIFE REINSURANCE COMPANY
of Los Angeles, California
(Executive Offices: Xxxxxxx, Xxxxxxx, Xxxxxx)
(hereinafter called the “REINSURER”)
Effective: April 1, 2001
This Agreement consists of Articles and Exhibits which must be read in
conjunction with each other to determine the respective rights and obligations
of the contracting parties.
ARTICLE I — BASIS OF AGREEMENT
| 1.
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Reinsurance required by the CEDING COMPANY on the coverages described in
Exhibit A will be accepted automatically by the REINSURER subject to the
provisions of Article II.
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| 2.
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The CEDING COMPANY may choose to submit any coverage for facultative
review subject to the provisions described in Article III.
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| 3.
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The method of reinsurance used for the various coverages will be as
stated in Exhibit B.
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| 4.
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All amounts shown in this Agreement are in U.S. dollars. All cessions
and payments under this Agreement shall be effected in U.S. dollars.
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| 5.
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This Agreement, together with all exhibits attached hereto or referenced
herein, represents the entire agreement between the CEDING COMPANY and the
REINSURER and supersedes, with respect to its subject matter, any prior
oral or written agreements between the parties.
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| 6.
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Any alteration to this Agreement shall be null and void unless made by a
written amendment to this Agreement and signed by both parties.
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| 7.
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In no event shall reinsurance under this Agreement be in force and
binding unless (i) the underlying insurance is in force, (ii) the
marketing, issuance, and delivery of such insurance are in compliance with
the laws of all applicable jurisdictions and (iii) the CEDING COMPANY is
in compliance with all applicable terms, provisions and conditions of this
Agreement.
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| 8.
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This Agreement shall not apply to any liability of the CEDING COMPANY
arising from its participation or membership in any insolvency or
insurance guaranty fund.
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| 9.
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Nothing in this Agreement shall prevent the REINSURER from ceding all or
any portion of its liability hereunder to another reinsurer or
retrocessionaire.
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ARTICLE II — AUTOMATIC REINSURANCE
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The CEDING COMPANY shall cede and the REINSURER shall automatically
reinsure those risks described in Exhibit A that meet the requirements
listed in section (2) below.
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| 2.
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Requirements for automatic reinsurance:
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a.
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The CEDING COMPANY will keep its maximum limit of retention per
life for the age and risk classification of the insured, as shown in
Exhibit C. If the CEDING COMPANY has previous retention on that
particular life on a policy currently in force, the maximum retention
per life shall be reduced by that amount.
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b.
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The amount ceded to the REINSURER on the life does not exceed the
automatic binding limits shown in Exhibit A.
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c.
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The issue age and mortality rating or its equivalent on a flat
extra premium basis of the life does not exceed the limits stated in
Exhibit A.
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d.
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The total insurance already in force on the life in any insurance
company plus the insurance currently being applied for, as shown on the
application does not exceed the Jumbo Limit as shown in Exhibit A.
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e.
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The risk has been underwritten by the CEDING COMPANY according to
its regular new issue underwriting guidelines, a copy of which
guidelines has been provided to the REINSURER pursuant to the
“Procedures” Article of this Agreement.
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f.
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The life has not been offered on a facultative basis to the
REINSURER or any other reinsurer.
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| 3.
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The liability of the REINSURER for automatic reinsurance will be as
follows:
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a.
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Once the policy has been placed, the liability of the REINSURER
will begin and end at the same time as that of the CEDING COMPANY,
subject to the terms, conditions and limitations stated in this
Agreement.
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b.
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Prior to placement of the policy, and provided the risk meets the
automatic requirements, the liability of the REINSURER is limited to:
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1.
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the CEDING COMPANY’s liability under the policy’s
conditional receipt or temporary insurance agreement, less
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2.
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the CEDING COMPANY’s maximum retention for the age and sex
of the insured had it been classified as a standard risk.
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3.
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In no case shall the REINSURER’s liability exceed the
automatic binding limit as shown in Exhibit A.
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ARTICLE III — FACULTATIVE PROVISIONS
| 1.
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The CEDING COMPANY may submit for facultative consideration any of the
coverages described in Exhibit A, that do not qualify for automatic
reinsurance, or that the CEDING COMPANY prefers to submit facultatively.
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| 2.
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To apply for reinsurance on a facultative basis, the CEDING COMPANY will
complete and send to the REINSURER the Application for Facultative
Reinsurance Form attached as Exhibit F, along with all underwriting papers
relating to the insurability of the risk. The REINSURER will immediately
examine the papers and promptly make a written offer to the CEDING
COMPANY.
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| 3.
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If the CEDING COMPANY accepts the offer from the REINSURER and the policy
is subsequently placed, the CEDING COMPANY shall advise the REINSURER in
accordance with Article V— Notification of Reinsurance.
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| 4.
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All offers of reinsurance made by the REINSURER will automatically
terminate one hundred and twenty (120) days from the date on which the
offer was made, unless the REINSURER has extended the offer in writing for
a further period.
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| 5.
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The liability of the REINSURER on any facultative reinsurance shall begin
and end at the same time as that of the CEDING COMPANY, provided that:
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a.
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The REINSURER has given the CEDING COMPANY an unconditional offer
to reinsure, and
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b.
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The CEDING COMPANY has notified the REINSURER in writing of its
acceptance of such offer.
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ARTICLE IV — PROCEDURES
| 1.
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The CEDING COMPANY shall submit to the REINSURER copies of the
application form for life insurance, conditional receipt or temporary
insurance agreement, policy and rider forms, premium and non-forfeiture
value manuals, underwriting guidelines and practices, reserve and cash
value tables applicable to the life reinsured, and any other document that
might affect the liability of the REINSURER under this Agreement.
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| 2.
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Any change to the above documents or the underlying insurance, such as
contractual provisions or options, premium rates, benefits, underwriting
guidelines and practices that have been described to the REINSURER will be
communicated to the REINSURER. The REINSURER shall then confirm in
writing its agreement with such changes and confirm that it will continue
the reinsurance at the same terms or at new reinsurance terms subject to
negotiation and mutual agreement.
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ARTICLE V — NOTIFICATION OF REINSURANCE
The CEDING COMPANY will advise the REINSURER that it is being bound as
follows:
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The CEDING COMPANY will send a report listing the new business, and
renewals, with all the relevant risk identification and reinsurance
particulars as shown in the Administration Exhibit.
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| 2.
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Facultative Reinsurance
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The CEDING COMPANY will complete and send to the REINSURER, within thirty
(30) days after the policy has been placed, a “Reinsurance Cession” as shown
in Exhibit 2, with all the relevant risk identification and reinsurance
particulars.
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ARTICLE VI — MINIMUM CESSION
The minimum initial amount per cession ceded under this Agreement will be as
stated in Exhibit A. If the net amount at risk of a cession reinsured under
this Agreement falls below the Final Reinsurance Limit as stated in Exhibit A,
the CEDING COMPANY has the option to cancel such reinsurance.
ARTICLE VII — REINSURANCE PREMIUMS, ALLOWANCES AND PREMIUM TAXES
| 1.
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For each risk ceded the CEDING COMPANY will pay to the REINSURER
reinsurance premiums as stated in Exhibit D, annually in advance, less the
allowances as stated in Exhibit D.
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| 2.
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The REINSURER anticipates the indefinite continuation of the reinsurance
premiums at the rates shown in Exhibit D for all cessions to which these
rates apply. However, if any renewal premium rate is less than the net
premium rate based on the 1980 CS0 Table (or related smoker and non-smoker
tables) at the interest specified in the Standard Valuation Law for the
applicable mortality rating, then, in that event, only the latter rate
will be guaranteed.
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| 3.
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If the CEDING COMPANY increases the mortality charges of the underlying
insurance, it shall promptly inform the REINSURER. In this event the
REINSURER shall have the right to renegotiate the reinsurance premiums.
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| 4.
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If the insured’s age or sex was misstated and the amount of insurance on
the CEDING COMPANY’s policy is adjusted after death, the CEDING COMPANY
and the REINSURER will share the adjustment in proportion to the amount of
liability of each at the time of issue of the policy. The reinsurance
premiums will be recalculated for the correct age or sex and new reinsured
amount and adjusted without interest. If the insured is still alive, the
method above will be adjusted for the future to the amount that would have
been correct at issue.
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| 5.
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Premium tax reimbursement shall be as stated in Exhibit D.
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ARTICLE VIII — REINSURANCE ADMINISTRATION AND REPORTS
| 1.
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The CEDING COMPANY shall administer the reinsurance under this Agreement
as described in the “Administration Exhibit”.
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| 2.
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Within thirty (30) days following the close of each reporting period, the
CEDING COMPANY will submit to the REINSURER the reports specified in the
“Administration Exhibit” attached to this Agreement, together with a
cheque or electronic funds transfer in payment of any balances due the
REINSURER as shown on the reports. If the balance is due to the CEDING
COMPANY, the REINSURER will pay such amount within thirty (30) days of
receipt of the reports.
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| 3.
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If any reinsurance premium is not paid when due, the REINSURER may
terminate the corresponding reinsurance upon sixty (60) days prior written
notice to the CEDING COMPANY. The unpaid premiums shall earn interest at
the same rate as paid by the CEDING COMPANY on delayed payment of claims,
compounded annually, from the due date to the date of payment. However,
if all overdue premiums, plus interest, are paid within the notice period,
the reinsurance will not terminate.
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| 4.
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Reinsurance terminated in accordance with the preceding paragraph, may be
reinstated by the CEDING COMPANY by paying all overdue premiums, plus
interest, within sixty (60) days from the date of termination and provided
the policies in question are in force. The REINSURER, however shall not
be liable for any claims incurred while the reinsurance was terminated.
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| 5.
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After termination, the CEDING COMPANY shall continue to be liable to the
REINSURER for all unpaid reinsurance premiums earned by the REINSURER,
less the applicable allowances, plus interest.
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ARTICLE IX — DAC TAX
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The term “party” will refer to either the CEDING COMPANY or the REINSURER
as appropriate.
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| 2.
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Pursuant to Section 1.848-2(g)(8) of the Income Tax Regulations issued
December 29, 1992, under Section 848 of the Internal Revenue Code of 1986,
as amended, the party with the net positive consideration for the
Agreement for each taxable year will capitalize specified policy
acquisition expenses with respect to the Agreement without regard to the
general deductions limitation of Section 848(c)(1).
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| 3.
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The parties agree to exchange information pertaining to the amount of net
consideration as determined for the Agreement each year to ensure
consistency or as may otherwise be required by the Internal Revenue
Service.
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| 4.
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By April 1 of each tax year, the party administering the business under
the Agreement shall submit to the other party its calculation of the net
consideration for the preceding calendar year. This calculation shall be
accompanied by a statement signed by an officer of the submitting party
declaring that this party will report such net consideration in its tax
return for the previous calendar year.
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| 5.
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The other party may contest said calculation by, within thirty (30) days
of its receipt of same, providing to the submitting party in writing an
alternative calculation. If the other party does not so notify the
submitting party, the other party shall report in its tax return for the
previous year the net consideration as determined by the submitting party.
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| 6.
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If the other party contests said calculation, the parties shall act in
good faith to reach an agreement on the correct net consideration within
thirty (30) days of the date that the other party provides its alternative
calculation. Once the parties agree with the net consideration amount,
each party shall report such amount in their respective tax returns for
the previous calendar year.
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| 7.
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The parties each represents that it is subject to taxation under
subchapter L or subpart F of part III of subchapter N of Chapter 1 of the
Internal Revenue Code of 1986, as amended. The terms used herein are
defined by reference to Regulation Section 1.848-2 in effect as of
December 29, 1992.
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ARTICLE X — CHANGES
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Reductions and Terminations
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a.
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If the face amount of the insurance with the CEDING COMPANY is
reduced, the full amount of the reduction will reduce the reinsurance
on the life. If the insurance is terminated, the reinsurance will be
terminated as of the same date.
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b.
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If there is more than one policy on the life, the reinsurance will
be first reduced on the reduced or terminated policy and the balance
will then reduce the reinsurance on the other in force policies on the
life on a chronological basis, with the oldest policy being reduced
first.
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c.
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If the reinsurance has been ceded to more than one reinsurer, the
reduction applied to the REINSURER’s cession will be in proportion to
the reduction in the total reinsurance.
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d.
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If reinsurance premiums have been paid for the period beyond the
reduction or cancellation date, the REINSURER will refund those
premiums, less allowances and premium taxes if applicable.
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e.
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Reductions in the amount of insurance resulting from the
application of a non-forfeiture provision, such as extended term
insurance (ETI) or reduced paid-up insurance (RPU) will be allocated to
the REINSURER in proportion to its share of the amount of insurance
prior to the reduction.
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The reinsurance of a policy reinstated by the CEDING COMPANY in
accordance with its terms and the CEDING COMPANY’s usual reinstatement
practices and procedures, shall be automatically reinstated as of the
date of reinstatement.
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Reinstatement of the reinsurance on policies ceded to the REINSURER on a
facultative basis will require prior written approval of the REINSURER.
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Upon reinstatement the CEDING COMPANY shall pay to the REINSURER all
reinsurance premiums that would have been paid if such reinsurance had not
been terminated, plus interest at the same rate charged by the CEDING
COMPANY.
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a.
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Continuation will be defined as a change to or a new policy
replacing a policy issued earlier by the CEDING COMPANY (the original
policy) that:
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1.
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was issued in compliance with the terms of the original
policy, or
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2.
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is not subject to new business underwriting, or
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3.
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does not have a new suicide exclusion or contestable
period, or
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4.
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on which the CEDING COMPANY does not pay a new business
commission.
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b.
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Continuations will be reinsured under this Agreement only if the
original policy was reinsured with the REINSURER; the amount of
reinsurance for the new or changed policy shall not exceed the amount
of reinsurance of the original policy immediately prior to the
continuation.
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c.
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If a new policy is issued, the liability of the REINSURER under the
new policy shall begin immediately after the termination of the
liability of the REINSURER under the original policy.
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a.
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If, in accordance with the policy provisions, the plan of insurance
of a policy reinsured with the REINSURER is changed from term to
permanent life, the reinsurance shall continue with the REINSURER as
follows:
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1.
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If reinsured on a YRT basis, the reinsurance terms on the
original plan will apply to the new plan. The reinsurance premiums
will be calculated as shown in Exhibit D.
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2.
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If reinsured on a coinsurance basis, the reinsurance terms
will be negotiated and mutually agreed by the CEDING COMPANY and
the REINSURER.
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b.
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The amount reinsured for the new policy shall not exceed that of
the original policy immediately prior to the conversion.
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ARTICLE XI — RECAPTURE
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If the CEDING COMPANY increases its regular retention limits, it has the
option of reducing reinsurance under this Agreement, provided it:
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a.
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applies the increase in retention in a consistent manner to all
categories of its regular retention limits;
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b.
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notifies the REINSURER in writing of its intention to start the
recapture process within ninety (90) days after the effective date of
the increase in retention; and
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c.
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reduces all reinsurance eligible for recapture, including any
supplementary benefits.
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If the CEDING COMPANY decides to recapture, then it can recapture those
risks where:
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a.
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the CEDING COMPANY has kept its maximum retention limit on that
life for the plan, age and mortality rating at the time the policy was
issued as shown in Exhibit C; and
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b.
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the reinsurance on that risk has been in force with the REINSURER
for at least the number of years stated in Exhibit D.
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The CEDING COMPANY will effect the recapture as follows:
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a.
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The CEDING COMPANY will reduce the reinsurance on the policy’s next
anniversary following the period stated in Exhibit D.
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b.
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The REINSURER’s share of the reduction will be in proportion to its
share of the total reinsurance on the person.
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c.
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The CEDING COMPANY will reduce the reinsurance by an amount equal
to the difference between the CEDING COMPANY’s new retention per life
and the retention in existence at the time the policy was issued or
last recaptured.
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d.
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If there is an active claim for waiver of premium disability on
that person, the life reinsurance will be recaptured, but the claim
will remain with the REINSURER until it terminates, at which time the
disability insurance will also be recaptured.
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If the CEDING COMPANY overlooks the recapture of any reinsurance and the
REINSURER subsequently accepts reinsurance premiums on such reinsurance,
the REINSURER will only
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be liable for the refund of unearned premiums,
less any allowances and premiums taxes if applicable, without interest.
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ARTICLE XII — CLAIMS
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a.
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The CEDING COMPANY shall promptly notify the REINSURER in writing
of each claim for insurance benefits reinsured under this Agreement and
send to the REINSURER copies of all claim papers and proofs when
requesting payment.
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b.
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For reinsurance of a risk involving more than one insured
individual, the CEDING COMPANY shall notify the REINSURER of each death
as soon as possible after it has occurred.
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a.
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With respect to a policy reinsured under this Agreement, the
REINSURER shall be liable to the CEDING COMPANY for the REINSURER’s
proportionate share of the reinsured benefits. Payment of reinsurance
benefits on a death claim, however, shall be in one lump sum,
regardless of the mode of settlement under the policy. The REINSURER
shall reimburse the CEDING COMPANY for its share of any interest paid
on claims by the CEDING COMPANY. Participation in accrued interest by
the REINSURER shall be paid in accordance with the applicable state
statutory regulations.
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b.
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In settlement of liability on a claim for disability waiver of
premium benefits under a cession reinsured on a Yearly Renewable Term
(YRT) basis, the REINSURER shall pay to the CEDING COMPANY its
proportionate share of the gross premium waived on an annual basis.
The CEDING COMPANY will continue to pay the reinsurance premiums,
including the premium for benefits that remain in effect during
disability.
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| 3.
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Claims Within Contestable Period
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a.
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Any settlement made by the CEDING COMPANY shall be binding on the
REINSURER. However, when the claim occurs within the contestable period
and the amount reinsured represents fifty percent (50%), or more, of
the contestable portion of the insurance benefit provided by the policy
or policies, or if the CEDING COMPANY has retained less than its
regular maximum limit of risk on the basic plan or supplementary
benefits and riders, the CEDING COMPANY shall await the REINSURER’s
recommendation before admitting any liability or making any settlement
with the claimant. The REINSURER shall review the claim papers as they
are received and make a recommendation within fifteen (15) working days
after receipt of all the necessary information.
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a.
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The CEDING COMPANY shall immediately notify the REINSURER in
writing of the CEDING COMPANY’s intention to contest, compromise or
litigate a claim. If the REINSURER agrees, within fifteen (15)
business days following its receipt of the written notice from the
CEDING COMPANY, to participate in the contest, compromise or litigation
of the claim, the REINSURER agrees that it will pay its share of any
settlement up to the maximum that would have been payable under the
specified policy had there been no controversy. The REINSURER shall
have the right to utilize legal counsel, accounting experts and such
other experts and personnel as the REINSURER in its sole discretion
chooses and, under such circumstances, the REINSURER shall not be
responsible for the payment of any “unusual expenses” (as defined in
paragraph 5 of this Article). However, if the REINSURER does not elect
to use counsel or other experts of its choosing, then the REINSURER
shall pay its proportionate share of all “usual expenses” and “unusual
expenses” (each as defined in paragraph 5 of this Article) of the
contest, compromise or litigation.
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b.
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The REINSURER’s failure to notify the CEDING COMPANY of the
REINSURER’s intent to participate in the contest, compromise or
litigation of a claim within the required fifteen (15) day notice
period shall be deemed a declination by the REINSURER to participate.
The REINSURER shall thereafter discharge all of its liability with
respect to any contested, compromised or litigated claim by paying to
the CEDING COMPANY the REINSURER’s proportionate share of the full
amount then current and at risk under the reinsurance cession with
respect to such claim. Upon such discharge, the REINSURER shall not be
liable for any portion of any usual expenses or unusual expenses
incurred with respect to such claim, nor shall the REINSURER share in
any reduced settlement thereof.
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For the purpose of this Article, the term “usual expenses” shall mean fees,
charges, costs and expenses of legal and investigative personnel that are
incurred in rescinding a policy or litigating a claim. The term “unusual
expenses” of the contest shall mean any penalties, attorney’s fees and
interest imposed automatically by statute against the CEDING COMPANY which
arise solely out of any judgement rendered against the CEDING COMPANY in a
suit for policy benefits; however, “unusual expenses” shall not include
extra-contractual damages (as defined in paragraph 7 of this Article).
Notwithstanding the foregoing definitions, the REINSURER shall not be liable
for any office expenses and salaries and expenses of employees of the CEDING
COMPANY or of any subsidiary or affiliate to the CEDING COMPANY, incurred in
connection with the administration of the business reinsured pursuant to
this Agreement or the disposition of a claim, loss, or legal proceeding
(including investigation, negotiation, legal expenses and court costs).
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| 6.
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Misstatement of Age or Sex
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If the amount of insurance provided by any policy or policies reinsured
hereunder is increased or reduced because of a misstatement of age or sex
which is established after the death of the insured individual, the
REINSURER shall share in the increase or reduction in the proportion that
the net liability of the REINSURER bears to the total of the net liability
of the CEDING COMPANY and the net liability of all reinsurers, including the
REINSURER, immediately prior to such increase or reduction. The reinsurance
shall be restructured from commencement on the basis of the adjusted amount
using premiums and reserves for the correct age or sex. The adjustment for
the difference in reinsurance premiums and any associated commissions or
allowances, dividends, policy value or reserves shall be made without
interest.
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| 7.
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Extra-Contractual Damages
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In no event shall the REINSURER participate in punitive or compensatory
damages which are awarded against the CEDING COMPANY as a result of an act,
omission or course of conduct committed solely by the CEDING COMPANY in
connection with the insurance reinsured under this Agreement. The REINSURER
shall not be liable under this Agreement for any punitive damages (as
defined below) or compensatory damages (as defined below) awarded to a
claimant or assessed against the CEDING COMPANY unless the REINSURER elected
to join in the contest or litigation of the underlying claim and actively
directed or participated in the act, error, omission or course of conduct of
the CEDING COMPANY which ultimately resulted in the award or assessment of
punitive damages and/or compensatory damages. Any resulting punitive
damages and/or compensatory damages award or assessment shall be shared by
the CEDING COMPANY and the REINSURER in equitable proportions.
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For the purposes of this provision, the following definitions shall
apply:
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a.
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“Punitive Damages” are those damages which are awarded as a
penalty, the amount of which is not governed, nor fixed, by statute;
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b.
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“Compensatory Damages” are those amounts which are awarded to
compensate for actual damages sustained, and are not awarded as a
penalty, nor fixed in amount by statute.
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ARTICLE XIII — NAIC STATEMENT OF CREDIT
| 1.
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Credit for statutory reserves reinsured under this Agreement will be
calculated in accordance with the Valuation of Life Insurance Policies
Model Regulation. Reinsurance reserves will be calculated using this same
Regulation.
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| 2.
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In the event the REINSURER is not licensed or otherwise accredited or
recognized in the CEDING COMPANY’S state of domicile, and where the CEDING
COMPANY is licensed to do business, the REINSURER agrees to provide
letters of credit or other methods of security which is or are (i)
authorized by the CEDING COMPANY’s state of domicile insurance department,
and (ii) mutually acceptable to the CEDING COMPANY and the REINSURER in
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favor of
the CEDING COMPANY for the purpose of offsetting ceded reinsurance policy
reserves and outstanding losses.
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| 3.
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Such letter of credit or other method of security shall be issued in
compliance with the statutes and/or policies of the state in which the
CEDING COMPANY is domiciled and shall be issued by a national bank located
in the United States chosen by the REINSURER.
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ARTICLE XIV — ERRORS AND OMISSIONS
| 1.
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Errors and omissions on the part of either party shall not invalidate
their rights and obligations arising from this Agreement, provided that
upon discovery, the other party is immediately notified and such errors or
omissions are corrected without delay to restore each party to the
position it would have occupied had no such error or omission occurred.
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| 2.
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In the event, however, that a party cannot as a practical matter be
restored to the position it would have occupied had no such error or
omission occurred, the parties will attempt in good faith to find a
resolution to the situation created by the error or omission that is fair
and reasonable and most closely approximates the original intent of the
parties as evidenced by this Agreement.
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ARTICLE XV — INSPECTION OF RECORDS
The REINSURER shall have the right, at any reasonable time, to inspect all
records, books and documents relating to or affecting reinsurance under this
Agreement, at the home office of the CEDING COMPANY.
ARTICLE XVI — INSOLVENCY
| 1.
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In the event of the insolvency of the CEDING COMPANY, any sums due from
the REINSURER under this Agreement shall be payable directly to the CEDING
COMPANY’s liquidator, receiver, conservator or statutory successor
immediately upon demand, with reasonable provision for verification, on
the basis of claims allowed against the CEDING COMPANY by any court of
competent jurisdiction or by any liquidator, receiver, conservator or
statutory successor, without diminution because of the insolvency of the
CEDING COMPANY or because the liquidator, receiver, conservator or
statutory successor of the CEDING COMPANY has failed to pay all or a
portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the CEDING COMPANY shall
give written notice to the REINSURER of a pending claim against the CEDING
COMPANY on a policy or policies reinsured within a reasonable time after
such claim is filed in the insolvency proceedings. While the claim is
pending, the REINSURER may investigate and interpose, at its own expense,
in the proceedings where the claim is to be adjudicated, any defenses
which it may deem available to the CEDING COMPANY or its liquidator,
receiver, or statutory successor. The expenses thus incurred by the
REINSURER shall be charged, subject to Court approval, against the CEDING
COMPANY as an expense of liquidation to the extent of a proportionate share of the benefit that
accrues to the CEDING COMPANY as a
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result of the defense undertaken by the
REINSURER. Where two or more reinsurers are involved in the same claim and
a majority in interest elect to defend a claim, the expenses will be
apportioned in accordance with the terms of the reinsurance Agreement as if
the expenses had been incurred by the CEDING COMPANY.
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| 2.
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If the REINSURER becomes insolvent, it shall immediately notify the
CEDING COMPANY and provide any relevant documentation. The CEDING COMPANY
shall have the right, at any time during such insolvency, to recapture all
reinsurance ceded to the REINSURER subject to a mutually agreed recapture
fee.
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ARTICLE XVII — OFFSET
The CEDING COMPANY or the REINSURER may offset any balance, whether on account
of premiums, commissions, claims or expenses due from one party to the other
under this Agreement or under any other agreement entered into between the
CEDING COMPANY and the REINSURER.
ARTICLE XVIII — ARBITRATION
| 1.
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If any dispute shall arise between the CEDING COMPANY and the REINSURER,
either before or after the termination of this Agreement, with reference
to the formation, interpretation, breach or enforcement of this Agreement
or the rights of either party with respect to any transaction under this
Agreement, the dispute shall be referred to and resolved by three
arbitrators as a condition precedent to any right of action arising under
this Agreement. The arbitrators shall be active or retired disinterested
officers, directors of life insurance or reinsurance companies other than
the parties or their affiliates, unless otherwise agreed to by both
parties in writing.
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| 2.
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The party desiring arbitration (“Claimant”) shall notify the other party
(“Respondent”) in writing of the request to arbitrate, specifying the
dispute(s) to be arbitrated. An arbitrator shall be chosen by each party
and the third by the two so chosen. If either party refuses or neglects
to appoint an arbitrator within thirty (30) days of receipt of written
notice from the other party requesting it to do so, the requesting party
may choose the second arbitrator. Following selection of the two
arbitrators, the parties shall not contact the arbitrators in any fashion
concerning the facts or merits of the dispute, unless such contact is
joint, except as specified below.
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| 3.
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In the event the two arbitrators do not agree on the selection of the
third arbitrator within thirty (30) days of when the second arbitrator is
appointed, or any other period mutually agreed to by the parties in
writing, each arbitrator shall name three candidates, of whom the other
shall decline two, and the decision shall be made by drawing lots. In the
event of the death, disability or incapacity of any arbitrator, a
replacement shall be named pursuant to the process which resulted in the
selection of the arbitrator to be replaced.
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| 4.
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Within thirty (30) days following completion of the arbitration panel, or
any other time agreed upon by a majority of the arbitrators or mutually
agreed upon by the parties, the arbitrators shall select a date for the
hearing of the dispute, and the parties shall exchange all documents then
reasonably available which they intend to use at the hearing and identify
all witnesses they intend to call at the hearing. If a document or witness
is not timely disclosed it shall be within the authority of the arbitrators
to exclude use of such witness or document from the arbitration proceedings.
The Claimant shall file a brief with the arbitrators no later than thirty
(30) days prior to the hearing date, the Respondent shall file its brief no
later than fifteen (15) days prior to the hearing date, and the Claimant may
file a reply brief no later than seven (7) days prior to the hearing date.
The parties shall make a good faith effort to agree upon a joint statement
of agreed upon facts to be submitted to the arbitration panel on the hearing
date.
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| 5.
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At the hearing, evidence may be introduced without following strict rules
of evidence but cross-examination and rebuttal shall be allowed. The
arbitrators shall make their decision with regard to the custom and usage
of the insurance and reinsurance business at the time of contract, or
amendment if the dispute involves an amendment. The panel shall issue its
decision in writing within sixty (60) days following the termination of
the hearing unless the parties mutually consent to an extension. The
majority decision shall be final and binding upon all parties to the
proceedings and no appeal shall be taken from it. Judgement may be
entered upon the award of the panel in any court having jurisdiction. The
jurisdiction of the arbitrators to make or render any decision or award
shall be limited by the limits of liability expressly set forth in this
Agreement.
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| 6.
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Each party shall bear its own legal expenses and fees, the fee and
expense of the arbitrator it selected, one half of the fee and expenses of
the third arbitrator and one half of the other expenses of the
arbitration. The arbitration panel, by majority vote, may allocate any or
all of the winning party’s costs and fees against the losing party.
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| 7.
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Any such arbitration shall take place in the CEDING COMPANY’s state of
domicile unless some other location is mutually agreed upon by the
parties.
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ARTICLE XIX — PARTIES TO AGREEMENT
This is an indemnity reinsurance agreement solely between the CEDING COMPANY
and the REINSURER. This Agreement shall be binding upon and shall inure only
to the benefit of the CEDING COMPANY, the REINSURER and their respective
conservators, liquidators and receivers. The acceptance of reinsurance
hereunder shall not create any right or legal relationship whatsoever between
the REINSURER and the insured, owner or beneficiary or any other party to or
under any policy reinsured hereunder.
ARTICLE XX — ASSIGNMENT AND TRANSFER
Neither this Agreement nor any reinsurance under this Agreement shall be sold,
assigned or transferred by either party without prior written consent of the
other party.
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ARTICLE XXI — DURATION OF THE AGREEMENT
| 1.
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This Agreement is effective on the date set forth on the cover page once
it has been executed by both parties and is unlimited in duration.
However, it may be cancelled at any time, with respect to new reinsurance,
by either party giving ninety (90) days notice of termination in writing
to the other. The day the notice is deposited in the mail will be the
first day of the ninety (90) day period. During this period the REINSURER
shall continue to accept new reinsurance under the terms of this
Agreement.
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| 2.
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Existing reinsurance will remain in force until natural termination or
expiry of the policies, unless otherwise mutually agreed.
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ARTICLE XXII — MISCELLANEOUS PROVISIONS
| 1.
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A waiver by any party of any of the terms and conditions of this
Agreement in any one instance shall not be deemed or construed to be a
waiver of such term or condition for the future, or of any subsequent
breach thereof, nor shall it be deemed a waiver of performance of any
other obligation hereunder.
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| 2.
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This Agreement shall be governed by and construed in accordance with the
laws of the CEDING COMPANY’s state of domicile, and accepted practices in
the reinsurance industry not in conflict with such laws.
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| 3.
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The titles of the Articles and paragraphs of this Agreement are for
convenience only and shall not in any way affect the interpretation of any
provision or condition of this Agreement.
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| 3.
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This Agreement is the result of mutual negotiation, compromise and
agreement between the CEDING COMPANY and the REINSURER. As such, in the
event of any disagreement between the CEDING COMPANY and the REINSURER as
to the meaning or intent of any term, condition or provision of this
Agreement, ambiguities in this Agreement shall not be construed against or
resolved to the detriment of either the CEDING COMPANY or the REINSURER.
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ARTICLE XXIII — XXXXX-XXXXX-XXXXXX PRIVACY REQUIREMENTS
The REINSURER and all of its representatives and service providers will hold
all private, non-public policyholder information furnished by the CEDING
COMPANY to the REINSURER for the purpose of providing services under this
Agreement in strict confidence. By reference to private, non-public
policyholder information, the REINSURER means all policyholder or other
consumer financial or health information furnished or obtained by the
REINSURER, its representatives or its service providers in order to carry out
its duties and obligations under this Agreement. The REINSURER will only use
such information for the purpose of performing services under this Agreement.
Such information will only be disclosed to a third party for the purpose of
carrying out the REINSURER’s
duties under this Agreement, to retrocessionaires or the
16
REINSURER’s service
providers, or as required or permitted by law. The REINSURER will take
reasonable steps to protect such information from unauthorized or inadvertent
disclosure.
ARTICLE XXIV — EXECUTION OF AGREEMENT
In witness of the above, this Agreement has been signed and delivered in
duplicate on the dates indicated below.
LIFE INVESTORS INSURANCE COMPANY OF AMERICA
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By: |
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Title: |
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Date: |
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XXXXXXX GLOBAL LIFE REINSURANCE COMPANY
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By: |
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Title: |
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Date: |
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17
Exhibit A
BUSINESS COVERED
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Single, Joint-Last-to-Die individual life insurance, supplementary benefits
and riders issued directly by the CEDING COMPANY on insureds that meet the
residency requirements shown in (3) below.
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The benefits, plans of insurance and riders covered are as shown below.
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Life and supplementary benefits.
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Reinsurance coverage will not provide cash surrender values, nor dividends.
The REINSURER will not participate in policy loans.
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| 3.
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Residency Requirements
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The insureds must be residents of the United States of America or its
territories or Canada at the time of issue of the policy.
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4. Plans of Insurance and Beginning Date of Coverage
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| Plan Name |
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Effective Date |
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| Lifetime Protector/Ultima Protector (APUL0100)* |
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April 1, 2001 |
| Preferred Protector 200 (APUL0708 00 1200)* |
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April 1, 2001 |
| Ultima Provider (APUL0710 00 0101)* |
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April 1, 2001 |
| Estate Protector (APUL0500 599)* |
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April 1, 2001 |
| Captal Protector (APJUL0711 00 0201)* |
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April 1, 2001 |
| Variable Protector (APUL0600 699)* |
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April 1, 2001 |
(continues ...)
Exhibit A (continues)
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| Plan Name |
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Effective Date |
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| Preferred Protector 100/Ultima Provider 100 (APUL0707 00 1100)* |
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April 1, 2001 |
| APUL0714 00 0801* |
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December 1, 2001 |
| Lifetime Protector II (APUL0712 00 1101)* |
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December 1, 2001 |
| *
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applies to Brokerage and Captive business
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| 5.
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Associated Riders and Supplementary Benefits
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| 6.
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Participation of the REINSURER
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The REINSURER agrees to accept a fifteen percent (15%) quota share of the
excess over the CEDING COMPANY’S retention but not more than the automatic
binding limits shown below on any one life.
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| 7.
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Automatic Binding Limits to the REINSURER
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THE REINSURER’S SHARE OF TOTAL POOL AUTOMATIC BINDING LIMITS:
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| Issue Ages |
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Standard – Xxx 0 |
Xxx 0 – Xxx 00 |
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Xxx 00 – Tbl 16 |
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0 - 70 |
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$ |
750,000 |
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$ |
300,000 |
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$ |
150,000 |
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71 - 75 |
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$ |
225,000 |
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0 |
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0 |
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76 - 80 |
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$ |
112,500 |
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0 |
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0 |
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81 - 85 |
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$ |
15,000 |
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0 |
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0 |
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0 - 70 |
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$ |
5,000,000 |
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$ |
2,000,000 |
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$ |
1,000,000 |
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71 - 75 |
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$ |
1,500,000 |
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0 |
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0 |
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Exhibit A (continues)
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THE TOTAL POOL AUTOMATIC BINDING LIMITS:
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| Issue Ages |
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Standard – Tbl 8 |
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Tbl 9 – Xxx 00 |
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Xxx 00 – Xxx 00 |
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00 - 00 |
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$ |
750,000 |
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0 |
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0 |
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81 - 85 |
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$ |
100,000 |
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0 |
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0 |
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Any amount in excess of the CEDING COMPANY’S retention but not exceeding an
amount corresponding to the life insurance automatically reinsured.
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a.
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Where automatic or conditional increases in the face amount of the
life insurance reinsured and any attaching supplementary benefits are
contractually provided for by the basic plan, an option under the basic
plan or rider of the policy and if they are covered under this
Agreement as shown in Exhibit A, the retention limits of the CEDING
COMPANY as shown in Exhibit C and binding limits of the REINSURER as
shown in this Exhibit, shall be applied to the maximum or ultimate face
amount that such policy benefits will provide.
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b.
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If the increase is non-contractual and where evidence of
insurability is required the increase will be subject to all automatic
or facultative requirements set out in this Agreement.
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Initial Amount Ceded: $5,000
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Final Reinsurance Limit: $5,000
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| 11.
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Jumbo Limits: $20,000,000 inforce and applied for on any one life.
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| 12.
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Facultative Submission Limit
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It is understood that at the time an amount for an aviation risk is
submitted by the CEDING COMPANY to the REINSURER for facultative
consideration, the REINSURER may reduce this amount by up to fifty percent
(50%) for capacity purposes.
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