Exhibit 10.10 (n)

Self-Administered

Automatic Reinsurance Agreement

Effective January 1, 2003

between

Citizens Insurance Company of America

Denver, Colorado

(hereinafter referred to as the “Ceding Company”)

and

Scottish Re Limited

(formerly known as World-Wide Reassurance Company Limited)

Windsor, England

(hereinafter referred to as the “Reinsurer”)

 

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ARTICLE I
BASIS OF REINSURANCE

1. On and after the effective date of this Agreement, the Ceding Company shall
cede to Reinsurer, subject to the limitations outlined in Exhibit III, 2! of the
First Excess, i.e., the amount of new direct agency and brokerage Standard and
Substandard individual issues of Life Insurance policies and Waiver of Premium
Disability benefits in excess of the Ceding Company’s regular retention for such
benefits as shown in Exhibit II. Reinsurer shall automatically accept such First
Excess within the limits indicated in Exhibit III, provided that the Ceding
Company has applied its normal underwriting rules and retains its regular
retention Life insurance volume is ceded on a yearly renewable term basis while
Waiver of Premium benefits are ceded on a coinsurance basis.

2. The term “new direct agency and brokerage issues” as used in this Article
shall include issues on the lives of U.S. Citizens and non-U.S. Citizens as
stipulated in Appendix I-A. It shall not include reinsurance business, or except
as provided herein, issues of conversions.

3. If the Ceding Company is already on the risk for its regular retention under
policies previously issued, reinsurance up to the limits indicated in
Exhibit III will be accepted automatically in accordance with Paragraph 1 above,
provided the Ceding Company has assessed the risk under the new application by
applying the same underwriting rules it would have applied had the new policy
fallen completely within its regular retention.

4. Any risk which falls within the automatic coverage granted by this Agreement
may nevertheless be submitted to Reinsurer for its underwriting opinion. If such
risk is acceptable for coverage, it shall automatically be reinsured under this
Agreement. Any other risk ineligible for automatic coverage hereunder, or which
the Ceding Company desires to reinsure facultatively, may be submitted to
Reinsurer for facultative underwriting by forwarding to Reinsurer copies of the
original applications, all medical examinations or reports, inspection reports
and all other information which the Ceding Company may have pertaining to the
insurability of the risk Any such risk shall, upon acceptance by the Ceding
Company of Reinsurer’s underwriting decision, be reinsured under this Agreement.

5. The reinsurance under this Agreement shall be maintained in force as long as
the original policy carried by the Ceding Company remains in force, except as
provided in Articles VII Automatic Reinsurance Coverage after Policy Change, IX
Recapture, and XVIII Duration of Agreement; Termination.

6. Notwithstanding any provision to the contrary in Article I Basis of
Reinsurance of said Agreement, Reinsurer shall be automatically bound under any
claim for which the Ceding Company is liable under a conditional receipt issued
in respect of business reinsured automatically or submitted exclusively to
Reinsurer tinder said Article I, Reinsurer’s liability on standard retention on
the policy applied for. In no event, however, shall Reinsurer’s liability on any
one life, including previous reinsurances ceded to Reinsurer, by the Ceding
Company, exceed the automatic acceptance limits provided by this Agreement.

7. The Ceding Company s conditional receipt is attached hereto and the Ceding
Company shall be obligated to advise Reinsurer of any changes or modifications
of such receipt

 

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ARTICLE II
MODES OF NOTIFICATION AND CESSION

1. The first notice to Reinsurer regarding any automatic cession will be sent to
Reinsurer within 15 working days following the Issue Month

2. For risks to be reinsured facultatively hereunder in accordance with
Article I, Paragraph 4, the Ceding Company shall forward to Reinsurer a
Preliminary Surplus Advice marked “Facultative” within five (5) working days
after the original policy has been reported delivered and paid for.

ARTICLE III
LIABILITY OF RENSURER

1. The liability of Reinsurer shall begin and terminate simultaneously with that
of the Ceding Company provided that, in the case of a facultative submission,
Reinsurer has notified the Ceding Company of its acceptance of the risk and the
Ceding Company has mailed a Preliminary Surplus Advice in accordance with
Paragraph 3 of Article II Mode of Notification and Cession.

2. Reinsurer has no liability under this Agreement for any policy amount or
benefit not expressly referred to in Article I Basis of Reinsurance, or in any
Addendum to this Agreement relating to reinsurance of other benefits.

3. The Ceding Company will provide Reinsurer with copies of its policy and rider
forms, rate schedules and underwriting rules for the business eligible for
reinsurance under this Agreement and shall keep Reinsurer informed of any
changes therein. See Appendix II.

4. Reinsurer shall not be liable for any amount paid by the Ceding Company for
punitive, exemplary, or compensatory damages awarded arising out of the conduct
of the Ceding Company in the investigation, trial, or settlement of any claim,
or the failure to pay or a delay to pay any benefits under any policy unless
Reinsure was informed of the circumstances and participated in the decision
which resulted in such liability.

ARTICLE IV
PLANT OF REINSURANCE

1. Life reinsurance shall be ceded on the Risk Premium basis for the Net Amount
at Risk reinsured. For the purpose of this Agreement, the Net Amount at Risk
reinsured during any calendar year is defined as the difference between the
First Excess (as defined in Article I and Exhibit III) and the reserve thereon
at the end of the prior calendar year. Such reserve shall be determined as the
statutory mean reserve based on the Ceding Company’s reserve standard unless an
approximate method of determination is applicable as shown in Exhibit IV In
either case, reserves shall be rounded to the nearer dollar.

2. For original policies issued on a level term plan for twenty (20) years or
less or on a reducing term plan for any period of years, the Net Amount at Risk
reinsured during all years shall be for the amount of the First Excess reinsured
and reserves shall be disregarded.

3. Except as otherwise proved in Exhibit IV hereof, or by Addendum to this
Agreement, the Net Amount at Risk reinsured :will be level during any calendar
year.

 

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4. Reinsurance of Waiver of Premium Disability benefits shall be in accordance
with the original policy terms of the Ceding Company subject to the limitations
in Exhibit III.

ARTICLE V
REINSURANCE PREMIUMS

1. The reinsurance premiums for Life reinsurance shall consist of a basic rate
per thousand of Net Amount at Risk reinsured in accordance with the schedule of
rates attached hereto (Exhibit I). Rates for females at ages 15 and higher are
equal to the rates for a male four years younger. For females aged 11-14, male’s
age 10 rates are used. Male and female rates for ages 0-10 are identical.

2. For purposes of premium calculation, based on the table of rates contained in
Exhibit I, the attained age shall be taken as the issue age last birthday, plus
the difference between the respective calendar year and the calendar year. at
issue.

3. The reinsurance premiums for Waiver of Premium Disability benefits shall be
as shown in Exhibit I.

4. Except as otherwise provided in Exhibit III, for all new reinsurance
originating without current evidence of insurability (conversions, options,
etc.) calendar years for entering the premium table, Exhibit I will be counted
starting with the calendar year of the last check of insurability.

5. All reinsurance premiums payable by the Ceding Company to Reinsurer under
this Agreement shall be paid on the calendar year basis in advance regardless of
the mode of premium payment of the policies reinsured. Reinsurance premiums
shall be payable as long as the reinsurance remains in force. Should any
reinsurance be reduced or terminated within any calendar year, the proportionate
part of the reinsurance premium paid shall be refunded at the beginning of the
calendar year next following the reduction or termination provided, however,
that for policies reduced or terminated during the second calendar year after
issue the refund shall not exceed 50% of the reinsurance premium paid

6 For technical reasons relating to the uncertain status of deficiency reserve
requirements by the various state insurance departments, the Life reinsurance
premiums contained herein cannot be guaranteed for more than one year For all
reinsurance ceded at these rates, however, Reinsurer shall continue to accept
premiums no lower than those arrived at based on these rate schedules

ARTIVLE VI
PREMIUM TAXES, EXCISE TAXES AND POLICY EXPENSES

1. When Reinsurer is not required to pay state or country premium taxes, levees,
or charges based on premiums, on reinsurance premiums received from the Ceding
Company, it shall reimburse the Ceding Company for any such taxes the latter may
be required to pay with respect to the part of the premium received under the
Ceding Company’s original policies which is remitted to reinsurer as reinsurance
premium.

2. The Ceding Company shall bear the expense of all medical examinations,
inspection fees, and other charges incurred in connection with the issuance of
any policy reinsured hereunder.

 

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3. Reinsurer will reimburse the Ceding Company for any excise taxes paid by the
Ceding Company in connection with this agreement.

ARTICLE VII
AUTOMATIC REINSURANCE COVERAGE AFTER POLICY CHANGE

1. Reinsurer will continue to grant automatic reinsurance coverage in accordance
with the provisions of this Agreement after renewal, conversion or amendment of
any policy reinsured hereunder provided that the amounts and benefits to be
reinsured following the change do not exceed the amounts and benefits initially
reinsured hereunder in respect of such policy. The following rules will apply
for the recalculation of the amounts reinsured with Reinsurer after a policy
change.

2. If an original policy is reduced, the Ceding Company will retain the same Net
Amount at Risk and the same other benefits on that life that it had before the
reduction. The reduction shall be applied first to the reinsurance based on the
original policy or policies reduced or terminated. If further reduction in
reinsurance is required, the policies for which reinsurance is to be terminated
or reduced shall be determined by the chronological order in which they were
issued, the first issued being the first terminated or reduced and so on If the
reinsurance required to be reduced under this Article is shared among Reinsurer
and other reinsurers, the reductions shall be pro-rated among all reinsurers in
proportion to the amount of reinsurance claimed by each If the amount of
reinsurance remaining is less than the amount of the minimum cession specified
in Exhibit II, such reinsurance shall be cancelled.

3. If any policy reinsured hereunder is changed to extended term insurance,
Reinsurer’s proportion of the amount of insurance under such policy shall remain
unchanged.

4. Should any change or conversion of any policy reinsured hereunder increase
the Net Amount at Risk or other benefits insured, Reinsurer’s proportion of the
amount of insurance and benefits under such policy shall remain unchanged unless
the limits provided under Paragraph I are exceeded. In the event that the limits
under Paragraph 1 are exceeded, Reinsurer will accept both the excess and any
additional amounts required to be reinsured in order to keep the Ceding
Company’s retention within the limits stated in Exhibit II, provided that the
total Net Amount at Risk reinsured after the increase does not exceed the
limitations of Automatic Coverage (Exhibit HI), and provided further that such
increase is underwritten in accordance with Article I Basis of Reinsurance,
Paragraph 3. Premiums for the amended cessions will be calculated in accordance
with Article V Reinsurance Premiums, Paragraph 4.

5. If after any reinsured policy has been terminated, changed to reduced paid-up
insurance or changed to extended term insurance, such policy is reinstated
according to the general reinstatement rules of the Ceding Company, the
reinsurance hereunder shall be restored with the same Net Amount at Risk and
other benefits reinsured as if no change bad occurred.

6.Policies issued because of options exercised under provisions of Guaranteed
Insurability benefits are not included under this Agreement, and shall be added
by Addendum if such benefits are to be reinsured.

 

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ARTICLE VIII
INFORMATION TO REINSURER AFTER POLICY CHANGE

1. All amendments and terminations of reinsurance under this Agreement occurring
during any calendar year will be shown in the List of Amendments prepared for
such calendar year in accordance with Article Xl List of Risks Reinsured and
List of Amendments.

2. If any policy change increases the Net Amount at Risk or other benefits
reinsured hereunder by more than 10%, the Ceding Company will include this
information in the monthly notification report described under Article II,
paragraph I.

ARTICLE IX
RECAPTURE

1. The Ceding Company is entitled to recapture reinsurance ceded to the
Reinsurer under this agreement on all policies that have been in force for at
least 10 years.

2. In order to effect recapture, the Ceding Company will reduce each cession
eligible under this Agreement by an amount which will increase the Net Amount at
Risk for life insurance or other benefit retained by the Ceding Company to its
then regular retention. Any recapture reducing the Net Amount at Risk reinsured
below the amount of the minimum cession according to Exhibit II will result in
complete recapture of the reinsurance on that life.

3. Before recapturing on a cession according to this provision, the Ceding
Company will proceed with all recaptures allowed for policies previously issued
on the same life and for all other reinsurance cessions on the same policy,
whoever the reinsurer may be.

4. The Ceding Company may waive recapture on any recapture date, but only if
such waiver applies to all reinsurance then eligible for recapture hereunder.

5 The Ceding Company shall notify Reinsurer at least sixty (60) days prior to
each recapture date of its intended recapture action. Any questions of recapture
eligibility or procedure will then be resolved during such sixty (60) day
period.

6. If recapture is effected, the List of Risks Reinsured for the calendar year
following recapture will identify the risks involved and show the new
reinsurance amounts applicable. In the event recapture results in cancellation
of any cession, such cancellation will be shown on the List of Amendments for
the calendar year of recapture.

7. It is hereby agreed and understood that risks of which no part is retained by
the Ceding Company or where the Ceding Company does not retain its regular
retention limit at issue, shall be considered not subject to recapture.

ARTICLE X
CLAIMS

1. In the event any policy is terminated by death while reinsured under this
Agreement, Reinsurer shall pay to the Ceding Company the Net Amount at Risk
reinsured with respect to such policy during the calendar year of death.

 

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2. In the event Waiver of Premium Disability benefits are validly claimed under
any policy reinsured for such benefits hereunder, Reinsurer shall pay the Ceding
Company annually during the continuance of disability the yearly gross premium
(exclusive of the premiums for the Waiver benefit itself) due under such policy
for the reinsured portion of the Waiver benefit. In suitable cases, the Ceding
Company and Reinsurer may agree to replace the annual payments of Reinsurer by
the payment of a lump sum If disability terminates, a refund, if appropriate,
will be made by the Ceding Company to Reinsurer. The payment of reinsurance
premiums in accordance with Article V Reinsurance Premiums for the other
benefits still reinsured will continue during the disability claim period.

3. In the event any policy reinsured hereunder becomes a claim before such
policy has appeared on any List of Risks Reinsured, the Ceding Company will
calculate the amount payable by Reinsurer in accordance with this Agreement and
will submit to Reinsurer all papers necessary to demonstrate that the risk
involved was covered automatically hereunder.! In addition, the Ceding Company
will inform Reinsurer of all other reinsurance, if any, ceded on the same
policy.

4. For any claim incurred after the policy affected has appeared on a List of
Risks Reinsured, Reinsurer will pay the Net Amount at Risk or other benefits
reinsured, as appropriate, shown in the List of Risks Reinsured applicable to
the calendar year of incurral, unless the benefits reinsured were amended
according to Article VII Automatic Reinsurance Coverage after Policy Change, but
not reflected in such List. In such case, Reinsurer will pay the Net Amount at
Risk or other benefits reinsured which would appear in the List of Amendments
for the calendar year of incurral, and the Ceding Company shall furnish proof
that the amended Net Amount at Risk and other benefits reinsured are in
accordance with the provisions of this Agreement.

5. In the event less than the full amount insured is paid as a claim or if any
special expenses are incurred in the settlement of a claim (such as attorney’s
fees, court and arbitration costs, special investigations, etc., but excluding
salaries of employees), Reinsurer and the Ceding Company shall share in the
amount of such reduction or special expenses in proportion to their respective
Net Amounts at Risk under the policy affected.

6. Reinsurer and the Ceding Company shall share in any increase or reduction
resulting from the Insured’s misstatement of his age in proportion to their
respective Net Amounts at Risk under the policy affected.

7. Notice will be sent to the Reinsurer of any claim reinsured under this
agreement. In every case of loss, proofs acceptable to the Ceding Company shall
likewise be taken as sufficient by Reinsurer. The Ceding Company shall forward
to the reinsurer copies of death certificates for each claim by the most
efficient means available.

8. At the end of each calendar quarter, a copy of the checks showing payment of
all claims and claim expenses paid by the Ceding Company during the quarter and
reinsured by the Reinsurer under this agreement will be provided to the
Reinsurer and paid within ten days of receipt by the Reinsurer. Should the total
amount of claims and claim expenses paid by the Ceding Company exceed $250,000
prior to the end of any quarter, proof of such payments will be provided to the
Reinsurer and paid within ten days of receipt by the Reinsurer.

9. The Reinsurer agrees to reimburse the Ceding Company for each claim with
respect to which this agreement affords indemnity within 90 days after Reinsurer

 

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received proof which is satisfactory to the Reinsurer that the Ceding Company
has paid the claim

ARTICLE XI
LIST OF RISKS REINSURED AND LIST OF AMENDMENTS

1. Before January 15 of each calendar year following the date of this Agreement,
the Ceding Company will provide Reinsurer with the Risks Reinsured for the
current year This List will include List of Amendments All reinsurance in force
under this Agreement at the beginning of the calendar year and contain
information as outlined in Exhibit V.

2. Before January 15 of each calendar year, beginning with the second year
following the date of this Agreement, the Ceding Company will provide Reinsurer,
for adjustment of coverage and premium, with the List of Amendments for the
preceding calendar year. This List will include all cessions amended during –the
preceding calendar year in accordance with Article VII Automatic Reinsurance
Coverage after Policy Change, exclusive of (a) amendments occurring during the
calendar year of issue of any policy, and (b) certain corrections referred to in
Article XIII Errors and Omissions. In detail, the List will contain information
as outlined in Exhibit VI

ARTICLE XII
ACCOUNTING AND NONDISCLOSURE OF CONFIDENTIAL INFORMATION

1. The Ceding Company shall remit the total of the reinsurance and premiums
shown in the List of Risks Reinsured simultaneously with the List.

2. Should the balance of changes in reinsurance premiums for the preceding
calendar year shown in the List of Amendments be in favor of Reinsurer, the
Ceding Company shall remit said balance, increased by 2% for interest,
simultaneously with the List. Should this balance be in favor of the Ceding
Company, Reinsurer shall remit said balance, increased by 2% for interest,
within ten (10) working days of receipt of the List.

3. Reinsurer is entitled to ask for correction of any of the Lists within ninety
(90) days after their receipt. The amount of any correction in reinsurance
premiums is due immediately after agreement between the Ceding Company and
Reinsurer.

4. Failure of the Ceding Company to pay any of the reinsurance premiums shown in
the List of Risks Reinsured by March 31 of the calendar year covered by such
List shall automatically terminate the liability of Reinsurer under this
Agreement as of midnight on that date. Payment of only a portion of this premium
by said March 31 shall reduce the liability of Reinsurer under this Agreement as
of midnight on that date. The reduced liability will be determined by applying
to the total liability under this Agreement the ratio of the reinsurance
premiums paid to the total of the reinsurance premiums due. Payment of a portion
or of the total of the outstanding premiums and interest, if any, after said
March 31 shall reinstate a proportionate part of the total liability of
Reinsurer effective on and after the date of receipt of the payment at
Reinsurer’s home office.

5. All amounts due under Paragraphs 1, 2, and 3 preceding and not paid by
March 31 of the respective calendar year, are subject to 0.5% additional
interest for each full month after March 31.

 

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6. Since reinsurance coverage and premium payments are on the calendar year
basis, Reinsurer will not hold any reserves, other than claims reserves, for the
reinsurance covered by this Agreement at the end of the calendar year.

7. During the course of business necessary under this Agreement, Ceding Company
may reveal to Reinsurer certain confidential or proprietary information which
includes but is not limited to the following various trade secrets, data
processing methods, marketing concepts, programs, formulas, pattern device
inventions, processes, policy forms and identities of customers, sales agents,
managing agents, associates and employees of Ceding Company. Reinsurer shall not
disclose, directly or indirectly, to others, including corporate subsidiaries
and affiliates, any confidential or proprietary information of Ceding Company
except as may be specifically authorized in writing by a senior officer of
Ceding Company. Reinsurer will also do all things necessary to prevent any of
its employees, representatives and agents from disclosing any such information.
Reinsurer further agrees to use any confidential or proprietary information of
Ceding Company solely for the purpose of reinsurance under this agreement.

8. In the course of performance of the Reinsurer’s duties and obligations under
this agreement, the Reinsurer may receive nonpublic personal information (i.e.,
any and all personal, financial, and/or health information) associated with the
Company’s policies that are the subject matter of this Agreement. Such nonpublic
information shall be held in the strictest confidence by the Reinsurer and its
agents, employees, affiliates, and representatives, and shall not be used for
any purpose other than the performance of its duties and obligations under this
Agreement. The Reinsurer Shall establish and adopt appropriate procedures to
protect the privacy, confidentiality, and security of all such information,
consistent with the requirements of the Gramm-Leach-Blilely Act (formally known
as the Financial Services Modernization Act of 1999”) and any other applicable
privacy laws or regulations

ARTICLE XIII
ERRORS AND OMISSIONS

1. The List of Risks Reinsured is the basis for the reinsurance coverage
provided by Reinsurer for the respective calendar year on the reinsurance in
force at the beginning of that year Any unintentional clerical error or omission
in the amounts reinsured shall not be corrected during the current calendar year
but will be reflected in the List of Risks Reinsured for the subsequent calendar
year, unless by such error or omission

     a. any risk not eligible for reinsurance under this Agreement is shown as
reinsured, or

     b. the amount retained by the ceding Company exceeds its retention at issue
(Exhibit II) by more than $5,000 or

     c. the benefits reinsured by Reinsurer and other reinsurers exceed the
benefits insured under the policy less the Ceding Company’s retention thereon,
if any, or

     d. the amount of any benefit reinsured by Reinsurer exceeds 125% of the
corresponding amount during the preceding calendar year, or

     e. the amount of any benefit reinsured by Reinsurer exceeds the Automatic
Coverage (Exhibit III).

 

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2. In those cases described in Paragraph 1, Reinsurer shall be notified in
writing and the reinsurance shall be corrected retroactively. Correction of the
reinsurance premium will be accounted for in the List of Amendments applicable
to the calendar year in which the error was discovered. The Ceding Company shall
also check its entire reinsured portfolio for similar discrepancies.

3. Any other failure of either party to comply with any provision of this
Agreement, if shown to be unintentional and the result of misunderstanding or
oversight, shall be corrected by restoring both parties to the positions they
would have occupied had no such error or oversight occurred.

ARTICLE XIV
INSPECTION OF RECORDS

Reinsurer shall have the right, at any reasonable time, to inspect, at the
office of the Ceding Company, all books, records and documents relating to the
reinsurance under this Agreement.

ARTICLE XV
INSOLVENCY

1. In the event of insolvency of the Ceding Company, the liquidator, receiver or
statutory successor shall give Reinsurer written notice of the pendency of a
claim on a policy reinsured hereunder within a reasonable time after such claim
is filed in the insolvency proceeding. During the pendancy of any such claim,
Reinsurer may investigate such claim and interpose in the name of the Ceding
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 Reinsurer may deem available to the Ceding Company or its
liquidator, receiver or statutory successor.

2. In the event of insolvency of the Ceding Company, the liquidator, receiver or
statutory successor shall give Reinsurer written notice of the pendency of a
claim on a policy reinsured hereunder within a reasonable time after such claim
is filed in the insolvency proceeding. During the pendency of any such claim,
Reinsurer may investigate such claim and interpose in the name of the Ceding
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 Reinsurer may deem available to the Ceding Company or its
liquidator, receiver or statutory successor.

3. The expense thus incurred by Reinsurer shall be chargeable, subject to court
approval, against the Ceding Company as part of the expense of liquidation to
the extent of a proportionate share of the benefit which may accrue to the
Ceding Company solely as a result of the defense undertaken by Reinsurer. Where
two or more reinsurers are participating in the same claim and a majority in
interest elects to interpose a defense or defenses to any such claim, the
expense shall be apportioned in accordance with the terms of the respective
reinsurance agreements as though such expense had been incurred by the Ceding
Company.

4. In the event of insolvency of the CEDING COMPANY, the arbitration provisions
of this agreement shall also be subject to the laws of the State of Colorado.

 

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ARTICLE XVI
ARBITRATION

1 All disputes and differences between the two contracting parties Arbitration
upon which an amicable understanding cannot be reached are to be decided by
arbitration The arbitrators shall regard this Agreement rather from the
standpoint of practical business and equity than from that of the strict law,
for the purpose of carrying out its evident intent.

2. The court of arbitration, which is to be held in the city in which the
Executive office of the Ceding Company is located, shall consist of three
arbitrators who must be executive officers of life insurance companies, other
than the two parties to this Agreement, familiar with the reinsurance business.
One of the arbitrators is to be appointed by the Ceding Company, the second by
Reinsurer, and the third is to be selected by these two representatives before
the beginning of the arbitration. Should the two arbitrators be unable to agree
upon the choice of a third, the appointment shall be left to the President of
the American Council of Life Insurance, or its successor organization.

3. The arbitrators shall decide by a majority of votes and from their written
decision there can be no appeal. The cost of arbitration, including the fees of
the arbitrators, shall be borne by the losing party unless the arbitrators shall
decide otherwise.

ARTICLE XVII
PARTIES TO AGREEMENT
COLORADO LAW

1. This is an agreement solely between the Ceding Company and Reinsurer. The
acceptance of reinsurance hereunder shall not create any right or legal relation
whatever between Reinsurer and the insured or the beneficiary under any policy
of the Ceding Company which may be reinsured hereunder

2. All provisions of this reinsurance agreement including the arbitration
provisions are subject to the laws of the State of Colorado.

3. During the continuance of any insurance contracts under this Agreement,
Reinsurer agrees to either maintain continuous qualification as a reinsurer in
the State of Colorado, or maintain a Letter of Credit as security acceptable
under Colorado statute § 10-3-118(6).

4. This agreement shall constitute the entire agreement between the parties with
respect to the business being reinsured hereunder. There are no other
understandings between the parties other than as expressed in this agreement.
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 XVIII
DURATION OF THE AGREEMENT; TERMINATION

1. This Agreement shall be unlimited as to its duration, but may be terminated
at any time, for new reinsurances only, by either party giving not less than
ninety (90) days notice of termination in writing to the other party and the
Colorado Insurance Department by registered mail stating the Termination Date.
Reinsurers shall continue to accept reinsurance during ninety. (90) days
aforesaid and shall remain liable on all reinsurance already placed in force

 

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under the terms of this Agreement until such contracts are terminated between
the original insured and the Ceding Company.

2. In the event of non-payment of any amounts due hereunder by either party
within three (3) months of the respective due dates, except as provided by
Article XIII Errors and Omissions, Paragraph 2, the other party shall have the
right to cancel all reinsurance in force under this Agreement by giving thirty
(30) days written notice. Payment of the amounts due, with interest according to
Article XII Accounting, Paragraph 5, during such thirty (30) days will nullify
the cancellation.

ARTICLE XIX
HOMICIDE BENEFIT LIMITATION

The Ceding Company limits the death benefit to the return of all premiums paid
if the cause of death is homicide, except in some countries as listed in
Exhibit VII, where the Ceding Company currently pays the full death benefit in
the case of homicide if the insured was noninvolved in the commission of a
crime. As of the date of this Agreement, it is agreed by both parties that the
Ceding Company may offer the less strict version of this benefit limitation in
all remaining countries that are classified as an “A” risk, as shown in
Appendix I-A.

1. The Reinsurer shall also allow the Ceding Company a contingent profit
commission of 50% of the net profits under this Agreement. The “net profit”
portion of the contingent profit commission calculation shall be as follows:

     a. Premiums Earned in Calendar Year, less

     b. Claims Incurred in Calendar Year, less

     c. Losses accumulated from prior calculations, less

     d. Reinsurer Expenses, equal to 15% of Earned Premium

2. The terms “Premiums” and “Claims” include those premiums and claims for
Waiver of Premium Benefits. Incurred claims for Waiver of Premium benefits are
defined as “Paid Claims Plus the Change in Disabled Life reserves.”

3.The contingent profit commission calculation will take place six (6) months
after the end of the experience year for which the calculation will be
performed. The first calculation will take place as soon as practicable after
July 1, 2004.

ARTICLE XX
CONTINGENT PROFIT COMMISSION

1. The Reinsurer shall also allow the Ceding Company a contingent profit
commission of 50% of the net profits under this Agreement. The “net profit”
portion of the contingent profit commission calculation shall be as follows:

     a. Premiums Earned in Calendar Year, less

     b. Claims Incurred in Calendar Year, less

     c. Losses accumulated fro prior calculations, less

 

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     d. Reinsurer Expenses, equal to 15% of Earned Premium

2. The terms “Premiums” and “Claims” include those premiums and claims for
Waiver of Premium Benefits. Incurred claims for Waiver of Premium benefits are
defined as “Paid Claims Plus the Change in Disabled Life Reserves.”

3. Any claims incurred in the year in questions, paid more than 24 months after
the year, would require a recalculation of the profit commission for that year.

4. The contingent profit commission calculation will take place six (6) months
after the end of the experience year for which the calculation will be
performed. The first calculation will take place as soon as practicable after
July 1, 2004.

ARTICLE XXI
EFFECTIVE DATE; EXECUTION

The said Citizens Insurance Company of America, Denver, Colorado, and the said
Reinsurer, declare that this Agreement and all its terms shall be effective as
of January 1, 2003, and shall apply to eligible policies applied for on and
after such date, notwithstanding that such policies may have been backdated for
up to six (6) months to save age. In witness whereof they have by their
respective officers executed and delivered this Agreement in duplicate.

ARTICLE XXII
REINSURANCE INTERMDIARY

Ballantyne, McKean & Sullivan Limited, London, UK, or one of its affiliated and
subsidiary corporations duly licensed as a reinsurance intermediary, is hereby
recognized as the Reinsurance Intermediary negotiating the Agreement for all
business hereunder. All communications (including but not limited to notices,
statements, premiums, return premiums, commissions, taxes and losses), relating
thereto will be transmitted to the Cedant or the Reinsurer through the
Reinsurance Intermediary, except for those mutually agreed administrative or
financial functions specifically undertaken by the Cedant directly with the
Reinsurer, in which case the Reinsurance Intermediary will receive copies of all
information. Payments by the Cedant to. the Reinsurance Intermediary will be
deemed payment to the Reinsurer. Payment by the Reinsurer to the Reinsurance
Intermediary will be deemed payment to the Cedant only to the extent that such
payments are actually received by the Cedant.

 

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              CITIZENS INSURANCE COMPANY OF AMERICA
 
       

  By:   /s/ J. Val Smith

       

  Title:   Executive Vice President/Chief Actuary

       

  Date:   January 26, 2003

       
 
            SCOTTISH RE LIMITED
 
       

  By:   /s/ David Huntley

       

  Title:   CEO

       

  Date:   16 January 2004

       
 
       

  By:   /s/ John Greenhaugh

       

  Title:   Director and Actuary

       

  Date:   9 January 2004

       

 

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Exhibit I
SAR Reinsurance Premiums

1. Reinsurance premiums under this Agreement for the first calendar year (from
the effective date of the policy to the next December 31) are, with certain
exceptions noted below, zero.

2 A list of countries from which applications for life insurance are accepted is
included in “Appendix I-A Foreign National Business”. Each country is
categorized as either and “A”, “B”. or “C” country, depending on the country’s
risk factor. Life reinsurance premiums for standard risks in the “A” countries
shall be calculated by multiplying the Net Amount at Risk reinsured during the
calendar year by the appropriate premium rate for such year from the appropriate
schedule shown in this Exhibit:

Age Last Birthday       SAR NR ALB

The rates for the “B” countries will equal the rates for the “A” countries from
the table above plus $0.50 per 1000 of NAAR. The rates for the “C” countries
will equal the rates for the “A” countries from the table above plus $1.50 per
1000 of NAAR.

Rates for females shall be in accordance with the respective rate schedule
applicable.

3. Life reinsurance premiums for substandard risks accepted subject to a Table
Rating shall be calculated by multiplying the corresponding standard risk life
reinsurance premiums by the appropriate Mortality Factor from the table:

                      Table Rating     Mortality Factor      
A
    (1 )     1.25    
AA
    (11/2 )     1.375    
B
    (2 )     1.5    
BB
    (21/2 )     1.625    
C
    (3 )     1.75    
D
    (4 )     2.00    
E
    (5 )     2.25    
F
    (6 )     2.50  

4. Life reinsurance premiums for substandard risks accepted subject to a flat
extra premium shall be the sum of

     (a)The applicable standard or substandard reinsurance premiums, calculated
from Paragraphs 2 and 3 above, and

     (b)The following percentages of the policy annual flat extra premiums
applicable to the initial amount of reinsurance hereunder on such risks:

                  Term of Flat   Second     Subsequent   Extra Premium  
Calendar Year     Calendar Years  
More than five years
    102.5 %     90 %
Five years or less
    135.0 %     90 %

 

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Exhibit I (continued)

5. Reinsurance premiums for Waiver of Premium Disability benefits payable for
the second and later calendar years shall be equal to 90% of the policy annual
premiums for such benefits applicable to the amount of such benefits reinsured
hereunder If premiums for the Waiver of Premium Disability benefit are
automatically included in the gross Life Insurance premiums under any policy
reinsurance hereunder, then reinsurance premiums for the Waiver of Premium
Disability benefit, for second and later calendar years, shall be 100% of the
Ceding Company’s net annual premiums for the reinsured amount of such benefit.

6. For standard risks only, the reinsurance premium for the excess over
$3,000,000 on any one life reinsured under this Agreement for the first calendar
year (from the effective date of the policy to the next December 31) shall be
based on the second calendar year rate for the issue age. Such first year
premium shall be prorated over the year of issue as follows:

First year prorated premium = n/360 (tabular rate), where n is the number of
days from the issue date to December 31, assuming 30-day months, and the tabular
rate is the second calendar-year rate for
the age at issue.

7. The Life reinsurance premiums for reinsurance of Joint Whole Life policies at
Standard or Substandard rates shall for each insured be 85% of the premium
applicable for an individual life shown in Exhibit I of the Agreement. Such rate
shall be applied to the Net Amount at Risk for each individual.

In case of reinsurance under a Joint Whole Life Policy where the Joint Insureds
die
simultaneously or within 60 days of each other, thus requiring the Ceding
Company to pay twice the amount of Life Insurance insured under the Joint Whole
Life Policy, Reinsurer shall for each of the joint lives reinsured pay the net
amount at risk plus 50% of the terminal reserve used in calculating the net
amount at risk in accordance with Article IV, Paragraph 1, relating to the
amount reinsured on the respective life.

 

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EXHIBIT II

Retention Limits of the Ceding Company

The retention limits of the Ceding Company on any one life for the benefits
reinsured hereunder are as follows:

Life Insurance

                          Issue                   Ages   Standard    
Substandard                     Tables 1     Tables 7               through 6  
  through 16  
All Ages
    100,000       100,000     None to
 
                  be accepted

Minimum Cession: $5,000

Waiver of Premium Disability Benefits

Same as for Life Insurance

Accidental Death Benefits

None

 

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EXHIBIT III

Limits and Special Conditions for the First Excess

1 Overall Limits

Automatic coverage of any risk of Life Insurance with or without Waiver of
Premium Disability benefits shall be granted under this Agreement only if,
according to the Ceding Company’s papers, the overall sum in force and applied
for on the same life with all insurance companies does not exceed 3,000,000 of
Life Insurance with or without Waiver of Premium Disability benefits.

2 First Excess

The First Excess of the Ceding Company to be automatically covered under this
Agreement, including previous reinsurance ceded to Reinsurer by the Ceding
Company on the same life, is defined as follows:

     a. Life Insurance

     1. Issue ages up to 75 years.

     2. Standard and Substandard risks up to and including Table 6 (25 0% total
mortality) written by the Ceding Company on any non-U S Citizens in countries
stipulated in Appendix I-A

     3 International Risks 400% of the retention of the Ceding Company, but not
more than $400,000 on any one life.

     The minimum cession will be $5,000. If the total First Excess is less than
such minimum, the Ceding Company will increase its retention to the full amount
insured on that life.

     b. Waiver of Premium Disability Benefits

     Same as for Life Insurance, subject to age and substandard issue limits
imposed by the Ceding Company on such risks.

3 Supplementary Benefit Forms

Supplementary benefits to be covered automatically under this Agreement shall be
those provided in the following policy forms issued by the Ceding Company:

     a. Waiver of Premium Disability Benefits, Forms as stated in Appendix II.

     b. Increasing Term Death Benefit in amount of Premium Coverage. 100%
reinsurance shall be provided for an amount equal to or greater than $5,000 with
respect to each person.

     c. No Accidental Death supplemental benefits are covered under this
Agreement.

 

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Exhibit IV

Calculation of the Net Amount at Risk Reinsured

For calculating the Net Amount at Risk according to Article IV Plan of
Reinsurance, Paragraph 1, the Ceding Company will use the following approximate
procedure

- Subtract Tabular Benefit Decreases

- Subtract Decreases in Commuted Value

- Add Tabular Benefit Increases

- Add Built-In Return Premium Benefit Increases

- Subtract Accumulated Statutory Mean Reserves

 

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Exhibit V

List of Risks Reinsured

The List of Risks Reinsured will be prepared at the beginning of each calendar
year in accordance with Article XI and will include, for each cession in force
at that time, the following information for the applicable reinsurance, in
policy number order

1. Basic

     a. Policy Number

     b. Name of Insured (last name first)

     c. Plan code

     d. Sex

     e. Date of birth (month, day, year)

     f. Effective date of issue (month, day, year)

     g. Age at issue

     h. Business code (new, new with issue effective before preceding calendar
year, converted, reinstated, unchanged, amended by change of direct policy,
amended by recapture),

2. Life insurance

     a. Rating (Table and/or Flat Extra)

     b. Total Gross Life Amount Insured on this policy

     c. Amount of First Excess reinsured

     d. Attained age for the current calendar year

     e. Life Net Amount at Risk reinsured for the current calendar year

     f. Life reinsurance premium for the current calendar year.

3. Waiver of Premium Disability benefits

     a. Rating

     b. Insured Code (Insured, Payor)

     c. Benefit Code

     d. Life Amount reinsured for WPD !

     e. WPD reinsurance premium for the current calendar year.

A policy count and subtotals for new issues and renewals along with grand totals
should be provided for items in Sub-paragraphs 2d, 2e, 2f, 3d, and 3e.

 

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Exhibit VI
List of Amendments

The List of Amendments will be prepared as of the end of each calendar year in
accordance with Article XI, and will include, for each cession which is amended
during that calendar year because of policy change (Article VII) or because of
certain errors and omissions (Article XIII), the following information for the
applicable reinsurance:

1. Basic

     a. Policy Number

     b. Name of insured (last name first)

     c. Sex

     d. Date of birth (month, day, year)

     e. Attained age for the calendar year

     f. Amendment Code

     g. Effective date of amendment (month, day, year)

     h. Number of days from date of amendment through December 31 of the
calendar year (for business amended in the second calendar year not more than
183 days).

2. Life Insurance

     a. Rating (Table and/or Flat Extra)

     b. Life Net Amount at Risk reinsured on last List of Risks Reinsured or
prior to amendment

     c. New Life Net Amount at Risk reinsured

     d. Adjustment to life reinsurance premium for the calendar year.

3. Waiver of Premium Disability benefits

     a. Rating

     b. Life amount reinsured for WPD on last List of Risks Reinsured or prior
to amendment

     c. New Life amount reinsured for WPD

     d. Adjustment to WPD reinsurance premium for the calendar year.

A policy count and subtotals by Amendment Code along with a grand total should
be provided for items in Sub-paragraphs 2b, 2c, 2d, 3b, 3c, and 3d.

 

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The List of Amendments will also include policies with issue dates in the
previous calendar year which failed to appear on the List of Risks Reinsured
applicable to the current calendar year.

 

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Exhibit VII

List of Countries with Less Strict Homicide Benefit Limitation

In the following countries, a less strict version of the Homicide Benefit
Limitation is currently offered, as stated in Article XIX In the standard
version of this limitation, the death benefit paid in the event the insured dies
in a homicide is the return of all premiums paid on the policy This less strict
version will pay the full death benefit if the insured dies in a homicide and
the insured’s death was not due to their involvement in the commission of a
crime The Ceding Company reserves the right to also offer this less strict
version to all countries classified as an “A” country, should they choose to do
so Country classifications are outlined in Appendix I-A.

Countries where the less strict Homicide Benefit Limitation is currently offered

1. France
2. Spain
3. Italy
4. Germany
5. Holland
6. Norway
7. Denmark
8. Belgium
9. Luxemburg
10. Austria
11. Switzerland
12. Portugal
13. Venezuela
14. Chile
15. Brazil
16. Japan
17. Panama
18. Argentina
19. Paraguay
20. Uruguay
21. Costa Rica
22. Taiwan

 

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Appendix I

CITIZENS’
INTERNATIONAL GUIDELINES

1. Premiums or remittances must be in U.S. Currency, and checks from U.S. banks
only.

2. Minimum issue amount is $50,000, except ages 66 to 75 where minimum issue is
$10,000 and the maximum is $25,000 (see 7d).

3.We will keep our full retention on each risk. (In force coverage and current
application combined.)

4.Amounts over our binding authority, including prior coverage, will be sent to.
Reinsurer on a facultative basis. ($500,000 for AUL, $600,000 for BMA/ERC split)

5.Application and medical papers must be written in English, Spanish,
Portuguese, or Chinese.

6.Supplemental benefits will be offered only on rider forms that contain special
protective exceptions.

7.We will not consider applications on:

a)political or military figures or their families;

b)private pilots or crew members without an extra rate or an aviation exclusion;

c)children under the age of 18 for an amount exceeding $1 50.000 except on a
facultative basis
(includes in force and applied for);

d)applicant over age 65, except for lower amount special plans offered to age 75
with $25,000
maximum (unless for business insurance and facultatively accepted);

e)applicants with coronary artery disease or insulin-dependent diabetic, except
when 100% facultatively accepted

f)will not issue with a rating over Table Six.

8.We will use appointed examiners or, when available, Embassy-affiliated doctors
for all medical examinations. (See attached Medical Requirements per age and
amount.)

9.Consumer Reports required on face amounts of $150,000 or more, except in
Colombia, where it is required for all amounts. All consumer report
investigative firms must be approved by the Home Office Chief Underwriter.

10. Require APS on all children age 5 and under. Other APS’s may be required by
Underwriting.

11. All questions on Part I and Part II of application must be answered, even if
medical exam (Part III) has same questions.

 

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GUIDELINES ON VARIOUS LIMITS EFFECTIVE

I. NON-MEDICAL LIMITS

INTERNATIONAL MARKET

      Issue Ages   Amounts
0 through 39
  Up to $150,000

II. BASIC LIFE COVERAGE LIMITS

INTERNATIONAL MARKET

                  Age   Minimum   Maximum
0-1
    50,000       150,000  
18-75
    250,000       500,000  

See Special Requirements on amounts $250,001 & Up

III. WAIVER OF PREMIUM LIMITS

INTERNATIONAL MARKET

-Same as Basic Life Coverage Limit for each plan

IV.ACCIDENTAL DEATH LIMITS

INTERNATIONAL MARKET

-Equal to face amount of Basic Life Benefit not to exceed 150,000 on each person
for all policies with all companies.

V. RETURN OF PREMIUM LIMITS

INTERNATIONAL MARKET

-Same as Basic Benefit limit.

VI.SUBSTANDARD LIMITS

INTERNATIONAL MARKET

-Table Ratings—Table 6 (25 0%) or less

-Flat Extra Ratings—No limit.

[LIST OF COUNTRY RATING JANUARY 1, 2003]