WITH RESPECT TO INDEX ANNUITY CONTRACTS ISSUED BY
THE CEDING COMPANY, INCLUDING WITH RESPECT TO COUNTERPARTY EXPOSURE, AND
(III) NO LESS FAVORABLE THAN THE HEDGING ACTIVITIES USED BY THE CEDING COMPANY
WITH RESPECT TO INDEX ANNUITY CONTRACTS ISSUED BY THE CEDING COMPANY THAT ARE
NOT REINSURED POLICIES.
IN ADDITION, THE CEDING COMPANY SHALL NOT TREAT THE
HEDGES IN ANY RESPECT IN A MANNER THAT IS DIFFERENT THAN THE MANNER IN WHICH IT
TREATS THE HEDGES IT ENTERS INTO WITH RESPECT TO INDEX ANNUITY CONTRACTS ISSUED
BY THE CEDING COMPANY THAT ARE NOT REINSURED POLICIES.
(B)
THE CEDING COMPANY SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE REINSURER, (I) MAKE ANY CHANGES TO THE HEDGING PROCEDURES AS THEY RELATE TO
HEDGING THE REINSURER'S RISK HEREUNDER OR (II) ASSIGN OR OTHERWISE TRANSFER ANY
INTEREST OR OBLIGATION IN OR UNDER ANY HEDGE.
(C)
THE CEDING COMPANY SHALL CONSULT WITH THE REINSURER WITH RESPECT
TO THE SELECTION OF COUNTERPARTIES FOR THE HEDGES.
ARTICLE VIII
CLAIMS AND ANNUITIZATIONS
SECTION 8.01
CLAIMS PAYMENT.
SUBJECT TO SECTION 8.02, THE REINSURER
SHALL PAY TO THE CEDING COMPANY THE QUOTA SHARE OF THE CLAIMS PAID BY THE CEDING
COMPANY IN ACCORDANCE WITH SECTION 9.03.
"CLAIMS" WILL CONSIST OF CLAIMS, NET
OF APPLICABLE SURRENDER CHARGES, IF ANY, FOR BENEFITS RELATED TO PARTIAL
SURRENDERS, FULL SURRENDERS, DEATH CLAIMS AND OTHER CONTRACTUAL BENEFITS UNDER
THE REINSURED POLICIES AND INCURRED ON OR AFTER THE EFFECTIVE DATE.
CLAIMS
SHALL NOT INCLUDE ANY ANNUITIZATION PAYMENTS, EXCLUDED LIABILITIES OR ANY
LIABILITIES OTHER THAN THE REINSURED LIABILITIES.
SECTION 8.02
CLAIMS SETTLEMENT.
(A)
THE CEDING COMPANY IS RESPONSIBLE FOR THE SETTLEMENT OF CLAIMS IN
ACCORDANCE WITH ARTICLE XI, APPLICABLE LAW AND POLICY TERMS.
(B)
THE CEDING COMPANY WILL NOTIFY THE REINSURER PROMPTLY OF ITS
INTENTION TO INVESTIGATE, CONTEST, COMPROMISE OR LITIGATE ANY CLAIM INVOLVING A
REINSURED POLICY (ANY SUCH CLAIM, A "CONTESTED CLAIM").
THE CEDING COMPANY WILL
PROVIDE THE REINSURER ALL RELEVANT INFORMATION AND DOCUMENTS, AS SUCH BECOME
AVAILABLE, PERTAINING TO CONTESTED CLAIMS AND WILL PROMPTLY REPORT ANY
DEVELOPMENTS DURING THE REINSURER'S REVIEW.
(C)
SUBJECT TO SECTION 2.01(F) RELATING TO EXCLUDED LIABILITIES, THE
REINSURER WILL REIMBURSE THE CEDING COMPANY FOR ITS QUOTA SHARE OF THE
REASONABLE EXPENSES OF ANY CONTEST OR COMPROMISE OF A CLAIM, AND WILL SHARE IN
THE REDUCTION OF LIABILITY IN THE SAME PROPORTION.
IF THE REINSURER SO ELECTS,
IT MAY DISCHARGE ITS LIABILITY WITH RESPECT TO ANY CONTESTED CLAIM BY PAYING TO
THE CEDING COMPANY ITS QUOTA SHARE OF SUCH CLAIM AS ORIGINALLY PRESENTED
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TO THE CEDING COMPANY AND, THEREAFTER, WILL HAVE NO OBLIGATION TO THE CEDING
COMPANY FOR REIMBURSEMENT OF EXPENSES RELATED TO THE CONTEST OF SUCH CLAIM AND
WILL NOT SHARE IN ANY SUBSEQUENT REDUCTION IN LIABILITY RELATING TO SUCH CLAIM.
(D)
IF THE REINSURER DOES NOT ELECT TO DISCHARGE ITS LIABILITY WITH
RESPECT TO ANY CONTESTED CLAIM AS SET FORTH IN SECTION 8.02(C), THE CEDING
COMPANY WILL PROMPTLY ADVISE THE REINSURER OF ALL SIGNIFICANT DEVELOPMENTS,
INCLUDING NOTICE OF LEGAL PROCEEDINGS (INCLUDING, BUT NOT LIMITED TO, CONSUMER
COMPLAINTS OR