AUTOMATIC
REINSURANCE AGREEMENT
(hereinafter, "the Agreement")
between
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
of Newark, Delaware
(hereinafter, "Cedent")
And
(hereinafter, "Reinsurer")
EFFECTIVE SEPTEMBER 28, 1999
[SPECIMEN]
TABLE OF CONTENTS
ARTICLES PAGE
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I Reinsurance Coverage 3
II Requirements for Automatic Reinsurance 3
III Requirements for Facultative Reinsurance 4
IV Liability 4
V Reinsurance Ceded to NYLARC or _____ 5
VI Notification of Reinsurance 6
VII Types of Reinsurance 6
VIII Reinsurance Premiums 6
IX Reinsurance Accounting 6
X Oversights 8
XI Reductions, Terminations and Changes 8
XII Increase In Retention 10
XIII Reinstatement 10
XIV Expenses 11
XV Claims 11
XVI Premium Tax Reimbursement 13
XVII DAC Tax Requirements 13
XVIII Inspection Of Records 15
XIX Insolvency 15
XX Arbitration 16
XXI Parties To Agreement 17
XXII Entire Agreement 17
XXIII Duration Of Agreement 17
XXIV Choice of Law and Forum 18
XXV Compliance with Law 18
SCHEDULES
A Policies
B Reinsurance Premium Rates
EXHIBITS
1 DAC Tax Calculation
2 Reinsurance Questionnaire
3 Corporate Retention Limits
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ALL SCHEDULES AND EXHIBITS ATTACHED HERETO WILL BE CONSIDERED
PART OF THIS AGREEMENT.
ARTICLE I
REINSURANCE COVERAGE
1. Reinsurance under this Agreement shall be individual fife insurance of the
type of business stated in Schedule A. Cedent shall automatically reinsure
and Reinsurer shall automatically accept the life insurance for the plans
and riders as stated in Schedule A that meet the requirements of Article II
below. Reinsurer's liability for the risks ceded hereunder shall be based
on the quota share specified in Schedule A unless a greater amount is
reinsured pursuant to Article III. (Individual life insurance reinsured
pursuant to Article I and II or Article III hereinafter referred to as a
"Covered Policy(ies)")
2. The effective date of this Agreement shall be September 28, 1999.
ARTICLE II
REQUIREMENTS FOR AUTOMATIC REINSURANCE
Cedent shall not cede, and Reinsurer shall not accept, any individual life
insurance for reinsurance under this Agreement unless it meets the following
requirements:
1. The individual risk must be a resident of the United States or Canada.
2. The individual risk must be underwritten by Cedent in accordance with
Cedent's usual underwriting practices and guidelines, or arise out of a
conversion from a prior term policy issued by Cedent. The individual must
be classified as preferred risk, non-smoker, select standard, standard,
substandard nonsmoker or substandard, in accordance with those guidelines.
3. The age of the individual risk at issue must be no greater than the maximum
issue age shown on Schedule A.
4. The maximum amount of insurance issued and applied for in all insurance
companies on each life must not exceed the jumbo limits shown on Schedule
A.
5. The maximum amounts of insurance to be reinsured on an individual life must
not exceed the automatic binding limits shown on Schedule A.
6. The initial minimum amount of life insurance on each policy must not be
less than the minimum amount at issue as shown on Schedule A.
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7. The issuance of the insurance must constitute the doing of business in a
jurisdiction in which Cedent is properly licensed.
8. On each individual life, Cedent must retain 10% of the amount of each risk.
ARTICLE III
REQUIREMENTS FOR FACULTATIVE REINSURANCE
1. If the requirements for automatic reinsurance on an individual life are not
met, or are met but Cedent prefers to apply for facultative reinsurance,
then Cedent may apply to Reinsurer for facultative reinsurance. In order to
apply for facultative reinsurance, Cedent must submit to Reinsurer complete
copies of the original application, medical examiner's reports, inspection
reports, attending physicians' statements plus any other papers or
information that may have a bearing on the insurability of the risk.
2. After Reinsurer has examined the underwriting information submitted in
accordance with Paragraph 1 above, Reinsurer shall promptly notify Cedent
in writing of either a final underwriting offer for facultative reinsurance
or an underwriting offer for facultative reinsurance subject to additional
requirements. Either underwriting offer of facultative reinsurance on an
individual life will automatically terminate on the first of the following
dates:
(a) The date Reinsurer receives notice from Cedent that Cedent has
withdrawn Cedent's application for facultative reinsurance;
(b) A date that is one hundred twenty (120) days after the date Reinsurer
made the offer; or
(c) The date specified in Reinsurer's offer.
3. If an underwriting offer made by Reinsurer in accordance with Paragraph 2
is accepted by Cedent in writing prior to the date the offer terminates,
that individual life is reinsured under the terms of this Agreement.
ARTICLE IV
LIABILITY
1. Reinsurer's liability for automatic reinsurance on each Covered Policy will
begin simultaneously with Cedent's liability.
2. Reinsurer's liability for facultative reinsurance on each Covered Policy
will begin simultaneously With Cedent's liability once Reinsurer has
accepted the
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application for facultative reinsurance in writing and Cedent has accepted
Reinsurer's offer.
3. Reinsurer's liability for reinsurance on each Covered Policy will terminate
when Cedent's liability terminates.
4. The initial and subsequent Reinsurance Premiums (as defined herein) must be
received by Reinsurer on a timely basis as provided in Article IX for
Reinsurer to maintain Reinsurer's liability for each individual risk.
5. Reinsurer agrees to accept policies backdated to March 28, 1999 for
reinsurance coverage under this Agreement. However, it is agreed that
Reinsurer shall not be liable for any mortality risk on such policies until
September 28, 1999.
6. Reinsurer shall not be liable for proceeds paid under Cedent's conditional
receipt or temporary insurance agreement for risks submitted on a
facultative basis.
ARTICLE V
REINSURANCE CEDED TO NYLARC OR ______
In determining the amount of a Covered Policy to be reinsured under this
Agreement, where the Covered Policy is reinsured under an agreement between
either New York Life Agents Reinsurance Company ("NYLARC") or _____ Insurance
Company ("_____") and Cedent, the net amount of any reinsurance eligible to be
assumed by NYLARC or _____ and not retroceded back to New York Life Insurance
Company ("New York Life") will first be deducted and then the terms of Article I
through III and Schedule A will be applied to the remainder to determine the
amount of reinsurance.
The amount of reinsurance assumed by NYLARC or _____ and not retroceded back to
New York Life will be 25% of the face amount of each eligible Covered Policy up
to a maximum amount of $250,000 per life. If 25% of the face amount of all
Covered Policies issued on an individual life is greater than $250,000, the
difference between such amounts will be retroceded to New York Life and will not
be reinsured under this Agreement. This Article will not apply to any Covered
Policy until the reinsurance agreement between either NYLARC or _____ and Cedent
becomes effective with respect to that Covered Policy. The following policies or
riders are not considered eligible for reinsurance with NYLARC or _____ and
therefore will be reinsured according to the terms of Articles I through III and
Schedule A.
A. Substandard or rated policies or riders.
B. Policies or riders issued to insureds under age 15 or over age 65.
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ARTICLE VI
NOTIFICATION OF REINSURANCE
Within thirty-one (31) days after the end of each calendar quarter, Cedent will
send Reinsurer an in force listing of all Covered Policies reinsured under this
Agreement.
ARTICLE VII
TYPES QF REINSURANCE
1. Automatic reinsurance under this Agreement shall be on a yearly renewable
term basis, based on the net amount at risk. The net amount at risk shall
be the death benefit under the Covered Policy less the total cash value.
2. When requested, Cedent shall furnish Reinsurer with a copy of each policy,
rider and rate book that applies to the life insurance reinsured.
ARTICLE VIII
REINSURANCE PREMIUMS
1. The premium for each Covered Policy reinsured pursuant to this Agreement
will be: (a) the quota share shown on Schedule A; multiplied by (b) the
reinsurance premium rate calculated in accordance with Schedule B applied
to the net amount at risk (hereinafter, the "Reinsurance Premium").
2. For technical reasons relating to the uncertain status of deficiency
reserve requirements, the reinsurance premium rates shown in Schedule B
cannot be guaranteed for more than one year. However, Reinsurer anticipates
continuing to accept premiums on the basis of the reinsurance premium
rates as described in Schedule B for reinsurance ceded. If Reinsurer deems
it necessary to increase reinsurance premium rates, such increased rates
shall not be higher than the valuation net premiums for yearly renewable
term insurance calculated using the minimum statutory mortality rates and
maximum statutory interest rate for each year of issue.
ARTICLE IX
REINSURANCE ACCOUNTING
1. PAYMENT OF REINSURANCE PREMIUMS
A. Cedent shall prepare and submit to Reinsurer by regular U.S. postal
service a monthly statement, which will provide the pertinent policy
premium details on a mutually agreed upon report format, within thirty
(30) days following the last
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day of the same calendar month. The net monthly premiums due will be the
balance of the monthly Reinsurance Premiums due on reinsurance in force
at the end of the immediately preceding calendar month plus Reinsurance
Premiums due on new business reinsured during the current month less the
refunds of Reinsurance Premiums due Cedent on deaths, lapses and
changes.
B. If the monthly statement shows a net Reinsurance Premium balance is
payable to Reinsurer, Cedent shall remit this amount due Reinsurer
within thirty (30) days. If the amount is not paid within the prescribed
period, the premiums for ail of the reinsurance risks listed on the
statement will be delinquent.
C. If the monthly statement shows a net Reinsurance Premium balance is
payable to Cedent, Reinsurer shall remit Reinsurer's payment to Cedent
within thirty (30) days after receiving Cedent's statement.
2. TERMINATION BECAUSE OF NON-PAYMENT OF PREMIUMS
When Reinsurance Premiums are delinquent, Reinsurer shall have the right to
terminate the reinsurance risks on the statement by giving Cedent thirty
(30) days' written notice. As of the close of this thirty (30) day period
all of Reinsurer's liability will terminate for:
A. The risks described in the preceding sentence, and
B. The risks where the Reinsurance Premiums became delinquent during the
thirty (30) day period.
Regardless of these terminations, Cedent will continue to be liable to
Reinsurer for all unpaid Reinsurance Premiums earned by Reinsurer. Cedent
agrees that Cedent will not force termination under this provision solely
to avoid the recapture requirements or to transfer the block of business
reinsured to another reinsurer.
3. REINSTATEMENT OF A DELINQUENT STATEMENT
Cedent may reinstate the terminated risks within sixty (60) days after the
effective date of termination by paying the unpaid Reinsurance Premiums for
the risks in force prior to the termination. However, Reinsurer will not be
liable for any claim incurred between the date of termination and
reinstatement. The effective date of
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reinstatement will be the day Reinsurer receive the required back
Reinsurance Premiums.
4. CURRENCY.
The Reinsurance Premiums and claims payable under this Agreement will be
payable in the lawful money of the United States.
5. OFFSET
Any debts or credits incurred on and after September 28, 1999 in favor of
or against either Cedent or Reinsurer with respect to this Agreement are
deemed mutual debts or credits, as the case may be, and shall be set off,
and only the balance shall be allowed or paid.
6. BALANCES IN DEFAULT
Reinsurer reserves the right to charge interest at the Prime Rate plus 2%
as stated in the Wall Street Journal on the first business day in January
prior to the due date of the premium when renewal premiums are not paid
within sixty (60) days of the due date or premiums for new business are not
paid within one hundred twenty (120) days of the date the policy is issued.
ARTICLE X
OVERSIGHTS
Inadvertent delays, errors or omissions made in connection with this Agreement
or any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery, and provided that the party making such error or omission or
responsible for such delay shall be responsible for any additional liability
which attaches as a result.
ARTICLE XI
REDUCTIONS, TERMINATIONS AND CHANGES
1. If there is a contractual or non-contractual replacement or change in the
Insurance reinsured under this Agreement where full underwriting evidence
according to Cedent's regular underwriting rules is not required, the
insurance will continue to be reinsured with Reinsurer.
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2. If the insurance reinsured under this Agreement increases and
A. The increase is subject to new underwriting evidence, the provisions of
Article I and II or Article III shall apply to the increase in
reinsurance.
B. The increase is not subject to new underwriting evidence, Reinsurer will
accept automatically the increase in reinsurance but not to exceed
Reinsurer's automatic binding limit.
3. If the insurance reinsured under this Agreement is increased or reduced,
the reinsurance for each policy involved will be proportionately increased
or reduced on the effective date of increase or reduction.
4. If any portion of the total insurance retained by Cedent on an individual
life reduces or terminates, any reinsurance under this Agreement based on
the same life will also be reduced or terminated. Cedent will reduce
Cedent's reinsurance by applying the retention limits that were in effect
at the time the policy was issued. Cedent will not be required to retain an
amount in excess of Cedent's regular retention limit for the age, mortality
rating and risk classification at the time of issue for any policy on which
reinsurance is being reduced.
Cedent must first reduce the reinsurance of the insurance that has the same
mortality rating as the terminated insurance. If further reduction is
required, the reinsurance to be terminated or reduced will be determined by
chronological order in which the reinsurance was first reinsured.
5. If the insurance for a risk is shared by more than one reinsurer,
Reinsurer's percentage of the increased or reduced reinsurance will be the
same as Reinsurer's percentage of the initial reinsurance of each policy.
6. If insurance reinsured under this Agreement is terminated, the reinsurance
for the policy involved will be terminated on the effective date of
termination.
7. On facultative reinsurance, if Cedent wishes to reduce the mortality
rating, this reduction will be subject to the facultative provisions of
this Agreement.
8. Reinsurer will refund to Cedent all unearned reinsurance premiums, arising
from reductions, terminations and changes as described in this Article.
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ARTICLE XII
INCREASE IN RETENTION
1. If Cedent should increase Cedent's retention limits, Cedent shall give
Reinsurer prompt written notice of this increase.
2. Cedent will have the option to recapture all or any part of the reinsurance
under this Agreement when Cedent's retention limit increases. Cedent may
exercise Cedent's option to recapture by giving Reinsurer ninety (90) days
prior written notice of such recapture.
3. If Cedent exercise this option to recapture, then
A. Cedent must reduce the reinsurance on each individual life on which
Cedent retained __% of Cedent's maximum retention limit for the age and
mortality rating that was in effect at the time the reinsurance was
ceded to Reinsurer.
B. No recapture will be made to reinsurance on an individual life if Cedent
did not retain insurance on the life.
C. Cedent must increase Cedent's total amount of insurance on the
individual life up to Cedent's new retention limit by reducing the total
reinsurance on that life by the same amount. If an individual life is
shared by more than one reinsurer, Reinsurer's percentage of the reduced
reinsurance will be the same percentage as Reinsurer's initial
reinsurance on the individual risk.
D. The reduction of reinsurance will become effective on the later of the
following dates:
(1) The policy anniversary date immediately following the effective
date of Cedent's increase in retention limits.
(2) The number of years stated in Schedule A starting with the original
policy date shown on Cedent's listing.
ARTICLE XIII
REINSTATEMENT
If a Covered Policy lapses for nonpayment of premium and is reinstated under
Cedent's terms and rules, the reinsurance will be reinstated by Reinsurer.
Cedent must pay Reinsurer all back Reinsurance Premiums in the same manner as
Cedent received insurance premiums under Cedent's policy. If Reinsurer is
requested to reinstate a policy that was originally ceded to Reinsurer on a
facultative basis, then Cedent must
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submit the policy and associated papers concerning the individual's insurability
to Reinsurer to be underwritten and approved for the reinsurance to be
reinstated if:
1. the policy lapsed for six months or longer, or
2. Cedent seeks additional underwriting information, or
3. Cedent reinsures ___% of the policy.
If the above conditions are not present, Cedent may automatically reinstate a
policy that was originally ceded to Reinsurer on a facultative basis.
ARTICLE XIV
EXPENSES
Cedent shall pay the expense of all medical examinations, inspection fees and
other underwriting expenses in connection with the issuance of the insurance.
ARTICLE XV
CLAIMS
1. Reinsurer shall pay Reinsurer's quota share of any claim under a Covered
Policy within a reasonable time after Cedent submits the claim to
Reinsurer. Reinsurer shall make payment to Cedent in a single sum
regardless of Cedent's mode of settlement.
2. All reinsurance claim settlements made in accordance with Paragraph 1 above
will be subject to the terms and conditions of the Covered Policy under
which Cedent is liable.
3. When Cedent is advised of a claim for Insurance benefits reinsured under
this Agreement, Cedent must promptly notify Reinsurer.
4. If a claim is made under a Covered Policy reinsured under this Agreement,
Reinsurer will abide by the issue as it is settled by Cedent. The maximum
benefit payable to Cedent under each Covered Policy is the amount
specifically reinsured with Reinsurer. When Cedent requests payment of the
reinsurance proceeds, Cedent must deliver a copy of the proof of death,
proof of payment and the claimant's statement to Reinsurer.
5. A. Cedent must promptly notify Reinsurer of Cedent's intent to contest
insurance reinsured under this Agreement or to assert defenses to a
claim for such insurance. Reinsurer shall participate in the contest or
assertion of defenses
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unless Reinsurer notifies Cedent promptly that Reinsurer declines to
participate. If Cedent's contest of such insurance results in the
reduction of Cedent's liability, Reinsurer will share in this reduction.
Reinsurer's percentage of the reduction will be Reinsurer's net amount
of risk on the individual life as it relates to Cedent's total net
amount at risk on the date of the death of the insured.
B. If Reinsurer should decline to participate in the contest or assertion
of defenses, Reinsurer will then release all of Reinsurer's liability by
paying Cedent the full amount of reinsurance as if there had been no
contest, compromise or litigation of a claim, and Reinsurer's
proportionate share of covered expenses incurred to the date, from the
date Reinsurer notifies Cedent that Reinsurer declined to be a party and
by not sharing in any subsequent reduction in liability.
6. If the amount of insurance provided by a Covered Policy reinsured under
this Agreement is increased or reduced because of a misstatement of age or
sex established after the death of the insured, Reinsurer will share with
Cedent in this increase or reduction. Reinsurer's share of this increase or
reduction will be the percentage that Reinsurer's net liability relates to
Cedent's total net liability, immediately prior to this increase or
reduction. Any adjustment in Reinsurance Premiums will be made without
interest.
7. Cedent shall pay the routine expenses incurred in connection with settling
claims. These expenses may include compensation of agents and employees and
the cost of routine investigations.
8. Reinsurer shall share with Cedent all expenses that are not routine.
Expenses that are not routine are those directly incurred in connection
with the contest or the possibility of a contest of insurance or the
assertion of defenses. These expenses will be shared in proportion to the
net sum at risk for both parties. However, if Reinsurer has released
Reinsurer's liability under Paragraph 5 of this Article, Reinsurer will not
share in any expenses incurred after Reinsurer's date of release.
9. Notwithstanding anything contained in this Article to the contrary,
Reinsurer will pay Reinsurer's proportionate share of a judgment which
includes extra-contractual damages awarded against Cedent in a lawsuit
arising out of a contested claim unless Reinsurer has declined to
participate in the contest pursuant to Paragraphs 5A and 5B of this article
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10. If either a misrepresentation or misstatement on an application or a death
of an insured by suicide results in Cedent returning the policy premiums to
the policy owner rather than paying the policy benefits, Reinsurer will
refund all of the Reinsurance Premiums Reinsurer received on that policy to
Cedent. This refund given by Reinsurer will be in lieu of all other
reinsurance benefits payable on that policy under this Agreement.
ARTICLE XVI
PREMIUM TAX REIMBURSEMENT
Reinsurer shall not reimburse Cedent for any taxes Cedent may be required to pay
with respect to reinsurance hereunder.
ARTICLE XVII
DAC TAX REQUIREMENTS
1. In accordance with Treasury Regulations Section 1.848-2(g)(8), Cedent and
Reinsurer hereby elect to determine specified policy acquisition expenses
with respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1) of the Internal Revenue Code (the "IRC").
This election shall be effective for calendar year 1999 and for all
subsequent taxable years for which this Agreement remains in effect.
2. All uncapitalized terms used herein shall have the meanings set forth in
the regulations under section 848 of the IRC.
3. Any party with the net positive consideration under this Agreement for each
taxable year shall capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1)of the IRC.
4. Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency.
5. Cedent shall submit a schedule in the format specified in Exhibit 1 to
Reinsurer by March 1 of each year of Cedent's calculations of the net
consideration under this Agreement for the preceding calendar year. This
schedule of calculations shall be accompanied by a statement signed by an
officer of Cedent stating that Cedent will report such net consideration in
its Federal income tax return for the preceding calendar year.
6. Reinsurer may contest such calculation by providing an alternative
calculation to Cedent in writing within thirty (30) days of Reinsurer's
receipt of Cedent's
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calculation. If Reinsurer does not notify Cedent within such time that
it contests the calculation, Reinsurer shall report the net
consideration as determined by Cedent in Reinsurer's tax return for the
previous calendar year.
7. If Reinsurer contests Cedent's calculation of the net consideration,
the parties will act in good faith to reach an agreement as to the
correct amount within thirty (30) days of the date Reinsurer submits
its alternative calculation. If the parties reach an agreement on an
amount of net consideration, each party will report the agreed upon
amount in its Federal income tax return for the previous calendar year.
If during such period, Cedent and Reinsurer are unable to reach
agreement, they shall promptly thereafter cause independent accountants
of nationally recognized standing satisfactory to Cedent and Reinsurer
(who shall not have any material relationship with Cedent or
Reinsurer), promptly to review (which review shall commence no later
than five (5) days after the selection of such independent
accountants), this Agreement and the calculations of Cedent and
Reinsurer for the purpose of calculating the net consideration under
this Agreement. In making such calculation, such independent
accountants shall consider only those items or amounts in Cedent's
calculation as to which Reinsurer has disagreed.
Such independent accountants shall deliver to Cedent and Reinsurer, as
promptly as practicable (but no later than sixty (60) days after the
commencement of their review), a report setting forth such calculation,
which calculation shall result in a net consideration between the
amount thereof shown in Cedent's calculation delivered pursuant to
Paragraph 5 and the amount thereof in Reinsurer's calculation delivered
pursuant to Paragraph 6. Such report shall be final and binding upon
Cedent and Reinsurer. The fees, costs and expenses of such independent
accountants shall be borne (i) by Cedent if the difference between the
net consideration as calculated by the independent accountants and
Cedent's calculation delivered pursuant to Paragraph 5 is greater than
the difference between the net consideration as calculated by the
independent accountants and Reinsurer's calculation delivered pursuant
to Paragraph 6, (ii) by Reinsurer if the first such difference is less
than the second such difference; and (iii) otherwise equally by Cedent
and Reinsurer.
8. Both parties agree to attach a schedule to their respective federal
income tax returns for the first taxable year ending after the date on
which this election becomes effective which identifies this Agreement
as a reinsurance agreement for which an election has been made under
Treasury Regulations Section 1.848-2(g)(8).
9. Reinsurer represents and warrants that it is subject to United States
taxation under Subchapter L of the IRC.
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10. Reinsurer shall complete a Reinsurance Questionnaire in the format
specified in Exhibit 2 and submit it to Cedent by May 1st of each
calendar year.
ARTICLE XVIII
INSPECTION OF RECORDS
Reinsurer shall have the right, at any reasonable time, to inspect Cedent's
books and documents that relate to Cedent's reinsurance under this Agreement.
ARTICLE XIX
INSOLVENCY
1. If Cedent becomes insolvent, all of the reinsurance due Cedent will be
paid in full directly to Cedent or Cedent's liquidator (receiver or
statutory successor) on the basis of Cedent's liability under the
policy or policies reinsured, without diminution because of Cedent's
insolvency.
2. If Cedent becomes insolvent, the liquidator, receiver or statutory
successor will give Reinsurer written notice of a pending claim against
Cedent for insurance reinsured under this Agreement within a reasonable
time after the claim is filed in the insolvency proceeding. During the
insolvency proceedings where the claim is to be settled, Reinsurer may
investigate this pending claim and interpose in Cedent's or Cedent's
liquidator's, receiver's or statutory successor's name, but at
Reinsurer's own expense, any defense or defenses which Reinsurer may
believe available to Cedent or Cedent's liquidator, receiver or
statutory successor.
3. The expenses incurred by Reinsurer will be chargeable, subject to
court approval, against Cedent as part of the expense of liquidation,
to the extent of the proportionate share of the benefit that may accrue
to Cedent solely as a result of the defense undertaken by Reinsurer.
Where two or more reinsurers are involved in the same claim and a
majority in interest elects to interpose a defense or defenses to this
claim, the expense will be apportioned in accordance with the terms of
this Agreement as though such expense had been incurred by Cedent.
4. In the event of Reinsurer's insolvency, as determined by the department
of insurance responsible for such determination, all reinsurance ceded
under this Agreement may be recaptured immediately by Cedent without
penalty effective as of the day prior to the earlier of Reinsurer's
becoming insolvent or the date of such determination by the said
department of insurance.
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5. Where two or more reinsurers are members of a pool of reinsurers
established hereby, the insolvency of one reinsurer shall not be deemed
to abrogate this Agreement with respect to the other reinsurers.
ARTICLE XX
ARBITRATION
1. If the parties cannot mutually resolve a dispute or claim arising out
of or in connection with this Agreement, including the formation or
validity thereof, and Whether arising during or after the period of
this Agreement, the dispute or claim shall be settled by arbitration.
The arbitrators shall have the authority to interpret this Agreement
and in doing so shall consider the customs and practices of the life
insurance and life reinsurance industries. To initiate arbitration,
either party shall notify the other party by facsimile or by overnight
delivery of its desire to arbitrate, stating the nature of the dispute
and the remedy sought (the "Notice of Arbitration"). The party to which
the notice is sent shall respond to the notification in writing within
ten (10) business days of receipt.
2. Arbitration shall be conducted by three arbitrators who shall be
current or past officers of life insurance companies other than the
contracting companies or their affiliates. Each party shall appoint one
arbitrator, and serve written notice of the appointment upon the other
party, within thirty (30) business days after the date of delivery of
the Notice of Arbitration. The two arbitrators so appointed shall
select the third arbitrator within thirty (30) business days after the
date of appointment of the second arbitrator to be appointed.
3. In the event either party fails to choose an arbitrator within thirty
(30) business days, as provided in Paragraph 2, the party which has
given written notice may choose two arbitrators who shall in turn
choose a third arbitrator before entering arbitration.
4. If the two arbitrators appointed in accordance with Paragraph 2 or
Paragraph 3 are unable to agree upon the selection of a third
arbitrator within thirty (30) business days after the appointment of
the second arbitrator to be appointed, each arbitrator shall nominate
three candidates within ten (10) business days thereafter, two of whom
the other shall decline and the decision shall be made by drawing lots.
5. Arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in effect on
the date of delivery of Notice of Arbitration.
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6. 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 in the
cost of the third arbitrator. The arbitration hearing will be held in
New York City.
7. The award agreed by the arbitrators will be final and binding, and
judgment may be entered upon it in any court having jurisdiction. The
arbitrators shall not award punitive damages.
ARTICLE XXI
PARTIES TO AGREEMENT
This is an Agreement solely between Cedent and Reinsurer. There will be no
legal relationship between Reinsurer and any person having an interest of any
kind in any Covered Policy.
ARTICLE XXII
ENTIRE AGREEMENT
1. This Agreement shall constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and there
are no understandings between the parties other than as expressed in
this Agreement.
2. Any change or modification to this Agreement shall be null and void
unless made by amendment to this Agreement and signed by both parties.
ARTICLE XXIII
DURATION OF AGREEMENT
1. This Agreement may be terminated as to new business, with respect to
the percentage participation in the risks reinsured hereunder by
Reinsurer, as set forth in Schedule A, at any time by either party
giving ninety (90) days, written notice of termination. The day the
notice is deposited in the mail addressed to the home office or to an
officer of either party will be the first day of the ninety (90) day
period. During the ninety (90) day period, new Covered Policies shall
be reinsured under this Agreement pursuant to Articles I and II or
Article III. Reinsurer's acceptance will be subject to the terms of
this Agreement and Cedent's payment of Reinsurance Premiums.
2. This Agreement may be terminated immediately as to new business by
either party if the other party materially breaches this Agreement or
becomes insolvent or financially impaired.
- 17 -
3. After termination, Reinsurer will both be liable for all automatic
reinsurance which becomes effective prior to termination of this
Agreement and also for all facultative reinsurance approved by
Reinsurer based upon applications Reinsurer received prior to
termination of this Agreement.
ARTICLE XXIV
CHOICE OF LAW AND FORUM
New York law shall govern the terms and conditions of the Agreement.
ARTICLE XXV
COMPLIANCE WITH LAW
When Reinsurer receive information from Cedent which is subject to any state or
Federal privacy laws or regulations, or similar laws or regulations, Reinsurer
will Keep such information confidential to the extent required by such state or
Federal law or regulation and otherwise comply with such state or Federal law or
regulation.
- 18 -
IN WITNESS WHEREOF the said
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
and the
have by their respective officers executed and delivered these presents in
duplicate on the date shown below.
NEW YORK LIFE INSURANCE NEW YORK LIFE INSURANCE
AND ANNUITY CORPORATION AND ANNUITY CORPORATION
Signed at New York, NY Signed at New York, NY
By Xxxxxx Xxxxxx By
-------------------------------- -----------------------------
Its authorized representative Its authorized representative
Title CVP & Actuary Title
----------------------------- --------------------------
Date 3/30/00 Date 3/30/00
Signed at__________________________ Signed at_______________________
By_________________________________ By______________________________
Its authorized representative Its authorized representative
Title______________________________ Title___________________________
Date_______________________________ Date____________________________
IN WITNESS WHEREOF the said
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
and the
have by their respective officers executed and delivered these presents in
duplicate on the date shown below.
NEW YORK LIFE INSURANCE NEW YORK LIFE INSURANCE
AND ANNUITY CORPORATION AND ANNUITY CORPORATION
Signed at__________________________ Signed at_______________________
By ________________________________ By______________________________
Its authorized representative Its authorized representative
Title______________________________ Title___________________________
Date_______________________________ Date____________________________
Signed at Signed at
------------------------- ----------------------
By By
-------------------------------- -----------------------------
Its authorized representative its authorized representative
Title Vice President Title Vice President
----------------------------- --------------------------------
Date March 30, 2000 Date March 30, 2000
SCHEDULE A
POLICIES
1 Quota Share Percentage: The Quota Share Percentage for Covered Policies shall
be __% of the Risk.
2. Type of Business: Variable Universal Life Insurance, plus Supplementary
Term Insurance Rider and Other Covered Insured Rider
attached to the base policy, issued by Cedent.
3. Plans of Insurance: VUL 2000 Variable Universal Life Insurance Policies (plus
Supplementary Term Insurance Rider and Other Covered
Insured Rider attached to the base policy).
4. Maximum Issue Age: 85
5. Jumbo Limit: $___________
6. Automatic Binding Limit: $__________ per life for issue ages to age 65; $_________
per life for issue ages 66 to 75; $_________ per life for
issue ages 76 and over.
7. Minimum Amount at Issue: $______
8. Recapture Period: 10 Years
SCHEDULE B
REINSURANCE PREMIUM RATES
1. Reinsurance Premium Rate
The reinsurance premium rate under this Agreement is calculated based upon
the tables attached to this Schedule B.
2. Flat Extra Premiums
The flat extra premium will be 80% of the annual fiat extra premium which
Cedent charges its insured on that amount of the insurance reinsured.
3. Renewal Premiums
The renewal of insurance shall be considered as a continuation of the
original insurance for the purpose of calculating future reinsurance
premiums.
EXHIBIT 1
DAC TAX CALCULATION
CEDING COMPANY: NEW-YORK LIFE INSURANCE AND ANNUITY CORPORATION
ASSUMING COMPANY: _______________________________
DATE: _____________________________
DAC TAX - DEDUCTIONS FROM GROSS PREMIUM
DAC TAX CALCULATION AMOUNT
GROSS PREMIUM
LESS;
DEDUCTIONS FROM GROSS PREMIUMS
Commissions
Death Claims
Claim Interest
Premium Taxes
Claim Investigation Expense
Claim Legal Expense
Waiver Claims
Surrenders
Experience Refunds
Admin Fee
Fee Income
Miscellaneous Interest
Dividends
Termination Dividends
Productions Bonus
Reserve Adjustments
Other (specify)
TOTAL DEDUCTIONS
NET CONSIDERATIONS
Please sign below confirming agreement with net considerations or provide an
alternate calculation within 30 days
__________________________________
Signature
__________________________________
Type or Print Name
__________________________________
Title
__________________________________
Date
EXHIBIT 2
REINSURANCE QUESTIONNAIRE
FOR FEDERAL INCOME TAX DETERMINATIONS
The purpose of this questionnaire is to secure sufficient information to allow
New York Life Insurance and Annuity Corporation ("NYLIAC") to account properly
under the federal income tax rules for the reinsurance transactions you have
with NYLIAC. Please provide NYLIAC with the following information:
1. Are you either
(a) a company that is subject to U.S. taxation directly under the
provisions of subchapter L of chapter 1 of the Internal Revenue Code
(i.e., an insurance company liable for filing Form 1120L or Form
1120-PC), or
(b) a company that is subject indirectly to U.S. taxation under the
provisions of subpart F of subchapter N of chapter 1 of the Internal
Revenue Code (i.e., a "controlled foreign corporation" with the
meaning of Internal Revenue Code Section 957)?
Answer: __________ Yes ___________ No
2. If your answer to 1. is no, have you entered into a closing agreement with
the Internal Revenue Service to be subject to U.S. taxation with respect
to reinsurance income pursuant to Treasury Regulation Section 1.848-2(h)
(2)(ii)(B)?
Answer: __________ Yes ___________ No
(If, your, answer is yes, please provide a copy of the closing
agreement.)
Company Name:
Signed by:
Title:
Date:
EXHIBIT 3
CORPORATE RETENTION LIMITS
Classification Ages Retention Limit Overall Maximum
-------------- ---- --------------- ---------------
All 0-65 $ plus up to $
an additional $
subject to the approval of
Cedent's Chief Underwriter.
66-75 $ plus up to $
an additional $
subject to the approval of
Cedent's Chief Underwriter.
76 and $ plus up to $
over an additional $
subject to the approval of
Cedent's Chief Underwriter.
Note: New York Life Insurance and Annuity Corporation will have a retention
limit of $ , with overretention amounts reinsured by its parent
company, New York Life Insurance Company, up to its corporate retention
limit.
