Exhibit (g)(4)
Automatic YRT
Reinsurance Agreement
between
IDS LIFE INSURANCE COMPANY OF NEW YORK
ALBANY, NEW YORK
(hereinafter referred to as the "Ceding Company")
and
[NAME OF REINSURANCE COMPANY]
[CITY AND STATE OF REINSURANCE COMPANY]
(hereinafter referred to as the "Reinsurer")
Effective August 18, 2003
Treaty # 9130
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IDSL-NY Succession Select Treaty
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TABLE OF CONTENTS
Page
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ARTICLE 1 - PREAMBLE...................................................... 5
1.1 Parties to the Agreement
1.2 Construction
1.3 Entire Agreement
ARTICLE 2 - AUTOMATIC REINSURANCE......................................... 6
ARTICLE 3 - FACULTATIVE REINSURANCE....................................... 7
ARTICLE 4 - COMMENCEMENT OF LIABILITY..................................... 8
4.1 Automatic Reinsurance
4.2 Facultative Reinsurance
4.3 Conditional Receipt or Temporary Insurance
ARTICLE 5 - REINSURED RISK AMOUNT......................................... 9
ARTICLE 6 - PREMIUM ACCOUNTING............................................ 10
6.1 Premiums
6.2 Payment of Premiums
6.3 Delayed Payment
6.4 Failure to Pay Premiums
6.5 Premium Rate Guarantee
ARTICLE 7 - REDUCTIONS, TERMINATIONS AND CHANGES.......................... 12
7.1 Reductions and Terminations
7.2 Increases
7.3 Risk Classification Changes
7.4 Reinstatement
7.5 Nonforfeiture Benefits
ARTICLE 8 - CONVERSIONS AND REPLACEMENTS.................................. 14
8.1 Conversions
8.2 Exchanges and Replacements
8.3 Policy Split Option
ARTICLE 9 - CLAIMS........................................................ 16
9.1 Notice
9.2 Proofs
9.3 Amount and Payment of Reinsurance Benefits
9.4 Contestable Claims
9.5 Claim Expenses
9.6 Misrepresentation or Suicide
9.7 Misstatement of Age or Sex
9.8 Extra-Contractual Damages
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ARTICLE 10 - CREDIT FOR RESERVES.......................................... 19
10.1 Reserve Methodology and Reporting
ARTICLE 11 - RETENTION LIMIT CHANGES...................................... 20
ARTICLE 12 - RECAPTURE.................................................... 21
ARTICLE 13 - GENERAL PROVISIONS........................................... 23
13.1 Currency
13.2 Premium Tax
13.3 Minimum Cession
13.4 Inspection of Records
13.5 Interest Rate
ARTICLE 14 - DAC TAX...................................................... 24
ARTICLE 15 - OFFSET....................................................... 25
ARTICLE 16 - INSOLVENCY................................................... 26
16.1 Insolvency of a Party to this Agreement
16.2 Insolvency of the Ceding Company
16.3 Insolvency of the Reinsurer
ARTICLE 17 - ERRORS AND OMISSIONS......................................... 28
ARTICLE 18 - DISPUTE RESOLUTION........................................... 29
ARTICLE 19 - ARBITRATION.................................................. 30
ARTICLE 20 - CONFIDENTIALITY.............................................. 32
ARTICLE 21 - SEVERABILITY................................................. 33
ARTICLE 22 - DURATION OF AGREEMENT........................................ 34
ARTICLE 23 - EXECUTION.................................................... 35
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EXHIBITS
A - RETENTION LIMITS OF THE CEDING COMPANY
B - PLANS COVERED AND BINDING LIMITS
C - FORMS, MANUALS, AND ISSUE RULES
D - REINSURANCE PREMIUMS
E - SELF-ADMINISTERED REPORTING
F - APPLICATION FOR FACULTATIVE REINSURANCE FORM
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ARTICLE 1
PREAMBLE
1.1 PARTIES TO THE AGREEMENT
This is a YRT agreement for indemnity reinsurance (the "Agreement")
solely between IDS Life Insurance Company of New York (the "Ceding
Company"), [name of reinsurance company] of [city and state of
reinsurance company] (the "Reinsurer"), collectively referred to as the
"parties".
The acceptance of risks under this Agreement will create no right or
legal relationship between the Reinsurer and the insured, owner or
beneficiary of any insurance policy or other contract of the Ceding
Company.
1.2 CONSTRUCTION
This Agreement will be construed in accordance with the laws of the state
of New York.
1.3 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the business reinsured hereunder. There are no understandings
between the parties other than as expressed in this Agreement. Any change
or modification to this Agreement will be null and void unless made by
amendment to this Agreement and signed by both parties.
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ARTICLE 2
AUTOMATIC REINSURANCE
2.1 On and after the effective date of this Agreement, the Reinsurer will
automatically accept a portion of the life insurance policies,
supplementary benefits, and riders directly issued by the Ceding Company
and listed in Exhibit B - Plans Covered and Binding Limits. The Reinsurer
will automatically accept its share of the above-referenced policies
within the limits shown in Exhibit B, provided that:
(a) the Ceding Company keeps its retention, as shown in Exhibit A -
Retention Limits of the Ceding Company, and
(b) the Ceding Company applies its normal underwriting guidelines, as
stated in Exhibit C - Forms, Manuals and Issue Rules, and
(c) the sum of all amounts in force and applied for on the joint lives
with the Ceding Company, excluding amounts being internally
replaced, does not exceed the Automatic Binding Limits set out in
Exhibit B, and
(d) the amount of life insurance in force in all companies, including
any coverage to be replaced plus the amount currently applied for
on that life in all companies, does not exceed the Jumbo Limit
stated in Exhibit B, and
(e) the application is on a life that has not been submitted
facultatively to the Reinsurer or any other reinsurer within the
last 2 years, unless the reason for any prior facultative
submission was solely for capacity that may now be accommodated
within the terms of this Agreement.
The Ceding Company may cede reinsurance automatically on international
clients underwritten in accordance with the agreed upon guidelines in
Exhibit B. This Agreement applies only to the issuance of insurance by
the Ceding Company in a jurisdiction in which it is properly licensed.
If the Ceding Company already holds its full retention on a life under
previously issued policies, the Reinsurer will automatically accept
reinsurance up to the limits shown in Exhibit B.
The Ceding Company may not reinsure the amount it has retained on the
business covered under this Agreement on any basis without the
Reinsurer's written consent.
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ARTICLE 3
FACULTATIVE REINSURANCE
3.1 The Ceding Company may submit any application on a plan or rider
identified in Exhibit B - Plans Covered and Binding Limits, to the
Reinsurer for its consideration on a facultative basis.
The Ceding Company will apply for reinsurance on a facultative basis by
sending to the Reinsurer an Application for Facultative Reinsurance,
providing information similar to the example outlined in Exhibit F -
Application for Facultative Reinsurance. Accompanying this Application
will be copies of all underwriting evidence that is available for risk
assessment including, but not limited to, copies of the application for
insurance, medical examiners' reports, attending physicians' statements,
inspection reports, and any other information bearing on the insurability
of the risk. The Ceding Company also will notify the Reinsurer of any
outstanding underwriting requirements at the time of the facultative
submission. Any subsequent information received by the Ceding Company
that is pertinent to the risk assessment will be immediately transmitted
to the Reinsurer.
After consideration of the Application for Facultative Reinsurance and
related information, the Reinsurer will promptly inform the Ceding
Company of its underwriting decision. The Reinsurer's offer will expire
at the end of 120 days, unless otherwise specified by the Reinsurer.
If the Ceding Company accepts the Reinsurer's offer, then the Ceding
Company will note its acceptance in its underwriting file and submit all
relevant individual policy information in its next statement to the
Reinsurer.
The relevant terms and conditions of the Agreement will apply to those
facultative offers made by the Reinsurer which are accepted by the Ceding
Company.
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ARTICLE 4
COMMENCEMENT OF LIABILITY
4.1 AUTOMATIC REINSURANCE
For automatic reinsurance, the Reinsurer's liability will commence at the
same time as the Ceding Company's liability.
4.2 FACULTATIVE REINSURANCE
For facultative reinsurance, the Reinsurer's liability will commence at
the same time as the Ceding Company's liability, provided that the
Reinsurer has made a facultative offer and that offer was accepted in
accordance with the terms of this Agreement.
4.3 CONDITIONAL RECEIPT OR TEMPORARY INSURANCE
Reinsurance coverage under a conditional receipt or temporary insurance
provision is limited to the Reinsurer's share of amounts within the
conditional receipt or temporary coverage limits shown in Exhibit B -
Plans Covered and Binding Limits.
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ARTICLE 5
REINSURED RISK AMOUNT
5.1 Reinsured risk amounts will be calculated on each policy anniversary;
during a policy year, reinsured risk amounts are adjusted if and only if
there is an increase or decrease in policy specified amount.
If the net amount at risk on a reinsured policy drops below the Ceding
Company's limit of retention as defined in Exhibit A - Retention Limits
of the Ceding Company, then the Ceding Company will terminate the
reinsurance on the policy. If the net amount at risk subsequently
increases above the Ceding Company's retention, then the excess amounts
over the retention limit will continue to be retained by the Ceding
Company, unless the increase is due to an underwritten, non-contractual
increase. In the event of such a non-contractual increase, the Ceding
Company may reinsure the total net amount at risk in excess of the
retention limit.
Option 1, Base Policy: The Net Amount at Risk is equal to the Death
----------------------
Benefit minus the Policy Value, where the Death Benefit is the greater of
the Specified Amount or the Policy Value multiplied by the tax corridor.
The Reinsured Net Amount at Risk is defined as the net amount at risk at
the most recent policy anniversary, or subsequent policy change date if
applicable, less the Ceding Company's retention on the policy, and for
automatic policies, multiplied by the Reinsurer's percentage share as
shown in Exhibit B - Plans Covered and Binding Limits.
Option 2, Base Policy: The Net Amount at Risk is equal to the Death
----------------------
Benefit minus the Policy Value, where the Death Benefit is the greater of
the Specified Amount plus the Policy Value or the Policy Value multiplied
by the tax corridor. The Reinsured Net Amount at Risk is defined as the
net amount at the most recent policy anniversary, or subsequent policy
change date if applicable, less the Ceding Company's retention on the
policy, and for automatic policies, multiplied by the Reinsurer's
percentage share as shown in Exhibit B.
Other Insured Riders: For Survivor Term Rider and Four-Year Term Rider,
---------------------
the Net Amount at Risk is the Specified Amount of the Rider. The Policy
Split Option rider does not contribute to total risk amount. The
Reinsured Net Amount at Risk is defined as the Specified Amount of the
Rider at the most recent policy anniversary, or subsequent policy change
date if applicable, less the Ceding Company's retention, and for
automatic policies, multiplied by the Reinsurer's percentage share as
shown in Exhibit B.
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ARTICLE 6
PREMIUM ACCOUNTING
6.1 PREMIUMS
Reinsurance premium rates for life insurance and other benefits reinsured
under this Agreement are shown in Exhibit D - Reinsurance Premiums. The
rates will be applied to the reinsured net amount at risk.
The Reinsurer will pay to the Ceding Company the allowances shown in
Exhibit D.
Premium adjustments due either party will be calculated and paid in the
event of mid-year policy increases, terminations, death claims, and other
changes as appropriate.
6.2 PAYMENT OF PREMIUMS
Reinsurance premiums are payable annually in advance. The Ceding Company
will calculate the amount of reinsurance premium due and, within 30 days
after the end of the month, will send the Reinsurer a statement that
contains the information shown in Exhibit E - Self-Administered
Reporting, showing reinsurance premiums due for that period. If an amount
is due the Reinsurer, the Ceding Company will remit that amount together
with the statement. If an amount is due the Ceding Company, the Reinsurer
will remit such amount within 15 days of receipt of the statement.
6.3 DELAYED PAYMENT
Premium balances that remain unpaid for more than 30 days after the
Remittance Date will incur interest from the end of the reporting period.
The Remittance Date is defined as 30 days after the end of the reporting
period. Interest will be calculated using the index specified in Article
13.5 - Interest Rate.
6.4 FAILURE TO PAY PREMIUMS
The payment of reinsurance premiums is a condition precedent to the
liability of the Reinsurer for reinsurance covered by this Agreement. In
the event that reinsurance premiums are not paid within sixty (60) days
of the Remittance Date, the Reinsurer will have the right to terminate
the reinsurance under all policies having reinsurance premiums in
arrears. If the Reinsurer elects to exercise its right of termination, it
will give the Ceding Company 30 days written notice of its intention.
Such notice will be sent by certified mail.
If all reinsurance premiums in arrears, including any that become in
arrears during the 30 day notice period, are not paid before the
expiration of the notice period, the Reinsurer
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will be relieved of all liability under those policies as of the last
date for which premiums have been paid for each policy. Reinsurance on
policies on which reinsurance premiums subsequently fall due will
automatically terminate as of the last date for which premiums have been
paid for each policy, unless reinsurance premiums on those policies are
paid before their Remittance Dates.
Terminated reinsurance may be reinstated, subject to approval by the
Reinsurer, and upon payment of all reinsurance premiums in arrears
including any interest accrued thereon. The Reinsurer will have no
liability for any claims incurred between the date of termination and the
date of the reinstatement of the reinsurance. The right to terminate
reinsurance will not prejudice the Reinsurer's right to collect premiums
for the period during which reinsurance was in force prior to the
expiration of the 30 days notice.
The Ceding Company will not force termination under the provisions of
this Article solely to avoid the provisions of Article 12 - Recapture, or
to transfer the reinsured policies to another reinsurer.
6.5 PREMIUM RATE GUARANTEE
The Ceding Company agrees to notify the Reinsurer of any intent to
increase current cost of insurance rates charged for new or existing
business.
For the reinsurance of new business, the Reinsurer reserves the right to
change reinsurance rates after 90 days written notice.
For the ongoing reinsurance of existing in force business, the Reinsurer
will accept YRT reinsurance at the current reinsurance premium rates, as
shown in Exhibit D, unless the Ceding Company increases the current cost
of insurance rates charged to the policyholder.
[terms of rate guarantee redacted]
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ARTICLE 7
REDUCTIONS, TERMINATIONS AND CHANGES
[terms of rate guarantee redacted]
7.1 REDUCTIONS AND TERMINATIONS
In the event of the reduction, lapse, or termination of a policy or
policies reinsured under this Agreement or any other agreement, the
Ceding Company will, in order to maintain its full retention, reduce or
terminate reinsurance on that life. The reinsured amount will be reduced,
effective on the same date, by the full amount of the reduction of the
affected policies. The reinsurance reduction will apply first to the
policy or policies being reduced and then, on a chronological basis, to
other reinsured policies on the life, beginning with the most recent
policy. If the amount of reduction exceeds the risk amount reinsured, the
reinsurance on the policy or policies will be terminated.
If the reinsurance for a policy has been placed with more than one
reinsurer, the reduction will be applied to all reinsurers pro rata to
the amounts originally reinsured.
If a fully retained policy on a life that is reinsured under this
Agreement is terminated or reduced, the Ceding Company will reduce the
existing reinsurance on that life by a corresponding amount, with the
reinsurance on the most recent policy being reduced first.
7.2 INCREASES
Noncontractual Increases
------------------------
If the amount of insurance is increased as a result of a noncontractual
change, the increase will be underwritten by the Ceding Company in
accordance with its customary standards and procedures. The policy will
be reinsured under this Agreement using the adjusted risk amount. For the
purposes of reinsurance, the original age and duration of the policy will
be used for the new adjusted risk amount. The underwriting class,
however, will be based on the most recent assessment and may differ for
the original amount and any subsequent increases. The Reinsurer's
approval is required if the original policy was reinsured on a
facultative basis or if the new amount will cause the total amount on the
lives to exceed either the Automatic Binding Limits or the Jumbo Limits
shown in Exhibit B - Plans Covered and Binding Limits.
Contractual Increases
---------------------
There are no contractual increases applicable to the policies covered
under this Agreement.
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7.3 RISK CLASSIFICATION CHANGES
If the policyholder requests a Table Rating reduction or removal of a
Flat Extra, such change will be underwritten according to the Ceding
Company's normal underwriting practices. Risk classification changes on
facultative policies will be subject to the Reinsurer's approval.
7.4 REINSTATEMENT
If a policy is reinstated in accordance with its terms and in accordance
with Ceding Company rules and procedures, the Reinsurer will, upon
notification of reinstatement, reinstate the reinsurance coverage. If the
policy was facultatively reinsured, approval by the Reinsurer will only
be required prior to the reinstatement of the reinsurance if the Ceding
Company's regular reinstatement rules indicate that more evidence than a
Statement of Good Health is required. Upon reinstatement of the
reinsurance coverage, the Ceding Company will pay the reinsurance
premiums that would have accrued had the policy not lapsed, together with
interest at the same rate as the Ceding Company receives under its
policy, and for the period for which the Ceding Company received premiums
in arrears and interest.
7.5 NONFORFEITURE BENEFITS
Nonforfeiture benefits are not applicable to policies reinsured under
this Agreement.
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ARTICLE 8
CONVERSIONS AND REPLACEMENTS
If a policy reinsured under this Agreement is converted, exchanged or replaced,
the Ceding Company will promptly notify the Reinsurer. Unless mutually agreed
otherwise, policies that are reinsured with another reinsurer and that exchange
or convert to a plan covered under this Agreement will not be reinsured
hereunder.
8.1 CONVERSIONS
The Reinsurer will continue to reinsure policies resulting from the
contractual conversion of any policy reinsured under this Agreement, in
an amount not to exceed the original amount reinsured hereunder. If the
plan to which the original policy is converting is reinsured by the
Reinsurer, either under this Agreement or under a different Agreement,
reinsurance premium rates for the resulting converted policy will be
those contained in the Agreement that covers the plan to which the
original policy is converting. However, if the new plan is not reinsured
by the Reinsurer, reinsurance premiums for a policy resulting from a
contractual conversion will be agreed between the parties. Reinsurance
premiums and any allowances for conversions will be on a point-in-scale
basis from the original issue age of the policy.
If the conversion results in an increase in the risk amount, the increase
will be underwritten by the Ceding Company in accordance with its
customary standards and procedures. The Reinsurer will accept such
increases, subject to the new business provisions of this Agreement.
Reinsurance premiums and any allowances for increased risk amounts will
be first-year premiums at the agreed-upon premium rate.
8.2 EXCHANGES AND REPLACEMENTS
A policy resulting from an internal exchange or replacement will be
underwritten by the Ceding Company in accordance with its underwriting
guidelines, standards and procedures for exchanges and replacements. All
internal exchanges to Succession Select from the current joint life last
survivor product that are over 120 days old will be fully underwritten
and will be treated as new business under this Agreement. Additionally,
policies that are 120 days old or less may be exchanged without penalty
to Succession Select within 120 days of the product's introduction in the
state in which the original policy was signed. All such exchanges will be
treated as new business for reinsurance purposes.
8.3 POLICY SPLIT OPTION
The Reinsurer will continue to reinsure the two policies ("Opted
Policies") resulting from exercise of any policy split option rider
reinsured under this Agreement. If the original policy was ceded
automatically, Ceding Company will continue reinsurance (using the
original proportionate share under this Agreement) on the Opted policy as
necessary to
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bring retained risk on the life, whether on the Opted policy or another
policy, to 50% of the retention limit shown in Exhibit A for the original
policy. If the original policy was ceded facultatively, on each Opted
Policy Ceding Company will continue reinsurance consistent with the
original cession. If the plan of the Opted Policy is reinsured by the
Reinsurer, either under this Agreement or under a different Agreement,
reinsurance premium rates for the Opted Policy will be those contained in
the Agreement that covers the new plan. However, if the new plan is not
reinsured by the Reinsurer, reinsurance premiums for the Opted Policy
will be agreed between the parties. Reinsurance premiums and any
allowances for Opted Policies will be on a point-in-scale basis from the
original issue age of the policy.
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ARTICLE 9
CLAIMS
Claims covered under this Agreement include only death claims, which are those
due to the death of the insured on a policy reinsured under this Agreement, and
any additional benefits specified in Exhibit B - Plans Covered and Binding
Limits, which are provided by the underlying policy and are reinsured under this
Agreement.
9.1 NOTICE
The Ceding Company will notify the Reinsurer, as soon as reasonably
possible, after it receives a claim on a policy reinsured under this
Agreement. The Ceding Company, if notified, will also notify the
Reinsurer at time of the first death.
9.2 PROOFS
The Ceding Company will promptly provide the Reinsurer with proper claim
proofs, including a copy of the proof of payment by the Ceding Company,
and a copy of the insured's death certificate. In addition, for
contestable claims, the Ceding Company will send to the Reinsurer a copy
of all papers in connection with the claim.
9.3 AMOUNT AND PAYMENT OF REINSURANCE BENEFITS
As soon as the Reinsurer receives proper claim notice and proof of the
claim, the Reinsurer will promptly pay the reinsurance benefits due the
Ceding Company. The Ceding Company's contractual liability for policies
reinsured under this Agreement is binding on the Reinsurer, provided that
generally accepted industry practices are followed in the adjudication of
the claim. When a death occurs within the contestable period and
reinsurance was ceded facultatively, then all papers connected with the
claim furnished to the Ceding Company by the Beneficiary/Owner will be
submitted to the Reinsurer for recommendation before the Ceding Company
admits liability or makes any settlement with its claimant. The Reinsurer
will review all the claim papers and make a recommendation within 5
working days after the receipt of all necessary papers. However, such
consultation will not impair the Ceding Company's freedom to determine
the proper action on the claim and the settlement made by the Ceding
Company will still be unconditionally binding on the Reinsurer.
The total reinsurance recoverable from all companies will not exceed the
Ceding Company's total contractual liability on the policy, less the
amount retained. The maximum reinsurance death benefit payable to the
Ceding Company under this Agreement is the risk amount specifically
reinsured with the Reinsurer. The Reinsurer will also pay its
proportionate share of interest that the Ceding Company pays on the death
proceeds until the date of settlement.
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Death benefit payments will be made in a single sum, regardless of the
Ceding Company's settlement options.
9.4 CONTESTABLE CLAIMS
The Ceding Company will promptly notify the Reinsurer of its intention to
contest, compromise, or litigate a claim involving a reinsured policy.
The Ceding Company will also promptly and fully disclose all information
relative to the claim. If the Reinsurer accepts participation, the
Reinsurer will promptly notify the Ceding Company in writing. The Ceding
Company will then promptly advise the Reinsurer of all significant
developments in the claim investigation, including notification of any
legal proceedings against it in response to a denial of a claim.
If the Reinsurer does not accept participation, the Reinsurer will then
fulfill its obligation by paying the Ceding Company its full share of
reinsurance and will not share in any subsequent reduction or increase in
liability.
If the Reinsurer accepts participation and the Ceding Company's contest,
compromise, or litigation results in a reduction or increase in
liability, the Reinsurer will share proportionately in any such reduction
or increase.
9.5 CLAIM EXPENSES
The Reinsurer will pay its share of reasonable claim investigation and
legal expenses connected with the litigation of contractual liability
claims unless the Reinsurer has discharged its liability pursuant to
Section 9.4 above. If the Reinsurer has so discharged its liability, the
Reinsurer will not participate in any expenses incurred thereafter.
The Reinsurer will not reimburse the Ceding Company for routine claim and
administration expenses, including the Ceding Company's home office
expenses and any legal expenses other than third party expenses incurred
by the Ceding Company. Claim investigation expenses do not include
expenses incurred by the Ceding Company as a result of a dispute or
contest arising out of conflicting claims of entitlement to policy
proceeds or benefits.
9.6 MISREPRESENTATION OR SUICIDE
If the Ceding Company returns premium to the policyowner or beneficiary
as a result of misrepresentation or suicide of the insured, the Reinsurer
will refund all reinsurance premiums received on that policy without
interest to the Ceding Company in lieu of any other form of reinsurance
benefit payable under this Agreement.
9.7 MISSTATEMENT OF AGE OR SEX
In the event of a change in the amount of the Ceding Company's liability
on a reinsured policy due to a misstatement of age or sex, the
Reinsurer's liability will change
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proportionately. Reinsurance premiums will be adjusted from the inception
of the policy, and any difference will be settled without interest.
9.8 EXTRA-CONTRACTUAL DAMAGES
The Reinsurer will not participate in punitive or compensatory damages
that are awarded against the Ceding Company as a result of an act,
omission, or course of conduct committed solely by the Ceding Company,
its agents, or representatives in connection with claims covered under
this Agreement. The Reinsurer will, however, pay its share of statutory
penalties awarded against the Ceding Company in connection with claims
covered under this Agreement if the Reinsurer elected in writing, and in
advance of the actions of the Ceding Company which ultimately led to the
imposition of the Extra Contractual Obligations, to join in the contest
of the coverage in question.
The parties recognize that circumstances may arise in which equity would
require the Reinsurer, to the extent permitted by law, to share
proportionately in punitive and compensatory damages. [terms of
extra-contractual damages redacted]
For purposes of this Article, the following definitions will apply.
"Punitive Damages" are those damages awarded as a penalty, the amount of
which is neither governed nor fixed by statute.
"Compensatory Damages" are those amounts awarded to compensate for the
actual damages sustained, and are not awarded as a penalty, nor fixed in
amount by statute.
"Statutory Penalties" are those amounts awarded as a penalty, but are
fixed in amount by statute.
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ARTICLE 10
CREDIT FOR RESERVES
10.1 RESERVE METHODOLOGY AND REPORTING
The Parties intend that the Ceding Company will receive statutory reserve
credit in its state of domicile for the insurance risks ceded to the
Reinsurer. The Parties agree to make all reasonable efforts to ensure
that this is accomplished.
Deficiency reserves are not applicable to the plans reinsured under this
Agreement.
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ARTICLE 11
RETENTION LIMIT CHANGES
11.1 If the Ceding Company changes its retention limits as shown in Exhibit A
- Retention Limits of the Ceding Company, it will provide the Reinsurer
with written notice of the intended changes thirty (30) days in advance
of their effective date.
A change to the Ceding Company's retention limits will not affect the
reinsured policies in force except as specifically provided elsewhere in
this Agreement. Furthermore, unless agreed between the parties, an
increase in the Ceding Company's retention schedule will not effect an
increase in the total risk amount that it may automatically cede to the
Reinsurer.
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ARTICLE 12
RECAPTURE
12.1 Whenever the Ceding Company increases its maximum retention limits over
the maximum retention limits set forth in Exhibit A - Retention Limits of
the Ceding Company, the Ceding Company has the option to recapture
certain risk amounts. If the Ceding Company has maintained its maximum
stated retention (not a special retention limit) for the plan and the
insured's age, sex, and mortality classification, it may apply its
increased retention limits to reduce the amount of reinsurance in force
as follows:
(a) The Ceding Company must give the Reinsurer 90 days written notice
prior to its intended date of recapture.
(b) The reduction of reinsurance on affected policies will become
effective on the policy anniversary date immediately following the
notice of election to recapture; however, no reduction will be made
until a policy has been in force for at least [number] years.
(c) If any reinsured policy is recaptured, all reinsured policies
eligible for recapture under the provisions of this Article must be
recaptured up to the Ceding Company's new maximum retention limits
in a consistent manner and the Ceding Company must increase its
total amount of insurance on each reinsured life. The Ceding
Company may not revoke its election to recapture for policies
becoming eligible at future anniversaries.
If portions of the reinsured policy have been ceded to more than one
reinsurer, the Ceding Company must allocate the reduction in reinsurance
among all the reinsurers so that the relationship of the total
reinsurance among the reinsurers in any given layer does not change due
to the recapture.
The amount of reinsurance eligible for recapture is based on the net
amount at risk as of the date of recapture. For a policy issued as a
result of a fully-underwritten exchange, the policy date and the current
duration of the new policy and the recapture provisions under this
Agreement will be used.
After the effective date of recapture, the Reinsurer will not be liable
for any reinsured policies or portions of such reinsured policies
eligible for recapture that the Ceding Company has overlooked.
If the Ceding Company transfers business that is reinsured under this
Agreement to a successor ceding company, then the successor ceding
company has the option to recapture the reinsurance in accordance with
the recapture criteria outlined in this Article, but only if the
successor ceding company has or adopts a higher retention limit than that
applicable to the block of business subject to recapture.
IDSL-NY Succession Select Treaty
22
The terms and conditions for the Ceding Company to recapture reinsured
policies, as made necessary by the insolvency of the Reinsurer, are set
forth in Article 16.3 - Insolvency of the Reinsurer.
No recapture will be permitted if the Ceding Company has either obtained
or increased stop loss reinsurance coverage as justification for the
increase in retention limits.
IDSL-NY Succession Select Treaty
23
ARTICLE 13
GENERAL PROVISIONS
13.1 CURRENCY
All payments and reporting by both parties under this Agreement will be
made in United States dollars.
13.2 PREMIUM TAX
The Reinsurer will not reimburse the Ceding Company for premium taxes.
13.3 MINIMUM CESSION
There are no minimum initial cession limits under this Agreement. The
Ceding Company will retain up to an additional 10% over its maximum
retention in order to avoid trivial amounts of reinsurance.
13.4 INSPECTION OF RECORDS
The Reinsurer and the Ceding Company, or their duly authorized
representatives, will have the right to inspect original papers, records,
and documents relating to the business reinsured under this Agreement.
Such access will be provided during regular business hours at the office
of the inspected party.
13.5 INTEREST RATE
If, under the terms of this Agreement, interest is accrued on amounts due
either party, such interest will be calculated using the 90 Day Federal
Government Treasury Xxxx rate as reported in the Wall Street Journal in
the month following the end of the billing period plus 50 basis points.
The method of calculation will be simple interest "Bankers' Rule" (or 360
day year).
IDSL-NY Succession Select Treaty
24
ARTICLE 14
DAC TAX
14.1 The parties to this Agreement agree to the following provisions pursuant
to Section 1.848-2(g)(8) of the Income Tax Regulations effective December
29, 1992, under Section 848 of the Internal Revenue Code of 1986, as
amended:
(a) The term `party' refers to either the Ceding Company or the
Reinsurer, as appropriate.
(b) The terms used in this Article are defined by reference to
Regulation Section 1.848-2, effective December 29, 1992.
(c) The party with the net positive consideration for this Agreement
for each taxable year will capitalize specified policy acquisition
expenses with respect to this Agreement without regard to the
general deductions limitation of Section 848(c)(1).
(d) Both parties agree to exchange information pertaining to the amount
of net consideration under this Agreement each year to ensure
consistency, or as otherwise required by the Internal Revenue
Service.
(e) The Ceding Company will submit a schedule to the Reinsurer by April
1 of each year with its calculation of the net consideration for
the preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an officer of the Ceding
Company stating that the Ceding Company will report such net
consideration in its tax return for the preceding calendar year.
The Reinsurer may contest such calculation by providing an
alternative calculation to the Ceding Company in writing within
thirty (30) days of the Reinsurer's receipt of the Ceding Company's
calculation. If the Reinsurer does not so notify the Ceding Company
within the required timeframe, the Reinsurer will report the net
consideration as determined by the Ceding Company in the
Reinsurer's tax return for the previous calendar year.
(f) If the Reinsurer contests the Ceding Company's calculation of the
net consideration, the parties will 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 will report the agreed upon amount in
its tax return for the previous calendar year.
(g) Both the Ceding Company and the Reinsurer represent and warrant
that they are subject to United States taxation under either
Subchapter L or Subpart F of Part III of Subchapter N of the
Internal Revenue Code of 1986, as amended.
IDSL-NY Succession Select Treaty
25
ARTICLE 15
OFFSET
15.1 Any debts or credits, in favor of or against either the Reinsurer or the
Ceding Company with respect to this Agreement or any other reinsurance
agreement between the parties, are deemed mutual debts or credits and
will be offset and only the balance will be allowed or paid.
The right of offset will not be affected or diminished because of the
insolvency of either party.
IDSL-NY Succession Select Treaty
26
ARTICLE 16
INSOLVENCY
16.1 INSOLVENCY OF A PARTY TO THIS AGREEMENT
A party to this Agreement will be deemed insolvent when it:
(a) applies for or consents to the appointment of a receiver,
rehabilitator, conservator, liquidator or statutory successor of
its properties or assets; or
(b) is adjudicated as bankrupt or insolvent; or
(c) files or consents to the filing of a petition in bankruptcy, seeks
reorganization or an arrangement with creditors or takes advantage
of any bankruptcy, dissolution, liquidation or similar law or
statute; or
(d) becomes the subject of an order to rehabilitate or an order to
liquidate as defined by the insurance code of the jurisdiction of
the party's domicile.
16.2 INSOLVENCY OF THE CEDING COMPANY
In the event of the insolvency of the Ceding Company, all reinsurance
payments will be payable directly to the liquidator, rehabilitator,
receiver, or statutory successor of the Ceding Company, without
diminution because of the insolvency, for those claims allowed against
the Ceding Company by any court of competent jurisdiction or by the
liquidator, rehabilitator, receiver or statutory successor having
authority to allow such claims.
In the event of insolvency of the Ceding Company, the liquidator,
rehabilitator, receiver, or statutory successor will give written notice
to the Reinsurer of all pending claims against the Ceding Company on any
policies reinsured within a reasonable time after such claim is filed in
the insolvency proceeding. While a claim is pending, the Reinsurer may
investigate and interpose, at its own expense, in the proceeding where
the claim is adjudicated, any defense or defenses that it may deem
available to the Ceding Company or its liquidator, rehabilitator,
receiver, or statutory successor.
The expense incurred by the Reinsurer will 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 that
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 elects to
interpose a defense or defenses to any such claim, the expense will be
apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by the Ceding Company.
The Reinsurer will be liable only for its proportionate share of the
amounts reinsured and will not be or become liable for any amounts or
reserves to be held by the Ceding Company on policies reinsured under
this Agreement.
IDSL-NY Succession Select Treaty
27
16.3 INSOLVENCY OF THE REINSURER
In the event of the Reinsurer's insolvency and upon giving written notice
to the Reinsurer, the Ceding Company may, at its option, immediately
terminate this Agreement with respect to the reinsurance of new business
and may recapture all of the business reinsured by the Reinsurer under
this Agreement.
Any Recapture Fee applicable will be mutually agreed upon by the Company
and the Reinsurer, its rehabilitator, conservator, liquidator or
statutory successor.
IDSL-NY Succession Select Treaty
28
ARTICLE 17
ERRORS AND OMISSIONS
17.1 If through unintentional error, oversight, omission, or misunderstanding
(collectively referred to as "errors"), the Reinsurer or the Ceding
Company fails to comply with the terms of this Agreement and if, upon
discovery of the error by either party, the other is promptly notified,
each thereupon will be restored to the position it would have occupied if
the error had not occurred, including interest. It is understood,
however, that interest will not be included when routine underpayments or
overpayments of reinsurance premiums are discovered and promptly
corrected according to the terms of this Agreement.
If it is not possible to restore each party to the position it would have
occupied but for the error, the parties will endeavor in good faith to
promptly resolve the situation in a manner that is fair and reasonable,
and most closely approximates the intent of the parties as evidenced by
this Agreement.
However, the Reinsurer will not provide reinsurance for policies that do
not satisfy the parameters of this Agreement, nor will the Reinsurer be
responsible for negligent or deliberate acts or for repetitive errors in
administration by the Ceding Company. If either party discovers that the
Ceding Company has failed to cede reinsurance as provided in this
Agreement, or failed to comply with its reporting requirements, the
Reinsurer may require the Ceding Company to audit its records for similar
errors and to take the actions necessary to rectify the situation and
avoid similar errors in the future.
IDSL-NY Succession Select Treaty
29
ARTICLE 18
DISPUTE RESOLUTION
18.1 In the event of a dispute, the parties agree to the following process of
dispute resolution. Within fifteen (15) days after the Reinsurer or the
Ceding Company has first given the other party written notification of a
specific dispute, each party will appoint a designated company officer to
attempt to resolve the dispute. The officers will meet at a mutually
agreeable location as soon as possible and as often as necessary, in
order to gather and furnish the other with all appropriate and relevant
information concerning the dispute. The officers will discuss the problem
and will negotiate in good faith without the necessity of any formal
arbitration proceedings. During the negotiation process, all reasonable
requests made by one officer to the other for information will be
honored. The designated officers will decide the specific format for such
discussions.
If the officers cannot resolve the dispute within thirty (30) days of
their first meeting, the dispute will be submitted to formal arbitration,
unless the parties agree in writing to extend the negotiation period for
an additional thirty (30) days.
IDSL-NY Succession Select Treaty
30
ARTICLE 19
ARBITRATION
19.1 It is the intention of the Reinsurer and the Ceding Company that the
customs and practices of the life insurance and reinsurance industry will
be given full effect in the operation and interpretation of this
Agreement. The parties agree to act in all matters with the highest good
faith. However, if the Reinsurer and the Ceding Company cannot mutually
resolve a dispute that arises out of or relates to this Agreement, and
the dispute cannot be resolved through the dispute resolution process
described in Article 18 - Dispute Resolution, the dispute will be decided
through arbitration as a precedent to any right of action hereunder.
To initiate arbitration, either the Ceding Company or the Reinsurer will
notify the other party in writing of its desire to arbitrate, stating the
nature of its dispute and the remedy sought. The party to which the
notice is sent will respond to the notification in writing within fifteen
(15) days of its receipt.
There will be three arbitrators who will be current or former officers of
life insurance or life reinsurance companies other than the parties to
this Agreement, their affiliates or subsidiaries. Each of the parties
will appoint one of the arbitrators and these two arbitrators will select
the third. If either party refuses or neglects to appoint an arbitrator
within sixty (60) days of the initiation of the arbitration, the other
party may appoint the second arbitrator. If the two arbitrators do not
agree on a third arbitrator within thirty (30) days of the appointment of
the second arbitrator, then the appointment of the third arbitrator will
be left to the American Arbitration Association.
Once chosen, the arbitrators are empowered to select the site of the
arbitration and decide all substantive and procedural issues by a
majority of votes. As soon as possible, the arbitrators will establish
arbitration procedures as warranted by the facts and issues of the
particular case. The arbitrators will have the power to determine all
procedural rules of the arbitration including but not limited to
inspection of documents, examination of witnesses and any other matter
relating to the conduct of the arbitration. The arbitrators may consider
any relevant evidence; they will weigh the evidence and consider any
objections. Each party may examine any witnesses who testify at the
arbitration hearing.
The arbitrators will base their decision on the terms and conditions of
this Agreement and the customs and practices of the life insurance and
reinsurance industries rather than on strict interpretation of the law.
The decision of the arbitrators will be made by majority rule and will be
submitted in writing. The decision will be final and binding on both
parties and there will be no appeal from the decision. Either party to
the arbitration may petition any court having jurisdiction over the
parties to reduce the decision to judgment.
IDSL-NY Succession Select Treaty
31
Unless the arbitrators decide otherwise, each party will bear the expense
of its own arbitration activities, including its appointed arbitrator and
any outside attorney and witness fees. The parties will jointly and
equally bear the expense of the third arbitrator and other costs of the
arbitration.
IDSL-NY Succession Select Treaty
32
ARTICLE 20
CONFIDENTIALITY
20.1 The Ceding Company and the Reinsurer agree that Customer and Proprietary
Information will be treated as confidential. Customer Information
includes, but is not limited to, medical, financial, and other personal
information about proposed, current, and former policyowners, insureds,
applicants, and beneficiaries of policies issued by the Ceding Company.
Proprietary Information includes, but is not limited to, business plans
and trade secrets, mortality and lapse studies, underwriting manuals and
guidelines, applications and contract forms, and the specific terms and
conditions of this Agreement.
Customer and Proprietary Information will not include information that:
(a) is or becomes available to the general public through no fault of
the party receiving the Customer or Proprietary Information (the
"Recipient");
(b) is independently developed by the Recipient;
(c) is acquired by the Recipient from a third party not covered by a
confidentiality agreement; or
(d) is disclosed under a court order, law or regulation.
The parties will not disclose such information to any other parties
unless agreed to in writing, except as necessary for retrocession
purposes, as requested by external auditors, as required by court order,
or as required or allowed by law or regulation.
The Ceding Company acknowledges that the Reinsurer can aggregate data
with other companies reinsured with the Reinsurer as long as the data
cannot be identified as belonging to the Ceding Company.
IDSL-NY Succession Select Treaty
33
ARTICLE 21
SEVERABILITY
21.1 If any provision of this Agreement is determined to be invalid or
unenforceable, such determination will not impair or affect the validity
or the enforceability of the remaining provisions of this Agreement.
IDSL-NY Succession Select Treaty
34
ARTICLE 22
DURATION OF AGREEMENT
22.1 This Agreement is unlimited as to its duration. The Ceding Company or the
Reinsurer may terminate this Agreement with respect to the reinsurance of
new business by giving 90 days written notice of termination to the other
party, sent by certified mail. The first day of the notice period is
deemed to be the date the document is postmarked.
During the notification period, the Ceding Company will continue to cede
and the Reinsurer will continue to accept policies covered under the
terms of this Agreement. Reinsurance coverage on all reinsured policies
will remain in force until the termination or expiry of the policies or
until the contractual termination of reinsurance under the terms of this
Agreement.
IDSL-NY Succession Select Treaty
35
ARTICLE 23
EXECUTION
23.1 This Agreement is effective as of August 18, 2003, and applies to all
eligible policies with issue dates on or after such date, and to eligible
policies applied for on or after such date that were backdated for up to
six (6) months. This Agreement has been made in duplicate and is hereby
executed by both parties.
IDS Life Insurance Company of New York [name of reinsurance company]
By: /s/ Xxxxxxx X. Xxxxxxxx By: [signature]
------------------------------------------ ---------------------------------------------
(signature) (signature)
Xxxxxxx X. Xxxxxxxx [name]
------------------------------------------ ---------------------------------------------
(print or type name) (print or type name)
Title: VP - Insurance Title: [title]
------------------------------------------ ---------------------------------------------
Date: 12/23/03 Date: 12/29/03
------------------------------------------ ---------------------------------------------
Location: Minneapolis, MN Location: [city and state of reinsurance company]
------------------------------------------ -------------------------------------------
Attest: /s/ Xxxxx X. Xxxxxx Attest: [signature]
------------------------------------------ ---------------------------------------------
(signature) (signature)
Title: Reinsurance Officer Title: [title]
------------------------------------------ ---------------------------------------------
IDSL-NY Succession Select Treaty
A-1
EXHIBIT A
RETENTION LIMITS OF THE CEDING COMPANY
A.1 LIFE INSURANCE
----------------------------------------------------
Issue Age* Retention Limit
(All Ratings)
----------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------
*Issue Age of the Oldest of the two joint lives will be used in the
determination of the Ceding Company's retention.
The Ceding Company will maintain its full available retention on the
policies issued automatically under this Agreement, to the maximums shown
in the table above. Prior retained amounts on all inforce single life and
joint life coverages issued by the Ceding Company other than on the VUL
III plan will be added together to determine the Ceding Company's
available retention for new Succession Select policies. The Ceding
Company's retention will be filled in the following order: existing
inforce policies other than VUL III, Base Succession Select policy,
Survivor Term Rider, Four-Year Term Rider.
It is understood that the Ceding Company may at its option retain less
than the full available retention limit on facultative policies.
IDSL-NY Succession Select Treaty
B-1
EXHIBIT B
PLANS COVERED AND BINDING LIMITS
The business reinsured under this Agreement is defined as follows:
B.1 PLANS, RIDERS AND BENEFITS
Policies issued on plans with effective dates within the applicable
period shown below may qualify for reinsurance under the terms of this
Agreement. It is understood that policies may be backdated by up to six
months from the date shown below.
COMMENCEMENT TERMINATION
PLAN IDENTIFICATION DATE DATE DATE
-------------------------------------------------------------------------
Succession Select (Variable August 18, 2003
JLLS UL) Form 39090
Benefit & Riders:
-Survivor Term Rider August 18, 2003
-Policy Split Option Rider August 18, 2003
-Four-Year Term Rider August 18, 2003
B.2 BASIS
The Ceding Company will reinsure 100% of the excess over its retention
stated in Exhibit A. Only mortality risk will be reinsured. Cessions may
be automatic, capacity facultative or non-capacity facultative.
IDSL-NY Succession Select Treaty
B-2
B.3 AUTOMATIC BINDING LIMITS
Life
----
-------------------------------------------------------
Oldest Issue Maximum Pool Autobind
Age
-------------------------------------------------------
[ages] [dollar amount]
-------------------------------------------------------
[ages] [dollar amount]
-------------------------------------------------------
[ages] [dollar amount]
-------------------------------------------------------
[ages] [dollar amount]
-------------------------------------------------------
The Ceding Company may not cede reinsurance automatically if the sum of
all amounts in force and applied for on the joint lives with the Ceding
Company, excluding amounts being internally replaced, exceed the above
Automatic Binding Limits.
The above automatic binding limits are also subject to the Ceding
Company's age and insurability procedures for the Succession Select
product, as outlined in subsection B.7 of this Exhibit.
B.4 JUMBO LIMITS
The Ceding Company will not cede any risk automatically if, according to
information available to the Ceding Company, the total amount in force
and applied for on the joint lives with all insurance companies,
including any amount to be replaced, exceeds the applicable amounts shown
below.
Life
----
----------------------------------------------------
Oldest Issue Jumbo Limit
Age
----------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------
[ages] [dollar amount]
----------------------------------------------------
B.5 CONDITIONAL RECEIPT OR TEMPORARY INSURANCE AGREEMENT
The Reinsurer's liability will not exceed its proportionate share of
a) [dollar amount] or
b) [dollar amount] collection amount if the Ceding Company is ordered to
pay such higher amount by a court of competent jurisdiction.
IDSL-NY Succession Select Treaty
B-3
B.6 CESSION LIMITS
Minimum Initial Cession: None. The Ceding Company will retain up to an
------------------------
additional 10% over its maximum retention in order to avoid trivial
amounts of reinsurance.
B.7 AUTOMATIC CESSIONS
a) Issue age and rating restrictions are shown in the following table.
The youngest insured must be between the ages of 15 - 85. The
minimum life expectancy for each of the two lives is one year.
-------------------------------------------------------------------
MAXIMUM TABLE RATING AVAILABLE TO
THE YOUNGEST APPLICANT IF
THE OLDEST APPLICANT'S CLASSIFICATION IS:
-------------------------------------------------------------------
YOUNGEST APPLICANT'S
AGE GROUP* STANDARD SUBSTANDARD UNINSURABLE
-------------------------------------------------------------------
Ages 15 - 45
-------------------------------------------------------------------
Ages 46 - 55
-------------------------------------------------------------------
Ages 56 - 75
-------------------------------------------------------------------
Ages 76 - 80
-------------------------------------------------------------------
Ages 81 - 85
-------------------------------------------------------------------
*If both applicants are in the same age group, use the lower rated
applicant as the youngest applicant. For example, if both
applicants are ages 81 - 85, the Ceding Company can issue up to D/D
or Standard/Uninsurable.
b) Definition of substandard (as opposed to uninsurable):
-------------------------------------------------------------------
Ages 20 - 75 Through Table P
-------------------------------------------------------------------
Ages 76 - 80 Through Table H
-------------------------------------------------------------------
Ages 81 - 85 Through Table D
-------------------------------------------------------------------
Ages 86 - 90 Always considered uninsurable even if standard
-------------------------------------------------------------------
c) Definition of (acceptable) uninsurable:
For the purposes of this Agreement, a risk will be classed as
uninsurable if it is assessed at a table rating higher than the
substandard limits above and if the life expectancy is at least one
year.
d) The Reinsurer's share of the total automatic pool will be
[percentage].
IDSL-NY Succession Select Treaty
B-4
B.8 INTERNATIONAL CLIENTS
The Ceding Company may cede reinsurance automatically on international
clients who meet the financial and medical criteria listed in the Ceding
Company's "Guidelines for Underwriting International Clients" and are
standard or preferred based on [name of reinsurance company]'s Foreign
Risk Guidelines for individual countries.
If an international client meets the Ceding Company's financial and
medical criteria, but requires a flat extra based on [name of reinsurance
company]'s Foreign Risk Guidelines, the Ceding Company may cede
reinsurance automatically only after consultation with an [name of
reinsurance company] International Team underwriter. The consultation
must be documented in the underwriting file.
If an international client does not meet the Ceding Company's financial
or medical criteria or requires individual consideration under [name of
reinsurance company]'s Foreign Risk Guidelines, reinsurance may not be
ceded automatically.
IDSL-NY Succession Select Treaty
C-1
EXHIBIT C
FORMS, MANUALS, AND ISSUE RULES
C.1 The Ceding Company affirms that its retention schedule, underwriting
guidelines, issue rules, premium rates and policy forms applicable to the
Reinsured Policies and in use as of the effective date, have been
supplied to the Reinsurer.
The Ceding Company will promptly notify the Reinsurer of any proposed
material changes in its underwriting guidelines. This Agreement will not
extend to policies issued pursuant to such changes unless the Reinsurer
has consented in writing to accept policies subject to such changes.
It is the Ceding Company's responsibility to ensure that its practice and
applicable forms are in compliance with current Medical Information
Bureau (MIB) guidelines.
IDSL-NY Succession Select Treaty
D-1
EXHIBIT D
REINSURANCE PREMIUMS
D.1 LIFE
a) Plans covered under this Agreement will be reinsured on a YRT
basis. YRT reinsurance premiums for the Base Plan, Survivor Term
Rider, and Four-Year Term Rider will be frasierized joint premiums
based on the individual ALB Annual Cost of Insurance (COI) rates,
attached to this Exhibit D, less allowances. After allowances are
applied, YRT reinsurance premiums are subject to a minimum rate of
[dollar amount] per [dollar amount] of reinsured risk amount in
years 2 +.
SUCCESSION SELECT REINSURANCE ALLOWANCES FOR BASE PLAN
AND SURVIVOR TERM RIDER
(YEAR 1 ALLOWANCE IS ALWAYS 100%)
Year 2 +
---------------------------------------------------------
2 Preferred [percentage]
---------------------------------------------------------
Preferred, Standard Non-Tobacco [percentage]
---------------------------------------------------------
Preferred, Tobacco [percentage]
---------------------------------------------------------
2 Standard Non-Tobacco [percentage]
---------------------------------------------------------
Standard Non-Tobacco, Tobacco [percentage]
---------------------------------------------------------
2 Tobacco [percentage]
---------------------------------------------------------
SUCCESSION REINSURANCE ALLOWANCES FOR FOUR-YEAR TERM RIDER
(YEAR 1 ALLOWANCE IS ALWAYS 100%)
Year 2 +
---------------------------------------------------------
2 Preferred [percentage]
---------------------------------------------------------
Preferred, Standard Non-Tobacco [percentage]
---------------------------------------------------------
Preferred, Tobacco [percentage]
---------------------------------------------------------
2 Standard Non-Tobacco [percentage]
---------------------------------------------------------
Standard Non-Tobacco, Tobacco [percentage]
---------------------------------------------------------
2 Tobacco [percentage]
---------------------------------------------------------
D.2 AGE BASIS
Age Last Birthday
IDSL-NY Succession Select Treaty
D-2
D.3 POLICY FEES
The Reinsurer will not participate in any policy fees.
D.4 SUBSTANDARD RATINGS
Where a substandard table rating is applied, or on an uninsurable life,
the underlying COI rates will be multiplied by the amount shown in the
following table, and then reinsurance allowances applied after
frasierizing.
-------------------------------------------------------------------------
RATING MULTIPLIER RATING MULTIPLIER
-------------------------------------------------------------------------
A [percentage] N [percentage]
-------------------------------------------------------------------------
B [percentage] O [percentage]
-------------------------------------------------------------------------
C [percentage] P [percentage]
-------------------------------------------------------------------------
D [percentage] Q [percentage]
-------------------------------------------------------------------------
E [percentage] R [percentage]
-------------------------------------------------------------------------
F [percentage] T [percentage]
-------------------------------------------------------------------------
G [percentage] U [percentage]
-------------------------------------------------------------------------
H [percentage] V [percentage]
-------------------------------------------------------------------------
I [percentage] W [percentage]
-------------------------------------------------------------------------
J [percentage] X [percentage]
-------------------------------------------------------------------------
K [percentage] Y [percentage]
-------------------------------------------------------------------------
L [percentage] Z [percentage]
-------------------------------------------------------------------------
M [percentage]
-------------------------------------------------------------------------
Premium rates for facultative cessions will be the same as for automatic
cessions.
D.5 FLAT EXTRAS
Temporary and permanent flat extras are not used directly for joint
coverages; rather, they are converted using an internal table to a
substandard table rating.
D.6 RIDERS AND BENEFITS
Premium for the Policy Split Option Rider is [dollar amount] per [dollar
amount] of the sum of the ceded specified amount of the Base Plan and
Survivor Term Rider. Allowances for the Policy Split Option Rider are
100% in the first year and 0% in subsequent years.
IDSL-NY Succession Select Treaty
D-3
SUCCESSION SELECT CURRENT INDIVIDUAL COI--FOR FRASIERIZED JOINT COI CALCULATION
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
IDSL-NY Succession Select Treaty
D-4
SUCCESSION SELECT CURRENT INDIVIDUAL COI--FOR FRASIERIZED JOINT COI CALCULATION
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
IDSL-NY Succession Select Treaty
D-5
SUCCESSION SELECT CURRENT INDIVIDUAL COI--FOR FRASIERIZED JOINT COI CALCULATION
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
--- --------- --------- ------ --------- --------- ------
86
87
88
89
90
91
92
93
94
95
96
97
98
99
IDSL-NY Succession Select Treaty
E-1
EXHIBIT E
SELF-ADMINISTERED REPORTING
E.1 The Ceding Company will self-administer all reinsurance reporting.
The Ceding Company will send the Reinsurer the reports listed below
at the frequency specified.
MONTHLY TRANSACTION REPORTS
1. New Business
2. First Year - Other than New Business
3. Renewal Year
4. Changes and Terminations
5. Accounting Information
QUARTERLY PERIODIC REPORTS
6. Statutory Reserve Information
7. Policy Exhibit Information
8. Inforce
A brief description of the data requirements follows below.
TRANSACTION REPORTS
The Ceding Company will report policy data using the Quasar (R2) system.
1. NEW BUSINESS
------------
This report will include new issues only, the first time the policy
is reported to the Reinsurer. Automatic and Facultative business
will be identified separately.
2. FIRST YEAR - OTHER THAN NEW BUSINESS
------------------------------------
This report will include policies previously reported on the new
business detail and still in their first duration, or policies
involved in first year premium adjustments.
3. RENEWAL YEAR
------------
All policies with renewal dates within the Accounting Period will
be listed.
4. CHANGES AND TERMINATIONS
------------------------
Policies affected by a change during the current reporting period
will be included in this report. Type of change or termination
activity must be clearly identified for each policy.
The Ceding Company will identify the following transactions either
by separate listing or unique transaction codes: Terminations,
Reinstatements, Changes,
IDSL-NY Succession Select Treaty
E-2
Conversions, and Replacements. For Conversions and Replacements,
the Ceding Company will report the original policy date, as well as
the current policy date.
5. ACCOUNTING INFORMATION
----------------------
Premiums and allowances will be summarized for Life coverages,
Benefits, and Riders by the following categories: Automatic and
Facultative, First Year and Renewals.
PERIODIC REPORTS
6. STATUTORY RESERVE INFORMATION
-----------------------------
Statutory reserves will be summarized for Life coverages, Benefits
and Riders. The Ceding Company will specify the reserve basis used.
7. POLICY EXHIBIT INFORMATION
--------------------------
This is a summary of transactions during the current period and on
a year-to-date basis, reporting the number of policies and
reinsured amount.
8. INFORCE
-------
This is a detailed report of each policy in force.
IDSL-NY Succession Select Treaty
F-1
EXHIBIT F
APPLICATION FOR FACULTATIVE REINSURANCE
SUBMITTED TO: _______________________ _______________________ _______________________ ______________________
(Reinsurers)
FROM: ____________________________________________________ DATE: _____________________________________________
(Ceding Company)
POLICY NUMBER: _________________________ INCREASING AMOUNT: YES _____________ NO _____________
PLAN NAME: _________________________ IF INCREASING, ULTIMATE AMOUNT: ______________________________
BIRTH DATE TOBACCO PREF
LAST NAME FIRST MIDDLE M/D/Y SEX USE CLASS
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
JOINT INSURED
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
LIFE SPECIFY OTHERS, E.G. SECOND LIFE, WAIVER, ADB, ETC.
------------------------------------------------------------------------------------------------------------------
PREVIOUS INFORCE WITH CO.:
------------------------------------------------------------------------------------------------------------------
OF WHICH WE RETAIN:
------------------------------------------------------------------------------------------------------------------
NOW APPLYING FOR:
------------------------------------------------------------------------------------------------------------------
OF WHICH WE WILL RETAIN:
------------------------------------------------------------------------------------------------------------------
REINS. AMOUNT APPLIED FOR:
------------------------------------------------------------------------------------------------------------------
IN EXCESS OF JUMBO: YES _________ NO _________ IF REPLACEMENT: INTERNAL _________ EXTERNAL _________
OUR MORTALITY ASSESSMENT: _______________________ SPECIAL RISK FEATURES: __________ AVIATION
(TABLE &/OR FLAT EXTRA) __________ FOREIGN/TRAVEL
__________ OCCUPATION/AVOCATION
------------------------------------------------------- ---------------------------------------------------------
ENCLOSED REQUIREMENTS REQUIREMENTS TO FOLLOW
------------------------------------------------------- ---------------------------------------------------------
------------------------------------------------------- ---------------------------------------------------------
------------------------------------------------------- ---------------------------------------------------------
------------------------------------------------------- ---------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
REMARKS
------------------------------------------------------------------------------------------------------------------
UNDERWRITING CONTACT: _____________________________________ TEL #: _____________________________________
E-MAIL: _____________________________________
IDSL-NY Succession Select Treaty
[logo]
UNITED STATES OF AMERICA
[name]
[title]
November 20, 2003
[name]
Appointed Actuary
IDS Life Insurance Company of New York
50814 AXP Financial Center
Xxxxxxxxxxx, XX 00000
Re: Compliance with Applicable Law and Regulations
Dear Xx. Xxxxxxx:
As you are aware, there are a number of laws and regulations applicable to the
business you issue and we reinsure. For example, the U.S. Treasury Department's
Office of Foreign Assets Control ("OFAC") administers and enforces economic
sanctions against countries, entities and groups of individuals, such as
terrorists and narcotics traffickers that may threaten the security of our
country. These sanctions allow for the blocking of assets and install trade
restrictions to accomplish foreign policy and national security goals.
Additionally, U.S. persons, including institutions, are restricted from
transacting business and distributing assets to individuals and companies
reflected on a list as published periodically by OFAC. Collectively, such
individuals and companies are called "Specially Designated Nationals and Blocked
Persons" or "SDNs." Any property in which an SDN has an interest (such as a life
insurance policy) shall be blocked.
Our reinsurance agreements are affected as OFAC takes the position that (a)
reinsurance of a risk that cannot be insured under OFAC regulations is also a
violation of OFAC regulations, since it represents "indirect" participation in a
transaction that is prohibited; and (b) reinsurance treaties should exclude such
a risk. In addition, a reinsurer is directly prohibited from participating in a
transaction that would, on its own, violate any OFAC regulations.
[address, city and state of reinsurance company]
While we have installed processes designed to comply with U.S. laws and
regulations, we rely on your company to comply with OFAC sanctions laws and
serve as the first line defense against OFAC violations. In view of OFAC's
position, we believe we are not permitted to do business with any companies on
the SDN list or with ties to prohibited countries, nor are we permitted to
reinsure a risk on the SDN list or with ties to a prohibited country or provide
payment of a death benefit that would provide a monetary benefit to a SDN or a
prohibited country, including its citizens.
We also believe that ceding companies insuring non-U.S. lives present a slightly
higher risk since the non-U.S. lives may be more prone to appear on the SDN list
or be associated with a prohibited country. If our reinsurance agreements with
you include coverage for non-U.S. lives, we have the following expectations to
assist with our compliance with U.S. law:
o A policy shall not be reinsured if its issuance, maintenance or
performance would be in violation of any sanctions laws
administered by OFAC, as such laws may be amended from time to
time.
o The ceding company shall have reasonable procedures in place such
that it shall not knowingly accept money or issue insurance for
illegal tax avoidance.
o A reinsured death claim shall not be payable if such a payment
would cause us to be in violation of any laws, regulations,
judicial and administrative orders including but not limited to
OFAC regulations.
We suggest you file a copy of this letter with each of your reinsurance
agreements with us. Future agreements will include specific language to assure
we are making best efforts to be in compliance with applicable laws and
regulations. If you have questions with respect to OFAC or other related
matters, please do not hesitate to contact [name] at [phone number]
Sincerely,
[signature]
[name]
[title]
[address, city and state of reinsurance company]
