TRANSFER, ASSIGN, CONVEY, REINSURE OR OTHERWISE DISPOSE OF ITS
SHARE OF THE LIABILITIES WITH RESPECT TO THE REINSURED POLICIES WITHOUT THE
PRIOR WRITTEN CONSENT OF THE REINSURER; PROVIDED THAT THE CEDING COMPANY MAY
REINSURE ANY OR ALL OF SUCH RETENTION TO A WHOLLY-OWNED SUBSIDIARY OF THE CEDING
COMPANY IF: (A) SUCH WHOLLY-OWNED SUBSIDIARY OF THE CEDING COMPANY IS
CONTRACTUALLY REQUIRED TO RETAIN SUCH AMOUNTS AT ITS OWN RISK AND LIABILITY
WITHOUT THE BENEFIT OF REINSURANCE AND (B) THE CEDING COMPANY CONTINUES TO
PROVIDE ALL CLAIM MANAGEMENT AND ADMINISTRATION SERVICES WITH RESPECT TO SUCH
POLICIES RETAINED BY SUCH WHOLLY-OWNED SUBSIDIARY OF THE CEDING COMPANY IN
ACCORDANCE WITH ARTICLE X.
SECTION 2.04
POLICY CHANGES.
(A)
THE CEDING COMPANY WILL NOT, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE REINSURER, TERMINATE, AMEND, MODIFY OR WAIVE ANY
PROVISION OR PROVISIONS OF THE REINSURED POLICIES WHICH ARE MATERIAL TO THE
BUSINESS REINSURED UNDER THIS AGREEMENT.
(B)
ANY SUCH TERMINATIONS, AMENDMENTS,
MODIFICATIONS OR WAIVERS MADE WITHOUT THE PRIOR WRITTEN CONSENT OF THE REINSURER
SHALL BE DISREGARDED FOR PURPOSES OF THIS
7
AGREEMENT, AND THE REINSURANCE WITH RESPECT TO THE AFFECTED POLICY WILL CONTINUE
AS IF SUCH TERMINATION, AMENDMENT, MODIFICATION OR WAIVER HAD NOT BEEN MADE.
SECTION 2.05
REINSTATEMENT OF SURRENDERED POLICIES.
IF A REINSURED
POLICY THAT HAS BEEN SURRENDERED IS REINSTATED ACCORDING TO ITS TERMS AND THE
CEDING COMPANY'S REINSTATEMENT POLICIES, THE REINSURER WILL, UPON NOTIFICATION,
AUTOMATICALLY REINSTATE THE REINSURANCE WITH RESPECT TO SUCH REINSURED POLICY;
PROVIDED, THAT, TO THE EXTENT THAT THE REINSTATEMENT OF SUCH REINSURED POLICY
REQUIRES PAYMENT OF PREMIUMS IN ARREARS OR REIMBURSEMENT OF CLAIMS PAID, THE
CEDING COMPANY SHALL PAY TO THE REINSURER ALL REINSURANCE PREMIUMS IN ARREARS
AND THE QUOTA SHARE OF ALL REIMBURSEMENTS OF CLAIMS PAID ON SUCH REINSURED
POLICY.
SECTION 2.06
MISSTATEMENT OF FACT.
IN THE EVENT OF A CHANGE IN THE
AMOUNT PAYABLE UNDER A REINSURED POLICY DUE TO A MISSTATEMENT IN FACT, THE
REINSURER'S LIABILITY WITH RESPECT TO SUCH REINSURED POLICY WILL CHANGE
PROPORTIONATELY. THE REINSURED POLICY WILL BE REWRITTEN FROM COMMENCEMENT ON THE
BASIS OF THE ADJUSTED AMOUNTS USING PREMIUMS AND SUCH OTHER TERMS BASED ON THE
CORRECT FACTS, AND THE PROPER ADJUSTMENT FOR THE DIFFERENCE IN REINSURANCE
PREMIUMS, WITHOUT INTEREST, WILL BE MADE.
SECTION 2.07
CREDITED RATES AND NON-GUARANTEED ELEMENTS.
THE CEDING
COMPANY WILL BE RESPONSIBLE FOR DETERMINING CREDITED INTEREST RATES AND OTHER
NON-GUARANTEED ELEMENTS OF THE REINSURED POLICIES; PROVIDED, THAT THE REINSURER
MAY PROVIDE RECOMMENDATIONS REGARDING CREDITED INTEREST RATES AND OTHER
NON-GUARANTEED ELEMENTS OF THE REINSURED POLICIES TO THE CEDING COMPANY AND, IF
SO PROVIDED, THE CEDING COMPANY WILL NOT UNREASONABLY TAKE ACTIONS THAT
CONTRAVENE SUCH RECOMMENDATIONS AND THE CEDING COMPANY MAY NOT CHANGE THE
CREDITED INTEREST RATE OR ANY OTHER NON-GUARANTEED ELEMENTS ON EXISTING
REINSURED POLICIES WITHOUT THE REINSURER'S CONSENT.
SECTION 2.08
PROGRAMS OF INTERNAL REPLACEMENT.
THE CEDING COMPANY
SHALL NOT SOLICIT, OR ALLOW ITS AFFILIATES TO SOLICIT, DIRECTLY OR INDIRECTLY,
POLICY HOLDERS OF THE REINSURED POLICIES IN CONNECTION WITH ANY PROGRAM OF
INTERNAL REPLACEMENT.
THE TERM "PROGRAM OF INTERNAL REPLACEMENT" MEANS ANY