AUTOMATIC AND FACULTATIVE
YEARLY RENEWABLE TERM REINSURANCE AGREEMENT
EFFECTIVE September 30, 2002
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(hereinafter referred to as "THE COMPANY")
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
And
MUNICH AMERICAN REASSURANCE COMPANY
(hereinafter referred to as "THE REINSURER")
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000-0000
Table of Contents
1. PARTIES TO THE AGREEMENT............................................................................... 5
2. EFFECTIVE DATE OF THE AGREEMENT........................................................................ 5
3. SCOPE OF THE AGREEMENT................................................................................. 5
4. DURATION OF THE AGREEMENT.............................................................................. 5
5. BASIS OF REINSURANCE................................................................................... 6
6. AUTOMATIC REINSURANCE TERMS............................................................................ 6
a. CONVENTIONAL UNDERWRITING........................................................................ 6
b. RESIDENCE AND TRAVEL............................................................................. 6
c. OCCUPATION....................................................................................... 6
d. AUTOMATIC ACCEPTANCE LIMIT....................................................................... 6
e. JUMBO LIMIT...................................................................................... 6
f. STACKING LIMIT................................................................................... 6
g. LOCATION LIMIT................................................................................... 6
h. PROJECTED NET AMOUNT AT RISK LIMIT............................................................... 6
i. MINIMUM NUMBER OF LIVES.......................................................................... 7
j. MAXIMUM ISSUE AGES............................................................................... 7
k. FOREIGN RESIDENTS................................................................................ 7
l. MINIMUM CESSION.................................................................................. 7
m. FACULTATIVE QUOTES............................................................................... 7
7. PORTIONS REINSURED AND RETAINED UNDER AUTOMATIC REINSURANCE...................................... 7
a. AUTOMATIC PORTION REINSURED...................................................................... 7
b. AUTOMATIC PORTION RETAINED....................................................................... 7
8. AUTOMATIC REINSURANCE NOTICE PROCEDURE........................................................... 7
9. FACULTATIVE REINSURANCE.......................................................................... 7
10. COMMENCEMENT OF REINSURANCE COVERAGE............................................................. 8
a. AUTOMATIC REINSURANCE............................................................................ 8
b. FACULTATIVE REINSURANCE.......................................................................... 8
c. PRE-ISSUE COVERAGE............................................................................... 9
11. REINSURANCE PREMIUM RATES............................................................................ 9
a. LIFE REINSURANCE................................................................................. 9
b. RATES NOT GUARANTEED............................................................................. 9
12. PAYMENT OF REINSURANCE PREMIUMS...................................................................... 10
a. PREMIUM DUE...................................................................................... 10
b. FAILURE TO PAY PREMIUMS.......................................................................... 10
c. PREMIUM ADJUSTMENT............................................................................... 10
13. PREMIUM TAX REIMBURSEMENT............................................................................ 10
14. DAC TAX AGREEMENT.................................................................................... 10
15. REPORTS.............................................................................................. 11
16. RESERVES FOR REINSURANCE.............................................................................. 11
17. CLAIMS........................................................................................... 11
a. NOTICE........................................................................................... 11
b. AMOUNT AND PAYMENT OF BENEFITS................................................................... 12
c. CLAIM SETTLEMENTS................................................................................ 12
d. CLAIM EXPENSES................................................................................... 12
e. EXTRACONTRACTUAL DAMAGES......................................................................... 13
18. MISREPRESENTATION, SUICIDE, AND MISSTATEMENT..................................................... 13
19. POLICY CHANGES....................................................................................... 13
a. NOTICE........................................................................................... 13
b. INCREASES........................................................................................ 13
c. REDUCTION OR TERMINATION......................................................................... 14
d. PLAN CHANGES..................................................................................... 14
e. OPTION TO EXCHANGE INSUREDS...................................................................... 14
f. ADD-ON LIVES..................................................................................... 14
20. RECAPTURE........................................................................................ 14
21. REINSTATEMENTS................................................................................... 15
a. AUTOMATIC REINSTATEMENT.......................................................................... 15
b. FACULTATIVE REINSTATEMENT........................................................................ 15
c. PREMIUM ADJUSTMENT............................................................................... 15
22. ERRORS AND OMISSIONS............................................................................. 16
23. INSOLVENCY............................................................................................ 16
24. ARBITRATION...................................................................................... 17
a. GENERAL.......................................................................................... 17
b. NOTICE........................................................................................... 17
c. PROCEDURE........................................................................................ 17
d. COSTS............................................................................................ 17
25. GOOD FAITH....................................................................................... 17
26. REPRESENTATIONS AND WARRANTIES................................................................... 17
27. CONFIDENTIALITY.................................................................................. 18
28. MEDICAL INFORMATION BUREAU....................................................................... 19
29. GOVERNING LAW.................................................................................... 19
30. ASSIGNMENT............................................................................................ 19
31. ACCESS TO RECORDS..................................................................................... 19
32. SEVERABILITY.......................................................................................... 20
33. OFFSET.............................................................................................. 20
ATTACHMENTS:
SCHEDULE A - REINSURANCE COVERAGE
SCHEDULE B - AUTOMATIC AND FACULTATIVE REINSURANCE PREMIUMS
SCHEDULE C - REPORTING INFORMATION - INFORMATION ON RISKS REINSURED
SCHEDULE D - MONTHLY BILLING AND ACCOUNTING SUMMARY
SCHEDULE E - FACULTATIVE REINSURANCE APPLICATION
SCHEDULE F - FACULTATIVE REINSURANCE NOTIFICATION
SCHEDULE G - CARRIER FACT SHEET
AUTOMATIC AND FACULTATIVE YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
1. PARTIES TO THE AGREEMENT
This Agreement is solely between THE REINSURER and THE COMPANY, a life insurance company domiciled in New Jersey. There is
no third party beneficiary to this Agreement. Reinsurance under this Agreement will not create any right or legal
relationship between THE REINSURER and any other person, for example, any insured, policyowner, agent, beneficiary, or
assignee. THE COMPANY agrees that it will not make THE REINSURER a party to any litigation between any such third party and
THE COMPANY. THE COMPANY will not use or disclose THE REINSURER's name with regard to THE COMPANY's agreements or
transactions with these third parties unless THE REINSURER gives prior written approval for the use or disclosure of its
name or unless THE COMPANY is compelled by law to do so.
The terms of this Agreement are binding upon the parties, their representatives, successors, and assigns. The obligations
of the parties to this Agreement shall terminate upon the earlier of the following: (1) the date of termination of this
Agreement; (2) with respect to a reinsured policy, the date the reinsured policy lapses, terminates, or is no longer in
force; or (3) the date of recapture pursuant to Section 20 hereof. This Agreement shall not be bifurcated, partially
assigned, or partially assumed without the consent of the parties.
2. EFFECTIVE DATE OF THE AGREEMENT
This Agreement will incept on the date hereof, to be effective as of 12:01 A.M., September 30, 2002, and will cover policies
effective on and after that date. In addition, THE REINSURER agrees to accept reinsurance coverage for policies backdated
to save age up to six months prior to the effective date of this Agreement. The reinsurance coverage for any backdated
policies will be effective as of the policy effective date.
3. SCOPE OF THE AGREEMENT
The text of this Agreement and all Exhibits, Schedules and Amendments are considered to be the entire agreement between the
parties. There are no other understandings or agreements between the parties regarding the policies reinsured other than as
expressed in this Agreement. The parties may make changes or additions to this Agreement, but they will not be considered
to be in effect unless they are made by means of a written amendment that has been signed and dated by both parties.
4. DURATION OF THE AGREEMENT
The duration of this Agreement will be unlimited. However, either party may terminate the Agreement for new business at any
time by giving the other a 90-day prior written notice. THE REINSURER will continue to accept new reinsurance during the
90-day period.
Existing reinsurance will not be affected by the termination of this Agreement with respect to new reinsurance. Existing
reinsurance will remain in force until the termination or expiry of the underlying policies on which the reinsurance is
based and THE REINSURER fulfills all of its obligations under this Agreement, provided that THE COMPANY continues to pay
reinsurance premiums as described in Section 12. However, existing reinsurance may be terminated in accordance with the
recapture provision described in Section 20.
5. BASIS OF REINSURANCE
Reinsurance under this Agreement will be on the Yearly Renewable Term basis on the portion of each policy that is reinsured
as described in Schedule A.
6. AUTOMATIC REINSURANCE TERMS
THE REINSURER agrees to automatically accept contractual risks on the life insurance policies shown in Schedule A, subject
to the following requirements:
a. CONVENTIONAL UNDERWRITING. Automatic reinsurance applies only to insurance applications underwritten by THE COMPANY
according to THE COMPANY's conventional underwriting and issue practices. For fully underwritten policies, the
underwriting requirements will be based on the ultimate face amount. Upon request, THE COMPANY shall provide THE
REINSURER with a copy of THE COMPANY's current underwriting and issue practices and guidelines.
THE COMPANY will inform THE REINSURER in writing of any proposed changes to THE COMPANY's conventional underwriting and
issue practices. This requirement will apply to all changes except those that THE COMPANY considers to be trivial. If
THE REINSURER considers the proposed changes to be significant, it will have fifteen business days to inform THE COMPANY
of its evaluation. In addition, from time to time, it may be appropriate for THE REINSURER to request of THE COMPANY
changes in the underwriting practices. For any significant changes, the party requesting the change must provide a
120-day advance written notice to the other party before the effective date of such change. Recognition of reinsurance
premium rates related to these changes must be determined within the 120-day period. If the underwriting change or rate
change is unacceptable to either party, this Agreement may be unilaterally terminated for acceptance of new business
with a 90-day written termination notice to the other party.
b. RESIDENCE AND TRAVEL. Each insured must either be a resident of the United States or Canada at the time of issue or be a
resident of another country that meets THE COMPANY's special underwriting requirements pertaining to foreign residence.
However, automatic reinsurance will not be available if the conditions stated in either Foreign Travel Exclusions or
Foreign Residence Exclusions in Schedule A apply.
c. OCCUPATION. To be eligible for automatic reinsurance, the insured must not be employed in an occupation as shown in the
Occupation Exclusion List in Schedule A.
d. AUTOMATIC ACCEPTANCE LIMIT - The initial and ultimate face amounts shall not exceed the Automatic Acceptance Limits as shown
in Schedule A.
e. JUMBO LIMIT. For fully underwritten policies to be reinsured under automatic reinsurance, the total amount of insurance in
force and applied for in all companies shall not exceed the Jumbo Limit as shown in Schedule A.
f. STACKING LIMIT. For simplified and guaranteed issue policies to be reinsured under automatic reinsurance, the total amount
of insurance, for simplified and guaranteed issue policies, in force and applied for, in all companies shall not exceed
the Stacking Limit as shown in Schedule A.
g. PROJECTED NET AMOUNT AT RISK LIMITS. The net amount at risk projected at issue cannot exceed the limits shown in Schedule
A.
h. LOCATION LIMIT. The total initial face amount subject to reinsurance with the pool at a single location cannot exceed the
Location Limit as shown in Schedule A.
i. MINIMUM CESSION. The minimum amount of reinsurance per cession that THE REINSURER will accept is shown in Schedule A.
j. MINIMUM NUMBER OF LIVES. The number of lives to be reinsured under automatic reinsurance for Simplified and Guaranteed
issue policies, must be no fewer than the minimum number of lives as shown in Schedule A.
k. MAXIMUM ISSUE AGES. The issue age for Simplified and Guaranteed issue policies, must be no greater than the maximum issue
ages as shown in Schedule A.
l. FOREIGN RESIDENTS. For simplified or guaranteed issue policies, face amounts for Non-US/Canadian work addresses cannot
exceed the maximum limit for each case as shown in Schedule A.
m. FACULTATIVE QUOTES. The risk shall not have been submitted on a facultative basis to THE REINSURER or any other reinsurer.
7. PORTIONS REINSURED AND RETAINED UNDER AUTOMATIC REINSURANCE
a. AUTOMATIC PORTION REINSURED. For any policy reinsured under automatic reinsurance, the portion reinsured is shown in
Schedule A.
b. AUTOMATIC PORTION RETAINED. THE COMPANY will retain, and not otherwise reinsure, an amount of insurance on each life equal
to its retention shown in Schedule A.
8. AUTOMATIC REINSURANCE NOTICE PROCEDURE
After the policy has been paid for and delivered, THE COMPANY will submit to THE REINSURER all relevant individual policy
information, as defined in Schedule C.
9. FACULTATIVE REINSURANCE
THE COMPANY may apply for facultative reinsurance with THE REINSURER on a risk if the automatic reinsurance terms are not
met or if the terms are met and THE COMPANY prefers to apply for facultative reinsurance.
a. Lead Reinsurer
For Simplified Issue and Guaranteed Issue cases where the terms for automatic reinsurance are not met, but where the
case falls within the lead reinsurer limits described below, THE COMPANY may submit these cases to the Security Life of
Denver Insurance Company ("SLD"). SLD will be the lead reinsurer for the pool with respect to underwriting. SLD will
promptly examine the case and notify THE COMPANY of the terms and conditions of a facultative offer by the pool or that
an offer will not be made by the pool. For cases that fall outside the lead reinsurer limits described below, SLD also
has the option of making a facultative offer that represents SLD, but not the pool.
Lead reinsurer limits are the same as the automatic reinsurance limits in except for the following respects:
Simplified Issue:
>> Maximum Initial Face Amount per Life:
$50,000 times the total number of lives up to $5,000,000
Guaranteed Issue:
>> Minimum Number of Lives: 20
>> Maximum Initial Face Amount per Life:
$50,000 times the total number of lives up to $5,000,000
All other lead reinsurer limits are the same as the automatic reinsurance requirements described in Section 6.
b. Facultative Quote
For fully underwritten business and for Simplified Issue and Guaranteed Issue cases where a facultative offer is not
made by the pool, THE COMPANY may request a facultative offer from THE REINSURER. THE COMPANY may apply for a
facultative reinsurance quote by submitting the following:
a. A form substantially similar to the "Application for Reinsurance" form shown in Schedule E.
b. Copies of the original insurance application, medical examiner's reports, financial information, and all other papers and
information obtained by THE COMPANY regarding the insurability of the risk.
After receipt of THE COMPANY's application, THE REINSURER will promptly examine the material and notify THE COMPANY either
of the terms and conditions of THE REINSURER's offer for facultative reinsurance or that no offer will be made. THE
REINSURER's offer expires 120 days after the offer is made unless the written offer specifically states otherwise. If THE
COMPANY accepts THE REINSURER's offer, then THE COMPANY will make a dated notation of its acceptance in its underwriting
file and mail as soon as possible a formal reinsurance cession to THE REINSURER using a form substantially similar to the
Notification of Reinsurance form shown in Schedule F. If THE COMPANY does not accept THE REINSURER's offer, then THE
COMPANY will notify THE REINSURER in writing as soon as possible.
10. COMMENCEMENT OF REINSURANCE COVERAGE
Commencement of THE REINSURER's reinsurance coverage on any policy or pre-issue risk under this Agreement is described below:
a. AUTOMATIC REINSURANCE. THE REINSURER's reinsurance coverage for any policy that is ceded automatically under this Agreement
will begin and end simultaneously with THE COMPANY's contractual liability for the policy reinsured.
In addition, THE REINSURER will be liable for benefits paid under THE COMPANY's conditional receipt or temporary
insurance agreement if all of the conditions for automatic reinsurance coverage under Section 6 of this Agreement are
met. THE REINSURER's liability under THE COMPANY's conditional receipt or temporary insurance agreement is limited to
the lesser of (1) THE REINSURER's reinsured portion of the face amount of the policy and (2) $266,700.
b. FACULTATIVE REINSURANCE. THE REINSURER's reinsurance coverage for any policy that is ceded facultatively under this
Agreement shall begin when (1) THE COMPANY accepts THE REINSURER's offer by making a dated notation of its acceptance in
its underwriting file and (2) the policy has been issued. After making a dated notation of its acceptance in its
underwriting file, THE COMPANY will mail a "Notification of Reinsurance" form to THE REINSURER.
In addition, conditional receipt for any facultative policies ceded under this Agreement shall only apply if the policy
is pre-paid, THE REINSURER has made a binding offer and THE COMPANY has accepted the offer. THE REINSURER's liability
under THE COMPANY's conditional receipt or temporary insurance agreement will be limited to the lesser of 1) THE
REINSURER's reinsured portion of the face amount of the policy and 2) the portion of $1,000,000 that is derived as the
amount of capacity reserved by THE COMPANY from THE REINSURER divided by the sum of the total amount of capacity
reserved by THE COMPANY from all reinsurers and the amount to be retained by THE COMPANY.
c. PRE-ISSUE COVERAGE. The pre-issue coverage for benefits paid under THE COMPANY's conditional receipt or temporary insurance
agreement will be effective once all initial medical exams and tests have been completed. The pre-issue liability
applies only once on any given life at one time no matter how many conditional receipts or temporary insurance
agreements are in effect. After a policy has been issued, no reinsurance benefits are payable under this pre-issue
coverage provision.
11. REINSURANCE PREMIUM RATES
a. LIFE REINSURANCE. The reinsurance premiums per $1000 are shown in Schedule B.
Reinsurance premiums for renewals will be calculated using (1) the issue age of the insured under the policy, (2) the
duration since issuance of the policy and (3) the current underwriting classification.
b. RATES NOT GUARANTEED. Although THE REINSURER anticipates that the premium rates in Schedule B will apply indefinitely, THE
REINSURER reserves the right to change the rates at any time. THE REINSURER guarantees only that the premium rates
applicable to business received under this Agreement will not exceed the YRT net premiums at the applicable statutory
minimum valuation select and ultimate mortality table and statutory maximum interest rate for the reinsured business.
If THE REINSURER changes the rates, it will give THE COMPANY a 90-day prior written notice of the change. Any change
applies only to reinsurance premiums due after the expiration of the notice period.
If THE REINSURER changes rates when THE COMPANY has not changed its charges to the customer, THE COMPANY may recapture
the reinsurance under Section 20 of this Agreement. If THE COMPANY changes its charges to the customer, THE REINSURER
has the right to change its rates, but any change by THE REINSURER must be proportionate to THE COMPANY's change. If
THE REINSURER's change is not proportionate to THE COMPANY's change, then THE COMPANY may recapture the reinsurance
under Section 20 of this Agreement.
12. PAYMENT OF REINSURANCE PREMIUMS
a. PREMIUM DUE. For each policy reinsured under this Agreement, reinsurance premiums are payable annually in advance.
These premiums are due on the issue date and each subsequent policy anniversary. Within 30 days after the close of
each reporting period, THE COMPANY will send to THE REINSURER a statement of account for that period along with
payment of the full balance due. On any payment date, monies payable between THE REINSURER and THE COMPANY under this
Agreement may be netted to determine the payment due. This offset will apply regardless of the insolvency of either
party as described in Section 23, to the extent permitted by law. If the statement of account shows a balance due THE
COMPANY, THE REINSURER will remit that amount to THE COMPANY within 30 days of receipt of the statement of account.
All financial transactions under this Agreement will be in United States dollars. If the reinsurance premium amounts
cannot be determined on an exact basis by the dates described below, such payments will be paid in accordance with a
mutually agreed upon formula which will approximate the actual payments. Adjustments will then be made to reflect
actual amounts when such information is available.
b. FAILURE TO PAY PREMIUMS. If reinsurance premiums are 90 days past due, for reasons other than those due to error or
omission as defined below in Section 22, the premiums will be considered in default and THE REINSURER may terminate
the reinsurance by providing a 30-day prior written notice, provided payment is not received within that 30-day
period. THE REINSURER will have no further liability as of the termination date for benefits applicable to periods
for which premium is not paid. THE COMPANY will be liable for the prorated reinsurance premiums to the termination
date. THE COMPANY agrees that it will not force termination under the provisions of this paragraph solely to avoid
the recapture requirements or to transfer the block of business reinsured to another reinsurer.
Subject to Section 21, THE COMPANY may reinstate reinsurance terminated for non-payment of balances due at any time
within 60 days following the date of termination. However, THE REINSURER will have no liability for claims incurred
between the termination date and the reinstatement date.
c. PREMIUM ADJUSTMENT. If THE COMPANY overpays a reinsurance premium and THE REINSURER accepts the overpayment, THE
REINSURER's acceptance will not constitute or create a reinsurance liability or increase in any existing reinsurance
liability. Instead, THE REINSURER will be liable to THE COMPANY for a credit in the amount of the overpayment. If a
reinsured policy terminates, THE REINSURER will refund the excess reinsurance premium. This refund will be on a
prorated basis without interest from the date of termination of the policy to the date to which a reinsurance premium
has been paid.
13. PREMIUM TAX REIMBURSEMENT
See Schedule B.
14. DAC TAX AGREEMENT
THE COMPANY and THE REINSURER, herein collectively called the "Parties", or singularly the "Party", hereby enter into an
election under Treasury Regulations Section 1.848-2(g) (8) as promulgated under the Internal Revenue Code, as found in Title
26 of the United States Code, hereinafter referred to as the Regulations and the IRC. Both parties agree to make the
election contemplated by this Section 14 by timely attaching to their U.S. tax returns the schedule contemplated by Section
1.848-2(g)(8)(ii) of the Regulations. Furthermore, the parties agree to the following:
a. For each taxable year under this Agreement, the party with the net positive consideration, as defined in the Regulations,
will capitalize specified policy acquisition expenses with respect to this Agreement without regard to the general
deductions limitation of Section 848 (c) (1);
b. THE COMPANY and THE REINSURER agree to exchange information pertaining to the net consideration under this Agreement each
year to insure consistency or as otherwise required by the U.S. Internal Revenue Service;
c. THE COMPANY will submit to THE REINSURER by May 1 of each year its calculation of the net consideration for the preceding
calendar year.
d. THE REINSURER may contest such calculation by providing an alternative calculation to THE COMPANY in writing within 30 days
of THE REINSURER's receipt of THE COMPANY's calculation. If THE REINSURER does not so notify THE COMPANY, THE REINSURER
will report the net consideration as determined by THE COMPANY in THE REINSURER's tax return for the previous calendar
year;
e. If THE REINSURER contests THE COMPANY's calculation of the net consideration, the parties will act in good faith to reach an
agreement as to the correct amount within 30 days of the date THE REINSURER submits its alternative calculation. If THE
COMPANY and THE REINSURER do not reach agreement on the net amount of consideration within such 30-day period, then the
net amount of consideration for such year shall be determined by an independent accounting firm acceptable to both THE
COMPANY and THE REINSURER within 20 days after the expiration of such 30-day period.
f. THE COMPANY and THE REINSURER agree that this election shall first be effective for the 2004 calendar tax year and will be
effective for all subsequent taxable years for which this Agreement remains in effect.
THE REINSURER and THE COMPANY represent and warrant that they are subject to U.S. taxation under either Subchapter L of
Chapter 1, or Subpart F of Subchapter N of Chapter 1 of the IRC of 1986, as amended.
15. REPORTS
The reporting period is shown in Schedule A. For each reporting period, THE COMPANY will submit reports to THE REINSURER
with information that is substantially similar to the information displayed in Schedule C.
In addition, the reports will include a billing and accounting summary and a policy exhibit summary similar to the reports
shown in Schedule D.
Within 15 business days after the end of each calendar year, THE COMPANY will submit a reserve summary similar to that shown
in Schedule D. THE COMPANY will also submit this reserve summary within 10 business days after the end of each other
calendar quarter.
Special COLI Reporting
A report for all policies will be provided that includes an underwriting indicator (i.e., RI for Fully Underwritten, SI for
Simplified Issued and GI for Guaranteed Issue) and the corporation name. In addition, working addresses will be provided
for policies that are part of cases where the initial face amount subject to reinsurance with the pool exceeds $100,000,000.
16. RESERVES FOR REINSURANCE
See Schedule A.
17. CLAIMS
a. NOTIFICATION OF CLAIMS. THE COMPANY will provide THE REINSURER with notification of claims reported. In addition, THE
COMPANY will provide THE REINSURER with notification of each claim incurred within the first two policy years
(individually, a "Contestable Claim" and collectively "Contestable Claims") on policies reinsured where THE REINSURER's
net amount at risk is in excess of $40,000, along with all relevant information including, but not limited to, claim
proofs.
After THE COMPANY has received all proper claim proofs and paid the claim, THE COMPANY will notify THE REINSURER that a
claim is due under this Agreement. THE COMPANY will send to THE REINSURER an itemized statement of amounts due THE
COMPANY under this Agreement along with all relevant information with respect to the claim, including the claim proofs.
However, claim proofs will not be required by THE REINSURER if THE REINSURER's net amount at risk is less than or equal
to $100,000 and THE COMPANY has paid the claim in full. In such cases, THE COMPANY will provide THE REINSURER with the
cause and date of death.
THE REINSURER shall have the right to audit the claims handling procedures of THE COMPANY at any time during the term of
this Agreement during normal business hours. Upon the completion of such audit, THE REINSURER may, in its sole
discretion, require THE COMPANY to provide THE REINSURER on an ongoing basis with all relevant information regarding any
Contestable Claim on policies reinsured under this Agreement regardless of THE REINSURER's net amount at risk on such
claim.
b. AMOUNT AND PAYMENT OF BENEFITS. As soon as THE REINSURER receives the request for payment and any required proof of the
claim, reinsurance benefits are due and payable to THE COMPANY. Payment of the benefits will be made in a single sum,
regardless of THE COMPANY's settlement options. THE COMPANY's contractual liability for claims under reinsured policies
is binding on THE REINSURER. The maximum benefit payable to THE COMPANY under each reinsured policy is the amount
specifically reinsured with THE REINSURER.
c. CLAIM SETTLEMENTS. THE REINSURER agrees that THE COMPANY will use its standard claim practices and guidelines in the
adjudication of all claims on policies reinsured under this Agreement. THE REINSURER has the right to inspect, at the
COMPANY's offices, the COMPANY's written claims practices and guidelines. In order to comply with the requirements of
the Securities and Exchange Commission, once THE REINSURER has been notified of a Contestable Claim in accordance with
subsection a. above, it will have 2 business days to review the information and offer advice to THE COMPANY as to
whether the claim should be paid or denied. If there is a disagreement between THE COMPANY and THE REINSURER as to
whether THE COMPANY should pay or deny the claim, THE COMPANY will make a reasonable effort to secure mutual agreement
between the parties. Any advice offered by THE REINSURER will not be binding on THE COMPANY.
THE COMPANY will advise THE REINSURER of any intention to contest a claim involving a policy reinsured hereunder and
provide THE REINSURER with copies of all relevant documents. THE REINSURER may choose not to participate in the contest
of a Contestable Claim. THE REINSURER will have 10 business days to communicate its decision to THE COMPANY. If THE
REINSURER chooses not to participate, it will discharge its liability by immediately paying to THE COMPANY the full
amount of THE REINSURER's liability on the portion of the policy reinsured under this Agreement, regardless of any
subsequent outcome of such contest.
d. CLAIM EXPENSES. THE REINSURER will pay its share of any interest paid by THE COMPANY to THE COMPANY on any claim payment.
In addition, THE REINSURER will pay its share of the unusual expense of adjudicating Contestable Claims, which expense
was paid by THE COMPANY. The term "unusual expense" shall mean all expenses of THE COMPANY associated with the
Contestable Claim other than normal and customary claim administration expenses that are commonly incurred with the
normal and customary settlement of non-contestable claims. Also, expenses incurred in connection with a dispute or
contest arising out of conflicting claims of entitlement to policy proceeds or benefits that THE COMPANY admits are
payable are not a claim expense under this Agreement. Notwithstanding the above, THE REINSURER will not be liable for
any portion of interest or unusual expenses for any period of time after THE REINSURER chooses not to participate in a
contest, compromise or litigation of a Contestable Claim.
e. EXTRACONTRACTUAL DAMAGES. In no event will THE REINSURER participate in statutory, punitive or compensatory damages, which
are awarded against THE COMPANY as a result of an act, omission or course of conduct committed by THE COMPANY in
connection with the reinsurance under this Agreement. The parties recognize that circumstances may arise in which
equity would require THE REINSURER, to the extent permitted by law, to share proportionately in certain assessed
damages. Such circumstances are difficult to define in advance, but generally would be those situations in which THE
REINSURER was an active party and in writing either directed, consented to, or ratified the act, omission, or course of
conduct of THE COMPANY with respect to a Contestable Claim which ultimately results in the assessment of statutory,
punitive and/or compensatory damages. In such situations, THE COMPANY and THE REINSURER would share such damages
assessed in equitable proportions.
For purposes of the provision, the following definitions will apply:
"Punitive Damages" are those damages awarded as a penalty, the amounts of which are not governed or fixed by statute;
"Statutory Penalties" are those amounts that are awarded as a penalty, but are fixed in amount by statute;
"Compensatory Damages" are those amounts awarded to compensate for actual damages sustained, and are not awarded as a
penalty, nor fixed in amount by statute.
18. MISREPRESENTATION, SUICIDE, AND MISSTATEMENT
If either a misrepresentation on an application or a death of an insured by suicide results in the return of policy premiums
by THE COMPANY under the policy rather than payment of policy benefits, THE REINSURER will refund all of the reinsurance
premiums paid for that policy to THE COMPANY. If there is an adjustment for a misrepresentation or misstatement of age or
sex, a corresponding adjustment to the reinsurance benefit will be made.
19. POLICY CHANGES
a. NOTICE. If a reinsured policy is changed as described below, a corresponding change will be made in the reinsurance for
that policy. THE COMPANY will notify THE REINSURER of the change in THE COMPANY's next report as stated in Section 15.
b. UNSCHEDULED AND RESCHEDULED INCREASES. If an request for an unscheduled increase in the amount of insurance is made for a
reinsured policy and the insured meets THE COMPANY's underwriting requirements and THE COMPANY approves the increase
under the policy, then the amount of reinsurance under this Agreement will be adjusted as of the effective date of the
increase.
If an increase has been scheduled on a policy at the time the policy is issued, then no new underwriting is required at
the effective date of the scheduled increase and the amount of reinsurance under this Agreement will be adjusted as of
the effective date of the increase. However, if an increase has been scheduled and the request is for an amount that is
higher than the amount scheduled to be increased and the insured meets THE COMPANY's underwriting requirements and THE
COMPANY approves the increase under the reinsured policy, then the amount of reinsurance under this Agreement will be
adjusted as of the effective date of the increase.
If a request for an increase is made for a reinsured policy and the insured meets THE COMPANY's underwriting
requirements and a new policy is issued on one of the plans shown in Schedule A for the higher amount, then reinsurance
under the old policy will cease as of the effective date of the change, and reinsurance under the new policy will
commence as of the policy date of the new policy.
If a request for an increase that has not been scheduled in a reinsured policy is granted without the insured meeting
THE COMPANY's underwriting requirements, then reinsurance on the increase will not be allowed.
If a request for an increase does not meet all of the terms of automatic reinsurance, then THE COMPANY may apply to THE
COMPANY for facultative reinsurance and in turn, THE COMPANY may apply to the REINSURER for facultative reinsurance as
stated in Section 9.
c. REDUCTION OR TERMINATION. If the amount of insurance on a reinsured policy is reduced, the reinsurance will be reduced
proportionately as of the effective date of the reduction.
If a reinsured policy is terminated, the reinsurance will cease on the date of such termination.
d. PLAN CHANGES. If a reinsured policy is changed to another plan of insurance that is not currently reinsured under this
Agreement as defined in Schedule A, then the reinsurance under this Agreement will cease as of the effective date of
the change.
If a policy that is not reinsured under this Agreement is changed to a plan that is reinsured under this Agreement as
defined in Schedule A and the insured has met THE COMPANY's underwriting requirements for the plan change, then
reinsurance will commence as of the policy date of the new plan.
e. OPTION TO EXCHANGE INSUREDS. Policies issued as a result of the 'Option to Exchange Insureds' must be underwritten
according to the underwriting basis of the original case and must meet all the automatic reinsurance requirements
stipulated in Section 6 above.
f. ADD-ON LIVES. Policies issued to add-on lives must be underwritten according to the underwriting basis of the original case
and must meet all the automatic reinsurance requirements stipulated in Section 6 above using the total number of lives
in the case, including the add-on lives.
20. RECAPTURE
At any time during the term of the Agreement, THE COMPANY may elect to recapture in full the coverage reinsured under this
Agreement following the occurrence of any of the following events:
1) Material breach of any term or condition of this Agreement if such breach is not cured within a period of at least 60
calendar days following the delivery of notice of such breach from THE COMPANY to THE REINSURER.
2) THE REINSURER is deemed insolvent as described in Section 23.
3) The occurrence of a "Risk Trigger Event" as defined in Schedule A of this Agreement.
4) THE REINSURER makes a premium rate change that is not proportionate to a change in THE COMPANY's charges to the
customer.
5) A change in ultimate ownership or control of THE REINSURER that results in the new owner of THE REINSURER not having
a Qualified Rating from at least one of the Major Rating Agencies which is at least as high as the minimum levels shown in
Section 12 of Schedule A.
6) Any representation or warranty made by THE REINSURER under this Agreement proves to be untrue in any material respect.
In addition, at any time after the twentieth policy anniversary, THE COMPANY may elect to recapture all or an appropriate
portion of the coverage reinsured under this Agreement to reflect increases in the maximum retention limits for THE COMPANY
and all of its affiliates, collectively, subsequent to the date of policy issue. These maximum retention limits as of the
effective date of this Agreement are equal to the amounts shown in the Risk Retention Limits table shown in Schedule A. The
portion of the coverage that may be recaptured must be directly related to the increase in the limits. To illustrate, if
the maximum retention limits are increased by 100%, then the portion that may be recaptured from all reinsurers of the
policies reinsured under this Agreement would be equal to 100% of the portion of each reinsured policy that is retained by
THE COMPANY. Furthermore, the portion that may be recaptured from THE REINSURER would be determined as THE REINSURER's
prorata share of the total portion reinsured with all reinsurers.
If THE COMPANY elects to recapture the coverage reinsured under this Agreement as a result of a Risk Trigger Event, it must
do so for all coverages reinsured under all agreements between THE COMPANY and THE REINSURER for which a Risk Trigger Event
occurred.
If THE COMPANY elects to recapture the risks ceded to THE REINSURER under this Agreement as stated above, it will do so by
giving written notice to THE REINSURER. Upon the delivery of such notice, all of the risks previously ceded under each of
the policies subject to this Agreement shall be recaptured, effective as of the date specified in THE COMPANY's notice. If
THE COMPANY does not specify in the written notice the date that such recapture is to be effective, then the recapture shall
be effective immediately upon THE REINSURER's receipt of the notice.
If a policy is recaptured, THE REINSURER will pay THE COMPANY the unearned reinsurance premium within 30 days following the
date of recapture. THE COMPANY will pay THE REINSURER any due but unpaid premiums under this Agreement up to the date of
recapture for any recaptured policies. THE REINSURER shall not be liable, under this Agreement, for any claims incurred
after the date of recapture, but shall remain liable for all claims incurred on or prior to the date of recapture.
No exercise by THE COMPANY of any recapture right will give rise to any claims for damages, lost profits, or other form of
compensation to THE REINSURER, other than payment of a prorated sum for any amount that might be due and owing under the
reinsurance treaty up to the effective date of the recapture.
21. REINSTATEMENTS
a. AUTOMATIC REINSTATEMENT. If THE COMPANY reinstates a policy that was originally ceded to THE REINSURER as automatic
reinsurance using conventional underwriting practices, THE REINSURER's reinsurance for the policy shall be reinstated.
b. FACULTATIVE REINSTATEMENT. If THE COMPANY has been requested to reinstate a policy that was originally ceded to THE
COMPANY as facultative reinsurance and the reinstatement is processed under THE COMPANY's Long Form Reinstatement
Process, then THE COMPANY will re-submit the appropriate evidence for the case to THE REINSURER for underwriting
approval before the reinsurance can be reinstated.
c. PREMIUM ADJUSTMENT. Reinsurance premiums for the interval during which the policy was lapsed will be paid to THE
REINSURER by THE COMPANY.
22. ERRORS AND OMISSIONS
If either THE REINSURER or THE COMPANY fails to comply with any of the terms of this Agreement and it is shown that the
failure was unintentional or the result of a misunderstanding or an administrative oversight on the part of either party,
this Agreement will remain in effect. If the failure to comply changes the operation or effect of this Agreement, both
parties will be put back to the positions they would have occupied if the failure to comply had not occurred. This section
will not apply to any facultative submission until THE COMPANY has mailed the Notification of Reinsurance form to THE
REINSURER.
23. INSOLVENCY
For the purpose of this Agreement, THE COMPANY or THE REINSURER shall be deemed "insolvent" if one or more of the following
occurs:
a. A court-appointed receiver, trustee, custodian, conservator, liquidator, government official or similar officer takes
possession of the property or assets of either THE COMPANY or THE REINSURER; or
b. Either THE COMPANY or THE REINSURER is placed in receivership, rehabilitation, liquidation, conservation, bankruptcy or
similar status pursuant to the laws of any state or of the United States; or
c. Either THE COMPANY or THE REINSURER becomes subject to an order to rehabilitate or an order to liquidate as defined by the
insurance code of the jurisdiction of the domicile of THE COMPANY or THE REINSURER, as the case may be.
In the event that THE COMPANY is deemed insolvent, all reinsurance claims payable hereunder shall be payable by THE
REINSURER on the basis of THE COMPANY's liability under the policies reinsured without diminution because of the insolvency
of THE COMPANY. Such claims shall be payable by THE REINSURER directly to THE COMPANY, its liquidator or statutory
successor. It is understood, however, that in the event of such insolvency, the liquidator or receiver or statutory
successor of THE COMPANY shall give written notice to THE REINSURER of the pendency of a claim against THE REINSURER on a
risk reinsured hereunder within a reasonable time after such claim is filed in the insolvency proceeding. Such notice shall
indicate the policy reinsured and whether the claim could involve a possible liability on the part of THE REINSURER.
Failure to give such notice shall not excuse the obligation of THE REINSURER unless it is substantially prejudiced thereby.
During the pendency of such claim, THE REINSURER may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated, any defense or defenses it may deem available to THE COMPANY, its
liquidator, receiver or statutory successor. It is further understood that the expense thus incurred by THE REINSURER shall
be chargeable, subject to court approval, against THE COMPANY as part of the expense of liquidation to the extent of a
proportionate share of the benefit which may accrue to THE COMPANY solely as a result of the defense undertaken by THE
REINSURER.
In the event THE REINSURER is deemed insolvent, THE REINSURER will be bound by any legal directions imposed by its
liquidator, conservator, or statutory successor. However, and if not in conflict with such legal directions, THE COMPANY
shall have the right to cancel this Agreement with respect to occurrences taking place on or after the date THE REINSURER
first evidences insolvency. Such right to cancel shall be exercised by providing THE REINSURER (or its liquidator,
conservator, receiver or statutory successor) with a written notice of THE COMPANY's intent to recapture ceded business. If
THE COMPANY exercises such right to cancel and recapture ceded business, such election shall be in lieu of any premature
recapture fee. Upon such election, THE COMPANY shall be under no obligation to THE REINSURER, its liquidator, receiver or
statutory successor; however, THE REINSURER, its liquidator, receiver or statutory successor shall be liable for all claims
incurred prior to the date of recapture.
If at any point in the future during the term of this Agreement, THE REINSURER is deemed insolvent, THE COMPANY's right of
recapture in Section 20 of this Agreement will be triggered unless THE REINSURER elects to, and does, provide, on a timely
basis, security in the form of a Letter of Credit, Assets in Trust, or Funds Withheld to THE COMPANY. If THE REINSURER
elects to furnish security in the form of one or more Letters of Credit, Assets in Trust, or Funds Withheld to avoid THE
COMPANY's right of recapture under Section 20 of this Agreement, any such security must meet the requirements set forth in
Sections 13, 14 and 15 of Schedule A attached hereto.
24. ARBITRATION
a. GENERAL. All disputes and differences under this Agreement that cannot be amicably agreed upon by the parties shall be
decided by arbitration. The arbitrators will have the authority to interpret this Agreement and, in doing so, will
consider the customs and practices of the life insurance and life reinsurance industry. The arbitrators will consider
this Agreement as an honorable engagement rather than merely a legal obligation, and they are relieved of all judicial
formalities and may abstain from following the strict rules of law. The arbitration shall take place within the United
States.
b. NOTICE. To initiate arbitration, one of the parties will notify the other, in writing, of its desire to arbitrate. The
notice will state the nature of the dispute and the desired remedies. The party to which the notice is sent will
respond to the notification in writing within 10 days of receipt of the notice. At that time, the responding party will
state any additional dispute it may have regarding the subject of arbitration.
c. PROCEDURE. Arbitration will be heard before a panel of three disinterested arbitrators. The arbitrators will be current or
former executive officers or employees of life insurance or reinsurance companies; however, these companies will not be
either party or any of their reinsurers or affiliates. Each party will appoint one arbitrator. Notice of the
appointment of these arbitrators will be given by each party to the other party within 30 days of the date of mailing of
the notification initiating the arbitration. These two arbitrators will, as soon as possible, but no longer than 45
days after the date of the mailing of the notification initiating the arbitration, then select the third arbitrator.
Should either party fail to appoint an arbitrator or should the two initial arbitrators be unable to agree on the choice
of a third arbitrator, each arbitrator will nominate three candidates, two of whom the other will decline, and the
decision will be made by drawing lots on the final selection. Once chosen, the three arbitrators will have the
authority to decide all substantive and procedural issues by a majority vote. The arbitration hearing will be held on
the date fixed by the arbitrators at a location agreed upon by the parties. The arbitrators will issue a written
decision from which there will be no appeal. Either party may reduce this decision to a judgment before any court that
has jurisdiction of the subject of the arbitration.
d. COSTS. Each party will pay the fees of its own attorneys, the arbitrator appointed by that party, and all other expenses
connected with the presentation of its own case. The two parties will share equally the cost of the third arbitrator.
25. GOOD FAITH
Each party agrees that all matters with respect to this Agreement require its utmost good faith.
26. REPRESENTATIONS AND WARRANTIES
THE COMPANY represents and warrants to THE REINSURER that it is solvent in all jurisdictions in which it does business or is
licensed. THE REINSURER represents and warrants to THE COMPANY that it is solvent on a statutory basis in all states in
which it does business or is licensed. Each party agrees to promptly notify the other if it is subsequently financially
impaired. Each party affirms that it has and will continue to disclose all matters material to this Agreement and each
cession. Examples of such matters are a material change in underwriting or issue practices or philosophy, or a change in
each party's ultimate ownership or control.
THE COMPANY represents and warrants the following:
a. It is a corporation duly organized, existing and in good standing under the laws of New Jersey.
b. It is empowered under applicable laws and by its charter and bylaws to enter into and perform the duties contemplated in
this Agreement.
c. It has taken all requisite corporate proceedings to authorize it to enter into and perform the duties contemplated in this
Agreement.
d. It has obtained any and all regulatory approvals as may be required for THE COMPANY to cede the Policies covered hereunder.
e. It will take no unauthorized action that would encourage the policyholders whose policies are reinsured under this Agreement
to surrender, reduce or otherwise terminate their existing coverages either through direct or indirect acts, including
but not limited to, a plan of internal replacement, without the consent of THE REINSURER.
f. THE COMPANY acknowledges that THE REINSURER is entering into this Agreement in reliance upon these representations and
warranties of THE COMPANY, and THE COMPANY agrees that THE REINSURER may terminate the reinsurance hereunder if, at any
point in the future during the term of this Agreement, these representations and warranties are no longer true and
correct in any material respect.
THE REINSURER represents and warrants the following:
a. It is a corporation duly organized, existing and in good standing under the laws of Georgia.
b. It is empowered under applicable laws and by its charter and bylaws to enter into and perform the duties contemplated in
this Agreement.
c. It has taken all requisite corporate proceedings to authorize it to enter into and perform the duties contemplated in this
Agreement.
d. It has obtained any and all regulatory approvals as may be required for THE REINSURER to provide the reinsurance covered
hereunder.
e. As part of THE COMPANY's due diligence process, THE REINSURER has provided a completed copy of the Reinsurance Carrier Fact
Sheet, a copy of which is attached in Schedule G. Upon request by the company, after THE REINSURER has completed its
Annual Statement, THE REINSURER will update the information included in The Reinsurance Carrier Fact Sheet. In
addition, from time to time, THE REINSURER will update the information included in the Carrier Fact Sheet as requested
by THE COMPANY. The information included in the Reinsurance Carrier Fact Sheet is true and accurate as of the date shown
on the Fact Sheet.
f. THE REINSURER acknowledges that THE COMPANY is entering into this Agreement in reliance upon these representations and
warranties of THE REINSURER, and THE REINSURER agrees that THE COMPANY's right of recapture under Section 20 of this
Agreement will be triggered if, at any point in the future during the term of this Agreement, these representations and
warranties are no longer true and correct in any material respect.
27. CONFIDENTIALITY
THE REINSURER agrees to regard and preserve as confidential all information and material which is related to THE COMPANY's
business and/or customers that may be obtained by THE REINSURER from any source as a result of this Agreement. THE
REINSURER will not, without first obtaining THE COMPANY's prior written consent disclose to any person, firm or enterprise,
or use for its own benefit or for the benefit of any third party any Company Confidential Information or Company Customer
Information except as necessary for retrocession purposes, external auditors, as required by court order, or as required by
law or regulation. "Company Confidential Information" includes, but is not limited to any and all financial data,
statistics, programs, research, developments, information relating to THE COMPANY's insurance and financial products,
planned or existing computer systems architecture and software, data, and information of THE COMPANY as well as third party
confidential information to which THE COMPANY has access. "Company Customer Information" includes all information provided
by or at the direction of THE COMPANY about a customer of THE COMPANY or its affiliates, including but not limited to name,
address, telephone number, email address, account or policy information, and any list or grouping of customers.
Notwithstanding the foregoing, the provisions of Section 27 shall not apply with respect to disclosing of Company
Confidential Information which is already known to THE REINSURER or is or becomes publicly known through no wrongful act of
THE REINSURER; or is received from a third party without similar restriction and without breach of this Agreement; or is
independently developed by THE REINSURER; or is approved for release by written authorization of THE COMPANY; or is placed
in or becomes party of the public domain pursuant to or by reason of operation of law. The foregoing exceptions do not
apply to the disclosure of Company Customer Information, which may not be disclosed without THE COMPANY's prior written
consent except as noted in the paragraph preceding this one.
The provisions of this Section 27 regarding Company Confidential Information shall survive the termination of the parties'
obligations under this Agreement for a period of two years, and the provisions of this Section 27 regarding Company Customer
Information shall survive the termination of the parties' obligations under this Agreement for a period of five years.
THE REINSURER certifies that it has implemented and will maintain an effective information security program to protect THE
COMPANY's Customer Information, which program includes administrative, technical, and physical safeguards:
(a) to ensure the security and confidentiality of Customer Information;
(b) to protect against any anticipated threats or hazards to the security or integrity of such Customer Information; and
to protect against unauthorized access to or use of Customer Information
In the event that Company Confidential Information or Company Customer Information in THE REINSURER's possession is
disclosed to an unauthorized third party, THE REINSURER shall immediately advise THE COMPANY and take steps to prevent
further disclosure.
28. MEDICAL INFORMATION BUREAU
THE REINSURER is required to strictly adhere to the Medical Information Bureau Rules, and THE COMPANY agrees to abide by
these Rules, as amended from time to time. THE COMPANY will not submit a preliminary notice, application for reinsurance,
or reinsurance cession to THE REINSURER unless THE COMPANY has a signed, currently required Medical Information Bureau
authorization.
29. GOVERNING LAW
This Agreement shall be governed by the laws of New Jersey without giving effect to the principles of conflicts of laws
thereof.
30. ASSIGNMENT
This Agreement is not assignable by either party except by the express written consent of the other.
31. ACCESS TO RECORDS
THE REINSURER and THE COMPANY, or their duly authorized representatives, will have the right to inspect original papers,
records, and all documents relating to the business reinsured under this Agreement including underwriting, claims
processing, and administration. Such access will be provided during regular business hours at the office of the inspected
party. THE COMPANY will be obligated to provide access to all of THE COMPANY's original papers, records and documents
relating to the business reinsured under this Agreement and will take all necessary measures to ensure that it can fulfill
this requirement.
32. SEVERABILITY
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.
33. OFFSET
Any debts or credits, in favor of or against either THE REINSURER or THE COMPANY with respect to this Agreement are deemed
mutual debts or credits and may 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.
In witness of the above, THE COMPANY and THE REINSURER have by their respective officers executed and delivered this Agreement in
duplicate on the dates indicated below, with an effective date of September 30, 2002.
----------------------------------------------------------- --------------------------------------------------------
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY MUNICH AMERICAN REASSURANCE COMPANY
----------------------------------------------------------- --------------------------------------------------------
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By:_/S/_______________________________ By:_/S/_____________________________
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----------------------------------------------------------- --------------------------------------------------------
Title:_______________________________ Title:_____________________________
----------------------------------------------------------- --------------------------------------------------------
----------------------------------------------------------- --------------------------------------------------------
Date:_______________________________ Date:_____________________________
----------------------------------------------------------- --------------------------------------------------------
----------------------------------------------------------- --------------------------------------------------------
By:_/S/_______________________________ By:_/S/_____________________________
----------------------------------------------------------- --------------------------------------------------------
----------------------------------------------------------- --------------------------------------------------------
Title:_______________________________ Title:_____________________________
----------------------------------------------------------- --------------------------------------------------------
----------------------------------------------------------- --------------------------------------------------------
Date:_______________________________ Date:_____________________________
----------------------------------------------------------- --------------------------------------------------------
SCHEDULE A
REINSURANCE COVERAGE
---------------------------------------------------------------------------------------------------------------------------------------
1. POLICIES REINSURED:
This Agreement covers the following plans:
o PruSelect III 2002 policies (Policy Form Numbers CVUL-1999 and all state variations) except policies written under the
Prudential owned COLI covering Prudential employees.
o Target Term Rider (TTR) added to PruSelect III 2002 Policies
2. AUTOMATIC PORTION REINSURED:
For Fully Underwritten Policies
For US/Canadian and Non US/Canadian Residents THE REINSURER will automatically reinsure an amount equal to 26.67% of the net
amount at risk corresponding to the face amount up to the First Layer of Coverage amounts shown in Schedule A, Section 5
below.
For Simplified and Guaranteed Issue
THE REINSURER will automatically reinsure an amount equal to 26.67% of the net amount at risk corresponding to the face
amount.
3. AUTOMATIC PORTION RETAINED:
For Fully Underwritten Policies
THE COMPANY will retain at least 10% of the net amount at risk corresponding to the face amount up to the First Layer of
Coverage as defined in Schedule A Section 5, below. THE COMPANY may cede up to 63.33% of the net amount at risk
corresponding to the face amount amount on a first-dollar quota share basis to other reinsurers. In addition, THE COMPANY
will retain 100% of the net amount at risk corresponding to the face amount in excess of the First Layer of Coverage.
For Simplified and Guaranteed Issue
THE COMPANY will retain at least 10% of the net amount at risk corresponding to the face amount. THE COMPANY may cede up to
63.33% of the net amount at risk corresponding to the face amount on a first-dollar quota share basis to other reinsurers.
4. NET AMOUNT AT RISK
The net amount at risk is determined as of the issue date and each subsequent policy anniversary and is defined as the death
benefit minus the contract fund.
5. AUTOMATIC ACCEPTANCE LIMIT:
Fully Underwritten
Maximum Face Amounts (Automatic Issue Limits)
For any policy to be reinsured under automatic reinsurance, the initial and ultimate face amount will not exceed the limits
shown in the following tables:
US/Canadian Residents - No Foreign Travel:
----------------------- ---------- ----------------------- --------------------- --------------------------
Non-Smoker/ Smoker Issue Age No Substandard Rating Rating Class A-D Class E-H
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
Non-Smoker 18 - 65 $40,000,000 $37,000,000 $24,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
66 - 70 $32,000,000 $29,000,000 $18,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
71 - 75 $24,000,000 $22,000,000 $12,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
76 - 77 $12,000,000 $12,000,000 $ 8,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
78 -80 $ 8,000,000 $ 8,000,000 $ 4,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
81 - 84 $ 4,000,000 $ 4,000,000 None
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
Smoker 18 - 65 $34,000,000 $34,000,000 $24,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
66 - 70 $26,000,000 $26,000,000 $18,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
71 - 75 $21,000,000 $21,000,000 $12,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
76 - 77 $12,000,000 $12,000,000 $ 8,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
78 -80 $ 8,000,000 $ 8,000,000 $ 4,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
81 - 84 $ 4,000,000 $ 4,000,000 None
----------------------- ---------- ----------------------- --------------------- --------------------------
---------------------------------------------------------------------------------------------------------------------------------------
US/Canadian Residents - Foreign Travel:
--------------------------- ------------------------------ --------------------- ---------------------------
Issue Age No Substandard Rating - Rating Class D - E Rating Class F-H
Rating Class C
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
18 - 70 $20,000,000 $15,000,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
71 - 75 $15,000,000 $10,000,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
00 - 00 Xxxx Xxxx Xxxx
--------------------------- ------------------------------ --------------------- ---------------------------
Non US/Canadian Residents:
--------------------------- ------------------------------ --------------------- ---------------------------
Issue Age No Substandard Rating - Rating Class D - E Rating Class F-H
Rating Class C
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
18 - 70 $20,000,000 $15,000,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
71 - 75 $15,000,000 $10,000,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
00 - 00 Xxxx Xxxx Xxxx
--------------------------- ------------------------------ --------------------- ---------------------------
First Layer Amounts
For any policy to be reinsured under automatic reinsurance, the initial and ultimate amounts subject to reinsurance are the
First Layer of Coverage amounts shown in the following tables:
US/Canadian Residents - No Foreign Travel:
----------------------- ---------- ----------------------- --------------------- --------------------------
Issue Age No Substandard Rating Rating Class A-D Class E-H
Non-Smoker/ Smoker
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
18 - 65 $25,000,000 $25,000,000 $17,500,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
66 - 70 $20,000,000 $20,000,000 $12,500,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
71 - 75 $17,500,000 $17,500,000 $ 7,500,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
76 - 77 $ 7,500,000 $ 7,500,000 $ 5,000,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
78 -80 $ 5,000,000 $ 5,000,000 $ 2,500,000
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
81 - 84 $ 2,500,000 $ 2,500,000 None
----------------------- ---------- ----------------------- --------------------- --------------------------
US/Canadian Residents - Foreign Travel:
--------------------------- ------------------------------ --------------------- ---------------------------
Issue Age No Substandard Rating - Rating Class D - E Rating Class F-H
Rating Class C
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
18 - 70 $20,000,000 $15,000,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
71 - 75 $15,000,000 $10,000,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
00 - 00 Xxxx Xxxx Xxxx
--------------------------- ------------------------------ --------------------- ---------------------------
Non US/Canadian Residents:
--------------------------- ------------------------------ --------------------- ---------------------------
Issue Age No Substandard Rating - Rating Class D - E Rating Class F-H
Rating Class C
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
18 - 70 $20,000,000 $15,000,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
71 - 75 $15,000,000 $10,000,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
00 - 00 Xxxx Xxxx Xxxx
--------------------------- ------------------------------ --------------------- ---------------------------
Automatic Binding Limits
For any policy to be reinsured under automatic reinsurance, the initial and ultimate amounts reinsured with THE REINSURER on
that life will not exceed the amounts in the following tables:
US/Canadian Residents - No Foreign Travel:
----------------------- ---------- ----------------------- --------------------- --------------------------
Issue Age No Substandard Rating Rating Class A-D Class E-H
Non-Smoker/ Smoker
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
18 - 65 $ 6,667,500 $ 6,667,500 $ 4,667,250
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
66 - 70 $ 5,334,000 $ 5,334,000 $ 3,333,750
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
71 - 75 $ 4,667,250 $ 4,667,250 $ 2,000,250
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
76 - 77 $ 2,000,250 $ 2,000,250 $ 1,333,500
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
78 -80 $ 1,333,500 $ 1,333,500 $ 667,750
----------------------- ---------- ----------------------- --------------------- --------------------------
----------------------- ---------- ----------------------- --------------------- --------------------------
81 - 84 $ 667,750 $ 667,750 None
----------------------- ---------- ----------------------- --------------------- --------------------------
US/Canadian Residents - Foreign Travel:
--------------------------- ------------------------------ --------------------- ---------------------------
Issue Age No Substandard Rating - Rating Class D - E Rating Class F-H
Rating Class C
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
18 - 70 $5,334,000 $4,500,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
71 - 75 $4,000,500 $2,667,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
00 - 00 Xxxx Xxxx Xxxx
--------------------------- ------------------------------ --------------------- ---------------------------
Non US/Canadian Residents:
--------------------------- ------------------------------ --------------------- ---------------------------
Issue Age No Substandard Rating - Rating Class D - E Rating Class F-H
Rating Class C
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
18 - 70 $5,334,000 $4,500,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
71 - 75 $4,000,500 $2,667,000 None
--------------------------- ------------------------------ --------------------- ---------------------------
--------------------------- ------------------------------ --------------------- ---------------------------
00 - 00 Xxxx Xxxx Xxxx
--------------------------- ------------------------------ --------------------- ---------------------------
Jumbo Limits
The amounts in force and applied for on an individual life cannot exceed:
>> $50,000,000 for US/Canadian Residents without Foreign Travel
>> $35,000,000 for US/Canadian Residents with Foreign Travel or Non US/Canadian Residents
These jumbo limits apply to all issue ages and rating classes and do not vary between smokers and non-smokers.
Location Limits (Per Case)
The total initial face amount subject to reinsurance with the pool at a single location cannot exceed $100 million.
Projected Net Amount at Risk Limits
For each life, the net amount at risk projected at issue cannot exceed the amount shown above for the maximum ultimate
face amount. The projected net amount at risk is determined from the primary illustration provided by THE COMPANY
during the sales process. If the net amount at risk projected at issue exceeds the US/Canadian Resident limits,
then facultative reinsurance must be pursued.
Simplified Issue
Minimum Number of Lives
Simplified Issue cases must include at least 10 lives.
Issue Ages
The minimum issue age is 18; the maximum issue age for automatic reinsurance is 72. In addition, 75% of all participants in
the case must be at or below issue age 60.
Maximum Face Amounts (Automatic Issue Limits)
The face amounts per life cannot exceed the following:
>> Initial: $35,000 times the total number of lives up to $3,500,000
>> Ultimate*: $70,000 times the total number of lives up to $7,000,000
* Ultimate face amount includes the initial face amount plus any increases.
Automatic Binding Limits
Therefore, the maximum face amounts per life that may be automatically ceded to the REINSURER are:
>> Initial: 26.67% * Maximum Initial Face Amount
>> Ultimate: 26.67% * Maximum Ultimate Face Amount
Stacking Limits
The amounts of Simplified Issue and Guaranteed issue in force and applied for across any and all companies on a single
life cannot exceed the lesser of three times the automatic issue limit or $10 million.
Non-US/Canadian Resident Limits
Face amounts for Non-US/Canadian work addresses cannot exceed 5% of the Simplified or Guaranteed Issue case face amounts.
Location Limits (Per Case)
The total initial face amount subject to reinsurance with the pool at a single location cannot exceed $100 million.
Projected Net Amount at Risk Limits
For each life, the net amount at risk projected at issue cannot exceed the amount shown above for the maximum ultimate
face amount. The projected net amount at risk is determined from the primary illustration provided by THE COMPANY
during the sales process. If the net amount at risk projected at issue exceeds the US/Canadian Resident limits,
then facultative reinsurance must be pursued.
Other Conditions
Pooled cases and cases involving negative consent are ineligible for automatic reinsurance.
Guaranteed Issue
Minimum Number of Lives
Guaranteed Issue cases must include at least 25 lives.
Issue Ages
The minimum issue age is 18; the maximum issue age for automatic reinsurance is 69. In addition, 75% of all participants
in the case must be at or below issue age 55.
Maximum Face Amounts (Automatic Issue Limits)
The face amounts per life cannot exceed the following:
>> Initial: $35,000 times the total number of lives up to $3,500,000
>> Ultimate: $70,000 times the total number of lives up to $7,000,000
Automatic Binding Limits
Therefore, the maximum face amounts per life that may be automatically ceded to the REINSURER are:
>> Initial: 26.67% * Maximum Initial Face Amount
>> Ultimate: 26.67% * Maximum Ultimate Face Amount
Stacking Limits
The amounts of Simplified Issue and Guaranteed Issue in force and applied for across any and all companies on a single
life cannot exceed the lesser of three times the automatic issue limit or $10 million.
Non-US/Canadian Resident Limits
Face amounts for Non-US/Canadian work addresses cannot exceed 5% of the Simplified or Guaranteed Issue case face amounts.
Location Limits (Per Case)
The total initial face amount subject to reinsurance with the pool at a single location cannot exceed $100 million.
Projected Net Amount at Risk Limits
For each life, the net amount at risk projected at issue cannot exceed the amount shown above for the maximum ultimate
face amount. The projected net amount at risk is determined from the primary illustration provided by THE COMPANY
during the sales process. If the net amount at risk projected at issue exceeds the US/Canadian Resident limits,
then facultative reinsurance must be pursued.
Other Conditions
Pooled cases and cases involving negative consent are ineligible for automatic reinsurance.
7. OCCUPATION EXCLUSION LIST FOR AUTOMATIC REINSURANCE
o Entertainers
o High Profile Athletes
8. FOREIGN TRAVEL EXCLUSIONS
Applications by US/Canadian residents with foreign travel will be excluded from automatic reinsurance and handled on a
facultative basis if the following conditions apply:
o The amount of insurance is in excess of $1 million and
o Travel is to a "C" or "D" rated country where the expected travel is greater than or equal to three months or travel is to
an "E" rated country where the expected travel is greater than one month.
9. FOREIGN RESIDENCE EXCLUSIONS
Non-US/Canadian residents will be excluded from automatic reinsurance and handled on a facultative basis if the following
conditions apply:
o The amount of insurance is in excess of $1 million and
o Residence is in a "C" or "D" rated country.
10. REPORTING PERIOD:
The reporting period will be monthly.
11. MINIMUM CESSION:
The minimum amount per cession that can be reinsured with THE REINSURER is $26,670.
12. RESERVES FOR REINSURANCE:
THE REINSURER will hold a reserve at least as high as the amount determined as the one-year term reserve on the portion of
each policy reinsured. This reserve will be calculated using the interest rate specified in the standard valuation law for
the applicable year of issue and the sex and smoker distinct 1980 CSO ultimate ALB mortality table.
13. RISK TRIGGER EVENT:
A "Risk Trigger Event" means that any of the following has occurred:
(1) THE REINSURER does not maintain its status as a licensed or accredited reinsurer under the applicable laws and regulations
of New Jersey and has not provided THE COMPANY with alternative security (such as a trust or letter of credit) that
satisfies THE COMPANY's specific requirements and the current, applicable legal and regulatory requirements in New
Jersey necessary to entitle THE COMPANY to take the maximum permissible credit on its statutory financial statements.
(2) THE REINSURER no longer has in effect a Qualified Rating (as defined below) from at least one of the Major Rating Agencies
shown in the chart below, which is at least as high as the minimum levels shown:
------------------------------------ -----------------------------------
Major Rating Agency Minimum Applicable Rating:
==================================== ===================================
------------------------------------ -----------------------------------
Xxxxx Investor Services, Inc. A rating of "A2" or higher.
------------------------------------ -----------------------------------
------------------------------------ -----------------------------------
Standard & Poor's Corporation A rating of "A" or higher.
------------------------------------ -----------------------------------
Definitions:
"Qualified Rating" shall mean the issuance of an insurance company long-term, financial strength rating from one or more of
the Major Rating Agencies that remains in effect, that has not been suspended or withdrawn, and that was issued as a result
of the full interactive ratings review process (including interviews with senior management) by the Major Rating Agency in
question. (Use of the modifiers "Q" or "Pi" by S&P or any similar indication that a rating is a "qualified" or "limited"
rating by any other of the Major Rating Agencies means that the rating does not constitute a "Qualified Rating" for purposes
of this Agreement.)
If at any point in the future during the term of this Agreement, THE REINSURER no longer has in effect a Qualified Rating as
specified in clause (1) above, then THE COMPANY's right of recapture will be triggered unless THE REINSURER elects to, and
does, provide, on a timely basis, security in the form of (1) a letter of credit that meets the requirements set forth in
the 'Letter of Credit Provisions' in Section 13 of this Schedule A and/or (2) amounts to be held on deposit as set forth in
the 'Funds Withheld Provisions' in Section 14 of this Schedule A, and/or (3) Assets in Trust as described in Section 15 of
this Schedule A. THE COMPANY'S right of recapture will expire 180 days after the date that THE REINSURER notifies THE
COMPANY of the occurrence of a Risk Trigger Event.
If THE COMPANY does not exercise its right of recapture in the 180-day period, then THE COMPANY cannot recapture, unless a
new right of recapture is triggered. A new right of recapture will be triggered if THE REINSURER no longer has in effect a
Qualified Rating from at least one of the Major Rating Agencies shown in the chart below, which is at least as high as the
minimum levels shown:
------------------------------------ -----------------------------------
Major Rating Agency Minimum Applicable Rating:
==================================== ===================================
------------------------------------ -----------------------------------
Xxxxx Investor Services, Inc. A rating of "A3" or higher.
------------------------------------ -----------------------------------
------------------------------------ -----------------------------------
Standard & Poor's Corporation A rating of "A-" or higher.
------------------------------------ -----------------------------------
THE COMPANY's right of recapture will last for 180 days from the date that THE REINSURER notifies THE COMPANY of the
occurrence of the Risk Trigger event.
If THE COMPANY does not exercise its right of recapture in this 180-day period, then THE COMPANY cannot recapture, unless a
new right of recapture is triggered. A new right of recapture will be triggered if THE REINSURER no longer has in effect a
Qualified Rating from at least one of the Major Rating Agencies shown in the chart below, which is at least as high as the
minimum levels shown:
------------------------------------ -----------------------------------
Major Rating Agency Minimum Applicable Rating:
==================================== ===================================
------------------------------------ -----------------------------------
Xxxxx Investor Services, Inc. A rating of "Baa1" or higher.
------------------------------------ -----------------------------------
------------------------------------ -----------------------------------
Standard & Poor's Corporation A rating of "BBB+" or higher.
------------------------------------ -----------------------------------
THE COMPANY's right of recapture will last for 180 days from the date that THE REINSURER notifies THE COMPANY of the
occurrence of the Risk Trigger event.
If at any point after the occurrence of a Risk Trigger Event, THE REINSURER's Qualified Rating rises back to the Minimum
Applicable Rating defined in clause (2), THE COMPANY's right of recapture reverts back to the original Risk Trigger Event
defined in clause (2).
14. LETTER OF CREDIT PROVISIONS:
a. Under the circumstances described in the last paragraph of Section 23 of this Agreement or under the circumstances described
in Section 12 of this Schedule A, THE REINSURER may apply for, provide to THE COMPANY, and maintain during the entire
term of this Agreement, one or more letters of credit with respect to all the amounts recoverable from THE REINSURER
under this Agreement (individually, a "Letter of Credit" and collectively, the "Letters of Credit") so as to avoid
triggering THE COMPANY's right of recapture under Section 20. If THE REINSURER elects to do so, each of the Letters of
Credit must individually satisfy the requirements of subsections b. and c. below and all of the Letters of Credit
collectively must satisfy the requirements of subsections d. and e. below. In addition, each Letter of Credit
individually and all of the Letters of Credit collectively must satisfy any other applicable legal or regulatory
requirements of New Jersey that must be complied with in order to ensure that THE COMPANY is entitled to take the
maximum credit for the risks ceded under this Agreement on its financial statements.
b. Each of the Letters of Credit must: (I) be an original and signed by an authorized official of the issuing bank or an
authorized official of the confirming bank (in the case of a confirmation meeting the requirements of this Section);
(II) contain an issuance date and contain an expiry date that is no earlier than one calendar year from the issuance
date; (III) be issued or confirmed by a "Qualified Financial Institution" as defined in accordance with applicable New
Jersey regulations that is acceptable to THE COMPANY; (IV) be issued on behalf of THE REINSURER as the "Applicant" and
include such indication in a boxed area that states it is "For Internal Identification Purposes Only" (or similar words
to that effect) and that does not affect the terms of the Letter of Credit or the bank's obligations thereunder; (V) be
issued to THE COMPANY as "Beneficiary" and expressly indicate in the body of the Letter of Credit that the definition of
the "Beneficiary" under the Letter of Credit includes any successor by operation of law of THE COMPANY, including,
without limitation, any liquidator, rehabilitator, receiver, or conservator for THE COMPANY; (VI) be issued, presentable
and payable at an office of the issuing or confirming bank within the United States; (VII) be "clean and unconditional"
(meaning that the Letter of Credit makes no reference to any other agreement, document or entity and provides that the
Beneficiary need only draw a sight draft under the Letter of Credit or confirmation and present it to promptly obtain
funds and that no other document need be presented); (VIII) contain a statement that it is not subject to any agreement,
condition or qualification outside the Letter of Credit itself; (IX) contain a statement to the effect that the
obligation of the issuing bank under the Letter of Credit is an individual obligation of such bank and is in no way
contingent upon reimbursement with respect thereto; (X) be irrevocable and contain an "evergreen clause" (meaning that
the letter of credit or confirmation cannot be revoked prior to its expiry date and that it will automatically renew
prior to the occurrence of the expiry date unless written notice sent by U.S. registered mail has been delivered to THE
COMPANY as Beneficiary at the notice address stipulated in subsection d. of this Section not less than 30 days prior to
the expiry date); and (XI) state that it is subject to and governed by the laws of the State of New Jersey.
c. Each Letter of Credit must indicate that notices of non-renewal will be sent to the following address, or such other address
as may be indicated in a notice sent by THE COMPANY to the issuing or confirming bank:
Chief Actuary
Pruco Life Insurance Company of New Jersey
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
d. All of the Letters of Credit must, in the aggregate, provide for a maximum amount that can be drawn thereunder of a sum that
is at least as great as THE COMPANY has indicated will be required under the terms of this Agreement and under the
respective terms of all other related reinsurance agreements between THE REINSURER and THE COMPANY for which a Risk
Trigger Event, as defined in the respective reinsurance Agreements, has occurred. The amount needed shall be an amount
at least equal to the deduction for reinsurance ceded from THE COMPANY's liabilities for policies ceded under this
Agreement. Such amount shall include, but not be limited to, reinsurance reserves credits, reserves for claims and
losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums. The
amount shall also include a provision for adverse deviation in claims and losses over the subsequent 12-month period
that is in excess of any conservation already included in the reinsurance reserve credits. Each year on or before
December 1, THE COMPANY will indicate to THE REINSURER the aggregate coverage amount needed under all of the Letters of
Credit as well as any other information necessary for THE REINSURER to provide THE COMPANY the required Letters of
Credit prior to December 31. The cost for all Letters of Credit furnished and maintained under this Agreement will be
borne solely by THE REINSURER.
e. THE REINSURER and THE COMPANY agree that any or all of the Letters of Credit provided by THE REINSURER pursuant to the
provisions of this Agreement may be drawn upon in full or in part at any time, notwithstanding any other provisions in
this Agreement, and may be utilized by THE COMPANY or any successor by operation of law of THE COMPANY including,
without limitation, any liquidator, rehabilitator, receiver or conservator of THE COMPANY for any of the following
purposes:
i. to reimburse THE COMPANY for THE REINSURER's share of premiums returned to the owners of policies reinsured under the
reinsurance agreement on account of cancellations of such policies;
ii. to reimburse THE COMPANY for THE REINSURER's share of benefits or losses paid by THE COMPANY under the terms and provisions
of the policies reinsured under this Agreement;
iii. to fund an account with THE COMPANY in an amount at least equal to the deduction, for reinsurance ceded, from THE COMPANY's
liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to, amounts
for policy reserves, reserves for claims and losses incurred (including losses incurred but not reported), loss
adjustment expenses, and unearned premiums; and
iv. to pay any other amounts THE COMPANY claims are due under this Agreement:
All of the foregoing will be applied without diminution because of insolvency on the part of THE COMPANY or THE
REINSURER.
THE REINSURER further acknowledges and agrees that THE COMPANY or any successor by operation of law of THE COMPANY
including, without limitation, any liquidator, rehabilitator, receiver or conservator of THE COMPANY may draw upon any or
all of the Letters of Credit in full or in part in the event that: (I) a notice of cancellation or non-renewal has been
issued by the issuing or confirming bank under any of the Letters of Credit and THE REINSURER has not obtained one or more
replacement letters of credit that satisfy all of the applicable requirements of this Section by that date which is ten
days prior to the earliest expiry date of the Letter of Credit or Letters of Credit as to which notice of cancellation or
non-renewal has been sent; or (II) the maximum amount that may be drawn under any of the Letters of Credit has been reduced
or THE COMPANY has communicated to THE REINSURER in accordance with the provisions of subsection d. of this Section a need
to increase the aggregate amount available under all of the Letters of Credit and THE REINSURER has not obtained one or more
replacement Letters of Credit or one or more additional Letters of Credit so that all issued and outstanding Letters of
Credit that will remain in effect provide for coverage in an amount sufficient to meet the requirements of subsection d. of
this Section.
15. FUNDS WITHHELD PROVISIONS
a. Under the circumstances described in the last paragraph of Section 23 of this Agreement or under the circumstances described
in Section 12 of this Schedule A, THE REINSURER may provide to THE COMPANY for the entire term of this Agreement an
amount of cash to be held on deposit ("Funds Withheld") with respect to all the amounts recoverable from THE REINSURER
under this Agreement so as to avoid triggering THE COMPANY's right of recapture under Section 20. If THE REINSURER
elects to do so, the Funds Withheld must satisfy the requirements of subsections b., c., d., and e.
b. The Funds Withheld must be an amount that is at least as great as what THE COMPANY has indicated will be required under this
Agreement and all other related reinsurance agreements between THE REINSURER and THE COMPANY for which a Risk Trigger
Event, as defined in the respective reinsurance Agreements, has occurred. Approximately fifteen days following the end
of each calendar quarter, THE COMPANY will indicate to THE REINSURER the amount of funds needed as well as any other
information necessary for THE REINSURER to provide THE COMPANY the required Funds Withheld within fifteen days.
The amount of funds needed shall be an amount at least equal to the deduction for reinsurance ceded from THE COMPANY's
liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to, reinsurance
reserves credits, reserves for claims and losses incurred (including losses incurred but not reported), loss adjustment
expenses, and unearned premiums. The amount shall also include a provision for adverse deviation in claims and losses
over the subsequent 3-month period that is in excess of any conservation already included in the reinsurance reserve
credits.
THE REINSURER will provide on or before a date agreed to by the parties funds that equal 103% of the most recently
communicated amount needed. In addition, THE REINSURER shall provide future additional funds so as to maintain the
value of the Funds Withheld at all times equal to 103% of the required amount needed. THE REINSURER will provide such
funds within fifteen days of receiving notification of the amount needed.
c. THE REINSURER and THE COMPANY agree that any Funds Withheld provided by THE REINSURER pursuant to the provisions of this
Agreement may be drawn upon by THE COMPANY in full or in part at any time, notwithstanding any other provisions of this
Agreement, and may be utilized by THE COMPANY or any successor by operation of law of THE COMPANY including without
limitation, any liquidator, rehabilitator, receiver or conservator of THE COMPANY for any of the following purposes:
i. to reimburse THE COMPANY for THE REINSURER's share of premium returned to the owners of policies reinsured under the
reinsurance agreement on account of cancellations of such policies;
ii. to reimburse THE COMPANY for THE REINSURER's share of benefits or losses paid by THE COMPANY under the terms and provisions
of the policies reinsured under this Agreement;
iii. to pay any other amounts THE COMPANY claims are due under this Agreement:
All of the foregoing will be applied without diminution because of insolvency on the part of THE REINSURER.
d. At the end of each calendar quarter, THE COMPANY will credit interest on the Funds Withheld during the previous quarter.
The amount of interest that THE COMPANY will credit will be based on the average amount of Funds Withheld over the
quarter. The interest rate will be equal to the sum of the London Interbank Office Rate, U.S. Denomination-Fixed
Twelve-month, (LIBOR) as of the beginning of the calendar quarter, plus 90 basis points.
e. THE COMPANY agrees to return to THE REINSURER any Funds Withheld which are in excess of the actual amounts required.
The Funds Withheld shall remain in effect until the later of the termination of this Reinsurance Agreement or the full
satisfaction and discharge of any and all liabilities and obligations owed by THE REINSURER to THE COMPANY, unless THE
REINSURER and THE COMPANY mutually agree in writing to terminate the Funds Withheld at an earlier date. If any Funds
Withheld remain after the parties have mutually agreed in writing to terminate the Funds Withheld, THE COMPANY shall
remit such amounts plus any interest due thereon to THE REINSURER within 15 days of the termination of the Funds
Withheld.
16. TRUST AGREEMENT PROVISIONS:
a. Under the circumstances described in the last paragraph of Section 23 of this Agreement or under the circumstances described
in Section 12 of this Schedule A, THE REINSURER may enter into, and maintain during the entire term of this Agreement,
a Trust Agreement to establish a trust account securing the Credit Amount (as defined in subsection b. below), so as
to avoid triggering THE COMPANY's right of recapture under Section 20. If THE REINSURER enters into a Trust Agreement
to establish a trust account securing the Credit Amount, the Trust Agreement must satisfy the requirements of
subsections b., c., d., e., f., g., h. and i. below. The trustee of the Trust shall be a "Qualified Financial
Institution" as defined in accordance with applicable New Jersey regulations.
b. Fifteen days prior to the end of each calendar quarter or at any other time, THE COMPANY will determine and communicate the
Credit Amount to THE REINSURER The Credit Amount shall be an amount at least equal to the deduction for reinsurance
ceded from THE COMPANY's liabilities for policies ceded under this Agreement. Such amount shall include, but not be
limited to, reinsurance reserves credits, reserves for claims and losses incurred (including losses incurred but not
reported), loss adjustment expenses, and unearned premiums. The amount shall also include a provision for adverse
deviation in claims and losses over the subsequent 3-month period that is in excess of any conservation already
included in the reinsurance reserve credits. THE COMPANY will communicate this amount to THE REINSURER in order to
enable THE REINSURER to ensure that the Trust is maintained with a sufficient balance. All costs and expenses of
maintaining the trust will be borne by THE REINSURER and will not be paid by any of the Assets held in the Trust.
c. THE REINSURER will deposit into the Trust on or before a date agreed to by the parties Assets that cause the market value of
the trust to meet or exceed 103% of the most recently communicated Credit Amount. In addition, as provided by the
Trust Agreement, THE REINSURER shall make future additional deposits into the Trust so as to cause the market value of
the trust assets at all times to meet or exceed 103% of the Credit Amount. THE REINSURER shall make such deposit(s)
within fifteen days of receiving notification of the Credit Amount.
d. The assets deposited in the trust account shall be valued according to their current fair market value, and shall consist of
only those instruments detailed within the Trust Agreement, provided that such investments are issued by an
institution that is not a parent, subsidiary, or an affiliate of either THE COMPANY or THE REINSURER. Upon request,
THE COMPANY will be entitled to a report setting forth the fair market value of the trust assets.
e. THE REINSURER shall, prior to depositing assets with the Trustee, execute assignments, endorsements in blank, or transfer
legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that THE
COMPANY, may, whenever necessary, negotiate any such assets without consent or signature from THE REINSURER or any
other entity.
f. All settlements of account between THE COMPANY and THE REINSURER shall be made in cash or its equivalent.
g. THE REINSURER and THE COMPANY agree that the assets in the trust account may be drawn upon at any time, notwithstanding any
other provisions in this Agreement, and be utilized and applied by THE COMPANY or any successor by operation of law of
THE COMPANY including, without limitation, any liquidator, rehabilitator, receiver or conservator of THE COMPANY, for
the following purposes:
i. To reimburse THE COMPANY for THE REINSURER's share of premiums returned to the owners of policies reinsured under this
Agreement on account of cancellation of such policies;
ii. To reimburse THE COMPANY for THE REINSURER's share of benefits or losses paid by THE COMPANY under the terms and provisions
of the policies reinsured under this Agreement;
iii. To fund an account with THE COMPANY in an amount at least equal to the deduction for reinsurance ceded from THE COMPANY's
liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to,
amounts for policy reserves, reserves for claims and losses incurred (including losses incurred but not
reported), loss adjustment expenses, and unearned premiums;
iv. To pay any other amounts THE COMPANY claims are due under this Agreement.
All of the foregoing will be applied without diminution because of insolvency on the part of THE COMPANY or THE
REINSURER.
THE COMPANY agrees to return to THE REINSURER any amounts withdrawn which are in excess of the actual amounts
required for i, ii and iii above, or in the case of iv, such amounts that are in excess of the amounts ultimately
determined to be due under this Agreement. In addition, THE COMPANY shall make interest payments to THE REINSURER on
amounts withdrawn pursuant to item (iii) above, to the extent such interest is not needed to be retained to maintain
the account at the Credit Amount. The rate of interest charged will be equal to MOODY's 30-Day AAA Rate, but no
greater than the Prime Rate of interest as published in Federal Reserve Bulletin. The XXXXX'x 30-Day AAA Rate and
the Prime Rate shall be determined on the first business day of each month in which interest is payable.
THE REINSURER shall have the right to seek approval from THE COMPANY to withdraw from the trust account a portion of
the assets contained therein and to transfer such assets to THE REINSURER, provided that after such withdrawal and
transfer, the market value of the trust account is no less than one hundred and three percent (103%) of the Credit
Amount most recently communicated by THE COMPANY to THE REINSURER. THE COMPANY should be the sole judge as to the
applicability of the provision, but it shall not unreasonably or arbitrarily withhold its approval.
h. The Trust shall remain in effect until the later of the termination of this Reinsurance Agreement or the full satisfaction
and discharge of any and all liabilities and obligations owed by THE REINSURER to THE COMPANY, unless THE REINSURER
and THE COMPANY mutually agree in writing to terminate the Trust at an earlier date. Notwithstanding any provision
contained in the Trust Agreement, THE REINSURER shall not seek to terminate the Trust unless it has written permission
from THE COMPANY. THE COMPANY shall not arbitrarily or unreasonably withhold such permission if another form of
collateral acceptable to THE COMPANY is provided by THE REINSURER for the Credit Amount. Upon termination of the Trust
by mutual agreement or full satisfaction and discharge of any and all liabilities and obligations owed by THE
REINSURER to THE COMPANY under this Agreement, any remaining assets shall be transferred to THE REINSURER.
i. Prior to THE REINSURER's establishing or funding the Trust, THE COMPANY shall submit the Trust Agreement to applicable state
regulatory authorities for approval, if any such approvals are required by state insurance law or regulations. THE
COMPANY shall promptly inform THE REINSURER of such approval or of any changes to such documents required by
regulatory authorities.
17. RISK RETENTION LIMITS:
The total amount of insurance retained on an individual life for THE COMPANY and its affiliates will not exceed the risk
retention limits in the following tables.
Non-Smoker:
-------------------- -------------------------- -------------------------- --------------------------
Issue Age No Substandard Rating Class A-D Class E-H
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
0 - 65 $30,000,000 $25,000,000 $15,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
66 - 70 $25,000,000 $20,000,000 $13,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
71 - 75 $15,000,000 $12,000,000 $10,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
76 - 80 $13,000,000 $10,000,000 $7,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
81 - 85 $9,000,000 $7,000,000 $5,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
86 - 90 $4,000,000 $3,000,000 $2,000,000
-------------------- -------------------------- -------------------------- --------------------------
Smoker:
-------------------- -------------------------- -------------------------- --------------------------
Issue Age No Substandard Rating Class A-D Class E-H
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
15 - 65 $20,000,000 $20,000,000 $15,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
66 - 70 $15,000,000 $15,000,000 $12,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
71 - 75 $10,000,000 $10,000,000 $10,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
76 - 80 $10,000,000 $10,000,000 $6,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
81 - 85 $7,000,000 $6,000,000 $4,000,000
-------------------- -------------------------- -------------------------- --------------------------
-------------------- -------------------------- -------------------------- --------------------------
86 - 90 $3,000,000 $2,000,000 $2,000,000
-------------------- -------------------------- -------------------------- --------------------------
SCHEDULE B
AUTOMATIC AND FACULTATIVE REINSURANCE PREMIUMS
---------------------------------------------------------------------------------------------------------------------------------------
1. STANDARD ANNUAL REINSURANCE PREMIUMS
The standard annual reinsurance premiums per $1,000 of net amount at risk will be the product of the reinsurance factor, a
grading factor and the June 14, 2001 version of the sex and smoker distinct, age last birthday, 2001 Valuation Basic Table
attached to this Schedule B.
The reinsurance factors vary by underwriting basis (Fully Underwritten, Simplified Issue, Guaranteed Issue) and underwriting
class (Select Preferred, Preferred and Standard). The factors for the Select Preferred and Preferred Classes will be
applied to the Non-Smoker Valuation Basic Table rates, and the factors for the Standard Class will be applied to the Smoker
rates.
The standard annual reinsurance factors for (1) all cessions of automatic reinsurance and (2) cessions of facultative
reinsurance in the amount of $10 million or less, are shown in the following table:
----------------------- --------------------- ---------------------------- ----------------------
Underwriting Basis Select Preferred Preferred Standard
(non-smoker) --------------------------- (smoker)
(non-smoker)
----------------------- --------------------- ---------------------------- ----------------------
----------------------- --------------------- ---------------------------- ----------------------
Fully Underwritten .570 .630 .750
----------------------- --------------------- ---------------------------- ----------------------
----------------------- --------------------- ---------------------------- ----------------------
Simplified Issue .540 .630 .690
----------------------- --------------------- ---------------------------- ----------------------
----------------------- --------------------- ---------------------------- ----------------------
Guaranteed Issue .640 .730 .800
----------------------- --------------------- ---------------------------- ----------------------
The standard annual reinsurance factors for cessions of facultative reinsurance in excess of $10 million, are shown in the
following table:
----------------------- --------------------- ---------------------------- ----------------------
Underwriting Basis Select Preferred Preferred Standard
(non-smoker) (non-smoker) (smoker)
----------------------- --------------------- ---------------------------- ----------------------
----------------------- --------------------- ---------------------------- ----------------------
Fully Underwritten .627 .693 .825
----------------------- --------------------- ---------------------------- ----------------------
----------------------- --------------------- ---------------------------- ----------------------
Simplified Issue .594 .693 .759
----------------------- --------------------- ---------------------------- ----------------------
----------------------- --------------------- ---------------------------- ----------------------
Guaranteed Issue .768 .876 .960
----------------------- --------------------- ---------------------------- ----------------------
The grading factors vary by underwriting basis (Fully Underwritten, Simplified Issue, Guaranteed Issue) and duration and are
shown in the following table:
---------- ---------------------------- --------------------------- -----------------------------
Policy Fully Simplified Guaranteed
Year Underwritten Issue Issue
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
1 100.00% 150.00% 175.00%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
2 100.00% 147.50% 171.25%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
3 100.00% 145.00% 167.50%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
4 100.00% 142.50% 163.75%
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5 100.00% 140.00% 160.00%
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---------- ---------------------------- --------------------------- -----------------------------
6 100.00% 137.50% 156.25%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
7 100.00% 135.00% 152.50%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
8 100.00% 132.50% 148.75%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
9 100.00% 130.00% 145.00%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
10 100.00% 127.50% 141.25%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
11 100.00% 125.00% 137.50%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
12 100.00% 122.50% 133.75%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
13 100.00% 120.00% 130.00%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
14 100.00% 117.50% 126.25%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
15 100.00% 115.00% 122.50%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
16 100.00% 112.50% 118.75%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
17 100.00% 110.00% 115.00%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
18 100.00% 107.50% 111.25%
---------- ---------------------------- --------------------------- -----------------------------
---------- ---------------------------- --------------------------- -----------------------------
19 100.00% 105.00% 107.50%
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---------- ---------------------------- --------------------------- -----------------------------
20 100.00% 102.50% 103.75%
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21+ 100.00% 100.00% 100.00%
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2. SUBSTANDARD ANNUAL REINSURANCE PREMIUMS
For fully underwritten business, the substandard extra premiums are available on classes 4 and 6 (Non-Smoker and Smoker).
For Simplified Issue contracts, the substandard extra premiums are available for all underwriting classes. For substandard
issues, the substandard extra reinsurance premium (plus any flat extra) is payable for 20 years. After this period, the
base reinsurance premium (plus any flat extra) is payable until the end of the premium paying period.
The substandard extra annual reinsurance premiums per $1,000 for substandard issues will be the product of the base
reinsurance premiums per $1,000 and the factor for the appropriate rating class. The factor is a product of the 95%
substandard adjustment percentage and the substandard mortality multiple for the rating class. Note that this is the total
premium rate, including both the base and substandard extra premium rates.
The factors (after the 95% adjustment mentioned above) applicable for the first 20 policy years are as follows:
---------------------- ------------------------
Special Class Factor
---------------------- ------------------------
---------------------- ------------------------
A 1.330
---------------------- ------------------------
---------------------- ------------------------
B 1.568
---------------------- ------------------------
---------------------- ------------------------
C 1.805
---------------------- ------------------------
---------------------- ------------------------
D 2.138
---------------------- ------------------------
---------------------- ------------------------
E 2.613
---------------------- ------------------------
---------------------- ------------------------
F 3.088
---------------------- ------------------------
---------------------- ------------------------
G 3.563
---------------------- ------------------------
---------------------- ------------------------
H 4.275
---------------------- ------------------------
3. FLAT EXTRA REINSURANCE PREMIUMS
The flat extra reinsurance premium per $1,000 will be the product of flat extra premiums charged by THE COMPANY and the
factors in the following table:
--------------------------------------------------------------
Permanent Flat Extra Premiums (i.e., for more than 5
years duration)
--------------------------------------------------------------
First year .25
--------------------------- ----------------------------------
--------------------------- ----------------------------------
Renewal year .90
--------------------------- ----------------------------------
--------------------------------------------------------------
Temporary Flat Extra Premiums (i.e., for 5 years
duration or less)
--------------------------------------------------------------
All years .90
--------------------------- ----------------------------------
4. AGE BASIS
Age Last Birthday
5. PREMIUM TAXES
Premium taxes are not reimbursed.
6. CURRENCY
All amounts are in U.S. Dollars.
