Document:

bmaagreement.htm

Exhibit 10.12

AMENDMENT TO

REINSURANCE AGREEMENT

DATED:     December 1, 1993

between

UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

5250 South Sixth Street

Springfield, Illinois  62705

(The Ceding Company)

and

OPTIMUM RE INSURANCE COMPANY

1345 River Bend Drive, Suite 100

Dallas, TX  75247

(The Reinsurer)

Respecting the Net Amount at Risk

	
  

	
1.  Effective December 1, 1993, the Net Amount at Risk (NAR) for the policies reinsured under this Agreement shall be calculated on a Level basis (Reinsured NAR Amount is equal to the Policy Death Benefit minus the Company’s retention).  Both parties mutually agree any modifications to the NAR calculation for policies reinsured under this Agreement shall be done prospectively.

	
  

	
2.  Signatures     :  The terms and conditions of this Agreement are not changed in    any way except as stated herein.

In witness of the above, this Amendment is signed in duplicate at the dates and places indicated.

FOR     :     UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

	
DATE:

	
11/18/10

	
SIGNATURE:

	
/s/Theodore C Miller

	
PLACE:

	
Springfield, IL

	
NAME:

	
Theodore C Miller

	
WITNESS:

	
/s/Fritzie Wagner

	
TITLE:

	
Accounting Manager

FOR     :     OPTIMUM RE INSURANCE COMPANY

	
DATE:

	
10/22/10

	
SIGNATURE:

	
/s/Mario Georgiev

	
PLACE:

	
DALLAS, TEXAS

	
NAME:

	
MARIO GEORGIEV

	
WITNESS:

	
/s/Jean-Claude Page

	
TITLE:

	
PRESIDENT

ADDENDUM

to the Automatic YRT Pool Agreement

dated December 1, 1993

between

UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

Springfield, Illinois

(hereinafter called the CEDING COMPANY)

and

BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA

Kansas City, Missouri

(hereinafter called the BMA)

Purpose:     To include coverage for the C21X plan under this agreement.

	
  

	
1.  BMA shall accept reinsurance covering the C21X plan (L019585A) on either an automatic or facultative basis.

2.  BMA will not participate in the endowments, or the return of premium features, nor the cash values.

3.  THE EFFECTIVE DATE shall be November 1, 1995

Except as herein amended, the provisions of the said Reinsurance Agreement shall remain unchanged.

IN WITNESS WHEREOF, this addendum is hereby executed in duplicate between the parties concerned, and is duly signed by both parties respective officers as follows:

	
CEDING COMPANY

	
/s/Gay E Sears

	  	
Senior Vice President

	
signature

	  	
title

	  	  	  
	
/s/Christopher J Heisler

	  	
Assistant Vice President

	
signature

	  	
title

	  	
11/27/95

	  
	  	
date

	  

	
BMA

	
/s/Al Rodriquez

	  	
Senior Vice President/Reinsurance

	
signature

	  	
title

	  	  	  
	
/s/James N. Mets

	  	
Vice President Reinsurance Actuary

	
signature

	  	
title

	  	
12/21/95

	  
	  	
date

	  

	
BMA

REINSURANCE AGREEMENT

between

	
UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

Springfield, Illinois

 

hereinafter referred to as the CEDING COMPANY

and

Business Men’s Assurance Company of America

Kansas City, Missouri

hereinafter referred to as BMA

AUTOMATIC TREATY

TABLE OF CONTENTS

	 ARTICLE...........	 ..........	 ......................................................................................................................................................................................................................................	 PAGE
	
I

	  	
BASIS OF REINSURANCE..................................................................................................................................................................

	
1

	
II

	  	
LIABILITY.......................................................................................................................................................................................

	
3

	
III

	  	
ADMINISTRATIVE REPORTING.........................................................................................................................................................

	
3

	
IV

	  	
PLANS OF REINSURANCE................................................................................................................................................................

	
5

	
V

	  	
REINSURANCE PREMIUM................................................................................................................................................................

	
5

	
VI

	  	
PREMIUM ACCOUNTING.................................................................................................................................................................

	
6

	
VII

	  	
OVERSIGHTS..................................................................................................................................................................................

	
7

	
VIII

	  	
REDUCTIONS, TERMINATIONS AND CHANGES.................................................................................................................................

	
7

	
IX

	  	
INCREASE IN RETENTION AND RECAPTURES....................................................................................................................................

	
8

	
X

	  	
REINSTATEMENTS..........................................................................................................................................................................

	
9

	
XI

	  	
EXPENSE OF ORIGINAL POLICY.........................................................................................................................................................

	
9

	
XII

	  	
CLAIMS..........................................................................................................................................................................................

	
9

	
XIII

	  	
TAX CREDITS..................................................................................................................................................................................

	
11

	
XIII

	  	
DAC TAX........................................................................................................................................................................................

	
11

	
XIV

	  	
INSPECTION OF RECORDS................................................................................................................................................................

	
11

	
XV

	  	
INSOLVENCY..................................................................................................................................................................................

	
11

	
XVI

	  	
ARBITRATION................................................................................................................................................................................

	
12

	
XVII

	  	
PARTIES TO AGREEMENT................................................................................................................................................................

	
13

	
XVIII

	  	
TERMINATION OF AGREEMENT.......................................................................................................................................................

	
13

	
SCHEDULES

	  	  	  
	
A

	  	
SPECIFICATIONS

	
B

	  	
BENEFITS AND NAR CALCULATIONS

	
C

	  	
ADDITIONAL INFORMATION AND EXCEPTIONS

	
EXHIBITS

	  	  	  
	
I

	  	
RETENTION LIMITS

	
IA

	  	
UNDERWRITING GUIDELINES

	
II

	  	
REINSURANCE PREMIUMS

	
III

	  	
COMMISSIONS AND ALLOWANCES (COINSURANCE)

ARTICLE I

BASIS OF REINSURANCE

Reinsurance under this agreement must be individual insurance.  The CEDING COMPANY shall automatically reinsure the life insurance for the plan(s) as stated in Schedule A and any additional benefits listed in Schedule B.

1.  REQUIREMENTS FOR AUTOMATIC REINSURANCE

     A.  The individual risk must be a permanent resident of the United States or Canada.

	
  

	
     B.  The individual risk must be underwritten by the CEDING COMPANY according to the standard underwriting practices and guidelines as shown in Exhibit IA.  The CEDING COMPANY shall immediately notify BMA of any changes in underwriting practices or guidelines.  Any risk falling into a category of special underwriting programs shall be excluded from this Agreement.

	
  

	
     C.  Any risk offered on a facultative basis to BMA or any other reinsurer shall not qualify for automatic reinsurance.

	
  

	
     D.  The maximum issue age on any risk shall be age 70.  Issue ages over 70 must be submitted facultatively.

	
  

	
     E.  The mortality rating on any one risk must not exceed Table 8, or 300%, or its equivalent on a flat extra premium basis.  Cases exceeding Table 8, or 300%, or its equivalent must be submitted facultatively.

	
  

	
     F.  The maximum amount of insurance issued and applied for in all companies on any one risk shall not exceed the Jumbo limits as stated in Schedule A.

	
  

	
     G.  On any risk, the CEDING COMPANY must retain the amounts of insurance as stated in Exhibit I.

	
  

	
     H.  The maximum amounts of insurance to be reinsured on any one life shall not exceed the automatic binding limits as stated in Schedule A.

	
  

	
     I.  The minimum amount of insurance to be ceded shall be $5,000.

	
  

	
2.  REQUIREMENTS FOR FACULTATIVE REINSURANCE

	
  

	
     A.  Plan of Insurance Listed in Schedule A:

	
  

	
           (1)  If the Requirements for Automatic Reinsurance are met but the CEDING COMPANY prefers to apply for facultative reinsurance, or

	
  

	
           (2)  If Requirements for Automatic Reinsurance are not met then the CEDING COMPANY must submit to BMA all the underwriting documentation relating to the insurability of the individual risk for facultative reinsurance.

	
  

	
     B.  Plan of Insurance Not Listed in Schedule A:

	
  

	
          On a Yearly Renewable Term treaty the CEDING COMPANY may submit an application for facultative reinsurance on any plan(s).

	
  

	
          On a Coinsurance treaty the Ceding Company cannot submit an application for facultative reinsurance on plan(s) other than the plan(s) listed in Schedule A.

	
  

	
     C.  An application for facultative reinsurance may include life insurance with or without either disability waiver of premium or accidental death or both.  Only accidental death reinsurance may be submitted without an application for life insurance.

	
  

	
     D.  Copies of all underwriting papers relating to the insurability of the individual risk must be sent to BMA for facultative reinsurance.  After BMA has examined the underwriting papers, BMA will promptly notify the CEDING COMPANY of the underwriting offer subject to additional requirements, the final underwriting offer or declination.  Any final underwriting offer on the individual risk will automatically terminate upon the earliest of:

	
  

	
            (1)  The date BMA receives notice of a withdrawal/cancellation by the CEDING COMPANY,

	
  

	
            (2)  120 days after the date on which the offer was made, or

	
  

	
            (3)  The date specified in BMA’s approval to extend the offer.

	
  

	
     E.  The minimum amount of insurance to be ceded shall be $5,000.

	
  

	
ARTICLE II

	
  

	
LIABILITY

	
  

	
1.     BMA’s liability for automatic reinsurance shall begin simultaneously with the CEDING COMPANY’s liability.

	
  

	
2.     Except for additional coverage pertaining to conditional receipt as described in Schedule C, BMA’s liability for facultative reinsurance on individual risks shall not begin unless and until the CEDING COMPANY has accepted BMA’s final and unconditional written offer on the application for facultative reinsurance.

	
  

	
3.     BMA’s liability for reinsurance on individual risks shall terminate when the CEDING COMPANY’s liability terminates.

	
  

	
4.     As long as the original policy remains in full force, all paid-up additions and accumulated dividends shall be the liability of the CEDING COMPANY.

	
  

	
5.     In no event shall reinsurance under this Agreement be in force unless the insurance issued directly by the CEDING COMPANY is in force and is issued and delivered in a jurisdiction in which the CEDING COMPANY is properly licensed.

	
  

	
6.     The payment of reinsurance premiums in accordance with this Agreement shall be a condition precedent to the liability of BMA under reinsurance covered by this Agreement

	
  

	
ARTICLE III

	
  

	
ADMINISTRATIVE REPORTING

	
  

	
1.     Self-Administered Business

	
  

	
        Promptly after liability for insurance has begun on an individual risk, the CEDING COMPANY shall have the responsibility of maintaining adequate records for the administration of the reinsurance account and shall furnish BMA with monthly reports, in substantial conformity with the following:

	
  

	
A.     MONTHLY NEW BUSINESS REPORT

	
(1) policy number

	  	
(10) amount reinsured

	
(2) full name of insured

	  	
(11) automatic/facultative indicator

	
(3) date of birth

	  	
(12) state of residence

	
(4) sex

	  	
(13) table rating

	
(5) issue age

	  	
(14) flat extra (amount + number of years)

	
(6) policy date

	  	
(15) death benefit option (UL products)

	
(7) underwriting  classification

	  	
(16) net amount at risk

	
(8) plan of insurance

	  	
(17) transaction code

	
(9) amount issued

	  	
(18) currently if other than U.S.

	
  

	
B.     MONTHLY CONVERSION REPORT

	
  

	
         The CEDING COMPANY shall furnish BMA with a separate listing of reinsurance policies that are conversions or replacements to the plan(s) as stated in Schedule A. The listing should provide the following information:

	
(1)     1 through 18 in 1.A above

	
(4)     attained age

	
(2)     original policy date

	
(5)     duration

	
(3)     original policy number

	
(6)     effective date if other than policy date

	
  

	
C.     MONTHLY PREMIUM REPORT

	
  

	
         At the end of each month the CEDING COMPANY shall send to BMA a listing of all reinsurance policies issued or renewing during the past month accompanied by the reinsurance premiums for such policies.  The listing should be segregated into first year issues and renewals and should provide the following information:

	
(1)     1 through 18 in 1.A above

	
(2)     current net amount at risk

	
(3)     On Yearly Renewable Term treaties the net reinsurance premium due for each reinsured policy with the premium for life and each supplemental benefit separated.

	
(4)     On Coinsurance treaties the gross reinsurance premium, commissions, net reinsurance premium and other amounts (e.g. dividends, cash surrender values) with premium separated for life and each supplemental benefit.

	
  

	
        All monthly lists shall be submitted to BMA no later than the 20th day of the following month.

	
  

	
D.     MONTHLY CHANGE REPORT

	
  

	
         The CEDING COMPANY shall report the details of all policy terminations and changes on the reinsured policies.  In addition to the data indicated in 1.A, above, the report should provide information about the nature, the effective date, and the financial result of the change with respect to reinsurance.

	
  

	
E.     MONTHLY POLICY EXHIBIT REPORT

	
  

	
         The CEDING COMPANY shall provide a summary of new issues, terminations, recaptures, changes, death claims and reinstatements during the month and the inforce reinsurance at the end of the month.

F.     QUARTERLY REPORTING

	
  

	
         1.  Within ten (10) days following the end of the quarter, the CEDING COMPANY shall provide BMA with Premiums Due and Unpaid.  This report may be in summary form reporting totals by line of business with separate totals for first year and renewals.

	
  

	
         2.  Within ten (10) days following the end of the quarter, the CEDING COMPANY shall provide BMA with totals for the reserve liability including statutory reserves by valuation basis segregated by Yearly Renewable Term and Coinsurance.

	
  

	
G.     ANNUAL INFORCE LISTING

	
  

	
         Within ten (10) days after the close of the year, the CEDING COMPANY shall furnish BMA a listing of reinsurance in force by policy, by year of issue, segregated by Yearly Renewable Term and Coinsurance and include statutory reserves for the same.

	
  

	
H.     CLAIMS

	
  

	
         Claims shall be reported as incurred on an individual basis.

	
  

	
2.       Individual Cession Business

	
  

	
          Promptly after liability for reinsurance has begun on the individual risk the CEDING COMPANY shall send BMA a “Reinsurance Cession”.  Based on the information on the “Reinsurance Cession”, BMA will prepare and send the CEDING COMPANY a “Reinsurance Cession Card”.  When reinsurance is reduced or changed the CEDING COMPANY shall send BMA an “Amended Reinsurance Cession”.

	
  

	
ARTICLE IV

	
  

	
PLANS OF REINSURANCE

	
  

	
1.     Life reinsurance shall be ceded on the basis stated in Schedule A.

	
  

	
2.     Copies of all life insurance policies, riders, rate manuals, benefit forms, commuted value tables and cash value tables shall be provided by the CEDING COMPANY to BMA, and BMA shall be promptly notified of any changes therein.

	
  

	
ARTICLE V

	
  

	
REINSURANCE PREMIUMS

	
  

	
1.     Life Reinsurance Premiums

A.     Life Reinsurance Premiums Paid on a Coinsurance Basis

	
  

	
        The CEDING COMPANY shall pay the current premium as shown in Exhibit II based on the amount of life insurance reinsured, less the allowance stated in Exhibit III. In addition, the CEDING COMPANY shall pay any substandard table extra and flat extra premiums, but shall exclude the policy fee.  In the event the current premium is changed, BMA shall be notified by the CEDING COMPANY immediately.

	
  

	
        B.     Life Reinsurance Premiums on a Yearly Renewable Term Basis

	
  

	
        The life reinsurance premium on the net amount at risk shall be based on rates shown in Exhibit II.

	
  

	
        For those premiums less than the net premium rate or rates based on the 1980 CSO Table at 4 1⁄2% interest, only the latter rate or rates shall be guaranteed.  Should BMA increase the reinsurance premiums to the 1980 CSO Table at 4 1⁄2% interest, then the CEDING COMPANY shall have the right to immediately recapture any business affected by that change.

	
  

	
ARTICLE VI

	
  

	
PREMIUM ACCOUNTING

	
  

	
1.     Payment of Reinsurance Premium.

	
  

	
        A.     The reinsurance premiums shall be paid to BMA using the rates shown in Exhibit II.

	
  

	
        B.     On issues ceded by individual cessions BMA shall send the CEDING COMPANY each month two copies of a statement listing first year and renewal reinsurance premiums less refunds and allowances which are due during the current month.

	
  

	
        C.     On self-administered business the CEDING COMPANY shall provide the statement to BMA using the format described in Article III Self-Administered Business.

	
  

	
        D.     If a net reinsurance premium balance is payable to BMA the CEDING COMPANY shall pay this balance within forty-five (45) days after the close of that month.  If the full balance is not received within the forty-five (45) day period, the reinsurance premiums for reinsurance risks listed on the statement, for which payment was not received, shall be delinquent and the liability of BMA shall cease as of the date reinsurance premium were due.

	
  

	
         E.     If a net reinsurance premium balance is payable to the CEDING COMPANY, BMA shall pay this net balance within forty-five (45) days after the monthly statement was sent to the CEDING COMPANY.  If the monthly statement has not been returned within forty-five (45) days, BMA shall assume the CEDING COMPANY has verified and is in agreement with the net balance and shall make payment to the CEDING COMPANY.

	
  

	
2.      Currency.

	
  

	
          The reinsurance premiums and benefits payable under this Agreement shall be payable in the lawful money of the United States or Canada.

	
  

	
ARTICLE VII

	
  

	
OVERSIGHTS

If there is an unintentional oversight or clerical error in the administration of this Agreement by either the CEDING COMPANY or BMA, it can be corrected provided the correction takes place promptly after the time the oversight or clerical error is first discovered.  In that event, the CEDING COMPANY and BMA will be restored to the position they would have occupied had such oversight or clerical error not occurred.

ARTICLE VIII

REDUCTIONS, TERMINATIONS AND CHANGES

	
  

	
1.     A.     If in accordance with policy provisions the original policy is converted to permanent life insurance, the life risk under the converted policy which exceeds the amount of risk originally retained by the CEDING COMPANY shall continue to be reinsured with BMA.

	
  

	
        B.     If there is a replacement where full underwriting evidence is not required according to the CEDING COMPANY regular underwriting rules, the life risk which exceeds the amount of risk originally retained by the CEDING COMPANY shall continue to be reinsured with BMA.

	
  

	
         C.     If there is a replacement where full underwriting evidence is required by the CEDING COMPANY, reinsurance may be ceded to BMA subject to a written agreement between BMA and the CEDING COMPANY.

	
  

	
2.      If the amount of insurance under a policy or rider reinsured under the Agreement increases and

	
  

	
         A.     The increase is subject to new underwriting evidence, the provisions of Article I shall apply to the increase in reinsurance.

	
  

	
         B.     The increase is not subject to new underwriting evidence, BMA shall accept automatically the increase in reinsurance but not to exceed the automatic binding limit as stated in Schedule A.

	
  

	
3.      If the amount of insurance under a policy or rider reinsured under this Agreement is increased or reduced, any increase or reduction in reinsurance for the risk involved shall be effective on the effective date of the increase or reduction in the amount of insurance.

	
  

	
4.      If any portion of the prior insurance retained by the CEDING COMPANY on an individual life reduces or terminates, any reinsurance under this Agreement based on the same life shall also be reduced or terminated.  The CEDING COMPANY shall reduce its reinsurance by applying the retention limits which were in effect at the time the policy was issued.  The “reinsurance adjustment due to lapse or reduction of previous insurance” shall be effective on the same date as the lapse or reduction of prior insurance.  The reinsurance to be terminated or reduced shall be determined in chronological order by the date the risk was first reinsured.  Two or more policies issued the same date shall be considered one policy.

	
  

	
5.      If the insurance for a risk is shared by more than one reinsurer, BMA’s percentage of the increased or reduced reinsurance shall be the same as BMA’s percentage of initial reinsurance of the individual risk.

	
  

	
6.      If a risk reinsured under this Agreement is terminated, the reinsurance for that risk shall be terminated as of the effective date of the termination.

	
  

	
7.      For facultative reinsurance, if the CEDING COMPANY reduces the mortality rating, the reduction shall be subject to the facultative provisions of this Agreement as stated in Article I, Section 2.

	
  

	
8.      BMA shall refund all unearned reinsurance premiums not including policy fees, less applicable allowances, arising from reductions, terminations and changes as described in this Article.

	
  

	
ARTICLE IX

	
  

	
INCREASE IN RETENTION

	
  

	
AND RECAPTURES

	
  

	
1.     If the CEDING COMPANY changes its retention limits, as listed in Exhibit I, prompt written notice of the change shall be provided to BMA.

	
  

	
2.     The CEDING COMPANY shall have the option of recapturing the reinsurance under this Agreement in the event the CEDING COMPANY increases its retention limit and the policies have been in force the required length of time as stated in Schedule A.  The CEDING COMPANY may exercise its option to recapture by giving written notice to BMA within ninety (90) days after the effective date of the increase in retention.  If the recapture option is not exercised within ninety days (90) days after the effective date of the increase in retention the CEDING COMPANY may choose to recapture at a later date.  In that case, the date of the written notification to BMA shall determine the effective date the recapture program shall begin.

	
  

	
3.     If the CEDING COMPANY exercises its option to recapture, then:

	
  

	
        A.     The CEDING COMPANY shall reduce the reinsurance on all individual risks on which it retained its maximum retention for the age and mortality rating that was in effect at the time the reinsurance was ceded.

	
  

	
        B.     The CEDING COMPANY shall increase its total amount of insurance on the    individual risk up to its new retention by reducing the amount of reinsurance.  If an individual risk is shared by more than one reinsurer, BMA’s percentage of the reduced reinsurance shall be the same as BMA’s initial percentage of reinsurance on the individual risk.

	
  

	
        C.     The reduction of reinsurance shall become effective on the later of the following dates:

	
  

	
                 (1)     The policy anniversary date immediately following the date the recapture program is to begin as determined by paragraph 2. of this Article;

	
  

	
                 (2)     The number of years stated in Schedule A starting with the “policy date.”

	
  

	
        D.     In the event the CEDING COMPANY overlooks any reduction in the amount of a reinsurance policy because of an increase in the CEDING COMPANY’s retention, the acceptance by BMA of reinsurance premiums under these circumstances shall not constitute a liability on the part of BMA for such reinsurance.  BMA shall be liable only for a refund of premiums.

	
  

	
4.     No recapture shall be permitted for reinsurance on an individual risk if (a) the CEDING COMPANY retained less than its maximum retention for the age and mortality rating in effect at the time the reinsurance was ceded to BMA, or if (b) the CEDING COMPANY did not retain any of the individual risk.

	
  

	
ARTICLE X

	
  

	
REINSTATEMENT

If a policy reinsured under this Agreement lapses for nonpayment of premium or is continued on the Reduced Paid-up or Extended Term Insurance basis, and is reinstated in accordance with the terms of the policy and the CEDING COMPANY’s rules, the reinsurance on such policy shall automatically be reinstated by BMA upon written notice of such reinstatement.  The CEDING COMPANY shall pay BMA all back reinsurance premiums.

ARTICLE XI

EXPENSE OF ORIGINAL POLICY

The CEDING COMPANY shall bear the expense of all medical examinations, inspection fees, and other charges in connection with the issuance of the insurance.

ARTICLE XII

CLAIMS

	
  

	
1.     The CEDING COMPANY shall give BMA prompt notice of any claim.  Copies of the proofs obtained by the CEDING COMPANY together with a statement showing the amount due or paid on such claim by the CEDING COMPANY shall be furnished to BMA at the time payment is requested.

	
  

	
2.     BMA shall accept the decision of the CEDING COMPANY in settling the claim and shall pay its portion to the CEDING COMPANY upon receipt of proof that the CEDING COMPANY has paid the claimant.  It is agreed, however, that if a lesser amount at risk is retained by the CEDING COMPANY than the amount ceded to BMA, the CEDING COMPANY shall consult with BMA concerning its investigation and/or payment of the claim, although the final decision shall be that of the CEDING COMPANY.

	
  

	
3.     The CEDING COMPANY shall notify BMA of its intention to contest, compromise, or litigate a claim involving reinsurance, and BMA shall pay its share of the payment and specific claim expenses therein involved, unless it declines to be a party to the contest, compromise, or litigation in which case it shall pay the full amount of the reinsurance to the CEDING COMPANY.  “Claim expenses” shall be deemed to mean only the reasonable legal and investigative expenses connected with the litigation or settlement of claims.  “Claim expenses” shall not include expenses incurred in connection with a dispute or contest arising out of conflicting claims or entitlement to policy proceeds which the CEDING COMPANY admits are payable or any routine claim administrative expenses, Home Office or otherwise.

	
  

	
4.     In the event the amount of insurance provided by a policy or policies reinsured hereunder is increased or reduced because of a misstatement of age or sex established after the death of the insured, BMA shall share in the increase or reduction in the proportion that the net liability of BMA bore to the sum of the retained net liability of the CEDING COMPANY and the net liability of other reinsurers immediately prior to such increase or reduction.  The reinsurance with BMA shall be written from commencement on the basis of the adjusted amounts using premiums and reserves at the correct ages and sex.  The adjustment for the difference in premiums shall be made without interest.

	
  

	
5.     It is understood and agreed that the payment of a death claim by BMA shall be made in one sum regardless of the mode of settlement under the policy of the CEDING COMPANY.

	
  

	
6.     In no event shall BMA have any liability for any Extra-Contractual damages which are assessed against the CEDING COMPANY as a result of acts, omissions or course of conduct committed by the CEDING COMPANY or its agents, other than a good faith decision to deny claim liability, in connection with insurance reinsured under this Agreement.  It is recognized that there may be special circumstances involved which indicate that BMA should participate in certain assessed damages.  These circumstances are not amendable to advance specific definition, but could include those situations in which BMA was an active party in the act, omission or course of conduct which ultimately results in the assessment of such damages.  The extent of such participation will be determined on a good faith assessment of culpability in each case, but all factors being equal, the division of any such assessment will generally be in the proportion of net liability borne by each party.

	
  

	
7.     If a claim is approved for disability waiver of premium insurance reinsured under this Agreement, the CEDING COMPANY shall continue to pay reinsurance premiums to BMA.  BMA shall reimburse the CEDING COMPANY BMA’s share of the annual liability.

	
  

	
ARTICLE XIII

	
  

	
TAX CREDITS

In jurisdictions which impose premium taxes on the CEDING COMPANY without deduction for reinsurance, BMA shall reimburse the CEDING COMPANY for taxes paid on the amount of the reinsurance premiums on the basis shown in Schedule A, unless BMA itself is required to pay a direct tax on such reinsurance premiums.

ARTICLE XIV

DEFERRED ACQUISITION COSTS TAX

The CEDING COMPANY and BMA elect under Regulation 1.848-2(g) (8) to compute “specified policy acquisition expense”, as defined in section 848(c) of the Internal Revenue Code, in the following manner:

The party with net positive consideration as determined under Reg. 1.848-2(f) and Reg. 1.848-3 shall compute specified policy acquisition expenses without regard to the general deductions limitation of section 848(c)(1) for each taxable year.

The parties will exchange information pertaining to the aggregate amount of net consideration as determined under Regs. 1.848-2(f) and 1.848-3, for all reinsurance agreements in force between them, to insure consistency for the purposes of computing specified policy acquisition expenses.  BMA shall provide the CEDING COMPANY with the amount of such net consideration for each taxable year no later than May 1 following the end of such year.  The CEDING COMPANY shall advise BMA if it disagrees with the amounts provided, and the parties agree to amicably resolve any difference.  The amounts provided by BMA shall be presumed correct if it does not receive a response from the CEDING COMPANY by May 31.

BMA represents and warrants that it is subject to U.S. taxation under Subchapter L of the Internal Revenue Code.

ARTICLE XV

INSPECTION OF RECORDS

BMA shall have the right, at any reasonable time, to inspect at the office of the CEDING COMPANY, all books and documents which relate to reinsurance under this Agreement.

ARTICLE XVI

INSOLVENCY

	
  

	
1.     In the event of insolvency of the CEDING COMPANY, all reinsurance shall be payable by BMA directly to the CEDING COMPANY or its liquidator, receiver, or statutory successor, on the basis of the liability of the CEDING COMPANY under the policy or policies reinsured, without diminution because of the insolvency of the CEDING COMPANY.

	
  

	
2.     It is agreed that the liquidator, receiver, or statutory successor of the insolvent CEDING COMPANY shall give written notice to BMA of the pending of a claim against the insolvent CEDING COMPANY on any policy reinsured within a reasonable time after such claim is filed in the insolvency proceedings.  During the pendency of any such claim BMA may investigate such claim and interpose, in the proceeding where such claim is to be adjudicated, any defense or defenses which BMA may deem available to the CEDING COMPANY or its liquidator, receiver, or statutory successor.  The expense thus incurred by BMA shall be chargeable, subject to court approval, against the insolvent CEDING COMPANY as part of the expense of liquidation to the extent of proportionate share of the benefit which may accrue to the CEDING COMPANY solely as a result of the defense undertaken by BMA.

	
  

	
3.     Where two or more reinsurers are participating in the same claim and a majority in interest elect to interpose a defense to such claim, the expense shall be apportioned in accordance with the terms of the Agreement as though such expenses had been incurred by the CEDING COMPANY.

	
  

	
4.     Any debts or credits, matured or unmatured, liquidated or unliquidated, in favor of or against either the CEDING COMPANY or BMA with respect to this agreement or with respect to any other claim of one party against the other are deemed mutual debts or credits, as the case may be, and shall be set off, and only the balance shall be allowed or paid.

	
  

	
ARTICLE XVII

	
  

	
ARBITRATION

	
  

	
1.     It is the intention of the CEDING COMPANY and BMA that the customs and practices of the insurance and reinsurance industry shall be given full effect in the operation and interpretation of this Agreement.  The parties agree to act in all things with the highest good faith.  However, if BMA and the CEDING COMPANY cannot mutually resolve a dispute or claim which arises out of or relates to this agreement, the dispute or claim shall be settled through arbitration.

	
  

	
2.     The arbitrators shall be impartial regarding the dispute, and shall base their decision on the terms and conditions of this agreement plus, as necessary, on the customs and practices of the insurance and reinsurance industry.

	
  

	
3.     There shall be three arbitrators who must be officers of life insurance companies other than the parties to this agreement or their subsidiaries.  Each of the parties to this agreement shall appoint one of the arbitrators and these two arbitrators shall select the third.  If a party to this agreement fails to appoint an arbitrator within thirty (30) days after the other party to this agreement has given notice of the arbitrator appointment, the American Arbitration Association shall appoint an arbitrator for the party to this Agreement that has failed to do so.  Should the two arbitrators be unable to agree on the choice of the third, then the appointment of this arbitrator is left to the American Arbitration Association.

	
  

	
4.     Except for the appointment of arbitrators in accordance with the provisions of Section 3 of this Article, arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association which are in effect on the date of delivery of demand for arbitration.  Arbitration shall be conducted in Kansas City, Missouri.

	
  

	
5.     Each party to this agreement shall pay part of the arbitration expenses which are apportioned to it by the arbitrators.

	
  

	
6.     The award agreed by the arbitrators shall be final, and judgment may be entered upon it in any court having jurisdiction.

	
  

	
ARTICLE XVIII

	
  

	
PARTIES TO AGREEMENT

This is an Agreement of indemnity reinsurance solely between the CEDING COMPANY and BMA.  The acceptance of reinsurance under this Agreement shall not create any right or legal relation whatever between BMA and the insured, owner, or any other party to or under any policy reinsured under this Agreement.

ARTICLE XVIV

TERMINATION OF AGREEMENT

	
  

	
1.     This Agreement may be terminated at any time by either party giving at least ninety (90) days written notice of termination.  The day the notice is deposited in the mail addressed to the Home Office, or to an Officer of either company shall be the first day of the ninety-day (90) period.

	
  

	
2.     The CEDING COMPANY shall continue to cede reinsurance and BMA shall continue to accept reinsurance, as provided for by the terms of this Agreement, until the date of termination.

	
  

	
3.     All automatic reinsurance which became effective prior to the termination of this Agreement and all facultative reinsurance approved by BMA based upon applications received prior to termination of this Agreement shall remain in effect until its termination or expiration, unless the CEDING COMPANY and BMA mutually decide otherwise.

IN WITNESS WHEREOF, this agreement shall be effective with policies dated 12:01A.M. September 1, 1993 and is hereby executed in duplicate between

UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

Springfield, Illinois

referred to as the CEDING COMPANY

and

BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA

Kansas City, Missouri

referred to as BMA,

and duly signed by both parties’ respective officers as follows:

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

	
CEDING COMPANY

	
/s/James E Melville

	  	
President

	
signature

	  	
title

	  	  	  
	
/s/George E Frances

	  	
Secretary

	
signature

	  	
title

	  	
11/15/93

	  
	  	
date

	  

	
BMA

	
/s/John Walker

	  	
Managing Director/Reinsurance

	
signature

	  	
title

	  	  	  
	
 

/s/WM. Crouch

	  	
Reinsurance

Administrative Vice President

	
signature

	  	
title

	  	
11/24/93

	  
	  	
date

	  

SCHEDULE

SPECIFICATIONS

1.     TYPE OF BUSINESS:

         Life insurance issued by the CEDING COMPANY.

2.     TYPE OF REPORTING

        Self-administered

3.     PLANS OF INSURANCE:

        Permanent Plans, Universal Life, and Riders Term Plans

4.     BASIS OF REINSURANCE:  Automatic Yearly Renewable Term

        SURNAME ALPHABETIC DIVISION:  A-Z

        QUOTA SHARE:  50%

5.     JUMBO LIMIT:

        A.  Life:  $10,000,000

        B,  Waiver of Premium:  $5,000,000

6.     BINDING LIMIT:

        A.  Life:  Five (5) times the retention of the CEDING COMPANY.

	
  

	
        B.  Waiver of Premium or Monthly Cost of Insurance:  Amounts equal to but not exceeding the amounts payable to the CEDING COMPANY for the amount of life reinsured with BMA.

	
  

	
7.     YEARS TO RECAPTURE:

	
  

	
         Ten (10) years

	
  

	
8.     PREMIUM TAX REIMBURSEMENT:

	
  

	
        BMA will not reimburse premium taxes.

	
  

	
SCHEDULE B

	
  

	
The following benefits are reinsured under this agreement:

	
  

	
1.     LIFE

	
  

	
         A.     Level Term Plans (twenty years or less) – The net amount at risk shall be the reinsurance face amount ceded.

	
  

	
         B.     Level Term Plans (more than twenty years) or Permanent Plans -

	
  

	
                  1st Year – Full amount ceded

	
  

	
                  2nd through 10th Years – Annual decrement is equal to one-tenth of the 10th year Cash Value.

	
  

	
                  11th through 20th Years – Annual decrement is equal to one-tenth of the difference between the 10th year and the 20th year Cash Value.

	
  

	
                  Subsequent years calculated in a similar manner.

	
  

	
         C.     Decreasing Term Plans – The first net amount at risk will be the reinsurance face amount ceded.  Subsequent years will be determined from the commuted values schedule provided by the CEDING COMPANY.

	
  

	
         D.     Universal Life Plans – The CEDING COMPANY shall furnish BMA the net amount at risk on a self-administered report.

	
  

	
2.      WAIVER OF PREMIUM OR MONTHLY COST OF INSURANCE

	
  

	
         Reinsurance premiums in the first years are zero.  Renewal reinsurance premiums to BMA are 90% of the gross disability premium charged the insured by the CEDING COMPANY on the initial amount reinsured for waiver of premium and the amount reinsured for monthly cost of insurance.

	
  

	
SCHEDULE C

	
  

	
ADDITIONAL INFORMATION

	
  

	
1.     This agreement includes coverage for conditional receipt liability for facultative cases sent to BMA.  In no event shall BMA’s conditional receipt liability exceed $750,000.00 or the automatic binding limit specified in Schedule A, whichever is less.

	
  

	
        BMA’s conditional receipt liability shall begin simultaneously with the CEDING COMPANY’s liability and shall cease upon:

	
  

	
        A.     BMA’s declination of the risk, or

	
  

	
        B.     The first acceptance by the CEDING COMPANY of an unconditional offer by a reinsurer other than BMA, or

	
  

	
        C.     The expiration of 120 days from the date BMA’s facultative offer is communicated to the CEDING COMPANY.

	
  

	
2.      For policies which are underwritten as substandard, the rate charged for reinsurance will be at the standard rate plus the appropriate table rate, regardless of how the policy is treated by the CEDING COMPANY.

	
  

	
3.      Conversions will be reinsured on a point-in-scale basis using the same reinsurance rate as the original plan.

	
  

	
EXCEPTIONS

	
  

	
EXHIBIT I

	
  

	
RETENTION SCHEDULE

	
  

	
CEDING COMPANY:  UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

	
  

	
CEDING COMPANY’S MAXIMUM LIMITS OF RETENTION – MALE AND FEMALE

	
  

	
EFFECTIVE WITH POLICIES DATED:

	  

	
  

	
LIFE

Please be sure to show your limit of retention for all ages and all rate classifications.  Show “none” in all categories where you have no retention.

	  	  	  	  	
SUBSTANDARD

	  	
SUBSTANDARD

	  	
SUBSTANDARD

	  	  	  	  	
TABLE FLAT EXTRA

	  	
TABLE FLAT EXTRA

	  	
TABLE FLAT EXTRA

	
ISSUE AGES

	  	
 

STANDARD

	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	
0-65

	  	
$100,000

	  	
$100,000

	  	
$100,000

	  	
$100,000

	
65 & OVER

	  	
 

$60,000

	  	
 

$60,000

	  	
 

$60,000

	  	
 

$60,000

*Minimum cession size $25,000

	
Spillover $25,000

DISABILITY

Is your Disability (Waiver of Premium, Waiver of Monthly Deduction) retention the same as Life?  Yes

If not, explain.

Do you have a separate retention for Payor Benefit issued in connection with children’s policies, based on commuted amount of premium?  No  If so, what is the commuted amount retention? _____

	  

ACCIDENTAL DEATH (ADB)

$ Bulk

Does your ADB retention apply to any ADB rate classification assigned? N/A

Is ADB retention in addition to Life amount above? N/Alifereagreement.htm

 

Exhibit 10.13

REINSURANCE AGREEMENT

referred to as the “Agreement”

BETWEEN

UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

OF

SPRINGFIELD, ILLINOIS

#5882-1

referred to in this Agreement as the “Company”

AND

LIFE REASSURANCE CORPORATION OF AMERICA

OF

STAMFORD, CONNECTICUT

referred to in this Agreement as “Life Re”

Effective:  December 1, 1993

TABLE OF CONTENTS

	
ARTICLE I

	
AUTOMATIC REINSURANCE........................................................................................................................

	
1

	
1.

	
Insurance.........................................................................................................................................................

	
1

	
2.

	
Coverages.........................................................................................................................................................

	
2

	
3.

	
Jumbo Risk........................................................................................................................................................

	
2

	
4.

	
Waiver of Disability Acceptance and Participation Limits..........................................................................................

	
3

	  	  	  
	
ARTICLE II

	
FACULTATIVE REINSURANCE......................................................................................................................

	
3

	  	  	  
	
ARTICLE III

	
LIABILITY................................................................................................................................................

	
3

	
1.

	
Automatic Reinsurance Liability..........................................................................................................................

	
3

	
2.

	
Facultative Reinsurance Liability..........................................................................................................................

	
4

	  	  	  
	
ARTICLE IV

	
AMOUNT OF INSURANCE...........................................................................................................................

	
4

	
1.

	
Amounts.........................................................................................................................................................

	
4

	
2.

	
Minimum Amounts...........................................................................................................................................

	
5

	
3.

	
Reductions and Terminations.............................................................................................................................

	
5

	
4.

	
Reinstatements................................................................................................................................................

	
6

	  	  	  
	
ARTICLE V

	
PROCEDURES FOR REINSURANCE...............................................................................................................

	
6

	
1.

	
Monthly Reports..............................................................................................................................................

	
6

	
2.

	
Facultative Reinsurance.....................................................................................................................................

	
7

	
3.

	
Quarterly Reports.............................................................................................................................................

	
8

	  	  	  
	
ARTICLE VI

	
PREMIUMS.............................................................................................................................................

	
8

	
1.

	
Life Insurance..................................................................................................................................................

	
8

	
2.

	
Disability Benefits............................................................................................................................................

	
8

	
3.

	
Preliminary Term Insurance...............................................................................................................................

	
9

	
4.

	
Premium Taxes................................................................................................................................................

	
9

	
5.

	
Payments.......................................................................................................................................................

	
9

	
6.

	
Nonpayment of Reinsurance Premiums................................................................................................................

	
9

	
7.

	
Misstatements................................................................................................................................................

	
10

	  	  	  
	
ARTICLE VII

	
CLAIMS................................................................................................................................................

	
10

	
1.

	
Notice...........................................................................................................................................................

	
10

	
2.

	
Company’s Decision........................................................................................................................................

	
10

	
3.

	
Contested Claims.............................................................................................................................................

	
11

	
4.

	
Misstatements................................................................................................................................................

	
11

	
5.

	
Payment........................................................................................................................................................

	
12

	
6.

	
Extra-Contractual Damages...............................................................................................................................

	
12

	
7.

	
Disability Waiver of Premium Insurance..............................................................................................................

	
12

	  	  	  
	
ARTICLE VIII

	
INSOLVENCY.........................................................................................................................................

	
13

	  	  	  
	
ARTICLE IX

	
ARBITRATION.......................................................................................................................................

	
14

	  	  	  
	
ARTICLE X

	
GENERAL PROVISIONS............................................................................................................................

	
15

	
1.

	
Policy Forms and Rates......................................................................................................................................

	
15

	
2.

	
Reinsurance Conditions.....................................................................................................................................

	
15

	
3.

	
Expenses.........................................................................................................................................................

	
16

	
4.

	
Errors and Omissions........................................................................................................................................

	
16

	
5.

	
Offset.............................................................................................................................................................

	
16

	
6.

	
Inspection......................................................................................................................................................

	
16

	  	  	  
	
ARTICLE XI

	
RECAPTURE...........................................................................................................................................

	
17

	  	  	  
	
ARTICLE XII

	
DURATION OF AGREEMENT........................................................................................................................

	
17

	  	  	  
	
ARTICLE XIII

	
EXECUTION...........................................................................................................................................

	
18

	  	  	  
	  	  	  
	
Schedule A

	
Retention and Reinsurance Limits

	  
	
Schedule B

	
Reinsurance Statement and Bulk Reporting Forms

	  
	
Schedule C

	
Premiums

	  

The Company and Life Re mutually agree to reinsure on the terms and conditions set forth below.  This Agreement is solely between the Company and Life Re, and performance of the obligations of each party under this Agreement will be rendered solely to the other party.  In no instance will anyone other than the Company or Life Re have any rights under this Agreement.

The policies and riders set forth in Schedule A that are reinsured under this Agreement are hereinafter referred to collectively as “Reinsured Policies” and individually as a “Reinsured Policy”.

ARTICLE I

AUTOMATIC REINSURANCE

	
1.

	
Insurance

The Company will cede and Life Re will accept reinsurance under the policies and riders written by the Company on citizens of the United States or Canada domiciled in the United States or Canada at the time of policy issue under the plans shown in Part III of Schedule A.  When the Company retains its maximum limit of retention, as shown in Part I of Schedule A, the Company will cede and Life Re will accept automatically reinsurance in amounts not exceeding the amounts per life in Part II of Schedule A of this Agreement.  Where the Company has more than one Agreement with Life Re, the total amount per life automatically ceded to Life Re, under all Agreements combined, will not exceed the automatic binding limits available to the Company under the Agreement with the highest binding authority.  Life Re will accept automatic reinsurance when (a) the Company already has for its own account its maximum limit of retention on the life and for this reason alone is not retaining any portion of the insurance applied for on a current application, and (b) in the Company’s opinion there has been no adverse change in the insurance status of the risk since the Company’s last acceptance for its own retention.  A risk as defined in the following categories is not eligible for reinsurance under this paragraph:

	
(a)

	
A jumbo risk as defined in paragraph 3 below.

 

	
(b)

	
A risk which has been sent to Life Re or any other reinsurer for facultative underwriting consideration.

	
2.

	
Coverages

The coverages or risks reinsured under Article I, 1. is life insurance and waiver of disability benefits to the extent of limits specified in Schedule A.

	
3.

	
Jumbo Risk

A jumbo risk is one where the papers of the Company, including all papers that are part of the current application, indicate that the person to be insured has or will have total insurance in force in all companies greater than:

	  	
Life

	
All Ages

	
$5,000,000

	
4.

	
Waiver of Disability Acceptance and Participation Limits

 

Life Re’s maximum acceptance limit for waiver of disability benefits is $2,000,000 per life, and the maximum participation limit for such benefits is $3,000,000 per life.

	
5.

	
Regular Limits of Retention

The Company may modify its regular limits or retention, detailed in Schedule A, by giving thirty days’ written notice to Life Re.  The amount of reinsurance to be ceded and accepted automatically after the new limits take effect will be determined by mutual Agreement.

ARTICLE II

FACULTATIVE REINSURANCE

Whether reinsurance is available as Automatic Reinsurance under Article I or not, the Company may submit, for consideration by Life Re, a request for any amount of reinsurance of the coverages in Article I, 2. that the Company may require.

ARTICLE III

LIABILITY

	
1.

	
Automatic Reinsurance Liability

The liability of Life Re on any policy reinsured on an automatic basis under this Agreement begins and ends at the same time as that of the Company.

	
2.

	
Facultative Reinsurance Liability

The liability of Life Re on any policy reinsured on a facultative basis under this Agreement begins and ends at the same time as that of the Company, provided that:

	
(a)

	
Life Re has given the Company an unconditional approval on the application for reinsurance, and

 

	
(b)

	
the Company has notified Life Re of its acceptance of such offer in writing within ninety (90) days.

ARTICLE IV

AMOUNT OF INSURANCE

	
1.

	
Amounts

Life insurance and waiver of disability benefits under this Agreement will be on the Yearly Renewable Term plan for the amount at risk under the policy reinsured.  For the purpose of this Agreement, the amount as risk will be calculated in the following manner:

	  	
R = D – X

 

	
Where:

	
D = Death Benefit

 

	  	
X = The Ceding Company’s Retention

	
2.

	
Minimum Amounts

If the amount to be reinsured with Life Re and the Company’s other excess reinsurers under a policy is less than $25,000, the Company will retain all of the liability for such policy.  If the amount to be reinsured with Life Re land the Company’s other excess reinsurers meets or exceeds $25,000 on any policy, such amount will be reinsured pursuant to this Agreement and the Company’s agreements with its other excess reinsurers.

	
3.

	
Reductions and Terminations

Reinsurance amounts are calculated in terms of coverages on a “per policy” basis.  If any of the Company’s policies or riders on an insured are reduced or terminated, the reinsurance under this Agreement will be reduced by the corresponding amount.  The reduction will not be applied to force the Company to reassume more than its regular retention limit at the time of the reduction for the age of issue, mortality rating and form of  the policy or policies for which reinsurance is being terminated.  The reduction first will be applied to reinsurance, if any, on the particular policy reduced.  If the reduction exceeds the amount of reinsurance on that policy, the reduction will then be applied to reinsurance on other policies on the insured in the order in which the policies were effected, the first  effected will be the first terminated or reduced.  If reinsurance has been ceded to more than one reinsurer, the reduction in Life Re’s reinsurance will be in proportion to the reduction in the total.  After the proportion has been determined, the rules above will be used.

	
4.

	
Reinstatements

	
(a)

	
Automatic Reinsurance

A Reinsured Policy originally ceded under this Agreement on an automatic basis, that is reduced, terminated or lapsed, and later reinstated by the Company pursuant to policy provisions will be accepted for reinsurance by Life Re up to such amount as would be in force if such Reinsured Policy had not been reduced, terminated or lapsed.  The Company will pay to Life Re, Life Re’s Share of any premiums and interest that the Company has received for reinstatement.

 

	
(b)

	
Facultative Reinsurance

A Reinsured Policy originally ceded under this Agreement on a facultative basis, that was reduced, terminated, or lapsed, will require approval by Life Re prior to reinstatement of such a policy, if the Company has retained less than 50% of the risk.  Upon such approval, reinsurance for the policy will be for the amount that would be in force had the policy not been reduced, terminated, or lapsed.

ARTICLE V

PROCEDURES FOR REINSURANCE

	
1.

	
Monthly Reports

Within ten (10) calendar days following the end of each calendar month, the Company will forward to Life Re a report as shown in Part I of Schedule B.  Along with the report, the Company will remit a check to Life Re for the balance indicated plus interest for the number of days since the middle of the preceding month, as if all transactions had occurred in the middle of the month.  If a balance is due the Company, it will be remitted promptly by Life Re, plus interest for the number of days since the middle of the preceding month, as if all transactions had occurred in the middle of the month.  Interest will accrue on such payments at an annual rate equal to 7%.

	
2.

	
Facultative Reinsurance

When a Company requests facultative reinsurance, the application will be made by submitting Life Re Form 2068, Bulk Preliminary Notification, shown in Part II of Schedule B (or a mutually agreeable form).  The Company will send to Life Re any and all information it has about the risk, including specifically, but not limited to, copies of the application, medical examiners’ reports, attending physicians’ statements, inspection reports, and other reports and other papers bearing on the insurability of the risk.  Upon receipt of the application, Life Re will analyze the risk promptly and as soon as possible notify the Company of its decision and its classification of the risk.  If the Company elects to use Life Re for facultative reinsurance and after the Company’s policy has been paid for and delivered, the Company will activate the facultative cession on the Company’s reinsurance system, within 120 days of Life Re’s decision to accept the case.  When the preceding facultative procedures have been satisfied Article V, paragraphs 2 and 4, apply to Facultative as well as Automatic Reinsurance.  A facultative indicator must be present on the monthly reinsurance transaction and inforce reports.

	
3.

	
Quarterly Reports

Within thirty (30) calendar days following the end of each calendar quarter, the Company will forward to Life Re a detailed reserve and inforce run.

ARTICLE VI

PREMIUMS

	
1.

	
Life Insurance

Premiums per $1,000 for life insurance rated standard and substandard are given in Schedule C.  The premiums per $1,000 are applied to the amount of life reinsurance as outlined in Article IV.  A policy fee, when applicable, is charged in each year in addition to the premium based on the amount of life insurance.  Life Re anticipates that these premiums will be continued indefinitely for all business ceded under this Agreement.  For  the purpose of satisfying requirements for deficiency reserves imposed by various state insurance departments, Life Re will guaranty for renewal the greater of the premiums provided in this Agreement or premiums based on the 1980 CSO Table at 2.5% interest.  When the Company charges a flat extra premium, whether alone or in addition to a premium based on a multiple table, the Company will pay this premium on the reinsurance amount in addition to the standard or multiple table premium for the rating and plan of reinsurance.

	
2.

	
Disability Benefits

Premiums for waiver of disability benefits will be paid at the same rate as the Company charges for the benefit on which reinsurance in Life Re is based.

	
3.

	
Preliminary Term Insurance

If the Company issued a policy with preliminary term insurance, the reinsurance premium for the preliminary term period will be paid to Life Re at the same rate the Company charges for the policies on which reinsurance in Life Re is based less commissions at the percentage paid by the Company.

This rule applies to all benefits under the preliminary term insurance.  For the first policy year after the preliminary term period, the premiums for all benefits will be computed at first year.

	
4.

	
Premium Taxes

The Company and Life Re agree that Life Re will not reimburse the Company for state premiums taxes on reinsurance premiums received from the Company.

	
5.

	
Payments

Premiums are payable annually in advance.  If reinsurance is reduced, terminated, increased or reinstated during the year, pro-rata adjustment will be made by Life Re and the Company on all premium items except policy fees.

	
6.

	
Nonpayment of Reinsurance Premiums

Except as provided in Article X, 5., the payment of reinsurance premiums is a condition precedent to the liability of Life Re under Reinsured Policies.  In the event of nonpayment of reinsurance premiums as provided in this Article, Life Re will have the right to terminate the reinsurance under all Reinsured Policies having reinsurance premiums in arrears.

	
7.

	
Misstatements

If the insured’s age or sex was misstated and the amount of insurance on the Company’s policies is adjusted, the Company and Life Re will share the adjustment in proportion to the amount of liability of each at the time of issue of the policies.  Premiums will be recalculated for the correct age or sex and amounts according to the proportion as above and adjusted without interest.  If the insured is still alive, the method above will be used for past years and the amount of reinsurance and premium adjusted for the future to the amount that would have been correct at issue.

ARTICLE VII

CLAIMS

	
1.

	
Notice

The Ceding Company shall give Life Re prompt notice of any claim.  Copies of the proofs obtained by the Ceding Company together with a statement showing the amount due or paid on such claim by the Ceding Company shall be furnished to Life Re at the time payment is requested.

	
2.

	
Company’s Decision

Life Re shall accept the decision of the Ceding Company in settling the claim and shall pay its portion to the Ceding Company upon receipt of proof that the Ceding Company has paid the claimant.  It is agreed, however, that if a lesser amount at risk is retained by the Ceding Company than the amount ceded to Life Re, the Ceding Company shall consult with Life Re concerning its investigation and/or payment of the claim, although the final decision shall be that of the Ceding Company.

	
3.

	
Contested Claims

The Ceding Company shall notify Life Re of its intention to contest, compromise, or litigate a claim involving reinsurance, and Life Re shall pay its share or the payment and specific claim expenses therein involved, unless it declines to be a party to the contest, compromise, or litigation in which case it shall pay the full amount of the reinsurance to the Ceding Company.  “Claim expenses” shall be deemed to mean only the reasonable legal and investigative expenses connected with the litigation or settlement of claims.  “Claim expenses” shall not include expenses incurred in connection with a dispute or contest arising out of conflicting claims of entitlement to policy proceeds which the Ceding Company admits are payable or any routine claim administrative expenses, Home Office or otherwise.

	
4.

	
Misstatements

In the event the amount of insurance provided by a policy or policies reinsured hereunder is increased or reduced because of a misstatement of age or sex established after the death of the insured, Life Re shall share in the increase or reduction in the proportion that the net liability of Life Re bore to the sum of the retained net liability of the Ceding Company and the net liability of other reinsurers immediately prior to such increase or reduction.  The reinsurance with Life Re shall be written from commencement on the basis of the adjusted amounts using premiums and reserves at the correct ages and sex.  The adjustment for the difference in premiums shall be made without interest.

	
5.

	
Payment

It is understood and agreed that the payment of a death claim by Life Re shall be made in one sum regardless of the mode of settlement under the policy of the Ceding Company.

	
6.

	
Extra-Contractual Damages

In no event shall Life Re have any liability for any Extra-Contractual damages which are assessed against the Ceding Company as a result of acts, omissions or course of conduct committed by the Ceding Company or its agents, other than a good faith decision to deny claim liability, in connection with insurance reinsured under this Agreement.  It is recognized that there may be special circumstances involved which indicate that Life Re should participate in certain assessed damages.  These circumstances are not amenable to advance specific definition, but could include those situations in which Life Re was an active party in the act, omission or course of conduct which ultimately results in the assessment of such damages.  The extent of such participation will be determined on a good faith assessment of culpability in each case, but all factors being equal, the division of any such assessment will generally be in the proportion of net liability borne by each party.

	
7.

	
Disability Waiver or Premium Insurance

If a claim is approved for disability waiver of premium insurance reinsured under this Agreement, the Ceding Company shall continue to pay reinsurance premiums to Life Re.  Life Re shall reimburse the Ceding Company Life Re’s share of the annual liability.

ARTICLE VIII

INSOLVENCY

All reinsurance under this Agreement will be paid by Life Re directly to the Company, its liquidator, receiver, or statutory successor, on the basis of the liability of the Company under the policy or policies reinsured without diminution because of the insolvency of the Company.  In the event of the insolvency of the Company, the liquidator, receiver, or statutory successor of the Company will give written notice of a pending claim against the Company on any policy reinsured within a reasonable time after the claim is filed in the insolvency proceedings.  While the claim is pending, Life Re may investigate and interpose, at its own expense, in the proceedings where the claim is to be adjudicated , any defenses which it may deem available to the Company or its liquidator, receiver or statutory successor.  The expense incurred by Life Re will be charged, subject to court approval, against the Company as an expense of liquidation to the extent of a proportionate share of the benefit that accrues to the Company as a result of the defenses by Life Re.  Where two or more reinsurers are involved and a majority in interest elect to defend a claim, the expense will be apportioned in accordance with the terms of the Reinsurance Agreement as if the expense had been incurred by the Company.

ARTICLE IX

ARBITRATION

Life Re and the Company intend that any dispute between them under or with respect to this Agreement be resolved without resort to any litigation.  Accordingly, Life Re and the Company agree that they will negotiate diligently and in good faith to agree on a mutually satisfactory resolution of any such dispute; provided, however, that if any such dispute cannot be so resolved by them within sixty calendar days (or such longer period as the parties may agree) after commencing such negotiations, Life Re and the Company agree that they will submit such dispute to arbitration in the manner specified in, and such arbitration proceeding will be conducted in accordance with, the rules of the American Arbitration Association.

The arbitration hearing will be before a panel of three arbitrators, each of whom must be a present or former officer of a life insurance or life reinsurance company.  Life Re and the Company will each appoint one arbitrator by written notification to the other party within thirty calendar days after the date of the mailing of the notification initiating the arbitration.  These two arbitrators will then select the third arbitrator within sixty calendar days after the date of the mailing of the notification initiating arbitration.

If either Life Re or the Company fail to appoint an arbitrator, or should the two arbitrators be unable to agree upon the choice of a third arbitrator, the president of the American Arbitration Association or of its successor organization or (if necessary) the president of any similar organization designated by lot of Life Re and the Company within thirty calendar days after the request will appoint the necessary arbitrators.

The vote or approval of a majority of the arbitrators will decide any question considered by the arbitrators; provided, however, that if no two arbitrators reach the same decision, then the average of the two closest mathematical determinations will constitute the decision of all three arbitrators.  The place of arbitration will be Stamford, Connecticut.  Each decision (including without limitation each award) of the arbitrators will be final and binding on all parties and will be nonappealable, and (at the request of either of Life Re or the Company) any award of the arbitrators may be confirmed by a judgment entered by any court of competent jurisdiction.  No such award or judgment will bear interest.  Each party will be responsible for paying (a) all fees and expenses charged by its respective counsel, accountants, actuaries, and other representatives in conjunction with such arbitration and (b) one-half of the fees and expenses charged by each arbitrator.

ARTICLE X

GENERAL PROVISIONS

	
1.

	
Policy Forms and Rates

The Company will furnish Life Re with a copy of its application forms, policy and rider forms, premium and non-forfeiture value manuals, reserve tables and any other forms or tables needed for proper handling of reinsurance under this Agreement.  It will advise Life Re promptly of any changes or new forms it may adopt from time to time.

	
2.

	
Reinsurance Conditions

The reinsurance is subject to the same limitations and conditions as the insurance under the policy or policies written by the Company on which the reinsurance is based.

	
3.

	
Expenses

The Company will bear the expense of all medical examinations, inspection fees, and other charges in connection with the original policy.

	
4.

	
Errors and Omissions

If either the Company or Life Re fails to perform an obligation under this Agreement, and such failure is the result of an Error on the part of the Company or Life Re, such Error will be corrected by restoring both the Company and Life Re to the positions they would have occupied had no such Error occurred.  For this purpose, “Error” shall mean any clerical mistake made inadvertently, excluding errors of judgement and all other forms of error.  For business reported but not covered under the provisions of this Agreement, Life Re shall be obligated only for the return of premium paid.

	
5.

	
Offset

Any amount which either the Company or Life Re is contractually obligated to pay to the other party may be paid out of any amount which is due and unpaid under this Agreement or under any other agreement heretofore and hereafter entered into between the Company and Life Re.  The application of this offset provision shall not be deemed to constitute diminution in the event of insolvency.

	
6.

	
Inspection

At any reasonable time, Life Re may inspect the original papers and any and all books or documents at the Home Office of the Company relating to or affecting reinsurance under this Agreement.

ARTICLE XI

RECAPTURE

After the Reinsured Policies have been in force for ten (10) years, the Company may recapture all, but not less than all, of the Reinsured Policies under this Agreement.  If the Company elects to recapture, it will notify Life Re in writing at least ninety (90) days before it begins recapturing all Reinsured Policies.  At the next anniversary (or tenth anniversary, if later) of each Reinsured Policy, the reinsurance under this Agreement will be terminated as to that Reinsured Policy.

ARTICLE XII

DURATION OF AGREEMENT

This Agreement will be effective on and after the effective date stated in Article XIII.  It is unlimited in duration but may be amended by mutual consent of the Company and Life Re.  It may be terminated as to new reinsurance by either party giving ninety (90) days’ written notice to the other.  Termination as to new reinsurance does not affect existing reinsurance.  That reinsurance will remain in force until termination of the Company’s policy or policies on which the reinsurance is based in accordance with the terms of this Agreement.

ARTICLE XIII

EXECUTION

In witness of the above, this Agreement is signed in duplicate at  the dates and places indicated with an effective date of December 1, 1993.

UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

	
Date:

	
11/15/93

	  	
By:

	
/s/ James JE. Melville

	  	  	  	
Name:

	
James E. Melville

	  	  	  	
Title:

	
President

LIFE REASSURANCE CORPORATION OF AMERICA

	
Date:

	
October 1, 1993

	  	
By:

	
/s/ Stephen D. Poth

	  	  	  	
Name:

	
Stephen JD. Poth

	  	  	  	
Title:

	
Senior Vice President

SCHEDULE A

Agreement Number 5882-1

Part I – RETENTION LIMITS OF UNIVERSAL GUARANTY LIFE INSURANCE COMPANY

	
A.

	
LIFE

 

	  	
The Company’s retention:

 

	  	
Life Insurance – All Ratings

	
Ages

 

0 – 65

65 and Over

	
Retention

 

$100,000

   60,000

	
B.

	
WAIVER

 

	  	
Same as Life

Part II – AUTOMATIC BINDING LIMITS (through age 70)

	
A.

	
LIFE

 

	  	
Life Re’s share is 50% of 10 times the Company’s retention to a maximum of $1,000,000; of which the maximum share to Life Re is $500,000.

	  	  
	
B.

	
WAIVER

 

	  	
Same as Life

Part III – PLANS COVERED

The preceding schedules refer to insured lives and riders under the following plans:

	  	
BASE POLICY FORMS

	  	  
	
1200A

	
Funder 1200 10 Year Premium Whole Life Policy

	
1203

	
Non Renewable 10 Year Term Base Plan

	
L-185 (U.G.)

	
Interest Sensitive Whole Life Insurance Policy

	
L-396 (U.G.)

	
5 Year R&C Term Policy

	
L193A

	
Small Whole Life Policy

	
REG-TERM (U.G.)

	
“Term Guard Plus” Term Life Insurance

	
U159385A

	
Universal Life Century 2000

	
UC-120

	
Universal Life Century Series (USL 100-400)

	
UC-150

	
Interest Sensitive Life contracts (ISL 100-300)

	
UL90A (U.G.)

	
Universal Life UL90A

	  	  
	  	
RIDERS & SUPPLEMENTAL BENEFITS

	  	  
	
R-902 (U.G.)

	
Annual Renewable Level Term (UL90A)

	
R-904 (U.G.)

	
Cov Ins Annual Renewable Level Term Rdr (UL90A)

	
R1201

	
Non Renewable 10 Year Term Rider for Funder 1200

	
R904UG93

	
Covered Insured ART Rider (UL Age Last)

	
US-125

	
Annual Renewable Level Term Rider (USL)

	
US-131

	
Annual Renewable Level Term Rider (ISL)

SCHEDULE B - PART I

Life Re Agreement Number 5882-1

LIFE REASSUSRANCE CORPORATION OF AMERICA

SELF ADMINISTERED/BILK REINSURANCE SUMMARY REPORTING FORM

	
Ceding Company

	  	  	
Reinsurer

	  
	
Treaty/Account #

	  	  	
Period Experience is for

	  
	
Coin ___  YRT ___  Mod Co ___  Other _____

	  	
Interest Sensistive:

	
Yes ____

	
No ____

	
Reinsurance premium Mode:

	
Monthly __

	
Quarterly __

	
Annual __

	
In Advance __

	
In Arrears __

	
Reinsurance Reporting Mode:

	
Monthly __

	
Quarterly __

	
Annual __

	  	  
	
Contact

	  	  	
Date

	  	  	
Phone

	  

	
SECTION I - ACCOUNTING

	  	
*** Premiums ***

	
*** Allowances ***

	
Other

Benefit

	
 

Total

	  	
First Year

	
Renewal Year

	
First Year

	
Renewal Year

	
Life

	  	  	  	  	  	  
	
ADB

	  	  	  	  	  	  
	
Waiver of Premium

	  	  	  	  	  	  
	
Other

	  	  	  	  	  	  
	
TOTAL

	  	  	  	  	  	  
	
SECTION II – RESERVE INFORMATION

	
Amount of check

	
Amount of Rein (000)

	
Issue

Year

	
Reserves Reinsured

	
Life

	
ADB

	
Life

	
ADB

	
Waiver

	
Subst’d

	
Deficiency

	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  

	
SECTION III – POLICY EXHIBIT INFORMATION

	  	
Current Perod

	  	
Year to Date

	  	
No of       Amt of *

Policies   Rein (000)

	  	
No. of            Amt of *

Policies         Rein (000)

	
A. Inforce Beg, of Period

	  	
A

	  
	
  1. New Business                           Auto

	  	
       1. Auto

	  
	
Fac

	  	
           Fac

	  
	
  2. Conversions/Replacements-On

	  	
2.

	  
	
  3. Reinstatements

	  	
3.

	  
	
  4. Other Increases

	  	
4.

	  
	
  5. Not Taken

	  	
5.

	  
	
     a) Total Inc (1+2+3+4-5)

	  	
              a.

	  
	
  6. Death

	  	
6.

	  
	
  7. Conversions/Replacements-Off

	  	
7.

	  
	
  8.  Lapses

	  	
8.

	  
	
  9. Surrenders

	  	
9.

	  
	
10. Expiry

	  	
10.

	  
	
11. Recapture

	  	
11.

	  
	
12.Other Decreases

	  	
12.

	  
	
    b) Total Dec (6+7+8+9+10+11+12)

	  	
                b.

	  
	
B. Inforce End of Period (A+a-b)

	  	
B.

	  
	
*Specified Reinsurers’s Share of Liability

	  	
Form #TA1(4/91)

SCHEDULE B – PART I

Agreement Number 5882-1

SELF-ADMINISTERED REINSURANCE

POLICY TRANSACTION DETAIL REPORT

	
A.

	
The policy detail report should be broken down into the following categories:

	  	  
	  	
1 – New Business

	  	
2 – First Year Other Than New Business*

	  	
3 - Renewals

	  	
4 – Terminations – (First year/Renewal split optional, subtotals by termination type

      optional).

	  	
5 – Changes - (First year/Renewal split optional, subtotals by change type optional).

	  	  

*If premium mode other than annual.

Subtotals should be provided by plan code for each of the above categories.  Where smokers and non-smokers are not assigned separate plan codes, subtotals for the above should be further broken down to provide totals by smoking habit.

Automatic and facultative business should be shown separately for each of the five categories above.

If more than one currency is involved per treaty, provide separate reports by currency.

If there is any qualified pension business ceded, please provide separate reporting.

	
B.

	
Field Descriptions

	  	  
	  	  	  	  

	  	
1.

	
Insured Information

 

	  	  	
Name

	
Full name (Last, first, middle) for insured

 

	  	  	
DOB

	
Full date of birth (MM/DD/YY) for insured

 

	  	  	
Sex

	
M/F

 

	  	  	
S/N

	
Smoker habit.  Up to three spaces should be allotted for this field to accommodate codes relevant to the treaty reported.  Suggested codes are:

 

	  	  	
S

	
Smoker

	  	  	
N

	
Nonsmoker

	  	  	
A

	
Aggregate (or composite)

	  	  	
PN

	
Preferred nonsmoker

	  	  	
PS

	
Preferred smoker

 

	  	  	
Age

	
Actual age at issue

 

	  	  	
ST

	
State of residence

	  	  	  	  
	  	
2

	
Policy Information

 

	  	  	
Policy No.

	
Ceding Company’s policy number.

	  	  	  	
Policies should be listed in numerical order.

	  	  	  	  
	  	  	
Plan

	
Ceding Company’s plan code.

	  	  	  	  
	  	  	
DOI

	
Full policy date (MM/DD/YY).  This is the date from which renewal processing will be driven.

	  	  	  	  
	  	  	
DRN

	
Duration from original policy date (i.e., where attained scale rates apply to policy conversions or replacements).

	  	  	  	  
	  	  	
A/F

	
Automatic/Facultative indicator.  Business ceded on a fac/ob basis can be indicated by an “0” in this field.

	  	  	  	  
	  	  	
Rating

	
Indicate table if substandard.  100% for standard issues.

	  	  	  	  
	  	  	
Flat

	
Flat extra amount per thousand.

	  	  	  	  
	  	  	
Yrs

	
Duration of flat extra (number of years).

	  	  	  	  
	  	  	
OPT

	
For Universal Life plans only, indicate death benefit Option 1 or 2.  Under Option 1, the level death benefit option, the amount at risk decreases as the cash value accumulates.  Option 2 produces an increasing death benefit, equivalent to the specified amount plus the accumulated cash value.  The Reinsured Net Amount at Risk remains level under this option.

	  	  	  	  
	  	  	
COV

	
L – Basic Coverage

	  	  	  	
WP – Waiver of Premium

	  	  	  	
ADB – Accidental Death Benefit

	  	  	  	  
	  	  	
DIRECT

FACE

	
Full face amount of the coverage at issue.

	  	  	  	  
	  	  	
REINS. FACE

	
Initial amount ceded.

	  	  	  	  
	  	  	
REINS. AAR

	
Current reinsured amount at risk.

	  	  	  	  
	  	  	
Chg. Amt.

	
Any change to the reinsurance amount at risk since previous report should be illustrated here.

	  	  	  	  
	  	  	
Chg. Dt.

	
Effective date of policy changes.  Applies to termination and change reports, may be blank for new business and renewals.

	  	  	  	  
	  	  	
TR

	
Transaction type (see list in Part C below).

	  	  	  	  
	  	  	
Base Prem.

	
Gross premium due for each coverage (excluding substandard premium amounts).

	  	  	  	  
	  	  	
SStd. Prem.

	
Gross substandard premium, i.e., multiple and/or flat extra premiums, if applicable.

	  	  	  	  
	  	  	
Base Allow.

	
Allowance (commission) due on base premium amount.

	  	  	  	  
	  	  	
SStd. Allow.

	
Allowance (commission) due on substandard premium amount.

	  	  	  	  
	  	  	
Net

	
Net amount due per coverage.

	  	  	  	  

	
C.

	
Transaction Types

	  	  
	  	
Suggested alpha codes for each of the various transaction types are:

	  	  
	  	
1.

	
NB

	
New Business

	  	  	  	  
	  	
2.

	
FO

	
First year other than New Business

	  	  	  	  
	  	
3.

	
RL

	
Renewal

	  	  	  	  
	  	
4.

	
Terminations

	  	  	  	  
	  	  	
LP

	
Lapse

	  	  	
NT

	
Not Taken

	  	  	
SR

	
Surrender

	  	  	
EX

	
Expiry

	  	  	
DH

	
Death

	  	  	
RC

	
Recapture

	  	  	  	  
	  	
5.

	
Changes

	  	  	  	  
	  	  	
RS

	
Reinstatement

	  	  	
IC

	
Increase

	  	  	
DC

	
Decrease

	  	  	
CA

	
Conversions on

	  	  	
CO

	
Conversions off

	  	  	
RA

	
Internal Replacements on

	  	  	
RO

	
Internal Replacements off

	  	  	
ET

	
ETI

	  	  	
RP

	
Reduced paid Up

	  	  	
MS

	
Misc. (e.g. names changes, benefit additions)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00182-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00182-of-00352.parquet"}]]