Note: Using this form of agreement, MetLife Investors Insurance Company has
entered into separate agreements with each of the following reinsurers: General
American Life Insurance Co., Allianz Life Insurance Company of North America,
Employers Reassurance Corp., RGA Reinsurance Co., SCOR Life U.S. Re Insurance
Co., Security Life of Denver Insurance Co. and Swiss Re Life and Health America
Inc.
Automatic and Facultative YRT Agreement
between
MetLife Investors Insurance Company
(the Ceding Company)
and
ABC REINSURANCE COMPANY
City, State
(the Reinsurer)
Effective Month, Day, Year
1
INDEX
Article Name Article Number Page Number
------- ---- ------- ------ ---- ------
Preamble 3
Automatic Cessions I 4
Facultative Cessions II 5
Reinsurance Premiums III 6
Reinsurer's Liability IV 7
Claims V 8
Administration and Accounting VI 9
DAC Tax VII 11
Conversions and Exchanges VIII 12
Terminations, Reductions/Increases
and Changes IX 13
Recapture and Retention Changes X 14
Reinstatements and
Reduced Paid-Up Insurance XI 15
Insolvency XII 16
Arbitration XIII 17
Duration of Agreement XIV 18
Miscellaneous XV 19
A. Choice of Law
B. Severability
C. Reserve Credit
D. Assignment
E. Confidentiality
F. Inspection of Records
G. Damages
H. Errors and Omissions
I. Indemnification and Limitation of Liability
J. Entire Agreement
K. Modifications to Agreement
L. Survival
M. Currency
N. Independent Contractor
O. Agents, Intermediaries, and Representatives
P. Construction Rules
Q. Written Notices
R. Representation of Authority and Acknowledgement of Understanding
S. Representation of Valid Signature
T. Counterparts
Execution XVI 23
Exhibit Name Exhibit Number
------- ---- ------- ------
Limits I 24
The Ceding Company Retention Limits II 25
Policy Plans Reinsured III 26
Premium Rates IV 31
Monthly Statements V 32
2
PREAMBLE
This Reinsurance Agreement (the "Agreement") is effective Month Day, Year,
between New England Life Insurance Company a Massachusetts domiciled life
insurance corporation (the "Ceding Company") and ABC Reinsurance Company a "name
state" domiciled life insurance corporation (the "Reinsurer").
The background of this Agreement is that the Ceding Company cedes and the
Reinsurer accepts, on a yearly renewable term ("YRT") basis, the quota share of
the mortality risk associated with permanent single life policies ("the
Policies") and associated Riders that the Ceding Company may issue during the
term of this Agreement.
In consideration of the mutual promises set forth herein, the parties agree as
follows:
3
ARTICLE I
AUTOMATIC CESSIONS
The Ceding Company shall cede and the Reinsurer shall accept as indemnity
reinsurance, on a YRT basis, in accordance with the terms and conditions hereof,
the portions of the Ceding Company's risk on all Policies that are not in excess
of the Automatic Binding Limit, as provided in Exhibit I, with respect to each
Policy and the Ceding Company shall retain for its own account the portions of
the risk on each Policy as provided in Exhibit II not to exceed its per life
retention, provided that:
A. the Ceding Company shall have retained the specified portion of the risk on
each ceded Policy as described above;
B. the amount ceded to the Reinsurer does not exceed the Automatic Binding
Limit as shown in Exhibit I;
C. the sum of the amount of insurance already in force and applied for on that
life according to information available to the Ceding Company, does not
exceed the Jumbo Limit as shown in Exhibit I;
D. the Ceding Company has not applied for facultative coverage on the current
application;
E. the Policy is issued in accordance with the Ceding Company's normal
individual ordinary life underwriting rules and practices;
F. the Policy is listed in Exhibit III.
4
ARTICLE II
FACULTATIVE CESSIONS
The Ceding Company has the option to, in accordance with the provisions of this
Article, facultatively submit to the Reinsurer any Policy that is not
obligatorily ceded under the provisions of Article I; provided that the
provisions of Sections A through E below are met. In addition, there is no
limitation on the Ceding Company's right to submit a case facultatively to other
reinsurers.
A. the Ceding Company shall have provided to the Reinsurer copies of the
original Policy application, medical reports, inspection reports, attending
physician statements and any additional information that is pertinent to
the insurability of the risk;
B. the Ceding Company shall have notified the Reinsurer of any outstanding
underwriting requirements at the time of the facultative submission;
C. the Reinsurer shall, within 30 days after receipt of all required
information, advise the Ceding Company of the portion that it would
facultatively accept and the terms and conditions of such acceptance;
D. the Ceding Company shall have notified the Reinsurer of its acceptance of
the Reinsurer's proposed terms and conditions for the facultative cession
within 120 days of receipt or the termination date specified in the
Reinsurer's offer unless the Reinsurer in writing expressly extends the
period for the Ceding Company's acceptance or rejection; and
E. the facultative cessions shall not be limited to those Policies that are
listed in Exhibit III.
5
ARTICLE III
REINSURANCE PREMIUMS
A. Life reinsurance shall be on the yearly renewable term basis for the net
amount at risk (death benefit less reserve or fund value) on that portion
of the policy which is reinsured by the Reinsurer. Premiums and allowances
shall be based on the rates specified in Exhibit IV.
B. The Reinsurer shall not indemnify the Ceding Company for premium taxes or
guaranty fund assessments. In the event that the reinsurer is an alien
company, the reinsurer shall reimburse the Ceding Company for any federal
excise tax payable on business ceded under this Agreement.
C. The Ceding Company shall report and pay reinsurance premiums on an annual
basis in advance without regard to the Policy mode of premium payment.
D. For technical reasons relating to statutory reserve requirements, the YRT
rates described in Exhibit IV cannot be guaranteed for more than one year.
The Reinsurer anticipates continuing to accept premiums on the basis of the
YRT rates described in Exhibit IV. The guaranteed reinsurance premium for
each age and duration shall be the higher of the premium based on the
reinsurance rates shown in Exhibit IV and the premium based on the
statutory minimum valuation mortality table and the statutory maximum
valuation interest rate permitted for the underlying Policy under the
National Association of Insurance Commissioners' Standard Valuation Law.
E. In no event shall the Reinsurer increase the reinsurance rates on inforce
business ceded under this Agreement unless it also concurrently increases
the reinsurance rates for all of its YRT reinsurance assumed individual
life insurance business.
F. Reinsurance premiums on Policies that terminate, reduce or change, the
Reinsurer shall refund any unearned reinsurance premium.
G. For Policies that are reinstated after coverage has ceased, the Ceding
Company shall pay to the Reinsurer reinsurance premiums for the period for
which the Ceding Company received Policy premiums in arrears.
6
ARTICLE IV
REINSURER'S LIABILITY
A. The Reinsurer's liability for cessions under Article I of this Agreement
shall commence simultaneously with that of the Ceding Company.
B. The Reinsurer shall have no liability for Policy proceeds paid under the
Ceding Company's temporary term insurance agreement ("TIA") unless
conditions for automatic cessions under Article I of this Agreement are
met.
C. The Reinsurer's liability for facultatively accepted cessions shall
commence when all of the conditions specified in Article II for facultative
acceptances shall have been met.
7
ARTICLE V
CLAIMS
A. The Ceding Company shall give prompt notice of Policy claims to the
Reinsurer in such form and detail as the parties may, from time to time,
agree. The Ceding Company shall, at the Reinsurer's request, provide copies
of Policy claim documentation to the Reinsurer. The Reinsurer shall, in all
cases, accept copies of Policy claim documentation provided by the Ceding
Company as sufficient. The Ceding Company's decision, in good faith, to pay
a Policy claim without contest, compromise or litigation shall be
unconditionally binding on the Reinsurer.
B. Ceding Company shall notify the Reinsurer that the Ceding Company intends
to contest, compromise or litigate a Policy claim. The Reinsurer shall pay
its share of any settlement up to the maximum that would have been payable
under the Policy had there been no controversy together with the
Reinsurer's share of specific expenses involved unless it declines to
endorse the contest, compromise or litigation, in which case it shall pay
the full amount of its share of the claim to the Ceding Company.
Compensation of salaried officers and employees of the Ceding Company shall
not be included in the Reinsurer's share of the specific expenses and/or
final settlement.
C. In the event that the amount of insurance provided by a Policy or Policies
reinsured hereunder shall be increased or reduced because of a misstatement
of age or sex established after the death of the insured, the Reinsurer
shall share in the increase or reduction in the proportion that the net
liability that the Reinsurer bore to the total net liability under the
Policy immediately prior to such increase or reduction. The Policy or
Policies shall be restated in accordance with the terms and rules of the
Ceding Company. Any adjustment for the difference in reinsurance premiums
shall be made without interest.
D. The Reinsurer shall pay interest on its share of any Policy claim
settlement calculated at the same rate and for the same period of time as
that used by the Ceding Company.
E. The parties may, from time to time, establish informal claims guidelines
for ease of administration and processing.
F. The Reinsurer shall share in the same proportion of any claim under an
accelerated death benefit rider (and any continued coverage under the
policy) that the Reinsurer would share in the absence of the rider.
8
ARTICLE VI
ADMINISTRATION AND ACCOUNTING
A. The Ceding Company shall administer the Policies, establish and maintain
necessary and appropriate Policy records in accordance with its general
standards and practices and shall furnish monthly statements for the month
just past to the Reinsurer in a form substantially similar to that shown in
Exhibit V within thirty (30) days following the close of each month showing
the net amount of reinsurance premium or return of reinsurance premium due
to or from the Reinsurer. The net amount shall be based on reinsurance
premiums less claims.
B. The Ceding Company shall include with each monthly statement payment of the
net amount of reinsurance premium, if any, due to the Reinsurer as shown on
the monthly statement. Amounts that have not been paid within thirty (30)
days following the close of each month shall be in default. The Reinsurer
shall pay to the Ceding Company any amounts due to the Ceding Company as
shown on the monthly statement within thirty days after the Reinsurer
receives the monthly statement from the Ceding Company. Any amounts due to
the Ceding Company that have not been paid within thirty (30) days after
the due date shall be in default.
C. Subject to the provisions of Article XV.H, the Reinsurer may terminate the
reinsurance on risks for which reinsurance premiums are in default by
giving thirty (30) days written notice of termination to the Ceding
Company; provided, however, that the Ceding Company may cure the default as
provided herein. Except to the extent the default shall have been cured, as
of the close of the last day of this thirty (30) day period, the
Reinsurer's liability for the following reinsurance shall terminate with
respect to risks that are the subject of the termination notice and risks
for which the reinsurance premiums went into default during the thirty (30)
day notice period.
D. Notwithstanding termination of reinsurance as provided in this Section, the
Ceding Company shall continue to be liable to the Reinsurer for all unpaid
reinsurance premiums earned by the Reinsurer under this Agreement.
E. Reinsurance terminated under Section C of this Article may be reinstated by
the Ceding Company if, within sixty (60) days after the effective date of
its termination, the Ceding Company pays in full all of the unpaid
reinsurance premiums for the reinsurance that was in force prior to its
termination. The effective date of reinstatement shall be the day on which
the Reinsurer receives all of the required reinsurance premiums. The
Reinsurer shall have no liability in connection with any claims incurred
between the date of termination of reinsurance applicable to a Policy and
the date of reinstatement of reinsurance of that Policy.
F. The first day of the thirty (30) day notice of termination under Section C
of this Article shall be the day on which the Ceding Company receives the
termination notice. If all premiums in default are received by the
Reinsurer within the thirty (30) day notice period, the reinsurance shall
remain in effect.
9
G. The Ceding Company shall bear the expense of all medical examinations,
inspection fees and other charges incurred in connection with Policy
issuance.
10
ARTICLE VII
DAC TAX
A. The Parties are making a joint election under Treas. Reg.
Section 1.848-2(g)(8) under which:
1. The Party with the net positive consideration under this Agreement is
required to capitalize specified policy acquisition expenses with respect
to such Agreement without regard to the general deductions limitation of
Section 848(c)(1) of the Internal Revenue Code.
2. This election shall be effective with the effective date of this
Agreement.
3. Each party shall attach a schedule to its federal income tax return for
its first taxable year ending after the election becomes effective which
identifies the Agreement for which this joint election under Treas. Reg.
Section 1.848-2(g)(8) has been made.
B. The Parties agree to exchange information pertaining to the amount of net
consideration as determined under Treas. Reg. Section 1.848-2(f) for this
Agreement to insure consistency as to amount and timing or as is otherwise
required by the Internal Revenue Service.
C. The exchange of information described in section B above shall follow the
procedures set forth below:
1. the Ceding Company shall submit its calculation of the "net
consideration" as defined under the above referenced regulation to the
Reinsurer not later than April 1 for each and every tax year for which this
Agreement is in effect;
2. the Reinsurer may challenge such calculation within thirty (30) calendar
days of receipt of the Ceding Company's calculation; and
3. if the Reinsurer contests the Ceding Company's calculation of the net
consideration, the parties shall act in good faith to reach an agreement as
to the correct amount within thirty (30) days of the date the Reinsurer
submits its alternative calculation. If the Ceding Company and the
Reinsurer reach an agreement on an amount of net consideration, each party
shall report the agreed upon amount in their respective tax returns for the
preceding taxable year.
D. The Parties represent and warrant that they are subject to U.S. taxation
under Subchapter L of Chapter 1 of the Internal Revenue Code or Subpart F
of Part III of Subchapter N of chapter 1 of the Internal Revenue Code.
11
ARTICLE VIII
CONVERSIONS AND EXCHANGES
A. If any policy ceded automatically under this Agreement is exchanged for
another policy that is listed in Exhibit III, the new policy shall be
reinsured on the basis described in Article I based upon the policy date,
age and underwriting classification of the new policy.
B. If any policy ceded automatically under this Agreement is exchanged for, or
converted to, another policy that is not listed in Exhibit III or does not
meet the criteria of Article I, the Ceding Company shall recapture
reinsurance under this Agreement. At the Ceding Company's option, the
ceding company may recapture only up to its retention limit as shown in
Exhibit II and the Reinsurer shall reinsure its proportionate share of the
excess above the Ceding Company's retention up to its automatic binding
limit shown in Exhibit I. Reinsurance premiums shall be those shown in
Exhibit IV, based upon policy date, age and underwriting classification of
the original policy.
C. If any policy ceded facultatively under this Agreement is exchanged for, or
converted to, another policy, at the Ceding Company's option reinsurance
shall continue based upon the policy date, age and underwriting
classification of the original policy.
D. If existing business that was not ceded under this Agreement is exchanged
for, or converted to a policy that is listed in Exhibit III, it shall not
be considered reinsured under this Agreement, unless otherwise agreed upon.
12
ARTICLE IX
TERMINATIONS, REDUCTIONS/INCREASES AND CHANGES
A. If a policy that was ceded pursuant to Article I, is reduced or terminated,
the reinsurance ceded to the Reinsurer shall be reduced by the Reinsurer's
share of the reduction shown in Exhibit I.
B. If a policy that was ceded on the excess retention basis, or if another
policy of the Ceding Company on the same life, is reduced or terminated,
reinsurance of the policy on that life shall be reduced, to restore, as far
as possible, the Ceding Company's retention on the risk such that the
amount retained shall not be greater than the retention limit at the time
of issue of the policy or the retention limit as adjusted in accordance
with recapture as provided in Article X. If there is more than one
insurance policy on the life, the reduction shall apply first to any
reinsurance on the policy being reduced, and then, to any reinsurance on
other policies on the life on a chronological basis with the last policies
reinsured being reduced first. If the reinsurance on any policy has been
ceded to more than one reinsurer, the reduction in reinsurance with the
Reinsurer on such policy shall be the same fraction of the total
reinsurance on that policy immediately before the reduction.
C. If a policy reinsured on the quota share basis pursuant to Article I, is
increased, subject to the normal rules and practices of the Ceding Company,
the Ceding Company shall cede automatically the Reinsurer's share of the
increase to the Reinsurer if the policy continues to meet the conditions of
Article I.
D. If a policy that was ceded on the excess retention basis is increased,
subject to the normal rules and practices to the Ceding Company, the Ceding
Company shall cede automatically a proportional share of the increase to
the Reinsurer if the policy continues to meet the conditions of Article I.
E. For policies ceded pursuant to Article I, reduction or removal of table
ratings and flat extras and changes in smoking classification shall be
underwritten according to the Ceding Company's normal rules and practices
and the Reinsurer shall be bound automatically. Risk classification changes
on facultative policies shall be subject to the Reinsurer's approval.
F. For plans of insurance with a variable death benefit that are reinsured
under this Agreement, the Reinsurer shall share proportionately in any
contractual increase or decrease in the amount at risk.
13
ARTICLE X
RECAPTURE AND RETENTION CHANGES
A. The Ceding Company shall promptly notify the Reinsurer of changes in its
retention limits.
B. For Policies ceded pursuant to this Agreement subject to excess retention
limits,
1. The Ceding Company may recapture business to reflect changes in its
retention limits, provided that ten (10) years have elapsed since the issue
date of the original policy. For policies issued as a result of exchange or
conversion, the duration for recapture eligibility shall be based on the
date used for premium calculations.
2. Recapture shall become effective on the policy anniversary date
following notification to the Reinsurer of the Ceding Company's intent to
recapture.
3. If any reinsurance is recaptured under the provisions of this Section,
all reinsurance eligible for recapture under the provisions of this Article
must be recaptured.
4. If the reinsurance on the policy has been ceded to more than one
reinsurer, the reduction in reinsurance with the Reinsurer on such policy
shall be the same fraction of the total recapture on that policy as the
Reinsurer held of the total reinsurance on that policy immediately before
the recapture.
C. Policies ceded on a quota share basis shall not be eligible for recapture
except as otherwise provided for by this Agreement.
D. If the Reinsurer increases reinsurance premiums on inforce business as
described in Article III, the Ceding Company may recapture all inforce
cessions or amounts thereof up to its retention limit.
E. The Reinsurer agrees it shall maintain a claims-paying ability rating of
BBB from Standard & Poor's Corporation. In the event that the Reinsurer's
Standard & Poor's Corporation rating falls below that level, or is
discontinued at the request of the Reinsurer, the Ceding Company shall have
the right to recapture upon ninety (90) days prior written notice to the
Reinsurer.
If the Standard and Poor's Corporation materially changes its scale for
rating life/health insurers, or if it ceases to rate life/health insurers,
then the parties agree to select a successor rating agency and substitute
the appropriate designation from that agency's rating system for the
Standard and Poor's Corporation rating.
14
ARTICLE XI
REINSTATEMENTS AND PAID-UP INSURANCE
A. Reinsurance of any lapsed Policy that was ceded in accordance with the
terms and conditions of this Agreement may be automatically reinstated so
long as the policy is reinstated in accordance with terms and rules of the
Ceding Company. The Ceding Company shall pay the Reinsurer reinsurance
premiums for the period for which the Ceding Company received premiums in
arrears from the policyholders.
B. Policy changes that are the result of extended term insurance or reduced
paid-up insurance (nonforfeiture options) shall continue to be reinsured
proportionately and shall be handled in accordance with Article III.
15
ARTICLE XII
INSOLVENCY
A. In the event of the insolvency of the Ceding Company, all reinsurance
benefits shall be payable directly to the Ceding Company or to the
liquidator, receiver, or statutory successor of the Ceding Company without
diminution because of the insolvency of the Ceding Company.
B. In the event of the insolvency of the Ceding Company, the liquidator,
receiver, or statutory successor shall give the Reinsurer written notice of
the pendency of a claim on a reinsured Policy within a reasonable time
after such claim is filed in the insolvency proceeding. During the pendency
of any such claim, the Reinsurer may investigate such claim and interpose
in the name of the Ceding Company (or its liquidator, receiver, or
statutory successor), but at its own expense, in the proceeding where such
claim is to be adjudicated, any defense or defenses that the Reinsurer may
deem available to the Ceding Company or its liquidator, receiver, or
statutory successor.
C. The expense thus incurred by the Reinsurer shall be chargeable, subject to
court approval, against the Ceding Company as part of the expense of
liquidation to the extent of a proportionate share of the benefit which may
accrue to the Ceding Company solely as a result of the defense undertaken
by the Reinsurer. Where two or more reinsurers are participating in the
same claim and a majority in interest elect to interpose a defense or
defenses to any such claim, the expense shall be apportioned in accordance
with the terms of the reinsurance agreements as though such expense had
been incurred by the Ceding Company.
D. In the event of the insolvency of the Reinsurer, the Ceding Company may
recapture all of the business reinsured by the Reinsurer under this
Agreement. Such recapture shall be effective as of the date of the
insolvency.
E. In the event of the insolvency of either party, the insolvent party must
notify the other party of its insolvency within thirty (30) days.
F. In the event of the insolvency of the Reinsurer, the Ceding Company must
notify the Reinsurer (or its liquidator, receiver, or statutory successor)
whether or not it is going to recapture the business within sixty (60) days
after being notified of the Reinsurer's insolvency.
16
ARTICLE XIII
ARBITRATION
A. All disputes and differences between the Ceding Company and the Reinsurer
shall be decided by arbitration, regardless of the insolvency of either
party, unless the liquidator, receiver or statutory successor is
specifically exempted from an arbitration proceeding by applicable law.
B. Either party may initiate arbitration by providing written notification to
the other party that sets forth (a) a brief statement of the issue(s); (b)
the failure of the parties to reach agreement; and (c) the date of the
demand for arbitration.
C. The arbitration panel shall consist of three arbitrators who must be
impartial and each of whom must, at that time, either be accredited as an
arbitrator by XXXXX-US or be an active or former officer of a life
insurance or reinsurance company other than the parties or their
affiliates.
D. Each party shall select an arbitrator within thirty (30) days from the date
of the demand. If either party refuses or fails to appoint an arbitrator
within the time allowed, the party that has appointed an arbitrator may
notify the other party that, if it has not appointed its arbitrator within
the following ten (10) days, the arbitrator shall appoint an arbitrator on
its behalf. Within thirty (30) days of the appointment of the second
arbitrator the two (2) arbitrators shall select the third arbitrator, who
must also be, at that time, accredited by XXXXX-US as an umpire. If the two
arbitrators fail to agree on the selection of the third arbitrator within
the time allowed, the Umpire Selection Procedures of XXXXX-US, as in force
at that time, shall be used to select the third arbitrator.
E. The arbitrators shall interpret this Agreement as an honorable engagement
rather than merely as a legal obligation and shall consider equitable
principles as well as industry custom and practice regarding the applicable
insurance and reinsurance business. The arbitrators are released from
judicial formalities and shall not be bound by strict rules of procedure
and evidence.
F. The arbitrators shall determine all arbitration schedules and procedural
rules and may, in their discretion, use applicable XXXXX-US forms and
procedures. Organizational and other meetings shall be held in New York,
New York, unless the arbitrators otherwise provide. The arbitrators shall
decide all matters by majority vote.
G. The decisions of the arbitrators shall be final and binding on both
parties. The arbitrators may, in their discretion, award costs and
expenses, as they deem appropriate, including but not limited to legal fees
and interest. Judgment may be entered upon the final decisions of the
arbitrators in any court of competent jurisdiction. The arbitrators may not
award any exemplary or punitive damages.
H. Unless the arbitrators provide otherwise, each party shall be responsible
for (a) all fees and expenses charged by its respective counsel,
accountants, actuaries and other representatives in connection with the
arbitration and (b) one-half of the expenses of the arbitration, including
the fees of the arbitrators.
17
ARTICLE XIV
DURATION OF AGREEMENT
A. Except as otherwise provided herein or as the parties may otherwise agree,
the Agreement shall be unlimited in duration. Either party may terminate
this Agreement with respect to new business at any time upon ninety (90)
days prior written notice to the other party. The first day of the notice
period shall be deemed to be the date on which notice is received by the
other party.
B. During the ninety (90) day period following delivery of a notice of
termination, this Agreement shall continue in force in accordance with its
terms.
C. Except as the parties may otherwise agree, this Agreement shall continue to
apply, after the date of termination, to cessions that became effective
prior to the termination of this Agreement.
D. The parties shall cooperate in seeking to obtain any required regulatory
approvals for this Agreement and, in the event that any required regulatory
approval cannot be obtained after reasonable effort, the Agreement and any
cessions previously effected hereunder shall be deemed void as of the
inception and the parties shall be restored to the position they would have
been in had this Agreement never become effective.
18
ARTICLE XV
MISCELLANEOUS
A. Choice of Law: This Agreement is subject to and is to be interpreted in
accordance with the laws of the Commonwealth of Massachusetts without
regard to the Massachusetts choice of law rules.
B. Severability: In the event that any provision or term of this Agreement is
held invalid, illegal or unenforceable, all of the other provisions and
terms shall remain in full force and effect to the extent that their
continuance is practicable and consistent with the original intent of the
parties. In addition, if provisions or terms are held invalid, illegal or
unenforceable, the parties shall attempt in good faith to renegotiate the
Agreement to carry out its original intent.
C. Reserve Credit: The Reinsurer shall establish and maintain reserves with
respect to ceded Policy liabilities that equal or exceed the Reinsurer's
proportionate share of the reserve credit taken by the Ceding Company. The
Ceding Company shall on an annual basis provide the Reinsurer with a
reserve summary for ceded Policy liabilities hereunder. This annual reserve
summary shall include the opinion of the Ceding Company's actuary
applicable to such Policy liabilities.
D. Assignment: This Agreement shall be binding on the parties and their
respective successors and permitted assignees. This Agreement may not be
assigned by either party without the written consent of the other, which
consent shall not be unreasonably withheld. In no instance shall anyone
other than the Ceding Company and the Reinsurer have any rights hereunder
and, except as otherwise herein provided, the Ceding Company shall be and
remain solely liable to any insured, owner or beneficiary under any Policy.
E. Confidentiality: Each party shall maintain the confidentiality of all
information, including legally protected consumer privacy information, that
is provided to it by the other party in connection with this Agreement;
provided, however, that this obligation of confidentiality shall not apply
(a) if and to the extent that disclosure is required by applicable law or
any court, governmental agency or regulatory authority or by subpoena or
discovery request in pending litigation; (b) if the information is or
becomes available from public information (other than as a result of prior
unauthorized disclosure by the disclosing party); (c) if the information is
or was received from a third party not known by the disclosing party to be
under a confidentiality obligation with regard to such information; or (d)
if the information was in the possession of the disclosing party (having
received such information on a non-confidential basis) other than by reason
of the services performed pursuant to this Agreement. In the event that
either party becomes legally compelled to disclose any secret or
confidential information, such party shall give prompt written notice of
that fact to the other party so that such other party may seek an
appropriate remedy to prevent such disclosure; provided, however, that this
provision shall not apply to information that is or otherwise becomes
available to the public or that was previously available on a
non-confidential basis. This provision does not prohibit the sharing of
information with Retrocessionaires or other parties engaged to provide
services in connection with this Agreement, to the extent necessary to
provide such
19
services, provided that such Retrocessionaires and parties shall have
agreed to maintain the confidentiality of such information.
F. Inspection of Records: Each party and its employees and authorized
representatives, respectively, may audit, during regular business hours, at
the home office of the other party, provided that reasonable advance notice
has been given, any and all books, records, statements, correspondence,
reports, and other documents that relate to a Policy. The audited party
agrees to provide a reasonable work space for such audit, to cooperate
fully and to disclose the existence of and to produce any and all necessary
and reasonable materials requested by such auditors. Each party shall bear
its own audit expenses. All such information, including audit reports and
analyses, shall be kept confidential.
G. Damages: The Reinsurer assumes no liability under this Agreement
1. for any damages, fines, penalties, costs or expenses, or portion
thereof, levied on or assessed against the Ceding Company by any court or
regulatory body on the basis of negligence, oppression, malice, fraud,
fault, wrong doing or bad faith by the Ceding Company in connection with
any Policy or for any act or omission that is not consistent with the
generally accepted practices and standards of the life insurance industry
applicable at the time of such act or omission, unless the Reinsurer shall
have received notice of and concurred in writing with the actions taken or
not taken by the Ceding Company that led to the levy or assessment, in
which case the Reinsurer shall pay a proportional share of such levy or
assessment; or
2. for any payment by the Ceding Company in excess of the Policy amount
because of negligence, oppression, malice, fault, wrongdoing or bad faith
of the Ceding Company in connection with any Policy or for any act or
omission not consistent with the generally accepted practices and standards
of the life insurance industry applicable at the time of such act or
omission, unless the Reinsurer shall have received notice of and concurred
in writing with the actions taken or not taken by the Ceding Company that
led to the excess payment, in which case the Reinsurer shall pay a
proportional share of such excess payment.
H. Errors and Omissions: If either the Ceding Company or the Reinsurer commits
an unintentional error, oversight or misunderstanding (collectively
referred to as "errors") in administering this Agreement, the error shall
be corrected by restoring both parties to the positions they would have
occupied had the error not occurred. If it is not possible to restore each
party to the position it would have occupied had the error not occurred,
the parties shall endeavor in good faith to fashion a resolution to the
situation created by the error that is fair and reasonable and most closely
approximates the intent of the parties as evidenced by this Agreement.
I. Indemnification and Limitation of Liability: Each party shall indemnify and
hold the other, its affiliates, directors, officers, employees and all
other persons and entities acting on behalf of or under the control of any
of them harmless from and against any and all claims, including reasonable
legal expenses, that result from any negligent, dishonest, malicious,
fraudulent or criminal act or omission or arising out of or related to any
incorrect representation, warranty or obligation of
20
this Agreement or any failure or breach of this Agreement by the
indemnifying party, its directors, officers, employees, other
representatives or any other person or entity acting on behalf of or under
the control of any of them. In no event shall any party to this Agreement
be liable to the other party for punitive, indirect or consequential
damages arising under this Agreement for any clause whatsoever, whether or
not such party has been advised or could have foreseen the possibility of
such damages.
J. Entire Agreement: This Agreement supersedes all prior discussions and
agreements between the parties and constitutes their sole and entire
agreement with respect to its subject matter and there are no
understandings between the parties with respect thereto other than as
expressed in the Agreement.
K. Modifications to Agreement: Any change or modification of this Agreement
shall be null and void unless made by amendment to the Agreement and signed
by both parties. No waiver by either party of any default by the other
party in the performance of any promise, term or condition of this
Agreement shall be construed to be a waiver by such party of any other or
subsequent default in performance of the same or any other promise, term or
condition of this Agreement. No prior transactions or dealings between the
parties shall be deemed to establish any custom or usage waiving or
modifying any provision hereof. The failure of either party to enforce any
part of this Agreement shall not constitute a waiver by such party of its
right to do so, nor shall it be deemed to be an act of ratification or
consent.
L. Survival: All of the provisions of this Agreement, to the extent necessary
to carry out the purposes of this Agreement or to ascertain and enforce the
parties' rights hereunder, shall survive the termination of this Agreement.
M. Currency: All monies due either the Reinsured or the Reinsurer under this
Agreement shall be offset against each other, dollar for dollar, regardless
of any insolvency of either party. All payments shall be effected through
offsetting balances, electronic funds transfers or as the parties may
otherwise agree in order to carry out the purposes of this Agreement. All
financial transactions under this Agreement shall be paid in the lawful
currency of the United States.
N. Independent Contractor: The parties shall be deemed to be independent
contractors, each with full control over its respective business affairs
and operations. This Agreement shall not be construed as a partnership or
joint venture and neither party hereto shall be liable for any obligations
incurred by the other party except as expressly provided herein.
O. Agents, Intermediaries, and Representatives: Each party represents that all
negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by the parties directly and without the
intervention of any person in such manner as to give rise to any valid
claim by any other person for a finder's fee, brokerage commission or
similar payment.
P. Construction Rules: Each party represents that it has had sufficient
opportunity to review and negotiate the terms of this Agreement and is
fully aware of all the obligations and responsibilities created hereunder.
Therefore, the parties agree
21
that the rule of construction that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of
this Agreement or any Exhibit attached hereto. Exhibits attached hereto are
incorporated into this Agreement. Captions are provided for reference only.
Q. Written Notices: Written notices under this Agreement shall be effective
when delivered to any party at the address provided herein:
1. If to the Ceding Company:
Xxxxxxx X. Xxxxxx
Vice President & Actuary
New England Life Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
2. If to the Reinsurer: ABC Reinsurance Company
3. Either party may change its address by giving the other party written
notice of its new address; provided, however, that any notice of change of
address shall be effective only upon receipt.
R. Representation of Authority and Acknowledgement of Understanding: Each
party represents that it has full power and authority to enter into and to
perform this Agreement and that the person signing this Agreement on its
behalf has been properly authorized and empowered to do so. Each party
further acknowledges that it has read this Agreement, understands it and
agrees to be bound by it.
S. Representation of Valid Signature: Each party represents and warrants that
this Agreement has been duly and validly signed on its behalf; that it has
the full corporate power and authority necessary to perform its obligations
hereunder; and that it shall maintain in force all necessary legal and
regulatory authorizations.
T. Counterparts: This Agreement may be signed in any number of counterparts,
each of which shall be deemed an original and all of which shall constitute
one and the same instrument.
22
ARTICLE XVI
EXECUTION OF AGREEMENT
In witness of the above,
New England Life Insurance Company
of
Boston, Massachusetts
and
ABC Reinsurance Company
of
City, State
have by their respective officers executed and delivered this Agreement,
effective Month, Day, Year.
NEW ENGLAND LIFE INSURANCE COMPANY
By: By:
--------------------------------- ------------------------------
Name: Name:
------------------------------- ----------------------------
Title: Title:
------------------------------ ---------------------------
ABC REINSURANCE COMPANY
By: By:
--------------------------------- ------------------------------
Name: Name:
------------------------------- ----------------------------
Title: Title:
------------------------------ ---------------------------
23
EXHIBIT I
LIMITS
REINSURER'S SHARE: X%
AUTOMATIC BINDING LIMIT
The Ceding Company may not cede Policy amounts pursuant to Article I when the
face amount of the Policy exceeds the following:
JUMBO LIMIT
The Ceding Company may cede Policy amounts pursuant to Article I only if,
according to the information available to the Ceding Company, the total amount
of life insurance in force and applied for on the life with all insurance
companies, including any amount to be replaced, does not exceed $
24
EXHIBIT II
CEDING COMPANY RETENTION LIMITS
CEDING COMPANY SHARE: X% of the Policy face amount, not to exceed the following
retention limits per life.
SINGLE LIFE
SURVIVORSHIP
SPECIAL LIMITS
25
EXHIBIT III
POLICIES AND RIDERS
The Policies and Riders described below may be ceded hereunder:
26
EXHIBIT IV
REINSURANCE RATES
There shall be no policy fees.
Premium rates shall be the same for automatic and facultative reinsurance.
Life premiums shall be the following percentages of the attached single life
mortality tables, for all underwriting classes.
Premiums for Temporary Term for all underwriting classes shall be the same as
the duration one rates for Life reinsurance premiums described above.
Substandard table ratings are 25% multiples based on NS, SM and JUV for each
table.
The premiums shall be increased by any flat extra premium charged the insured
less allowances.
Insurance coverage resulting from exercise of ABTR and GIR shall be reinsured at
point in scale.
27
EXHIBIT V
MONTHLY REPORTS
The Ceding Company shall provide the Reinsurer reports each month in substantial
accord with those shown in this Exhibit.
28
