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EXHIBIT 10.4
TRUST AGREEMENT
Between
VOYAGER LIFE AND HEALTH INSURANCE COMPANY
State of Georgia
And
XXXXXXX INSURANCE, LTD.
Turks and Caicos Islands
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TRUST AGREEMENT
THIS TRUST AGREEMENT is made and entered into by and among Voyager life and
Health Insurance Company, a corporation organized under the laws of the State
of Georgia (hereinafter referred to as Ceding Company) and Xxxxxxx Insurance,
Ltd. a corporation organized under the laws of The Turks and Caicos Islands
(hereinafter referred to as Reinsuring Company), and First Union National Bank
of Florida, a National Bank organized under the laws of the State of Florida,
with offices in Jacksonville, Florida (hereinafter referred to as Trustee).
WITNESSETH:
WHEREAS, Ceding Company has heretofore entered into a Reinsurance Agreement
effective as of January 1, 1993, with Reinsuring Company; and
WHEREAS, Reinsuring Company has accepted certain liability for reinsurance
assumed as provided in the Reinsurance Agreement, but is not authorized to
transact insurance business in certain states, or is not authorized to act as
reinsurer pursuant to statutes or regulations as prescribed by the governing
officials of said states;
and WHEREAS, notwithstanding Ceding Company's liability under said policy being
reinsured by Reinsuring Company, so long as Reinsurer Company remains
unqualified to act as reinsurer in certain states, Ceding Company, in order to
take credit for such reinsurance on its Annual Statement is required to keep and
maintain certain required reserves thereon to the same extent as would have been
maintained bad such liability not been reinsured;
and WHEREAS, the Reinsurance Agreement requires the establishment of a Trust
Account 50 as to permit Ceding Company to take credit in its Annual Statement in
accordance with Section 33-7-14(b) of the Georgia Insurance Code as revised from
time to time for the reinsurance so ceded;
and WHEREAS, the Trustee is a qualified U.S. Financial Institution in accordance
with Section 33-7-14(c)(2) of the Georgia Insurance Code,
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
ARTICLE I. REQUIRED DEPOSIT
This Trust Agreement, which is attached to and forms a permanent part of the
Reinsurance Agreement and which is effective on the date of its execution by
all parties, is established for the benefit of Ceding Insurer for the sole
purpose of Reinsuring Company providing additional security for the performance
of all its obligations to Ceding Company under the Reinsurance Agreement.
Reinsuring Company hereby agrees to deposit into a trust account
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established with Trustee, which is a member of the Federal Reserve System,
assets equal to the reserves required to be established by Reinsuring Company
(such deposits hereinafter referred to as the Account). The Trustee shall
determine that the assets shall be held in such form that the Trustee upon
direction of Ceding Company may, whenever necessary, negotiate or transfer any
such assets without consent or signature from Reinsuring Company or any other
person or entity. Reinsuring Company agrees to execute assignments,
endorsements in blank or other necessary documents on all assets requiring such
in order to effect such transfer. The determination of the amount required to
be maintained in the Account shall be determined by Ceding Company through
actuarial statements upon which the Trustee may rely without liability.
ARTICLE II. PERMISSIBLE INVESTMENTS
It is understood that assets so deposited shall be valued, for purposes in
determining the extent thereof, according to their fair market value thereof.
Such assets shall consist only of: 1) Cash (United States legal tender), 2)
deposit accounts or certificates of deposit, of less than one year maturity, in
an amount not exceeding $1,000,000 in any single bank or savings and loan
company organized under the laws of the United States that has a short term
debt rating of F2/A2 or better from Xxxxx'x or Standard and Poor's or $100,000
in any other single bank or savings and loan company that is organized under
the laws of the United States and is federally insured, 3) U.S. government
obligations, or 4) such securities which are readily marketable over a national
exchange listed by the Securities Valuation Office of the National Association
of Insurance Commissioners and qualifying as admitted assets for life
companies, provided that such securities are issued by an institution that is
not the parent, subsidiary or affiliate of Reinsuring Company or Ceding
Company. It is understood that the Trustee shall not be responsible for
determining the fair market value of securities maintained in the Account nor
to determine the total assets required to be maintained in the Account.
ARTICLE III. BALANCE ADJUSTMENT
Any adjustments by Reinsuring Company necessary to maintain the Account at the
required reserves shall be made by Reinsuring Company within ten (10) days
following receipt by Reinsuring Company of Coding Company's statement
indicating the necessary amount of said reserves.
ARTICLE IV. VOTING/DIVIDEND AND INTEREST RIGHTS
Reinsuring Company shall have the full and unqualified right to vote and
execute consents with respect to any shares of stock forming a part of the
Account for any purpose as Reinsuring Company in their discretion may deem
proper. The Trustee is hereby authorized and empowered, with prior notice to
Ceding Company, to demand payment of and collect any and all interest or cash
dividends on assets pledged hereunder, and the Trustee, is directed to remit to
Reinsuring Company all of such interest or cash dividends collected;
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provided, however, that if at any time of collection or receipt of such
interest by the Trustee, any amount is due the Account under provisions of
Article I or is due Ceding Company under the circumstances described in Article
VI hereof the Trustee shall deposit, retain, hold or dispose of such interest
upon the same terms and conditions as the Trustee is authorized to hold and
dispose of the assets pledged hereunder.
The Trustee shall not be responsible for the collection or record maintenance
for any stock dividends.
ARTICLE V. WITHDRAWAL OF FUNDS
Withdrawals of assets from the Account cannot be made without the written
consent of the Ceding Company. With the written consent of Ceding Company,
Reinsuring Company shall at any time have the right to withdraw assets from the
Account, provided that Reinsuring Company replaces such assets with assets that
are in such form and of sufficient value to meet the requirements of this Trust
Agreement, and that after such withdrawal and transfer, the market value of the
Account is no less than 102% of the amount required by Article I above. Ceding
Company shall execute any and all documents necessary to permit Reinsuring
Company to withdraw assets under this Trust Agreement. In the event that the
Reinsurance Agreement is terminated, Ceding Company shall have the right during
the runoff period to control assets deposited under this Trust Agreement to the
extent of 150% of the amount required by Article I above, until the Account is
dissolved, in accordance with Article VIII hereof.
ARTICLE VI. USE OF FUNDS
Reinsuring Company agrees that the assets of Reinsuring Company deposited in
the Account pursuant to this Trust Agreement, shall be subject to withdrawal by
Ceding Company at. any time and utilized only by Ceding Company, or its
successors in interest by operation of law, including without limitation any
liquidator, rehabilitator, receiver or conservator, only in the event of
Reinsuring Company's failure to fulfill its obligations under the terms of the
Reinsurance Agreement or any other reinsurance agreement between the Ceding
Company (including its affiliate companies) and Reinsuring Company (including
its affiliate companies) and only for the following purposes:
A. to reimburse Ceding Company for Reinsuring Company's share of premium
refunded on account of cancellations of policies reinsured under the
Reinsurance Agreement;
B. to reimburse Ceding Company for Reinsurance Company's share of
surrenders, if any, and benefits or losses paid pursuant to the
provisions of the policies reinsured under the Reinsurance Agreement;
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C. in the event of notice of termination of this Trust Agreement, to fund
an account with Ceding Company in an amount at least equal to the
deduction, for reinsurance ceded, from Ceding Company's liabilities
for policies ceded under the Agreement, such account to include, but
not be limited to, amounts for policy reserves, claims and losses
incurred (including losses incurred but not reported), allocated loss
adjustment expenses and unearned premiums reserves; and
D. to reimburse Ceding Company for any other amounts due from Reinsuring
Company pursuant to the Reinsurance Agreement or any other reinsurance
agreement between Ceding Company (including its affiliate companies)
and Reinsuring Company (including its affiliate companies).
All of said reimbursements shall be made without diminution because of
insolvency of Ceding Company or Reinsuring Company.
ARTICLE VII. RESPONSIBILITIES OF TRUSTEE
A. Upon written demand by Ceding Company at Trustee's office in the
United States, Trustee is hereby authorized and directed to
immediately convey, assign or transfer absolutely and unequivocally
all right, title and interest in. or sell or collect at maturity (in
which manner Ceding Company shall direct) any and all of the assets
pledged hereunder, without notice to Reinsuring Company, and to
deliver physical custody of such assets or the proceeds of any such
sale to Ceding Company. In the event that the amount realized upon any
sales or collections of any assets is greater than the amount due
Ceding Company hereunder, the excess shall be returned to, or retained
by Trustee, to be held in the same manner as other assets pledged
hereunder. Reinsuring Company agrees to cooperate promptly with all
requests of Trustee or Ceding Company to assign, sell and/or transfer
to Ceding Company the assets necessary to satisfy the requirements of
this Trust Agreement.
B. Trustee shall notify Coding Company and Reinsuring Company, within 10
days, of any deposits to or withdrawals from the Account and shall
report to Ceding Company and Reinsuring Company at the inception of
the Account and not later than the 20th day of the month following the
end of each calendar quarter, the amount on deposit as of the last day
of the preceding quarter. The report shall also contain a listing
identifying the cash, securities and other assets on deposit. The
Trustee shall be responsible for investing funds at the direction of
the parties as herein provided, and shall have no other investing
responsibilities.
C. Trustee agrees to receive from Reinsuring Company the assets forming
the Account and to hold said assets in safekeeping subject to the
terms of this Trust Agreement at the Trustee's office in the United
States. All cash received by Trustee shall be deposited in a bank,
which is a member of the Federal Reserve System including itself, as
the Trustee may deem proper.
D. Reinsuring Company agrees to pay all costs or fees of Trustee for
acting as Trustee
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hereunder including fees for legal services incurred by Trustee if
Trustee deems such services necessary, and the parties agree that such
costs or fees shall not be withdrawn from the Account or otherwise
paid with Trust assets.
E. Subject to the obligations of Paragraph F. below, the Trustee shall be
protected in acting upon any statement notice, resolution, consent,
letter or other document reasonably believed by the Trustee to be
genuine and to have been signed, sent or presented by the proper party
or parties.
F. Whenever the Trustee is authorized or directed pursuant to the
provisions of this Trust Agreement to take any action and acts in
accordance with such written and signed directions by the appropriate
party or parties, then Ceding Company and Reinsuring Company hereby
agree to indemnify the Trustee against all losses, insuring damages,
costs and expenses, including reasonable attorney's fees, resulting
from any act so taken by the Trustee, except that Trustee shall be
liable for its own negligence, willful misconduct, lack of good faith,
or breach of fiduciary duty.
ARTICLE VIII. TERMINATION
A. Unless sooner terminated by mutual written consent of Ceding Company
and Reinsuring Company, this Trust Agreement shall terminate when
Reinsuring Company shall no longer be liable as a reinsurer under the
terms and provisions of the Reinsurance Agreement; provided always
that the Trustee shall deliver to the parties notification of
termination at least 30 days prior to termination. Upon termination of
this Trust Agreement, the Trustee shall, upon written approval of
Ceding Company, return the assets then remaining in the Account to
Reinsuring Company or Reinsuring Company's legal representative or
assigns, without further order of instruction, and thereupon the
Trustee shall be released and discharged from all further duty and
liability in respect to the assets.
B. Ceding Company and Reinsuring Company may mutually agree to change the
Trustee at any time.
C. The Trustee shall have the option to terminate its agreement to am as
Trustee under this Trust Agreement at any time by giving 90 days prior
notice by certified mail to Ceding Company and Reinsuring Company
provided that no such resignation shall be effective until a successor
trustee has been duly appointed and approved by Ceding Company and
Reinsuring Company and all assets in the Account have been duly
transferred to the new Trustee.
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ARTICLE IX. ENTIRE CONTRACT
This Trust Agreement and the Reinsurance Agreement to which it is attached
constitute the entire agreement and supersede all prior agreements,
understandings and negotiations, oral and written, between Coding Company and
Reinsuring Company. This Trust Agreement is not subject to any conditions or
qualifications outside of this Trust Agreement other than the Reinsurance
Agreement. Except with respect to the provisions of Paragraphs E and F of
Article VII hereof, this Trust Agreement may be altered, amended or terminated
at any time by written agreement of Ceding Company and Reinsuring Company.
However, no waiver, amendment or modification hereof shall be of any force or
effect unless in writing and signed by the parties making specific reference
hereto. If any provision of this Trust Agreement is held to be unenforceable by
a tribunal having jurisdiction in the matter, then such provision shall be
enforced to the maximum extent possible and the remaining provisions shall
remain in full force and effect. Furthermore, in lieu of such unenforceable
provision, there shall be added automatically a part of this Trust Agreement a
provision as similar in terms as may be possible and enforceable.
ARTICLE X. MISCELLANEOUS PROVISIONS
A. Neither Ceding Company nor Reinsuring Company shall assign or transfer
all of any part of the rights or obligations accruing hereunder
without the prior written consent of each other. Trustee shall not
assign or transfer all or any part of its rights or obligations
hereunder without the prior written consent of both Ceding Company and
Reinsuring Company.
B. Should an irreconcilable difference of opinion or dispute arise between
Ceding Company and Reinsuring Company as to the interpretation of this
Trust Agreement or as to transactions with respect to this Trust
Agreement, such differences or dispute shall be resolved in accordance
with the Arbitration provision in the Reinsurance Agreement which is
incorporated herein by reference in its entirety.
C. This Trust Agreement shall be deemed to have been made and shall be
interpreted and construed pursuant to the laws of the State of Texas.
Reinsuring Company agrees to submit to the jurisdiction of any court
of competent jurisdiction in Texas, to comply with all requirements
necessary to give such court jurisdiction, and to abide by the final
decision of such court or any Appellant Court in the event of appeal.
Reinsuring Company hereby designates the Commissioner of Insurance of
the state of domicile of Ceding Insurer as its true and lawful
attorney upon whom may be served any lawful process and any action,
suit or proceeding instituted by or on behalf of the Ceding Company.
This provision, however, is not intended to conflict with or override
the obligation of the parties to arbitrate their disputes in
accordance with Paragraph B above.
D. All notices and other communications shall be in writing and shall be
delivered personally or mailed, postage prepaid, certified or
registered mail, return receipt
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requested to the respective addresses as follows or otherwise to a
party as it may specify by notice given:
If to Ceding Insurer: Voyager Life & Health Insurance Company
000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: President
If to Reinsuring Company Xxxxxxx Insurance, Ltd.
000 Xxxx Xxx.
Xxxxx Xxxxx, XX. 00000
Attention: Mr. Xxx Xxxxxxx
If to Trustee: First Union National Bank of Florida
Capital Management Group
000 Xxxxx Xxxxxx - Xx Xxxx Bldg., FL 0135
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxx, Vice President
E. The terms of this Agreement shall not be construed in favor of or
against any party on account of the party's participation or lack of
participation in the drafting of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate by their duly authorized officers.
VOYAGER LIFE & HEALTH INSURANCE
COMPANY
By: Witness:
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Title:
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Date:
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XXXXXXX INSURANCE, LTD.
By: Witness:
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Title:
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Date:
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FIRST UNION NATIONAL BANK OF
FLORIDA
By: Witness:
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Title:
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Date:
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