MANAGING AGREEMENT
BETWEEN
XXXXX ASSURANCE COMPANY
AND
PAN PACIFIC BENEFIT ADMINISTRATORS, INC.
1993
EXHIBIT E
MANAGING AGREEMENT
This Agreement is effective this 1st day of January, 1993, by and between XXXXX
ASSURANCE COMPANY (hereinafter referred to as COMPANY), and PAN PACIFIC BENEFIT
ADMINISTRATORS, INC. (hereinafter referred to as MANAGER).
I
APPOINTMENT AND ACCEPTANCE
COMPANY does hereby appoint MANAGER, as its representative with authority to act
for it in the conduct of its insurance business, all to the extent herein
limited and provided.
MANAGER does hereby accept such appointment and agrees that it will perform the
functions of Manager and Administrator for COMPANY to the extent herein limited
and provided.
MANAGER may act as Administrator for other insurance companies provided such
activity creates no conflict of interest with respect to COMPANY.
II
SCOPE OF APPOINTMENT
This Agreement is limited to the transaction of life and group disability
insurance in the State of California. Additional classes or lines of insurance
and additional territories may, from time to time, be added to the foregoing by
Addendum to this Agreement. Such additions shall only be operative if MANAGER is
properly licensed to administer such classes of insurance in the States
involved.
If MANAGER is not so licensed, COMPANY may procure other Administrators
therefore. Such additions shall, further, only be operative if COMPANY holds the
necessary Certificate(s) of Authority permitting it to transact such classes in
said State(s).
This Agreement is to address the administrative and management processes
involved with the continuing Group Life business and conversion policies and the
run off of the canceled Group Accident and Health (Disability) Insurance (the
"Subject Business").
Except for Life claims which should be referred to the COMPANY for processing,
with respect to the Subject Business, MANAGER is responsible for complete claims
adjudication and processing for all policies including those on waiver of
premium during total disability and extension of benefits, premium billing and
Group Life policy issuance and administration.
III
UNDERWRITING OF GROUP LIFE INSURANCE BUSINESS
Within the scope of this Agreement, MANAGER shall have the authority to
underwrite and effect insurance on the Subject Business on the COMPANY's
behalf, including the issuance of COMPANY's life insurance policies, riders, and
endorsements. It shall also have authority, acting for COMPANY, to reject,
cancel, and refuse to renew insurance where permitted by law and the insurance
policy. The authority granted herein shall be exercised in compliance with such
underwriting standards as COMPANY may, from time to time, prescribe and in
compliance with usual and customary insurance industry practices. A copy of the
underwriting standards of COMPANY applicable to the Subject Business as of the
date of this Agreement has been provided to MANAGER. COMPANY shall promptly
provide to MANAGER notice and copies of any changes to the underwriting
standards applicable to the Subject Business.
COMPANY has the right to reject any risk or to require cancellation, or to
require MANAGER to renew any risk.
IV
RATING OF GROUP LIFE
MANAGER shall have no authority to make rates. Rates will be provided by
COMPANY where needed.
MANAGER shall compile and furnish COMPANY with such statistics pertaining to the
establishment of rates for COMPANY as may be required.
MANAGER shall fairly and properly apply such rates to the policies of COMPANY
issued by it, and shall, where required by a final adjudication of any rate
regulatory authority, make such adjustments in rates as may be necessary.
V
PREMIUMS
MANAGER shall xxxx, collect and receive, in the name of COMPANY, all premiums
and any other remuneration on policies of COMPANY administered by it, in a
manner acceptable to, or prescribed by, COMPANY.
The payment to MANAGER of premium or any other insurance charge due or otherwise
owing to COMPANY by or on behalf of an insured of COMPANY shall be deemed
received by COMPANY. The payment of return premium or claims
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by Company to MANAGER shall not be deemed payment to the insured or claimant
until such payment is received by the insured or claimant. Nothing in this
Section V shall in any way limit any right of COMPANY against MANAGER resulting
from MANAGER's failure to make payment to COMPANY or insured or claimants of
COMPANY when due.
MANAGER shall cancel or otherwise terminate any coverage not paid by an
insured, in accordance with the terms of the applicable policy, unless such
cancellation or termination is specifically waived by COMPANY.
MANAGER shall issue and deliver xxxxxxxx, statements, and/or other documents
necessary to collect premium and, where necessary under policy terms or
required by good insurance practice, make such audits of insureds' records as
may be necessary, or required by COMPANY.
All insurance charges or premiums collected by MANAGER on behalf of or for
COMPANY and all return premium received from COMPANY shall be held by MANAGER in
a fiduciary capacity. Such funds shall be immediately remitted to the person or
persons entitled thereto, or shall be deposited promptly in a fiduciary bank
account established and maintained by MANAGER for the benefit of COMPANY. If
such fiduciary account contains charges or premiums collected on behalf of any
insurer other than COMPANY, MANAGER shall keep records clearly recording the
deposits in and withdrawals from such fiduciary account on behalf of COMPANY and
on behalf of each other insurer. MANAGER shall keep copies of all such records
and, such records pertaining to deposits and withdrawals from such fiduciary
account.
MANAGER shall not pay any claim on behalf of or for COMPANY or any other
insurer by withdrawals from the fiduciary account. Withdrawals from the
fiduciary account shall be made solely for the following purposes: (1)
remittance to COMPANY or to such other insurer entitled thereto; (2) deposit
into an account maintained by COMPANY or such other applicable insurer; (3)
transfer to and deposit into a claims paying account maintained by COMPANY or
such other applicable insurer, provided that payments by MANAGER from such
claims paying account shall in all cases be on checks or drafts of and as
authorized by COMPANY or such other applicable insurer; (4) payment to a
group policyholder for remittance to COMPANY or other applicable insurer;
(5) payment to MANAGER of its fees or other charges as determined pursuant to
Article XIII of this Agreement: or (6) remittance of return premium to the
person or persons entitled thereto. Funds maintained within the fiduciary
account on behalf of COMPANY or any other insurer may not be put to any other
purpose or use.
VI
CLAIMS
MANAGER shall investigate, adjudicate, and appropriately pay or deny, all
3
claims presented or reported on policies subject to this Agreement Such
investigation and adjudication shall be in accordance with the terms and
conditions of the specific policy(ies) involved, procedures and rules as
prescribed by COMPANY, and applicable statutes
MANAGER shall immediately advise COMPANY of any and all complaints to regulatory
authorities, correspondence from and to such regulatory authorities in response
to such complaints, and notices of intent to litigate. All such correspondence
shall be sent to COMPANY at 000 X. Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx
00000.
MANAGER shall pay appropriate claims, and any necessary claim expense, from
funds furnished by COMPANY. COMPANY shall establish claim accounts, and give
MANAGER authority to draw on such accounts.
Payment of claims by MANAGER on behalf of COMPANY shall, without exception, be
on checks or drafts of COMPANY and as authorized by COMPANY.
VII
FORMS
In the conduct of its activity on behalf of COMPANY, MANAGER shall only use
forms provided by the COMPANY. Such use shall be in accordance with instructions
provided by COMPANY. In the absence of explicit instructions, such use shall be
in accordance with usual and customary insurance industry practice and in
compliance with legal and regulatory requirements. COMPANY shall have sole
authority to file and/or secure approval of all forms intended for use on its
behalf.
VIII
REPORTS
MANAGER shall transmit to COMPANY, on a monthly basis, reports specifically
covering life business written and canceled, life and conversion premiums
collected and return premiums paid, claims received and paid, COMPANY's funds
received and expended.
IX
RECORDS
Throughout the term of this Agreement and for a period extending five years
after any expiration or other termination of this Agreement,
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MANAGER shall maintain at its principal administrative office in such form as
COMPANY and any regulatory authority or institution may require, complete books
and records of all business administered by MANAGER, including underwriting and
claim files, and all transactions between or among MANAGER, COMPANY and persons
or entities insured by COMPANY. Such books and records shall be maintained in
accordance with prudent standards of insurance record keeping as determined by
COMPANY, regulatory authorities and institutions, and by usual and customary
industry practices. Such books and records shall be the sole and exclusive
property of COMPANY.
MANAGER shall maintain books and records applicable to the Subject Business
separate and apart from the records of MANAGER or any other entity for whom
MANAGER provides services. Such books and records shall be available to
COMPANY for inspection and copying at any and all times. COMPANY shall
maintain the right to continuing access to such books and records sufficient
to permit COMPANY to fulfill all its contractual obligations to persons
insured by COMPANY. In the event MANAGER fails to prepare and maintain books
and records as required by this Article IX, COMPANY may, at its option and
without termination of this Agreement, secure the necessary personnel to
compile and maintain such books and records at the expense of, MANAGER.
COMPANY shall retain the right to conduct periodic audits of the books and
records and of the fiduciary bank accounts of MANAGER during normal business
hours at the office of MANAGER. COMPANY's right to audit such books and
records and fiduciary bank accounts shall include the right to inspect and
copy any and all books and records relating to the performance by MANAGER of
its obligations under this Agreement.
MANAGER shall make available to the California Commissioner of Insurance and
to his/her representatives for the purpose of examination, audit and
inspection all books and records applicable to the Subject Business of
COMPANY as administered by MANAGER pursuant to this Agreement. MANAGER
understands and acknowledges that any failure to keep and maintain the books
and records required by this Article IX shall, pursuant to California
Insurance Code 1759 4(d), be grounds for suspension or revocation of the
certificate of registration of MANAGER.
COMPANY has the obligation, at its own expense, to maintain its own general
ledger, investment records, stock records, corporate minute books,
reinsurance records, and all other records and accounts which do not pertain
to the obligations assumed by MANAGER under the terms of this Agreement.
X
MISCELLANEOUS OBLIGATIONS OF THE PARTIES
A. SUBROGATION AND SALVAGE. If the payment of any claim under the terms of
this Agreement creates a right of subrogation or salvage,
5
such right; is the property of COMPANY, and all recovery therefrom is
COMPANY's.
MANAGER shall furnish COMPANY with full information and cooperate with it
to the fullest possible extent to enable COMPANY to proceed with salvage or
subrogation.
B. REINSURANCE. MANAGER shall make COMPANY aware of any claim that is likely
to involve the reinsurer by using the over $20,000 notice form and by
providing Weekly Report #4000, "High Dollar Claims" to the COMPANY who will
be responsible to advise the reinsurer.
C. NOTICE TO INSUREDS. MANAGER shall provide written notice in a form
approved by COMPANY to each insured of COMPANY advising them of the
identity of and relationship of MANAGER, COMPANY and the insured. In
addition, in all circumstances in which MANAGER collects premium or any
other charges for insurance coverage from an insured of COMPANY, MANAGER
must identify and state separately in writing to the insured the amount of
any such charge or premium specified by COMPANY for such insurance
coverage.
XI
COMPANY CONTROL -- SPECIFIC ITEMS
A. REGULATORY RELATIONSHIPS. COMPANY shall make its routine filings and
secure routine approvals as are provided for in this Agreement, and control
over COMPANY's relationships with governmental authorities, rating bureaus
and similar official or quasi-official organizations shall remain with
COMPANY.
MANAGER shall immediately refer any matters of controversy to COMPANY and
proceed in accordance with COMPANY's direction.
B. ADVERTISING. MANAGER shall not engage in any advertising or issue any
circular or other writing referring to COMPANY, or in COMPANY's name,
without COMPANY's prior approval.
C. LITIGATION. COMPANY shall have the right to control any litigation
to which it is a party.
MANAGER shall immediately inform COMPANY of the commencement of such
litigation if COMPANY is named as a defendant, and shall secure advance
approval of commencement of any litigation to which COMPANY is to be a
plaintiff.
MANAGER shall follow COMPANY's direction with respect to all phases of any
litigation proceedings.
6
XII
COMPANY CONTROL -- GENERAL
It is recognized by the parties to this Agreement that COMPANY has an obligation
to the public and to the insurance regulatory authorities to comply with all
statutes and requirements imposing obligations on it and upon insurance
companies generally. It is, therefore, the intent of the parties that all
provisions of this Agreement be interpreted to permit it to satisfy these
obligations.
MANAGER agrees to follow this principle in performing its obligations hereunder
This principle applies generally to the entire Agreement and, not in any way
limiting this general application, it applies specifically to underwriting;
rating; use of State Insurance Department forms where required; furnishing and
maintaining of reports, records, and files; collection and transmission of
premium; and, the prompt and equitable adjudication of claims.
XIII
COMPENSATION
COMPANY will pay to the MANAGER at the first of each month based on the
following Fee Schedule to cover expense of administering the run-off business
and on-going Life business:
JAN 1993 $73,600
FEB 1993 $38,200
MAR 1993 $11,300
APR 1993 $ 7,100
MAY 1993 $ 2,800
JUN 1993 $ 8,500
Runoff payments stated herein are GAAP based cost allocations.
Other than the run-off business, starting with July 1, 1993, MANAGER will xxxx
COMPANY for the actual costs incurred in the performance of its duties and
responsibilities under the terms of this Agreement, providing appropriate
documentation. The determination of such actual costs shall be a reasonable
allocation of actual costs, which allocation shall comply with California
insurance laws and regulations relating to such cost allocations and shall be in
compliance with generally accepted accounting principles. This billing shall
constitute full and complete compensation for administration of COMPANY'S
business.
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XIV
INDEMNITY
MANAGER shall indemnify COMPANY and its employees and agents and hold COMPANY
harmless against any and all claims, actions and expenses, including court costs
and attorneys fees, and against all liabilities, losses, damages, judgments or
awards, whether compensatory or punitive, that COMPANY may sustain or be put to
by reason of any failure on the part of MANAGER to use its best efforts in good
faith to carry out the terms of this Agreement, the provisions of the plan, or
any policies, procedures or decisions of MANAGER.
COMPANY shall indemnify MANAGER and its employees and agents and hold MANAGER
harmless against any and all claims, actions and expenses, including court
costs and attorneys fees, and against all liabilities, losses, damages,
judgments or awards, whether compensatory or punitive, that MANAGER may
sustain or be put to by reason of any failure on the part of COMPANY to use
its best efforts in good faith to carry out the terms of this Agreement, the
provisions of the plan, or any policies, procedures or decisions of COMPANY.
If a claim is made by a party which would give rise to a right of
indemnification under this paragraph, the party entitled to indemnification
(the "Indemnified Party") will promptly cause notice thereof to be delivered
to the party required to provide indemnification (the "Indemnifying Party").
The Indemnified Party will permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom. Counsel for
the Indemnifying Party, which will conduct the defense of such claim or
litigation, must be approved by the Indemnified Party, whose approval will
not be unreasonably withheld, and the Indemnified Party may participate in
such defense at the Indemnified Party's expense. Neither Party will consent
to entry of any judgment or enter into any settlement without the written
consent of the other Party, which consent will not be unreasonably withheld.
The Indemnified Party shall cooperate fully with the Indemnifying Party and
make available to the Indemnifying Party all pertinent information under its
control.
XV
DISPUTES AND ARBITRATION
All disputes arising out of this Agreement shall be submitted to the decision
of a Board of Arbitration composed of two arbiters and an umpire, meeting in
Los Angeles County, California, unless otherwise agreed.
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The members of the Board of Arbitration shall be active or former,
disinterested officials of companies within the insurance industry and
domiciled in the United States of America or of governmental insurance
regulatory agencies. Each party shall appoint its arbiter and two arbiters
shall choose an umpire before instituting the hearing. If the respondent
fails to appoint its arbiter within thirty (30) days after being requested to
do so by the complainant, the latter shall also appoint the second arbiter.
The complainant shall submit its initial brief within twenty (20) days from the
appointment of the umpire. The respondent shall submit its brief within twenty
(20) days thereafter, and the complainant may submit a reply brief within ten
(10) days after filing of the respondent's brief.
The Board shall make its decision with regard to the custom and usage of the
insurance business. The Board is relieved from all judicial formalities and may
abstain from the strict rules of procedural law. The Board shall make its
decision within sixty (60) days following the termination of the hearings unless
the parties consent to an extension.
The majority decision of the Board shall be final and binding upon all parties
to the proceeding. Judgement may be entered upon the final decision of the
arbiters in any court of proper jurisdiction. By agreement between any two of
the members of the Hoard, the time intervals contained in the Article may be
extended.
Each party shall bear the expense of its own arbiter and shall jointly and
equally bear with the other party the expenses of the umpire. The remaining
costs of the arbitration proceedings shall be allocated by the Board.
If the arbiters find that any party has failed to comply with any provision of
this Agreement, the arbiters shall limit remedial actions to those reasonably
determined to be needed to place the parties in the same position as if the
failure to comply had not occurred. It is expressly agreed that the jurisdiction
of the arbiters to make or render any decision or award shall be limited to what
is needed to equitably enforce the terms of this Agreement, and that the
arbitrators shall not have jurisdiction to make any decision or render any award
not reasonably consistent with the intent, scope and provisions of this
Agreement.
This Article shall survive the termination of this Agreement.
XVI
ASSIGNMENT
This is a personal service contract, and the duties and obligations thereof may
not be assigned by one party without the specific written agreement of the
other.
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XVII
TERMINATION OF AGREEMENT
A. This Agreement shall remain in force and effect to and until cancellation
which may be effected in one of the following ways:
1. At any time by mutual consent.
2. By either party on written notice if there be a substantial and
material breach or inability to perform by the other party. Such
written notice shall specify, with particularity, the grounds for
termination.
3. By ninety (90) days written notice from one party to the other.
B. If the relationship between the parties at or before the termination is of
such a nature as to preclude the carrying out by MANAGER of its further
obligations, COMPANY upon notice to MANAGER may perform such services
itself or produce their performance by a third party, in which event
MANAGER shall be liable for the cost thereof.
C. MANAGER shall complete the processing of all claims received prior to the
date of termination unless the provision of XVII B above is invoked
specifically with respect to claims in process.
D. MANAGER shall make available for inspection or copying by the COMPANY all
records created or maintained by MANAGER in connection with the
performance of its obligations under this Agreement without the written
consent of COMPANY. MANAGER shall not use information, acquired by it
through its duties on behalf of COMPANY pursuant to the Agreement, for any
purpose other than to advance the interests of COMPANY.
XVIII
AMENDMENT
This Agreement may only be amended by a writing executed by both parties and
specifically referring to it. No verbal change, or changes by course of conduct,
inconsistent herewith is valid although such may be used to interpret any
provision which is ambiguous. Failure by either party to take action because of
a breach by the other shall not be a waiver of the right to take action because
of a subsequent breach. Where, pursuant to any provision hereof, COMPANY
establishes standards or procedures for the conduct of business, such shall not
be deemed an amendment or change of this Agreement.
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XIX
ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement and supersedes any and all prior
agreements and understandings, both written and oral, among the parties, with
respect to the subject matter hereof.
In witness whereof the parties hereto have executed this Agreement as of the
date above written, and by such execution certify that the same has been
approved by their respective Boards of Directors.
XXXXX ASSURANCE COMPANY
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------
XXXXXX X. XXXXXXXX
President
PAN PACIFIC BENEFIT ADMINISTRATORS, INC.
/s/ Xxxxx X. Xxxxx
----------------------------------
XXXXX X. XXXXX
President
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AMENDMENT NO. 1 TO MANAGING AGREEMENT
This Amendment No. 1 to Managing Agreement (the "Agreement") dated as of January
1, 1993 between Xxxxx Assurance Company (the "Company") and Pan Pacific Benefit
Administrators, Inc. ("Manager") is entered into as of this 28th day of April,
1995 (this "Amendment").
WHEREAS, the Agreement was entered into, among other reasons, to provide for the
management of the run-off of group accident and health (disability) insurance
coverage which had been cancelled by the Company;
WHEREAS, the Company has chosen to begin to underwrite new group accident and
health (disability) insurance and desires that Manager provide services to and
on behalf of the Company in connection therewith pursuant to the terms of the
Agreement;
NOW, THEREFORE, the Company and the Manager agree that the term "Subject
Business" as defined in the Agreement shall include any and all new accident and
health (disability) insurance underwritten BY the Company during the term of the
Agreement.
IN WITNESS WHEREOF, parties hereto have executed this Amendment as of the 28th
day of April, 1995.
XXXXX ASSURANCE COMPANY
By: /s/ [ILLEGIBLE]
-------------------
Title: President/CEO
----------------
PAN PACIFIC BENEFIT ADMINISTRATORS, INC
By: /s/ [ILLEGIBLE]
-------------------
Title: President/CEO
----------------
