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Exhibit 10(ix)
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COINSURANCE AGREEMENT
Between
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA
and
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
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TABLE OF CONTENTS
PAGE
Section 1. Definitions 63
Section 2. Reinsurance Coverage 64
Section 3. Representations and Warranties of the Company 64
Section 4. Representations and Warranties of the Reinsurer 65
Section 5. Conditions Precedent 65
Section 6. Payments by the Company 66
Section 7. Payments by the Reinsurer 66
Section 8. Expenses and Adjustments 67
Section 9. Payment Settlement Procedures and Reports 67
Section 10. Administration of Policies 68
Section 11. Notice and Settlement of Claims 68
Section 12. Interest Rate Committee 68
Section 13. Policy Changes and New Policy Forms 69
Section 14. Oversights 69
Section 15. Tax Matters 69
Section 16. Audit of Records and Procedures 70
Section 17. Arbitration 70
Section 18. Special Provisions 70
Section 19. Insolvency 70
Section 20. Offset 71
Section 21. Parties to Agreement 71
Section 22. Effective Date 71
Section 23. Entire Agreement 71
Section 24. Recapture of Reinsurance 71
Section 25. Termination 71
Section 26. Marketing Materials 72
Section 27. Severability of Provisions 72
Section 28. Counterparts 72
Section 29. Amendments 72
Section 30. No Waiver 72
Section 31. Confidentiality 73
Section 32. Governing Law 73
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TABLE OF CONTENTS - Continued
PAGE
Schedules
Schedule A List of Policies Included 74
Schedule B Reinsured Policies 76
Schedule C Reimbursement of Costs 78
Schedule D Licenses - The Company 84
Schedule E Approvals - The Company 86
Schedule F Licenses - The Reinsurer 87
Schedule G Approvals - The Reinsurer 88
Schedule H Transfer Adjustments 89
Schedule I Daily Cash Settlement Procedure 98
Schedule J Daily Cash Settlement Information 99
Schedule K Monthly Cash Settlement Information 99
Schedule L Rules of the Company 105
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COINSURANCE AGREEMENT
Between
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA
hereinafter referred to as "the Company"
and
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
hereinafter referred to as "the Reinsurer"
This Agreement, executed this 1st day of January, 1999 between the Company and
The Reinsurer as follows:
SECTION 1. - DEFINITIONS
"ACCOUNTING PERIOD": As provided in Section 9 hereof.
"AFFILIATES": Respectively, any Person which directly or indirectly controls, or
is under common control with, the Company, or any Person which directly or
indirectly controls, or is under common control with, or is controlled by, the
Reinsurer.
"BENEFIT PAYMENTS": Proceeds payable under a Reinsured Policy arising from:
annuitization; death of a Policy owner or annuitant; full or partial withdrawal
of amounts held in a Policy; or the maturity of a Policy. All such proceeds are
net of surrender charges, market value adjustments and Premium Taxes recovered.
"BUSINESS DAY": Any references to Business Day in this Agreement will mean the
days during which the Company is open for business.
"EFFECTIVE DATE": As provided in Section 22 hereof.
"EXPERIENCE REFUND": Any amount due from the Reinsurer to the Company in excess
of those provided for in Section 7 of this Agreement which is based solely on
the experience of the Reinsured Policies.
"GOVERNMENTAL AUTHORITY": Any nation or government, and province, state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial (including an arbitrator), regulatory or administrative functions of or
pertaining to government.
"MATERIAL ADVERSE EFFECT": In the case of either the Company or the Reinsurer,
as appropriate, a material adverse effect on (1) its Property, business,
operations, financial condition, liabilities or capitalization, individually or
together with their respective Affiliates taken as whole; (2) its ability to
perform its obligations under this Agreement; or (3) the validity or
enforceability of this Agreement.
"PERSON": Any natural person, corporation, partnership, business trust, limited
liability company, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or any other entity, whether acting in an
individual, fiduciary or other capacity.
"POLICY OR POLICIES": Fixed annuity contracts and variable annuity contracts
issued by the Company and covered by the terms of this Agreement as listed in
Schedule A..
"PREMIUM TAXES": State taxes levied as a percent of gross premiums received,
gross premium receipts, premiums collected, premiums collected or contracted
for, new renewal premiums, or premiums written.
"PROMOTIONAL BONUS": Those portions of new money interest rates, renewal
interest rates, settlement option rates, and annuity purchase rates for
Reinsured Policies designated by the Company that exceed the Reinsurer's
Supportable Rate.
"PROPERTY": Any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed, and whether tangible or intangible.
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"REINSURANCE PREMIUMS": The premiums received by the Company with respect to
Reinsured Policies after the Effective Date and prior to termination of this
Agreement.
"REINSURED POLICY OR POLICIES": The quota share percentage of the portion of
Policies as defined in Schedule B.
"REINSURED POLICY EXPENSE ALLOWANCE": Reimbursement of costs related to
Reinsured Policies as set forth in Schedule C.
"REINSURER'S SUPPORTABLE RATE": New money interest rates, renewal interest
rates, settlement option rates, and annuity purchase rates for Reinsured
Policies agreed upon by a majority of the Reinsurer appointed membership of the
Interest Rate Committee provided in Section 12.
"REQUIREMENTS OF LAW": As to any Person, the certificate of limited partnership,
partnership agreement, charter and by-laws, or other organizational or governing
documents as such Person, and any treaty, constitution, law, rule, order,
regulation, statute, ordinance, code, decree, or determination of any
Governmental Authority, in each case applicable to, binding upon or affecting
any such Person or any of its Property or to which such Person or any of its
Property is subject.
"STATUTORY RESERVES:" The formula for reserves for the business reinsured under
the Agreement as calculated by the Company in accordance with the applicable
model regulations promulgated by the National Association of Insurance
Commissioners increased by any additional reserve required to meet statutory
valuation requirements for any state. Such reserves will be determined so as to
comply with applicable standards published by the American Academy of Actuaries
or by any state regulatory authority
"UNUSUAL EXPENSES OF LAW": As provided in Section 8 hereof.
SECTION 2. - REINSURANCE COVERAGE
(a) On the basis hereinafter stated, the Company's liability under the Policies
listed in Schedule A shall be reinsured with the Reinsurer automatically for
those portions of Policies as set forth in Schedule B for policies with an issue
date on or after the Effective Date of this Agreement as provided in Section 22
hereof.
(b) The liability of the Reinsurer for Policies shall begin simultaneously with
that of the Company but not prior to the Effective Date of this Agreement. In no
event shall reinsurance under this Agreement be in force and binding unless and
until the issuance and delivery of Policies underlying such reinsurance
constituted the doing of business in a state of the United States or the
District of Columbia in which the Company was properly licensed in good
standing.
(c) Reinsurance hereunder shall be coinsurance and shall follow the Policy forms
of the Company.
(d) The reinsurance under this Agreement with respect to any Policy shall be
maintained in force without reduction so long as and to the extent that the
liability of the Company under such Policy reinsured hereunder remains in force
without reduction, unless such reinsurance is terminated or reduced as provided
herein.
(e) Except as otherwise provided in this Agreement, the reinsurance provided
hereunder is subject to the same limitations and conditions to which the
Policies reinsured under this Agreement are subject.
(f) The Company shall notify the Reinsurer immediately, in writing, of any and
all investigations of the Company or its directors, principal officers or
shareholders conducted by a Governmental Authority.
(g) For purposes of this agreement, Product Exchanges, Internal Movements of
Money and Settlement Contracts are considered to be a new contract.
SECTION 3. - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Reinsurer that:
(a) The Company has furnished the Reinsurer with copies of all forms,
applications, rates, and values with respect to the Policies and shall keep the
Reinsurer informed with respect to any changes or modifications to such forms,
applications, rates or values in accordance with Section 13 herein.
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(b) The Company's authority to conduct an insurance business is in good standing
in all jurisdictions identified on Schedule D for the lines of business
identified therein and that it has not been placed in, nor does it have any
reason to believe that it is about to be placed in supervision, rehabilitation,
receivership, suspension or liquidation by any insurance department.
(c) The Company (1) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (2) has all necessary
corporate power and authority to entitle it to use its name, to own, lease or
otherwise hold its properties and assets, to carry on its business as currently
conducted, to perform its obligations, and (3) is in compliance with all
Requirements of Law, except to the extent that the failure to comply therewith
could not reasonably be expected to have a Material Adverse Effect.
(d) The Company has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement, and has taken all necessary
corporate and other action to authorize the ceding of the Policies under the
terms of this Agreement. Except as shall have been obtained and set forth on
Schedule E, no consent or approval of any Person, no waiver of any right of
distraint or other similar right, and no consent, license, approval,
authorization or declaration of, filing with or other act by or in respect of
any Governmental Authority, was, is or will be required in connection with the
fulfillment of the Company's duties under this Agreement.
(e) This Agreement has been duly executed and delivered by the Company and
constitutes the valid and legally binding obligation of the Company, enforceable
in accordance with its terms.
(f) The Policies are in compliance with all applicable Requirements of Law and
are on forms approved in all material respects by the appropriate Governmental
Authorities except to the extent that failure to be in compliance therewith does
not have a Material Adverse Effect.
(g) There are no material misrepresentations or omissions contained in the
information provided to the Reinsurer prior to the date of this Agreement.
SECTION 4. - REPRESENTATIONS AND WARRANTIES OF THE REINSURER
The Reinsurer hereby represents and warrants to the Company that:
(a) The Reinsurer's authority to conduct an insurance business is in good
standing in all jurisdictions identified on Schedule F for the lines of business
identified therein and that it has not been placed in, nor does it have any
reason to believe that it is about to be placed in supervision, rehabilitation,
receivership, suspension or liquidation by any insurance department.
(b) The Reinsurer (1) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan, (2) has all necessary
corporate power and authority to entitle it to use its name, to own, lease or
otherwise hold its properties and assets, to carry on its business as currently
conducted, to perform its obligations, and (3) is in compliance with all
Requirements of Law, except to the extent that the failure to comply therewith
could not reasonably be expected to have a Material Adverse Effect.
(c) The Reinsurer has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement, and has taken all necessary
corporate and other action to authorize the reinsurance of the Policies under
the terms of this Agreement. Except as shall have been obtained and set forth on
Schedule G, no consent or approval of any Person, no waiver of any right of
distraint or other similar right, and no consent, license, approval,
authorization or declaration of, filing with or other act by or in respect of
any Governmental Authority, was, is or will be required in connection with the
fulfillment of the Reinsurer's obligations under this Agreement.
(d) This Agreement has been duly executed and delivered by the Reinsurer and
constitutes the valid and legally binding obligation of the Reinsurer,
enforceable in accordance with its terms.
(e) There are no material misrepresentations or omissions contained in the
information provided to the Company prior to the date of this Agreement.
SECTION 5. - CONDITIONS PRECEDENT
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(a) The obligations of the Company and the Reinsurer hereunder are expressly
subject to the approvals of the insurance commissioners, directors, or
superintendents, as the case may be, of the insurance departments necessary for
the consummation of the reinsurance contemplated by this Agreement, and such
approvals shall be in full force and effect, and shall not impose upon either
the Company or the Reinsurer any material conditions or other requirements that
would impose upon either party any material additional costs.
(b) The obligations of the Reinsurer hereunder are expressly subject to the
Reinsurer not having discovered prior to the Closing Date material errors,
omissions or liabilities previously undisclosed to it in the due diligence
investigation and documentation furnished to the Reinsurer by the Company prior
to the date hereof.
(c) The obligations of the Company hereunder are expressly subject to the
Company not having discovered prior to the Closing Date material errors,
omissions or liabilities previously undisclosed to it in the due diligence
investigation and documentation furnished to the Company by the Reinsurer prior
to the date hereof.
SECTION 6. - PAYMENTS BY THE COMPANY
(a) Payment of Reinsurance Premiums
To effect or continue reinsurance with respect to Policies in force on
or after the Effective Date and prior to the termination of this Agreement, the
Company shall pay to the Reinsurer the Reinsurance Premiums.
(b) Promotional Bonus
The Company will pay the Reinsurer the cost assessed to the Company
under Section 18.
(c) Adjustments on Transfers
The Company will pay to the Reinsurer any amounts transferred to
Reinsured Policies, after the Effective Date, that were not previously Reinsured
Policies, less any transfer adjustments as determined in accordance with
Schedule H.
(d) Payment Procedures
All amounts payable by the Company to the Reinsurer under this Section
will be made in accordance with the terms and procedures set forth in Section 9
for payments required by this Agreement.
SECTION 7. - PAYMENTS BY THE REINSURER
(a) Benefits Payments
Benefit Payments will first be paid by the Company and the Reinsurer
will thereafter reimburse the Company for such Benefit Payments.
(b) Reinsured Policy Expense Allowances
The Reinsurer shall pay the Company the full amount of the Reinsured
Policy Expense Allowances as specified in Schedule C.
(c) Premium Taxes
The Reinsurer will reimburse the Company for Premium Taxes incurred by
the Company with respect to the Reinsured Policies.
(d) Policy Loans
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Loans on Policies will be paid by the Company to Contract owners and
the Reinsurer shall fund the Company for any such loans with respect to the
Reinsured Policies and the Company shall pay the Reinsurer interest and
principal with respect to such loans as such amounts are remitted by the Policy
owner.
(e) Adjustments on Transfers
The Reinsurer will pay to the Company any amounts transferred after the
Effective Date that were not previously Reinsured Policies to Reinsured
Policies, less any transfer adjustments as determined in accordance with
Schedule H.
(f) Payment Procedures
All amounts payable by the Reinsurer to the Company under this Section
will be made in accordance with the terms and procedures set forth in Section 9
for payments required by this Agreement.
SECTION 8. - EXPENSES AND ADJUSTMENTS
(a) The Reinsurer shall bear no part of the expenses incurred in connection with
the Policies reinsured hereunder, except as otherwise provided in this
Agreement.
(b) Any Unusual Expenses incurred by the Company in defending or investigating a
claim for Benefit Payments or in rescinding a Policy reinsured hereunder shall
be participated in by the Reinsurer in the same proportion as the Reinsured
Policy bears to the total liability under such Policy.
(c) For purposes of this Agreement, it is agreed that penalties, attorney's
fees, and interest that are imposed automatically by statute and that arise
solely out of a judgment rendered against the Company in a suit for Benefit
Payments shall be considered Unusual Expenses.
(d) The Reinsurer shall not pay the Company an Experience Refund under this
Agreement.
(e) In no event, however, shall the following categories of expenses or
liabilities be considered for purposes of this Agreement as Unusual Expenses:
(1) routine investigative or administrative expenses;
(2) expenses, fees, settlements or judgments arising out of or in
connection with claims of entitlement to Benefit Payments which the Company
admits are payable;
(3) expenses, fees, settlements or judgments arising out of or in
connection with claims against the Company for punitive or exemplary damages;
and
(4) expenses, fees, settlements or judgments arising out of or in
connection with claims made against the Company and based on alleged or actual
bad faith, failure to exercise good faith, or tortious conduct.
(f) In the event that the coverage provided by Reinsured Policies is increased
or reduced because of a misstatement of age or sex, the reinsurance hereunder
shall increase or reduce proportionately.
SECTION 9. - PAYMENT SETTLEMENT PROCEDURES AND REPORTS
(a) Daily Cash Settlement
The Company and the Reinsurer will establish and maintain a daily cash
settlement procedure in accordance with the principles set forth in Schedule I,
using approximations where required, to cover substantially all of the amounts
due under this Agreement. The daily cash settlement procedures may be amended as
agreed by the parties to help minimize the amount of net settlements due at the
end of each Accounting Period.
(b) Payments Due
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Except as otherwise specifically provided herein, all amounts due to be
paid to either the Reinsurer or the Company shall be determined daily on a net
basis. If such amounts cannot be determined on any day on an exact basis, such
payments will be paid on an estimated basis and any final adjustments are to be
made within fifteen (15) days after each Accounting Period as defined in
subsection (d) below.
(c) Accounting Period
The Accounting Period for this Agreement shall be a calendar month. The
Company and the Reinsurer shall each reconcile the reinsurance transactions and
payments contemplated by this Agreement in accordance with Schedule H at the end
of each Accounting Period.
(d) Reports
The Reports prescribed in Schedule H will be provided by the Company to
the Reinsurer within fifteen (15) days of the end of each Accounting Period.
SECTION 10. - ADMINISTRATION OF POLICIES
(a) The Company will have the ultimate authority for the administration of the
Policies. Notwithstanding the foregoing, the Company will administer the
Policies pursuant to servicing standards mutually agreed upon by the Company and
the Reinsurer, and in no event shall the Company administer the Policies in any
manner that is not in accordance with all Requirements of Law and with standard
industry custom, except to the extent that the failure to be in accordance with
such Requirements of Law and standard industry custom would not have a Material
Adverse Effect.
(b) The Company will indemnify and hold harmless the Reinsurer, its officers,
directors, employees, and agents (each as "Indemnified Party") from, and shall
reimburse as Indemnified Party for, all loss arising out of any claim against
such Indemnified Party arising out of any action or failure to act by the
Company or its representatives in respect of the administration of the Policies.
For purposes of this subsection, "loss" shall include all fees, costs,
penalties, judgments and expenses of any kind reasonably incurred by an
Indemnified Party in investigating, preparing for, defending against or taking
any other action with respect to a threatened or asserted claim.
SECTION 11. - NOTICE AND SETTLEMENT OF CLAIMS
(a) The Company will promptly notify the Reinsurer in writing after receipt of
any information regarding a claim for Benefits Payments and the institution of
any legal proceeding in respect of such claim. The Reinsurer will be furnished
copies of any proofs or other documents bearing on such claim or proceeding upon
request.
(b) The Company will promptly notify the Reinsurer in writing or its intention
to contest any claims for Benefits Payments. The Reinsurer will accept the good
faith decision of the Company in settling any claim for Benefits Payments and
shall pay its share of net reinsurance liability upon receiving proper evidence
of the Company's having settled with the claimant. In no event will the
Reinsurer be required to reimburse the Company for any Benefits Payments greater
than those guaranteed by the Policies.
(c) If the Company should contest any claim or proceeding and the amount of net
liability thereby be reduced, or if at any time the Company should recover
monies from any third party in connection with or arising out of any claim
reinsured by the Reinsurer, the Reinsurer's liability hereunder shall be reduced
accordingly.
(d) Notwithstanding the foregoing, the Reinsurer shall have the right to consult
with the Company in respect of the handling of any claim and, at its own
expense, shall have the right to participate in the defense of any claim.
SECTION 12. - INTEREST RATE COMMITTEE
(a) An Interest Rate Committee will be established by the Reinsurer and the
Company. The Committee members will be selected from the Reinsurer's and the
Company's then-current employees or their respective affiliates' employees.
(b) The Committee will be authorized to determine interest rate crediting
methodologies and to recommend new money interest rates, renewal interest rates,
settlement option rates, and annuity purchase rates for the Policies. Such
methodologies and
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rates will be based on indices, or other information relevant to the appropriate
maturities of the Policies. The Company has the right to approve or reject all
rates recommended by the Committee. Any Promotional Bonus will be subject to the
terms of Section 18.
(c) The Committee will establish the procedures for its operations including,
but not limited to, determining the frequency of meetings, frequency of interest
rate reviews, maintenance of minutes for meetings of the Committee, and notice
requirements for any unscheduled meetings. Meetings will generally be conducted
by teleconference. A quorum for any meetings of the Committee will be at least
one representative from each of the Company and the Reinsurer. Members in
attendance may cast the votes of those absent members from their respective
group.
SECTION 13. - POLICY CHANGES AND NEW POLICY FORMS
(a) If any change is made with respect to any Policies, including but not
limited to changes in the terms and conditions of a Policy issued by the
Company, or a change in the method used to calculate the reserves on a Policy,
and such change affects Reinsured Policies, the Company will notify the
Reinsurer promptly in writing of such change.
(b) For purposes of this Agreement, any of the types of changes described in
subsection (a) above will be deemed to be the issuance of a new policy form by
the Company and policies issued by the Company on such new policy form will not
automatically be considered Policies subject to this Agreement. The Reinsurer,
in its full and unfettered discretion, will decide whether the policies
utilizing the new policy form will be Policies subject to this Agreement and the
Company shall be bound by the Reinsurer's decision. The Reinsurer shall inform
the Company whether the Reinsurer wishes to include policies utilizing the new
policy form as Policies subject to this Agreement within 30 days of the notice
provided to the Reinsurer by the Company pursuant to Section 13(a) hereof.
SECTION 14. - OVERSIGHTS
(a) If either the Company or the Reinsurer shall unintentionally perform an
obligation incorrectly or fail to perform an obligation under this Agreement or
perform an obligation incorrectly, such error or omission shall be corrected as
soon as reasonably possible after its discovery and both the Company and the
Reinsurer will be restored to the positions they would have been in had no such
error or omission occurred. For purposes of this Agreement, errors and omissions
are defined as clerical mistakes made inadvertently and exclude errors of
judgment and all other forms of errors or omissions.
SECTION 15. - TAX MATTERS
(a) Pursuant to IRC Section 848, insurance companies are required to capitalize
and amortize specified policy acquisition expenses. The amount capitalized is
determined by proxy based on a percentage of "reinsurance premiums" as defined
by the IRS regulations relating to IRC Section 848. At the Reinsurer's request,
the Company will reimburse the Reinsurer for any positive timing cost to the
Reinsurer which results from the application of IRC Section 848 to the Policies
reinsured under this Agreement and which the Reinsurer considers material. At
the Company's request, the Reinsurer will reimburse the Company for the absolute
value of any negative timing cost to the Company which results from the
application of IRC Section 848 to the Policies reinsured under this Agreement
and which the Company considers material.
(b) The Company and the Reinsurer agree that the party with net positive
consideration under this Agreement will capitalize specified Policy acquisition
expenses with respect to the Policies reinsured under this Agreement without
regard to the general deductions limitation of IRC Section 848(c)(1). The
Company and the Reinsurer will exchange information pertaining to the amount of
net cash consideration under this Agreement each year to ensure consistency. The
Company will submit a schedule to the Reinsurer by May 1st of each year showing
its calculation of the net consideration for the preceding taxable year. The
Reinsurer may contest the calculation in writing within thirty (30) days of
receipt of the Company's schedule. Any difference will be resolved between the
parties so that consistent amounts are reported on the respective tax returns
for the preceding taxable year. This election to capitalize specified Policy
acquisition expenses without regard to the general deductions limitation is
effective for all taxable years during which this Agreement remains in effect.
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SECTION 16. - AUDIT OF RECORDS AND PROCEDURES
(a) The Reinsurer and the Company each shall have the right during normal
business hours and at reasonable intervals, to audit, at the office of the
other, all records and procedures relating to reinsurance under this Agreement.
Books and records shall be maintained in accordance with prudent standards of
insurance company record keeping and must be retained for a period of at least
seven (7) years from the date of creation.
SECTION 17. - ARBITRATION
(a) It is the intention of the parties that the customs and usages of the
business of reinsurance shall be given full effect in the interpretation of this
Agreement. The parties shall act in all things with the highest good faith. A
dispute or difference between the parties with respect to the operation or
interpretation of this Agreement on which an amicable understanding cannot be
reached, including but not limited to claims for rescission of the Agreement,
shall be decided by arbitration. The arbitrators are empowered to decide all
questions or issues and shall be free to reach their decisions from the
standpoint of equity and customary practices of the insurance and reinsurance
industry rather than from that of strict law.
(b) To initiate arbitration, a party shall send by certified mail, return
receipt requested, to the other party's home office a notice demanding
arbitration. The notice shall include the issues for decision and the remedies
sought. The party receiving the notice shall thereafter have thirty days within
which to respond in writing.
(c) There shall be three arbitrators who shall be active or retired officers of
life insurance companies other than the contracting companies or their
affiliates. Each of the contracting companies shall appoint one of the
arbitrators and these two arbitrators shall select the third. In the event that
either contracting company should fail to choose an arbitrator within thirty
days after the response to the demand for arbitration, the other contracting
company may choose two arbitrators, who shall in turn choose a third arbitrator
before entering arbitration. If the two arbitrators are unable to agree upon the
selection of a third arbitrator within thirty days following their appointment,
each arbitrator shall nominate three candidates within ten days thereafter, two
of whom the other shall decline and the decision shall be made by drawing lots.
(d) The decision in writing of any two arbitrators when filed with the parties
hereof, shall be final and binding on both parties. Judgment may be entered upon
the final decision of the arbitrators in any court having competent
jurisdiction. Each party shall bear the expense of its own arbitrator, and with
the other party shall bear equally the expense of the third arbitrator and of
the arbitration.
(e) In the event of arbitration, the arbitration hearing shall take place in
Boston, Massachusetts, unless another location is agreed to in writing by both
the Company and the Reinsurer.
(f) This Section 17 constitutes a separate and independent agreement between the
Company and the Reinsurer and shall remain in force even after termination of
this Agreement and even if the Agreement is found wholly or partially void or is
disputed. The arbitrators shall decide upon the validity of this Agreement and,
in case of its invalidity, upon any dispute between the parties.
SECTION 18. - SPECIAL PROVISIONS
Promotional Bonus
On a case by case basis, the Reinsurer will determine the extent to
which it will share in the costs, if any, associated with a Promotional Bonus.
If a Promotional Bonus is offered by the Company without the Reinsurer's prior
written approval and agreement to share the cost of such Promotional Bonus, then
the Company shall be assessed the full amount of costs associated with the
Promotional Bonus.
SECTION 19. - INSOLVENCY
(a) In the event of the insolvency of the Company, all reinsurance shall be
payable directly to the liquidator, receiver, or statutory successor of the
Company, without diminution or increase because of the insolvency of the
Company.
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(b) In the event of insolvency of the Company, the liquidator, receiver, or
statutory successor shall give the Reinsurer written notice of the pendency of a
claim on a Reinsured Policy within a reasonable time after such claim is filed
in the insolvency proceeding. During the pendency of any such claim, the
Reinsurer may investigate such claim and interpose in the name of the Company
(its liquidator, receiver or statutory successor), but at its own expense, in
the proceeding where such claim is to be adjudicated any defense or defenses
which the Reinsurer may deem available to the Company or its liquidator,
receiver or statutory successor.
(c) 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. Where two or more
reinsurers are participating in the same claim and a majority in interest elect
to interpose a defense or defenses to any such claim, the expense shall be
apportioned in accordance with the terms of this Agreement as though such
expenses had been incurred by the Company.
SECTION 20. - OFFSET
(a) Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or where incurred, in favor of or against either
the Company or the Reinsurer with respect to this Agreement or with respect to
any other claim of one party against the other under this Agreement or any other
Agreement between the parties are deemed mutual debts or credits, as the case
may be, and shall be set off dollar for dollar, and only the balance shall be
allowed or paid, regardless of the solvency of either party.
SECTION 21. - PARTIES TO AGREEMENT
(a) This is an Agreement for coinsurance solely between the Company and the
Reinsurer. The acceptance of reinsurance hereunder shall not create any right or
legal relation whatsoever between the Reinsurer and the insured or the
beneficiary under any Policy, and the Company shall be and remain solely liable
to such insured or beneficiary under any such Policy.
(b) This Agreement may not be assigned by either party without the prior written
approval of the other party. However, the Reinsurer reserves the right to
retrocede the reinsurance assumed under this Agreement to one or more of its
affiliated insurance companies. Except for the foregoing, the Reinsurer shall
not retrocede the Policies reinsured hereunder without the prior written
authorization by the Company.
SECTION 22. - EFFECTIVE DATE
(a) The Effective Date for the reinsurance provided under this Agreement shall
be January 1, 1999.
SECTION 23. - ENTIRE AGREEMENT
(a) This Agreement constitutes the entire agreement between the Company and the
Reinsurer with respect to the risks reinsured hereunder and there are no
understandings between the parties other than as expressed in this Agreement.
SECTION 24. - RECAPTURE OF REINSURANCE
(a) Once each calendar year, the Company shall have the option to recapture
existing contracts reinsured hereunder. If the Company elects to recapture,
recapture will occur subject to a mutually acceptable schedule determined at the
time recapture is elected.
SECTION 25. - TERMINATION
(a) This Agreement may be terminated at any time by either the Reinsurer or the
Company upon six (6) months written notice with respect to reinsurance of
Policies not yet placed in force. Upon termination pursuant to this subsection
(a), the Reinsured Portions of Policies in force at the time of termination
shall continue to be reinsured pursuant to the terms of this Agreement. The
payment of Reinsurance Premiums by the Company to the Reinsurer in respect of
Reinsured Portions shall be a condition precedent to the liability of the
Reinsurer in respect of those Reinsured Portions.
(b) At the end of any Accounting Period, this Agreement shall automatically
terminate if none of the Policies reinsured hereunder are in force.
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14
(c) The failure to make payments in accordance with Section 9 shall permit the
aggrieved party to terminate this Agreement with respect to all Policies
following thirty (30) days written notice to the party in default provided the
party in default has not cured such default within that notice period.
SECTION 26. - MARKETING MATERIALS
(a) No marketing materials, prospectuses, broker communications or other
communications of the Company or the Reinsurer which refer to the other party
hereto shall be distributed in any manner without the prior approval of such
other party.
SECTION 27. - SEVERABILITY OF PROVISIONS
(a) If any provision of this Agreement is declared null and void by any
Government Authority, each party will have the right to terminate this Agreement
upon five (5) days written notice to the other party. Upon such termination the
Reinsurer shall transfer to the Company a total amount, in cash or assets having
fair market value acceptable to the Company, equal to the net consideration with
respect to the Reinsured Portions in effect as of the effective date of such
termination. Upon transfer pursuant to this section 27, the Reinsurer shall have
no liability whatsoever with respect to such reinsurance.
SECTION 28. - COUNTERPARTS
(a) This Agreement may be executed in several counterparts and each shall have
the same force and effect as an original.
SECTION 29. - AMENDMENTS
(a) Any amendment, alteration, modification, variation or addition to this
Agreement shall only be valid if in writing and executed by both parties hereto.
SECTION 30. - NO WAIVER
(a) The failure of any party to enforce at any time any of the provisions of
this Agreement shall in no way be construed to be a waiver of such provisions,
nor in any way to affect the validity of this Agreement, or any part thereof, or
the rights of any party to thereafter enforce each and every provision.
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15
SECTION 31. - CONFIDENTIALITY
(a) The Reinsurer or the Company, as the case may be, will handle confidential
information received from the other party in accordance with standards of care
and confidentiality that it applies to its own records, trade secrets and
proprietary information.
SECTION 32. - GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware.
IN WITNESS WHEREOF, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
and THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.) have by their respective
officers executed this Agreement in duplicate on the date first mentioned above.
THE MANUFACTURERS LIFE THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NORTH INSURANCE COMPANY (U.S.A.)
AMERICA
________________________________ ________________________________
By By
________________________________ ________________________________
Title Title
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16
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA
COINSURANCE AGREEMENT
SCHEDULE A
THE REINSURED THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA PRODUCTS
UNDER THIS AGREEMENT ARE LISTED BELOW.
STANDARD
POLICY FORM CODE* PRODUCT ADMINISTRATIVE CODE
DEFERRED ANNUITIES AND ANNUITIZATIONS WITH FIXED PAYOUT OPTIONS
Venture Fixed Annuity
204-FA VEN 4
Venture Variable Annuity (Annuitizations with fixed payout options only)
200-VA VEN 1
203-VA VEN 3
Venture Variable Annuities - Fixed Options
207-VFA VEN 7
207-VFA OWN 7
VFA.CONT, VFA.CERT VEN 8
207-VFA VEN 17
VFA.CONT,VFA.CERT VEN 18
VENTURE.001, VENTURE.005 VEN 20
VENTURE.001, VENTURE.005 VEN 21
VENTURE.003, VENTURE.004 VEN 22
VENTURE.003, VENTURE.004 VEN 23
VENTURE.001, VENTURE.005 VEN 25
VENTURE.003, VENTURE.004 VEN 26
207-VFA VEN 27
VENTURE.001, VENTURE.005 MLL 25
VENTURE.003, VENTURE.004 MLL 26
207-VFA MLL 27
Venture Vision Product - Fixed Options
VEN 10 VIS 5, VIS 6
VISION.001 VIS 25, VIS 26
Venture Vantage Product - Fixed Options
VENTURE.015 XXX00, XXX00,
XXX00
Venture Group Unallocated Annuities - Fixed Options only All Product
UGA Administrative
codes starting
with "G"
Venture Market Value-adjusted Annuity
VENTURE.010, VENTURE.030, All Product
VENTURE.031 Administrative
codes starting
with "MVA"
Manulife Venture Rollover Annuities - Fixed Options
VENTURE.025, VENTURE.026 MRPG01
207-VFA MRP07
207-VFA MRP17
VENTURE.001, VENTURE.005 MRP20
VENTURE.001, VENTURE.005 MRP21
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17
VENTURE.003, VENTURE.004 MRP22
VENTURE.003, VENTURE.004 MRP23
VENTURE.001, VENTURE.005 MRP25
VENTURE.003, VENTURE.004 MRP26
207-VFA MRP27
IMMEDIATE PAYOUT ANNUITIES (FIXED OPTIONS ONLY)
206-IA VEN 6 Fixed
Immediate
*Slight variations to the identified policy form codes may exist by state.
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18
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA
COINSURANCE AGREEMENT
SCHEDULE B
THE REINSURED THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA RELATED
PRODUCT COINSURANCE PERCENTAGES ARE LISTED BELOW. THIS AGREEMENT COVERS THE
FIXED ACCOUNT OPTIONS IN BOTH THE ACCUMULATION (DEFERRED ) AND PAYOUT PHASES OF
THESE CONTRAST. THE LOAN COLLATERAL ACCOUNT UNDER A CONTRACT SHALL BE INCLUDED
AS A FIXED ACCOUNT OPTION.
PRODUCT ADMINISTRATIVE CODE COINSURANCE PERCENTAGE
DEFERRED ANNUITIES AND ANNUITIZATIONS WITH FIXED PAYOUT OPTIONS
Venture Fixed Annuity
VEN 4 100%
Venture Variable Annuity (Annuitizations with fixed payout options only)
VEN 1 100%
VEN 3 100%
Venture Variable Annuities - Fixed Options
VEN 7 100%
OWN 7 100%
VEN 8 100%
VEN 17 100%
VEN 18 100%
VEN 20 100%
VEN 21 100%
VEN 22 100%
VEN 23 100%
VEN 25 100%
VEN 26 100%
VEN 27 100%
MLL 25 100%
MLL 26 100%
MLL 27 100%
Venture Vision Product - Fixed Options
VIS 5, VIS 6 100%
VIS 25, VIS 26 100%
Venture Vantage Product - Fixed Options
XXX 00, XXX00, XXX 25 100%
Venture Group Unallocated Annuities - Fixed Options only
All Product Administrative
codes starting with "G" 100%
Venture Market Value-adjusted Annuity
All Product Administrative
codes starting with "MVA" 100%
Manulife Venture Rollover Annuities - Fixed Options
MRPG01 100%
MRP07 100%
MRP17 100%
MRP20 100%
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19
MRP21 100%
MRP22 100%
MRP23 100%
MRP25 100%
MRP26 100%
MRP27 100%
IMMEDIATE PAYOUT ANNUITIES (FIXED OPTIONS ONLY)
VEN 6 Fixed Immediate 100%
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20
SCHEDULE C: COMPENSATION ALLOWANCE
[INTENTIONALLY OMITTED]
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21
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA
COINSURANCE AGREEMENT
SCHEDULE D
INSURANCE LICENSES
EXPIRATION
DATE OF
STATE: CERTIFICATE: COVERAGE:
------ ------------ ---------
Alabama Permanent Life, Disability and Annuities and
Variable Authority
Alaska Permanent Life (includes Annuities and Disability),
Variable Annuities and Variable
Life
Arizona Permanent Life (includes Annuities), Disability and
Variable Authority
Arkansas Permanent Life, (includes Annuities) Disability,
Variable Annuities and Variable Life
California Permanent Life (includes Annuities), Disability
and Variable Annuities
Colorado Permanent Life, Annuities, Health and Accident,
Credit Life, Credit Accident &
Health, Group Life, Variable Annuities
Connecticut 5/95 Life, (includes Annuities) Variable
Annuities and Reinsurance
D.C. 5/1/95 Life, Annuities (individual, group and
variable), and Group Life
Delaware Permanent Life (includes Annuities), Health, Credit
life, Credit Health, Variable
Annuities and Variable Life
Florida Permanent Life, Annuities, Group Life and Variable Annuities
Georgia 6/30/95 Life (includes Annuities), Health and
Accident and Variable Authority
Hawaii Permanent Life (includes Annuities) and Variable Authority
Idaho Permanent Life (includes Annuities and Disability)
and Variable Authority
Illinois 7/95 Life (includes Annuities), Accident and
Health and Variable Products
Indiana Permanent Life, Annuities, Variable Annuities and
Variable Life
Iowa 6/95 Life (includes Annuities, Variable Life,
Variable Annuities, and Credit
Life), Individual Accident, Individual
Accident and Health, Group
Accident and Health, Individual Hospital
and Medical Expenses
Kansas Permanent Life (includes Annuities) and Variable Authority
Kentucky Permanent Life, Annuities and Variable Authority
Louisiana Permanent Life (includes Annuities), Health,
Accident and Variable Authority
Maine Life (includes annuties and variable
annuities) Health and Variable Life
COINSURANCE AGREEMENT
SCHEDULE D (CONTINUED)
INSURANCE LICENSES
Maryland 6/30/95 Life (includes Annuities), Health, Variable
Annuities and Variable Life
Massachusetts 6/30/95 Life (includes Annuities), Health, Accident
and Variable Annuities
Michigan Permanent Life (includes Annuities), Disability and
Variable Annuities
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22
Minnesota 6/1/95 Life, Annuities and Variable Contracts
Mississippi 1/1/95 Life (includes Annuities), Variable Contracts
Missouri Permanent Life (includes Annuities) and Variable Contracts
Montana Permanent Life (includes Annuities), Disability and
Variable Annuities
Nebraska 4/95 Life (includes Annuities), Health,
Accident, Variable Annuities and
Variable Life
Nevada Permanent Life (including Variable Annuities and
Variable Life)
New Hampshire None
New Jersey 5/1/95 Life, Health, Annuities and Variable Contracts
New Mexico Permanent Life (includes Annuities), Health and
Variable Annuities
North Carolina 6/30/95 Life, Annuities (includes Variable Annuities)
North Dakota Permanent Life and Annuities, Health, Accident,
Variable Annuities and Variable Life
Ohio 7/1/95 Life, Accident, Health, Disability,
Annuities and Variable authority
Oklahoma 2/28/95 Life (includes Annuities), Health and
Accident, Variable Annuities and
Variable Life
Oregon Permanent Life (includes Annuities), Health and
Variable products authority
Pennsylvania 3/31/95 Life, Annuities, Variable Life and
Variable Annuities
Puerto Rico 6/30/95 Life (includes Annuities), Disability and
Variable Annuities
Rhode Island Life, Health, Variable Annuities and Variable Life
South Carolina Permanent Life (includes Annuities), Accident and
Health and Variable Contracts
South Dakota Permanent Life (includes Annuities), Variable Annuities
and Variable Life
Tennessee Permanent Life (includes Annuities) and Variable Contracts
Texas Permanent Life (includes Annuities), Accident and
Health, Variable Annuities
COINSURANCE AGREEMENT
SCHEDULE D (CONTINUED)
INSURANCE LICENSES
Utah 3/1/95 Life, Disability, Annuities, Variable Life
and Variable Annuities
Vermont Permanent Life, Annuities (includes variable), and
Variable Life
Virginia 6/30/95 Life, Individual Accident & Health,
Annuities, Credit Life, Credit Accident and Health,
Variable Life and Variable Annuities
Washington Permanent Life (includes Annuities), Variable
Life and Variable Annuities
West Virginia 5/31/95 Life (includes Annuities and Disability),
Variable authority
Wisconsin Permanent Life and Annuities, Disability, Variable Life
and Variable Annuities
Wyoming Permanent Life (includes Annuities) and Variable Contracts
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23
COINSURANCE AGREEMENT
SCHEDULE E
DELAWARE DEPARTMENT OF INSURANCE
86
24
COINSURANCE AGREEMENT
SCHEDULE F
JURISDICTIONS AND LINES OF BUSINESS THEREIN
87
25
COINSURANCE AGREEMENT
SCHEDULE G
NONE
88
26
COINSURANCE AGREEMENT
SCHEDULE H
TRANSFER OF ADJUSTMENTS
[INTENTIONALLY OMITTED]
89
27
Coinsurance Agreement
Schedule I
The following reports and data feeds are to be provided by the Company to the
Reinsurer. The data contents will only include information related to the
reinsured business.
I. Daily Reports
Daily cash settlement statement (Schedule J) by 4:00 p.m. on
the following business day.
II. Month end reports and data feeds1
A. By the third business day after month end
o Liability database reserve feed2
o Annuitized census data feed3
o Liability database and accounting activity
data feeds4
o Policy loan progressions, reports and
reconciliations
B. By the fourth business day after month end
o Month end ceding statement data feed
(Schedule K)
o Exhibits and supporting data for the
computation of the
Policy Expense Allowances (as defined in
Schedule C) and
the Adjustments on Transfers (as defined in
Schedule H).
o Statutory reserve summary by product and by
company
o Progression of Deferred Account
Values/Annuitized Reserves
by product and by company showing specific
transactions
(month only and year to date).
----------------
1 Based upon technology and business reporting needs, the content, format,
and interim report/file substitutes will be negotiated as needed by the
appropriate Accounting and Valuation staff of the Reinsurer and the Company.
2 At a minimum, they will contain the following Company information on a
policy level basis: For the deferred business: (a) ending account value,
by fund option, duration and interest rate; (b) surrender charges; (c)
owner and annuitant age and (d) plan code.
3 For the annuitized business: ending policy census data including
annuity option; annuitant date of birth, rated age, and sex; annuity payment
frequency, amount, option, and date of first and last payments; cost of living
adjustments; pricing date; issue date; unloaded net premium and expense
loads; state; and reserve valuation modes and rates.
4 At a minimum, they will contain the following Company information on a
policy level basis for both deferred and annuitized business: ceding statement
activity for the period for each plan code segregated by qualified vs.
nonqualified, individual vs. group and by state.
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28
Coinsurance Agreement
Schedule J
Daily Cash Settlement Information
Company: ___________
For Activity of: _____________
Daily Month to Quarter Year to
Activity Date to date date
Deferred Activity Only
(1) New Policy Premium
(2) Transfer/Exchanges from Variables
(a) Transfers from Variable to Fixed
(b) Product Exchanges from Variable to Fixed
(c) Total Transfers in [(2a)+(2b)]
(3) Total Inflow to Fixed [(1)+(2c)]
(4) Partial withdrawals (including SWIP's)
(5) Full Terminations (Account Value only)
(6) Transfers/Exchanges from Fixed
(a) Transfers from Fixed to Variable
(b) Product Exchanges from Fixed to Variable
(c) Total Transfers Out [(6a)+(3b)]
(7) Death Benefit (Account Value Only)
(8) Market Value Adjustments Collected
(9) Surrender Charges Collected
(10) Total Outflow from Fixed
[(4)+(5)+(6c)+(7)-(8)-(9)]
(11) Net Fixed Cashflow [(3)-(10)]
(12) Allowances
(a) Commissions Paid (see schedule)
(b) Issue Expenses [.38% x (1)] (est.)
(c) Maintenance Expenses [$5,000 per day] (est.)
(d) Transfer settlement [.05 x ((2c) - (6c))] (est.)
(e) Total allowances [(12a)+(12b)+(12c)+(12d)]
(13) CASH DUE TO (FROM) PSI [(11) - (12e)]
Prepared by: __________________________
Approved by: __________________________
Date Prepared: __________________________
Coinsurance Agreement
Schedule K
Monthly Cash Settlement Information
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29
Company: ___________
For Activity of: _____________
Month to Quarter Year to
Date to date date
(A) Deferred Activity Only
(1) New Policy Premium
(2) Transfer/Exchanges from Variables
(a) Transfers from Variable to Fixed
(b) Product Exchanges from Variable to Fixed
(c) Total Transfers In [(2a)+(2b)]
(3) Total Inflow to Fixed [(1)+(2c)]
(4) Partial withdrawals (including SWIP's)
(5) Full Terminations (Account Value only)
(6) Transfers/Exchanges from Fixed
(a) Transfers from Fixed to Variable
(b) Product Exchanges from Fixed to Variable
(c) Total Transfers Out [(6a)+(6b)]
(7) Death Benefit (Account Value only)
(8) Market Value Adjustments Collected
(a) Collected
(b) Waived
(c) Total [(8a) +(8b)]
(9) Surrender Charges Collected
(a) Collected on Withdrawal
(b) Collected on Death
(c) Waived
(d) Total [(8a)+(8b)+(8c)]
(10) Total Outflow from Fixed [(4)+(5)+(6c)+(7)-(8c)-(8d)]
(11) Net Fixed Deferred Cashflow [(3)-(10)]
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30
COINSURANCE AGREEMENT
SCHEDULE K (CONTINUED)
MONTHLY CASH SETTLEMENT INFORMATION
Month to Quarter Year to
Date to date date
-------- ------- -------
(B) PAYOUT ACTIVITY
(1) Annuitized Funds (Account Value)
(a) Immediate Annuity Premium
(b) Variable to Fixed Annuitizations
(c) Fixed to Variable Annuitizations
(d) Total Annuitized Funds [(1a)+(1b)-(1c)]
(2) Premium Taxes (Back & Front-end)
(a) Immediate Annuity
(b) Var/Fixed Settlement Annuity
(c) Fixed/Fixed Settlement Annuity
(d) Total [(2a)+(2b)+(2c)]
(3) Benefit Payments
(a) Immediate Annuity - Regular
(b) Immediate Annuity - Commuted (Deaths)
(c) Settlement Annuity - Regular (d)
Settlement Annuity - Commuted (Deaths) (e)
Total Benefits [(3a)+(3b)+(3c)+(3d)]
(4) Net Payout Annuity Activity [(1d)-(2d)-(3a)]
(C) CAN'T READ FROM COPY
(1) Agent Compensation
(a) Commissions Paid (see schedule)
(b) Commissions Charged-back (see schedule)
(c) Renewal Comm. Adj. (see schedule)
(d) High Age Adj. (see schedule)
(e) Trails Paid (see schedule)
(f) Total Compensation [(1a)-(1b)+(1c)-(1d)+(1e)]
(2) Issue Expenses (see schedule)
(3) Maintenance Expenses (see schedule)
(4) Transfer Allowance on Net Fund Transfers to Fixed
(including loans - see schedule)
(5) Transfer Allowance on Net Product Exchanges to Fixed
(see schedule)
(6) Premium Tax Reimbursement
(7) Total Allowances [(1f)+(2)+(3)+(4)+(5)+(6)]
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31
COINSURANCE AGREEMENT
SCHEDULE K (CONTINUED)
MONTHLY CASH SETTLEMENT INFORMATION
Month to Quarter Year to
Date to date date
-------- ------- -------
(D) OTHER ACTIVITY
(1) Excess Interest Credited
(2) Policy Loans
(a) Loan Principal Paid Back to Fixed
(b) Loan Interest Paid Back to Fixed
(c) New Loans from Fixed
(d) Interest on Variable Paybacks
(e) Interest Capitalized on Variable Loans
(f) Int. Credited on Loans from Var.
(g) Reduction due Fixed & Variable Decrements (asset fund)
(h) Net Loan Cashflow [(2a)+(2b)-(2c)+(2d)+(2e)-(2f)+(2g)]
(3) Total Other Activity [(1)+(2f)]
(E) CASH DUE TO (FROM) PSI [(A11)+(B4)-(C7)+(D3)]
(F) CASH PAID TO (FROM) PSI DURING MONTH
(G) MONTHLY TRUE-UP [(E)-(F)]
(H) SUMMARY RECONCILIATION OF DAILY AND MONTHLY DEFERRED ANNUITY ACTIVITY
(1) True-up of daily items (monthly deferred annuity and allowances)
[(A1)+(A2c)-(A4)-(A5)-(A6c)-(A7)+(A8a)+(A9a)-(C1a)-(C2)-(C3)-(C4)-(C5)]
(2) Cash Paid to(from) PSI During Month
(3) Difference [(H1)-(H2)]*
*See attached explanation if these items are not equal
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32
COINSURANCE AGREEMENT
SCHEDULE K (CONTINUED)
MONTHLY CASH SETTLEMENT INFORMATION
(I) ITEMIZED RECONCILIATION OF DAILY AND MONTHLY DEFERRED ANNUITY ACTIVITY
{i} {ii}
Cumulative Monthly
Daily True-up
---------- -------
(1) Transfers/Exchanges from Variable
(a) Transfers from Variable to Fixed
(b) Product Exchanges from Variable to Fixed
(c) Total Transfers In [(1a)+(1b)]
(2) Transfers/Exchanges from Fixed
(a) Transfers from Fixed to Variable
(b) Product Exchanges from Fixed to Variable
(c) Total Transfers Out [(2a)+(2b)]
(3) Allowances
(a) Commissions Paid
(b) Issue Expenses
(c) Maintenance Expenses
(d) Transfer Settlement
(e) Total
(4) Total [(I1)-(I2)-(I3)]
(5) Variances
(line 4 column (i) less column (ii)
Prepared by: _________________________
Approved by: _________________________
Date Prepared: _________________________
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33
COINSURANCE AGREEMENT
SCHEDULE K (CONTINUED)
DAILY CASH SETTLEMENT INFORMATION
Company: ___________
For Activity of: _____________
Month to Quarter Year to
Date to date date
-------- ------- -------
(1) Fixed to Fixed Transfers/Exchanges
(a) Transfers from Fixed to Fixed
(b) Product Exchanges from Fixed to Fixed
(c) Fixed/Fixed Annuitizations (account value)
(2) Admin Fees Collected
(3) Deferred Annuity Interest Credited
(4) Number of Policies in Force
(a) Deferred
(b) Payout
(5) Fixed Premiums in Suspense (detail attached)
(6) Fixed Account Claims not yet Processed
(7) Policy Loan Reconciliation - Collateral Account
(a) Collateral Account at Beg. of Period
(b) New Loans Taken
(c) Reduction due to Surrender
(d) Reduction due to Maturity
(e) Reduction due to Annuitization
(f) Reduction due to death
(g) Principal Repaid
(h) Interest Credited to Collateral Account
(i) Interest Capitalized due Non-payment
(j) Collateral Account at End of Period
[(7a)+(7b)-(7c)-(7d)-(7e)-(7f)-(7g)-(7h)+(7i)]
(k) Change in Collateral Account [(7j)-(7a)]
(l) Interest Expense Accrued but not Credited to Collateral Fund
(8) Policy Loan Reconciliation - Asset Fund
(a) Asset Fund at Beg. of Period
(b) New Loans Taken
(c) Reduction due to Surrender
(d) Reduction due to Maturity
(e) Reduction due to Annuitization
(f) Reduction due to Death
(g) Principal Repaid
(h) Interest Capitalized
(i) Asset Fund End of Period
[(7a)+(7b)-(7c)-(7d)-(7e)-(7f)-(7g)+(7h)]
(j) Int. Inc. Accrued but not cap. on Asset Fund
Prepared by: _______________________
Approved by: _______________________
Date Prepared: _______________________
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COINSURANCE AGREEMENT
SCHEDULE L
RULES OF THE COMPANY
The reinsured, The Manufacturers Life Insurance Company of North
America, will achieve the service standards set forth below when dealing with
Reinsured Portions of Policies reinsured under this Agreement.
The Manufacturers Life Insurance Company of North America will:
1) Answer telephones within 30 seconds of the call being received during
Business Days;
2) Issue new Policies within 2 full Business Days of all requirements needed
to issue a Policy having been received by MNA at its office in Boston,
Massachusetts;
3) Complete processing of Policy terminations and withdrawals within 2 full
Business Days of all requirements needed for such transactions having been
received by MNA at its office in Boston, Massachusetts;
4) Complete processing of all non-financial Policy changes within 5 full
business Days of all requirements needed for such transactions having been
received by MNA at its office in Boston, Massachusetts; and
5) Send Letters of Acceptance regarding 1035 exchanges within 5 full Business
Days of receipt by MNA at its office in Boston, Massachusetts.
6) Release commission payments to Broker Dealers within 2 full Business Days
of receipt of Commission Statements/Checks by MNA at its office in Boston,
Massachusetts.
MNA will meet the above standards, on average, 90% of the time.
In any event, MNA will employ service standards for the Reinsured Portions at
least at the same target level as those used for the Policies in their entirety.
Target is defined in the MNA Incentive Pay Plan for Annuity Customer Service. In
the event targets are revised, MNA will notify Peoples in writing within 30 days
of any such revisions becoming effective.
105
