Document:

Coinsurance TI and Reserve

 

    
      Exhibit 10.10

       

       

       

      COINSURANCE
        AGREEMENT

      Between:
               Texas Imperial Life Insurance Company

                             
        Houston, Texas

       

                             
hereinafter referred to as
        CEDENT

       

                 
and:     Reserve
        National Insurance
        Company 

                             
Oklahoma City, Oklahoma

       

      hereinafter referred to as
        REINSURER 

      Effective:
      
December
        31,
        2006

       

    

    
      TABLE OF CONTENTS

      
        	
                A.

              	
                Coinsurance Coverage

              	
                4

              
	
                B.

              	
                Representations and Warranties of
                  the
                  CEDENT

              	
                4

              
	
                C.

              	
                Representations and Warranties of
                  the
                  REINSURER

              	
                6

              
	
                D.

              	
                Offset

              	
                6

              
	
                E.

              	
                Payments

              	
                6

              
	
                F.

              	
                Terms of Coinsurance

              	
                8

              
	
                G.

              	
                Assessments

              	
                8

              
	
                H.

              	
                Indemnity

              	
                8

              
	
                I.

              	
                Policy Changes

              	
                8

              
	
                J.

              	
                Errors and Omissions

              	
                9

              
	
                K.

              	
                Audit of Records and Procedures

              	
                9

              
	
                L.

              	
                Arbitration

              	
                9

              
	
                M.

              	
                Insolvency

              	
                10

              
	
                N.

              	
                Parties to Agreement

              	
                11

              
	
                O.

              	
                Effective Date

              	
                11

              
	
                P.

              	
                Terms Effective Upon Election to
                  Convert to
                  Assumption Reinsurance

              	
                11

              
	
                Q.

              	
                Confidentiality

              	
                13

              
	
                R

              	
                Entire Agreement

              	
                13

              
	
                S.

              	
                Duration of Agreement

              	
                14

              
	
                T.

              	
                Severability of Provisions

              	
                14

              
	
                U.

              	
                Other Conditions

              	
                14

              
	
                V.

              	
                Execution of Agreement

              	
                15

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              

      

       

      
        	
                SCHEDULE I

              	
                Policies Subject to
                  Reinsurance

              	
                16

              
	
                SCHEDULE II

              	
                Coinsurance Percentages

              	
                17

              
	
                Exhibit “A”

              	
                Administrative Services
                  Agreement

              	
                 

              
	
                Exhibit “B”

              	
                Medicare Supplement Business Activity
                  Indicators Report

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              

      

       

       

       

       

    

    
      A.              
Coinsurance
        Coverage

      1.        
The
        policies
        issued or accepted as insurance by CEDENT as described in Schedule I (the
        "Policies") shall be reinsured with REINSURER on a coinsurance basis pursuant
        to
        this Agreement. The reinsurance shall cover that portion of the risk as
        specified in Schedule II.

      2.        
The
        liability
        of REINSURER shall begin on the effective date of this Agreement.
        Notwithstanding the foregoing, the reinsurance provided pursuant to this
        Agreement shall cover only policies validly issued or assumed by the CEDENT
        and
        in force as of the Effective Date or validly reinstated following the Effective
        Date.

      3.        
The
        reinsurance
        hereunder shall follow the fortunes of the CEDENT, and the REINSURER shall
        be
        liable in the same amount and to the same extent as CEDENT except as to
        extra-contractual liabilities as provided in Subsection H.

      4.        
The
        reinsurance
        under this Agreement with respect to any Policy shall be maintained in force
        without reduction so long as and to the extent that the liability of CEDENT
        under such policy reinsured hereunder remains in force without reduction,
        unless
        reinsurance is terminated or reduced as provided herein.

      5.        
The
        CEDENT
        shall notify the REINSURER in writing, as soon as CEDENT is notified, of
        the
        pendancy of any and all examinations of the CEDENT or its principal officers
        or
        shareholders conducted by any federal, state or local governmental or regulatory
        agency.

      6.        
The
        CEDENT and
        REINSURER agree that REINSURER has the option to convert this Agreement to
        an
        assumption reinsurance agreement on a state by state basis as regulatory
        approvals are obtained at the expense of the REINSURER.  REINSURER shall be
        responsible for complying with state requirements for filing for approval
        or the
        assumption reinsurance agreement. Once such approvals have been obtained,
        REINSURER will comply with all notice requirements, including mailing or
        delivery of an assumption certificate to each applicable policyholder of
        a
        Policy within 45 days from the date approval is obtained; and including any
        notification of right of the policyholder’s right to reject, if
        applicable.    

      7.        
The
        CEDENT and
        REINSURER agree that from and after the Effective Date, REINSURER will serve
        as
        Administrator for CEDENT, pursuant to the Administrative Service Agreement
        attached hereto as Exhibit “A”, to process claims made on the Policies,
        including claims with dates of service prior to the Effective Date which
        have
        not been processed by CEDENT.  REINSURER agrees to make all filings or
        registrations necessary to serve in this capacity.  CEDENT agrees to
        transfer to REINSURER all information necessary for REINSURER to serve in
        the
        capacity of Administrator. 

      B.              
Representations
        and Warranties of the CEDENT

      1.        
The
        CEDENT has
        provided the REINSURER copies of all forms, applications, rates and values
        with
        respect to the Policies and shall keep the REINSURER promptly informed with
        respect to any changes or modifications to such forms, applications or
        rates.  CEDENT has provided all files, claims processing manual(s),
        electronic records or databases and other documents necessary for REINSURER
        to
        serve as Administrator.

      2.        
        The CEDENT has provided the REINSURER with the latest Examination Report
        of
        CEDENT by the Texas Department of Insurance, and all examinations performed
        by
        any regulatory authority within the last 5 years.

      3.        
        The CEDENT is licensed and in good standing in all jurisdictions in which
        policies were issued or assumed and all Policies are in full compliance with
        applicable laws, regulations and rules. The CEDENT has not been placed in,
        nor
        does it have any reason to believe that it is about to be placed in supervision,
        rehabilitation, receivership, suspension or liquidation by any insurance
        department.

      4.        
        The CEDENT is duly organized, validly existing and in good standing under
        the
        laws of the state of Texas, and has all necessary corporate power and authority
        to entitle it to use its name, to own, lease or otherwise hold its properties
        and assets, to carry on its business as currently conducted, and to perform
        its
        obligations.

      5.        
        The execution, delivery and performance of this Agreement by the CEDENT will
        not
        (i) violate or conflict with any provision of its Certificate of Incorporation
        or by-laws; (ii) violate or result in any breach of or constitute a default
        under, or give rise to a right of modification, termination or cancellation
        of,
        or accelerate the performance required by the terms of, as the case may be,
        any
        contract, lease, license, mortgage, note, or any agreement to which the CEDENT
        is bound; or (iii) violate or conflict with any law, regulation, code, judgment,
        order, writ, injunction or decree of any court, governmental body, or
        administrative agency by which the CEDENT may be bound.

      6.        
        The CEDENT has full corporate power and authority to execute, deliver and
        perform its obligations under this Agreement, and has taken all necessary
        corporate and other action to authorize the ceding of the Policies under
        the
        terms of this Agreement.

      7.        
        This Agreement has been duly executed and delivered by the CEDENT and
        constitutes the valid and legally binding obligation of the CEDENT, enforceable
        in accordance with its terms. The Policies are in compliance with all applicable
        requirements of law and are on forms approved in all material respects by
        the
        appropriate governmental authorities except to the extent that failure to
        be in
        compliance therewith does not have a material adverse effect.

      8.        
        The assets reflected by CEDENT on its annual statement to the Insurance
        Department of the State of Texas for the year ended December 31, 2005 are
        a)
        substantially unchanged since that time, b) accurately reflected as to value,
        c)
        unencumbered, except as reflected on the statement, and d) fully available
        to
        the CEDENT to support its obligations to its policyholders.

      9.        
        The disclosures CEDENT has made regarding the premium, claims and reserves,
        including but not limited to, the loss ratios for the year 2005 and the first
        nine months of 2006 contained in the Medicare Supplement Business Activity
        Indicators Report attached hereto as Exhibit “B” and incorporated herein by this
        reference, fairly and accurately present the information contained therein
        and
        contain no material omissions.

      C.              
Representations
        and Warranties of the REINSURER

      1.        
        The REINSURER is duly organized, validly existing and in good standing as
        a
        licensed insurance company under the laws of the state of Oklahoma, and has
        all
        necessary corporate power and authority to entitle it to use its name, to
        own,
        lease or otherwise hold its properties and assets, to carry on its business
        as
        currently conducted, and to perform its obligations.

      2.        
        The execution, delivery and performance of this Agreement by the REINSURER
        will
        not (i) violate or conflict with any provision of its Certificate of
        Incorporation or by-laws; (ii) violate or result in any breach of or constitute
        a default under, or give rise to a right of modification, termination or
        cancellation of, or accelerate the performance required by the terms of,
        as the
        case may be, any contract, lease, license, mortgage, note, or any agreement
        to
        which the REINSURER is bound; or (iii) violate or conflict with any law,
        regulation, code, judgment, order, writ, injunction or decree of any court,
        governmental body, or administrative agency by which the REINSURER may be
        bound.

      3.        
        The REINSURER has full corporate power and authority to execute, deliver
        and
        perform its obligations under this Agreement, and has taken all necessary
        corporate and other action to authorize the ceding of the Policies under
        the
        terms of this Agreement.

      4.        
        This Agreement has been duly executed and delivered by the REINSURER and
        constitutes the valid and legally binding obligation of the REINSURER,
        enforceable in accordance with its terms.

      D.              
Offset

      1.        
        Any debits or credits under this Agreement, matured or unmatured, liquidated
        or
        unliquidated, regardless of when they arose or were incurred, between CEDENT
        and
        REINSURER are deemed mutual debts or credits, as the case may be, and shall
        be
        set off dollar for dollar, and only the balance shall be allowed or paid,
        regardless of the solvency of either party.

      E.              
Payments

      1.        
        As of the Valuation Date, REINSURER shall be assigned and entitled to all
        premiums for the Policies coinsured by it under this Agreement and CEDENT
        agrees
        to promptly remit to REINSURER any such premium payments as are received
        by it.
 REINSURER shall be authorized to endorse all checks, drafts, and money
        orders payable to CEDENT with respect to premium paid on the Policies. 
CEDENT assigns, to the extent permitted by law, to REINSURER all its rights
        and
        privileges to draft or debit the accounts of any policyholders for premiums
        due
        under the Policies pursuant to existing pre-authorized bank draft, credit
        card
        or electronic fund transfer arrangements between CEDENT and such
        policyholders.  CEDENT agrees to fully cooperate and perform all acts
        necessary to ensure premiums are remitted to the REINSURER, including, but
        not
        limited to, the execution of any document necessary for any financial
        institution to accept the endorsement of the REINSURER or its right to draft
        or
        debit the account of an insured, and if permissible, requiring its insureds
        to
        remit payment directly to the REINSURER in the REINSURER’s name as Administrator
        of the Policies.

                 
        Upon receipt of premium payment for the Policies via any bank draft, credit
        card
        or electronic fund transfer arrangements after the Effective Date, CEDENT
        shall
        remit such payments to REINSURER within thirty days after the receipt together
        with appropriate detailed policyholder and premium information.  REINSURER
        has the right to audit and inspect the records related to such payments.

      2.        
        REINSURER agrees to pay CEDENT and CEDENT agrees to accept a single one time
        commission payment of 45% of the annualized premium of the Policies in force
        with paid to dates on or after the December 15, 2006 (the “Valuation Date”) (the
“Coinsurance Premium”).  The Coinsurance Premium paid shall be the net
        amount after the following deductions:

      a.        
Claim Reserve.  Actuaries for
        REINSURER and CEDENT shall determine an
        agreed upon reserve, as of the Valuation Date, for incurred and reported
        and
        incurred but not reported claims (jointly “Claims”)(“Claim Reserve”). 
REINSURER will withhold the Claim Reserve from the Coinsurance Premium and
        place
        it in a trust account in a bank chosen by REINSURER for the sole purpose
        of
        paying such claims.  

      b.        
Unearned Premium
        Reserve.  Actuaries for REINSURER and CEDENT shall
        determine as of the Valuation Date, on the daily pro-rata basis, the unearned
        premium reserve (“Unearned Premium Reserve”).  The Unearned Premium Reserve
        shall be deducted from the Coinsurance Premium.  

      c.        
Active Life Reserve.  Actuaries for
        REINSURER and CEDENT shall determine
        the appropriate amount of active life reserve, as of the Valuation Date,
        for the
        Policies (“Active Life Reserve”).  The Active Life Reserve will be deducted
        from the Coinsurance Premium.

      3.        
        In the event the agreed Claim Reserve exceeds the amount necessary to pay
        Claims, the difference between these two amounts shall be returned to CEDENTas
        soon as practicable after the first anniversary of the Effective Date. 
Prior to such return, the CEDENT shall have the right to audit the Claims
        processed by REINSURER. Such election shall be made within 30 days after
        notice
        by REINSURER that it will be returning excess Claim Reserve funds.  If
        CEDENT elects to audit, the audit will be completed within 90 days of its
        election.  REINSURER shall return excess Claim Reserve funds, as soon as
        practicable after the conclusion of any audit elected by CEDENT, or in the
        event
        no audit is elected, as soon as practicable after the 30 day period to elect
        to
        audit has expired.  However, in the event of threatened or pending
        litigation, the parties may agree to determine a reserve for any threatened
        or
        pending litigation and continue the Claim Reserve in that amount.

      4.        
        In the event the Claim Reserve is less than the amount necessary to pay Claims,
        CEDENT shall transfer the amount necessary to satisfy all Claims to the Claim
        Reserve trust account within 30 days from receipt of documentation from
        REINSURER of payment of claims in excess of the original Claim Reserve.

      5.        
        REINSURER shall be liable for all state or territory premium and maintenance
        taxes arising out of business reinsured hereunder.

      F.              
Terms of Coinsurance

      1.               
Expenses

      1.1.     
        REINSURER shall be responsible for the administration of agent’s or broker’s
        commissions in accordance with the written agent and broker agreements furnished
        to REINSURER related to the Policies, except as provided in Section (P)(4).
        

      2.              
Collateral
        in Trust.

      2.1      
        In the event that the coinsured premium as of December 31, 2007 exceeds 10%
        of
        the Coinsurance Premium (as defined in Subsection (E)(2)),  REINSURER shall
        establish a trust for the benefit of CEDENT and deposit in said trust collateral
        in an amount equal to the reserve liabilities of the CEDENT; said trust shall
        be
        adjusted quarterly to maintain collateral sufficient to equal all reserve
        liabilities.  Collateral assets shall be cash, cash equivalents or
        securities of a quality equivalent to NAIC 1 or 2 rated securities.  

      G.             
Assessments

      1.        
        REINSURER shall reimburse CEDENT for payment of all guarantee fund or other
        assessments incurred by CEDENT related to the Policies for calendar years
        subsequent to 2006.

      H.             
Indemnity

      1.        
        REINSURER shall not be liable for extra-contractual damages or penalties,
        including but not limited to punitive, compensatory, statutory, bad faith,
        or
        other damages, attorneys fees, fines, or liability in excess of policy limits
        which may arise from the acts or omissions of CEDENT or its agents and
        representatives, in its conduct with its own insured, policyholder, beneficiary
        or assignee of the policy or with other persons.  CEDENT agrees to
        indemnify and hold harmless REINSURER, its shareholders, directors, officers,
        agents and assigns from and against all costs and expenses (including interest,
        penalties, reasonable attorneys’, accountants’ and actuaries’ fees, and any
        other costs and expenses incident to any suit, action or proceeding), damages,
        charges, losses, deficiencies, liabilities, obligations, claims and judgments
        sustained or incurred by, or asserted against, REINSURER by any third-party
        arising from these extra-contractual damages and penalties.

      2.        
        CEDENT shall not be liable for extra-contractual damages or penalties, including
        but not limited to punitive, compensatory, statutory, bad faith, or other
        damages, attorneys fees, fines, or liability in excess of policy limits which
        may arise from the acts or omissions of REINSURER or its agents and
        representatives, in its conduct with its own insured, policyholder, beneficiary
        or assignee of the policy or with other persons.  REINSURER agrees to
        indemnify and hold harmless CEDENT, its shareholders, directors, officers,
        agents and assigns from and against all costs and expenses (including interest,
        penalties, reasonable attorneys’, accountants’ and actuaries’ fees, and any
        other costs and expenses incident to any suit, action or proceeding), damages,
        charges, losses, deficiencies, liabilities, obligations, claims and judgments
        sustained or incurred by, or asserted against, CEDENT by any third-party
        arising
        from these extra-contractual damages and penalties.

      I.               
Policy Changes

      1.        
        The REINSURER shall have the exclusive right to make changes to the terms
        and
        conditions of Policies issued or assumed by the CEDENT and reinsured hereunder
        including, but not limited to, changes in the current premium rates on the
        Policies. CEDENT will cooperate with REINSURER in any such regulatory filings
        in
        connection with the Policies, including without limitation, loss ratio
        information, request for rate adjustments and the like. If necessary, these
        filings will be made in the name of CEDENT.  CEDENT will furnish all
        information reasonably requested by REINSURER in connection with all such
        filings.  

      J.              
Errors and
        Omissions

      1.        
If either CEDENT
        or REINSURER shall unintentionally perform an obligation
        incorrectly under this Agreement or unintentionally fail to perform an
        obligation required by this Agreement, such error or omission shall be corrected
        by restoring both CEDENT and REINSURER to the positions they would have occupied
        had no such error or omission occurred.

      2.        
This provision
        shall apply only to misunderstandings, oversights or clerical
        errors relating to the administration of reinsurance covered by this
        Agreement.

      3.        
Any negligent
        or deliberate acts of commission or omission by CEDENT are the
        responsibility of CEDENT but not that of REINSURER.

      K.             
Audit of Records
        and Procedures

      1.                 
REINSURER shall
        have the right to audit all records and procedures relating to
        business covered under this Agreement. Further, CEDENT agrees to complete,
        at
        the reasonable request of REINSURER and in a manner acceptable to REINSURER
        a
        process confirming the existence of policies reinsured under this
        Agreement.

      2.                 
REINSURER and
        CEDENT shall have the right to review the Statutory Financial
        Statements and available State Examination reports of the other party in
        order
        to monitor its statutory solvency and general financial condition.

      L.              
Arbitration

      1.        
        Any dispute or difference between the parties arising out of or relating
        to this
        Agreement, including the formation or validity thereof, shall be decided
        by
        arbitration. The arbiters are empowered to decide all questions or issues
        and
        shall be free to consider this Agreement as an honorable engagement rather
        than
        merely as a legal obligation and they are relieved of all judicial formalities
        and may abstain from following the strict rules of law.  

      2.        
        Arbiters shall be selected from the AIDA Reinsurance and Insurance Arbitration
        Society, ARIAS US.  

      3.        
        To initiate arbitration, a party shall send by facsimile or overnight delivery,
        to the other party's home office, a notice demanding arbitration.  If the
        demand is sent by facsimile, a report of successful transmission shall be
        deemed
        proof of delivery and shall trigger the time period in which to name an arbiter;
        if the demand is sent by overnight delivery, a delivery receipt provided
        by the
        overnight carrier shall be deemed proof of delivery and shall trigger the
        time
        period in which to name an arbiter.  

      4.        
        There shall be three neutral and disinterested arbiters who shall be active
        or
        retired officers of health insurance or health reinsurance companies. An
        arbiter
        may not be a present or former employee, officer, director or attorney of
        CEDENT
        or REINSURER or either's affiliates. The CEDENT and REINSURER shall each
        appoint
        one of the arbiters and these two arbiters shall select the third. In the
        event
        that either company fails to appoint an arbiter within thirty days after
        it
        receives a written request from the other to do so, the other company may
        choose
        two arbiters, who shall in turn choose a third arbiter before entering
        arbitration. If the two arbiters are unable to agree upon the selection of
        a
        third arbiter within thirty days of the appointment of the second arbiter,
        each
        party shall nominate five qualified candidates, four of whom the other shall
        decline and the final selection shall be made by any random method agreed
        to by
        the arbiters.

      5.        
Each party shall
        present is case to the arbiters within 30 days following the
        appointment of the third arbiter.  The arbiters shall decide by a majority
        vote and such decision shall be final and binding on both parties. 
Judgment upon the final decision may be entered in any court of competent
        jurisdiction.  There shall be no motion to vacate or amend the arbitration
        panel’s award, except to the extent permitted by the Federal Arbitration Act.
 The cost of arbitration, including the fees of the arbiters, but not
        including attorneys fees, shall be borne by the losing party unless the arbiters
        decide otherwise.

      M.            
Insolvency

      1.        
In the event
        of the insolvency of the CEDENT, this reinsurance, with respect to
        Policies not converted to assumption reinsurance only, shall be payable directly
        to the CEDENT or to its liquidator, receiver, conservator or statutory successor
        on the basis of the liability of the CEDENT, without diminution because of
        the
        insolvency of CEDENT or because the liquidator, receiver, conservator or
        statutory successor of the CEDENT has failed to pay all or a portion of any
        claim.  

      2.        
The liquidator,
        receiver, conservator or statutory successor of the CEDENT shall
        give written notice to the REINSURER of the pendency of a claim against the
        CEDENT indicating the policy reinsured which claim would involve a possible
        liability on the part of the REINSURER within a reasonable time after such
        claim
        is filed in the conservation or liquidation proceeding or in the receivership,
        and that during the pendency of such claim, the REINSURER may investigate
        such
        claim and interpose, at its own expense, in the proceeding where such claim
        is
        to be adjudicated any defense or defenses that it may deem available to CEDENT
        or its liquidator, receiver, conservator or statutory successor.

      3.        
The expense thus
        incurred by the REINSURER shall be chargeable, subject to the
        approval of the Court, against the CEDENT as part of the expense of conservation
        or liquidation to the extent of a pro rata share of the benefit which may
        accrue
        to CEDENT solely as a result of the defense undertaken by REINSURER.

      4.        
In the event
        of the insolvency of the REINSURER, CEDENT shall have the right to
        immediately take possession of and exercise control over any and all trust
        funds
        established under this agreement, and to apply said funds to pay policy
        obligations, commissions, fees and any other legal obligations relating to
        the
        policies subject to this agreement.

      N.             
Parties to
        Agreement

      1.        
        This is an Agreement for indemnity reinsurance solely between CEDENT and
        REINSURER. The acceptance of reinsurance hereunder shall not create any right
        or
        legal relation whatever between REINSURER and any original issuing or insuring
        company (if other than CEDENT), the insured or the beneficiary under any
        policy
        reinsured hereunder, and the CEDENT shall be and remain solely liable to
        such
        insured or beneficiary under any such policy.

      2.        
        This Agreement may not be assigned by either party without the written
        permission of the other party. 

      O.              
Effective Date

      1.        
        The effective date of this Agreement is December 31, 2006.

      P.              
Terms Effective
        Upon Election to Convert to Assumption
        Reinsurance

      1.        
        On and after the effective date of any conversion, REINSURER will be responsible
        for the investigation, payment, denial, settlement or litigation under the
        Policies of claims with dates of service after the effective date of any
        conversion (“Post-Conversion Claims”).  

      2.        
        REINSURER agrees that as of the effective date of any conversion, it is
        responsible for the contractual obligations under the Policies and all liability
        under the Policies resulting from any actions taken by it on or after the
        conversion date(s), including liability which may result from the processing
        of
        Claims and Post-Conversion Claims.  However, REINSURER does not assume any
        tort liability under the Policies which may have resulted from the action
        or
        inaction of CEDENT prior to or after the effective date of any conversion,
        or
        the liability for any extra-contractual damages or penalties arising from
        such
        tort liability or otherwise, as set forth in paragraph H(1).  CEDENT’S
        agreement to indemnify and hold harmless REINSURER in paragraph H(1) extends
        to
        all liability not assumed pursuant to this Agreement.  Any liability of the
        CEDENT under this paragraph expires 24 months from the conversion date(s)
        of the
        relevant policies.  

      3.       
        Litigation.  

      3.1.     
        A reasonable time prior to the effective date of any conversion, CEDENT shall
        provide a schedule setting forth a description of each lawsuit involving
        a
        Policy subject to this Agreement and shall disclose any potential litigation
        for
        which it has received written notice.  CEDENT shall retain the defense of
        all litigation pending as of the Effective Date.  In the event any
        judgment, settlement or compromise of pending litigation contemplates continued
        coverage under a Policy reinsured by REINSURER, CEDENT shall notify REINSURER
        and REINSURER will have the right to participate in any proceeding related
        to
        the terms of continuation of coverage.

      3.2.     
        For any lawsuit filed after the effective date of any conversion, REINSURER
        shall have the sole right and shall at its own costs and expense investigate,
        pay, settle, compromise or defend any demand, threat of litigation or litigation
        arising from Policies as it deems best; provided, however:

      (a)       
In the event such
        demand, threat of litigation or litigation involves liability
        not assumed by REINSURER under this Agreement, REINSURER shall promptly notify
        CEDENT of such claim in writing, and CEDENT shall have the sole right to
        investigate, pay, settle, compromise, defend against, or otherwise deal with
        such claim as it deems best, and REINSURER shall be obligated to pay only
        that
        part of the payment, settlement, compromise or judgment attributable to contract
        liability.  If such payment, settlement, compromise or judgment arises from
        Claim(s), REINSURER’s payment will be made from the Claim Reserve. 
However, if any such payment, settlement, compromise, or judgment which is
        attributable, in whole or in part, to contract liability Claims is made after
        the return of the Claim Reserve (and the parties have not continued the Claim
        Reserve to address the risk at issue), then CEDENT shall be responsible for
        any
        portion attributable to contract liability.  

      (b)       
In the event a
        demand, threat of litigation or litigation involves both contract
        and tort liability, then the expenses of handling such demand, threat of
        litigation or litigation, shall be borne by REINSURER and CEDENT in the
        proportion of their respective exposure.

      3.3.     
        In the event service of process or other legal notice is served on CEDENT
        in any
        legal action instituted against CEDENT in connection with any Policy reinsured
        by REINSURER under this Agreement, it will promptly forward such notice to
        REINSURER at its Home Office.  In the event service of process or other
        legal notice is served on REINSURER in any legal action instituted against
        CEDENT and/or REINSURER in connection with a claim under any Policy reinsured
        by
        REINSURER under this Agreement, for which CEDENT remains liable hereunder,
        REINSURER will promptly forward such notice to CEDENT at its Home Office.

      4.          
        A reasonable time prior to the effective date of any conversion, CEDENT shall
        provide copies of agents or brokers agreements, which agents or brokers may
        have
        commissions payable to them on and after the effective date of conversion. 
REINSURER assumes only the contractual liability of any written agency or
        broker
        agreements solely with respect to the commissions provided in such agent
        agreements and due after the effective date of the conversion of the Policies
        subject to all remedies, rights of defense, set off or counterclaim that
        CEDENT
        may or might have against agents or brokers.

      5.          
        On or immediately after the effective date of conversion, CEDENT agrees that
        it
        will deliver to REINSURER all of its books, files and records, including
        all
        electronic files, spreadsheets, databases and records, forms and supplies
        pertaining to the Policies, the policyholders, and samples of its said policy
        forms and policy contracts, if any not previously provided. CEDENT agrees
        to
        cooperate with REINSURER, including but not limited to, issues related to
        electronic data transfer and interpretation, software compatibility, transfer
        of
        paper records, claims handling practices and procedures and the like.

      Q.             
        Confidentiality

      1.        
        Pursuant to the provisions of the Health Insurance Portability and
        Accountability Act of 1996 and federal regulations issued pursuant thereto,
        and/or the Gramm‐Leach‐Bliley Act, the NAIC Insurance Information and Privacy
        Protection Model Act, the NAIC Privacy of Consumer Financial and Health
        Information Model Regulation and/or similar laws and regulations as enacted
        in
        various states, the parties recognize that, in the performance of their
        respective obligations under this Agreement, they each may obtain from the
        other
        nonpublic personal or privileged information about individuals collected
        or
        received in connection with insurance transactions under the Policies. Each
        of
        the parties agrees not to disclose such information to third-parties without
        the
        individual’s written authorization unless such disclosure is otherwise permitted
        by law, and each of the parties shall also maintain the confidentiality of
        all
        other information related to the Policies and all other information denominated
        as confidential by the other party provided to it in connection with this
        Agreement and shall not disclose such information to any third parties without
        prior written consent of the other party, except as may be required by
        regulatory authorities, or pursuant to legal process.

      R.             
Entire Agreement

      1.        
        This Agreement represents the entire contract between CEDENT and REINSURER
        and
        supersedes, with respect to its subject, any prior oral or written agreement.
        There are no understandings between the parties other than those expressed
        in
        this Agreement.

      2.        
        Any change or modification to the Agreement shall be null and void unless
        made
        by amendment to the Agreement and signed by both
        parties.        

      S.               
Duration of
        Agreement

      1.        
        At the end of any accounting period, this Agreement shall automatically
        terminate if none of the Policies hereunder are in force, or if they have
        been
        assumed by a company other than CEDENT.

      T.              
Severability
        of Provisions

      1.        
        If any provisions of this Agreement were declared null and void by a regulatory
        authority in any jurisdiction within which either party operates, the remaining
        provisions shall nevertheless continue to have full force and effect.

      U.             
Other Conditions

      1         
        The obligations of the CEDENT and the REINSURER to consummate the transactions
        described hereunder are expressly subject to:

      (i)        
the approvals
        of the insurance commissioners, directors, or superintendents, as
        the case may be, of the insurance departments necessary for the consummation
        of
        the transactions contemplated by this Agreement, and such approvals shall
        be in
        full force and effect, and shall not impose upon either the CEDENT or the
        REINSURER any material conditions or other requirements that would impose
        upon
        either party any material additional costs;

      (ii)       
the REINSURER
        having discovered no material errors, omissions or liabilities
        previously undisclosed to it in the due diligence investigation and
        documentation provided the REINSURER by the CEDENT prior to the date
        hereof;

      (iii)      
the CEDENT and
        the REINSURER having all requisite corporate power and authority
        to execute and deliver the Agreement and to consummate the transactions
        contemplated hereunder; and

      (iv)      
there being no
        material change in the amount of the Policy Reserves or the
        annualized premium in force of the CEDENT from December 15, 2006 to the date
        of
        the execution of the Agreement. Notwithstanding the foregoing, a "material
        change" shall be deemed to have occurred if, on the Effective Date of the
        Agreement the CEDENT's reserves are less than $88,000, or its annualized
        premium
        in force is less than $454,000.

      V.             
Execution of
        Agreement

      IN
        WITNESS OF THE AGREEMENT that is detailed in the Provisions and attached
        Schedules, the PARTIES have had their respective officers execute this Agreement
        in duplicate below.

      TEXAS IMPERIAL LIFE INSURANCE COMPANY

      Houston,
        Texas

      By: /s/ Theodore C.
        Miller______________________ 

      Title: Sr. Vice
        President________________________ 

      Witness: /s/ Lucinda A.
        Knight___________________ 

      RESERVE NATIONAL INSURANCE
        COMPANY
Oklahoma City, Oklahoma

      By: /s/ Kempner Joe
        Cole______________________ 

      Title:
President______________________________

      Witness: /s/ Orin Crossley______________________ 

       

       

       

       

       

       

       

      2672

    

    
      SCHEDULE
        I

      A.       
Policies Subject to Reinsurance

      1.        
        The Medicare supplement policies and the hospital indemnity policies, if
        any,
        included on the attached Exhibit “A”.

       

      SCHEDULE
        II

      A.       
Coinsurance Percentages

      Policies                                                                          
Quota Share Reinsured

      All policies in Schedule
        I                                                                
100%Administrative Service Agrmt AC

 

    
      Exhibit
        10.11

      ADMINISTRATIVE
        SERVICE AGREEMENT

      THIS
        AGREEMENT is made this 31st_____ day of December, 2006 by and between
        Reserve National Insurance Company (hereinafter referred to as “Administrator”)
        and American Capitol Insurance Company (hereinafter referred to as
“Insurer”).

      RECITALS

      WHEREAS,
        Insurer is a legal reserve insurance company licensed pursuant to the Texas
        Insurance Code (“Code”); and

      WHEREAS,
        Administrator is a capital stock insurance company domiciled in Oklahoma,
        and
        has registered or will register as a third party administrator to the extent
        required by applicable law; and

      WHEREAS,
        Insurer and Administrator are desirous of entering into an agreement reflecting
        the rights of the parties hereto with respect to the administration of the
        insurance business of Insurer subject to the Coinsurance Agreement (“Coinsurance
        Agreement”) which was entered into by and between Administrator and Insurer
        effective on December 31, 2006.

      WITNESSETH

      NOW,
        THEREFORE, for and in consideration of these premises and of the mutual
        covenants and agreements hereinafter set forth, the parties hereto agree
        as
        follows:

      1.        
        The Insurer agrees to provide Administrator with the information and support
        reasonably required by the Administrator to perform its duties pursuant to
        this
        Agreement.

      2.        
        The Administrator shall perform the following duties:

      A.       
        Prepare and mail premium notices to the insureds reasonably in advance of
        the
        premium due dates in accordance with guidelines established by Insurer and
        agreed to by Administrator. Billings shall be run and mailed at least once
        a
        month.

      B.        
        Prepare and mail past due notices and lapse notices. With the cooperation
        of
        Insurer, prepare and send reinstatement applications consistent with policy
        provisions. Upon receipt of completed reinstatement applications, Administrator
        will perform appropriate underwriting and Administrator will proceed with
        policy
        issuance or denial in accordance with the underwriting guidelines applied
        by
        Administrator to its similar business including preparation and issuance
        of
        policies and policy certificates.

      C.       
        Receive claims, verify coverage, request and collect proof of claim, review
        and
        pay claims in accordance with the Coinsurance Agreement.  Administrator
        agrees to be current in awareness of and compliance with the applicable prompt
        payment laws.

      D.       
        Collect and record premiums as provided in the Coinsurance Agreement. 
Initial correspondence sent by Administrator to any policyholder shall notify
        and summarize to said policyholder the relationship among Insurer,
        Administrator, and the policyholder. The written notice must be approved
        by
        Insurer before distribution to policyholders and must state the amount of
        premium specified. The payment of premiums to the Administrator by or on
        behalf
        of an insured is considered to have been received by the Insurer. However,
        the
        payment of return premium by the insurer to the Administrator is not considered
        payment to the insured.

      E.        
        Maintain administrative and statistical records which will determine the
        insurance status of each insured or certificate holder including, but not
        limited to, the effective dates, termination dates, nature of coverage, lapse
        dates, benefit assignments, beneficiary designations (if applicable), and
        appropriate address of record. This record keeping shall include the posting
        of
        premium payments.

      F.        
        Maintain all licenses required by applicable statutes, rules and regulations.
        Conduct its activities pursuant to this Agreement in compliance with all
        applicable statutes, rules or regulations or pursuant to an exemption
        therefrom.

      G.       
        Handle all routine correspondence and other general clerical administration
        of
        the insurance plans subject to this Agreement, maintain all files relating
        to
        such correspondence and general clerical administration.

      H.       
        Make available to Insurer all information necessary to maintain its general
        ledger and prepare statutory financial statements.

      3.        
        Insurer hereby agrees to remain solely liable for and covenants to indemnify
        and
        hold harmless Administrator against any and all loss, cost, expense, claims,
        damages, liabilities and expenses including legal fees and costs (“Loss” or
“Losses”) assessed against or incurred by Administrator with respect to any
        action, demand, proceeding, suit, settlement or compromise concerning claims
        arising out of or related to: (i) the insurance administered under this
        Agreement pursuant to actions or inactions of the Administrator taken or
        not
        taken in reliance upon instructions provided by the Insurer; or (ii) the
        willful
        misconduct, negligent or bad faith acts or omissions of the Insurer or the
        Insurer’s agents, servants or employees. Administrator shall remain solely
        liable for the willful misconduct, negligent or bad faith acts or omissions
        of
        Administrator and shall indemnify and hold harmless Insurer for any loss
        or
        losses Insurer may sustain by virtue of such acts.

      4.        
        Administrator shall maintain adequate books and records of all transactions
        among it, Insurer and the insureds under this Agreement and the business
        being
        administered in connection therewith to comply with regulatory examination
        requirements and statutory retention requirements.

      5.        
        It is understood and agreed that all records in any form including film or
        electronic media, pertaining to each covered plan hereunder (including but
        not
        limited to, all individual applications, files and correspondence related
        thereto) which are generated by Administrator are the property of Insurer.
        It is
        understood and agreed that Insurer shall have access to all records to the
        extent necessary to fulfill contractual obligations to insureds, comply with
        its
        statutory and regulatory obligations, and conduct audits of Administrator.

      6.        
        The initial term of this Agreement shall be for a period of one (1) year
        and
        shall commence on the effective date of this Agreement. Either party may
        terminate the Agreement at any time on or after the expiration of the initial
        term by giving ninety (90) days prior written notice.  This Agreement will
        automatically terminate in the event that Administrator’s obligations under the
        Coinsurance Agreement are converted to assumption reinsurance with respect
        to
        those policies which are subject to assumption reinsurance. Unless otherwise
        terminated, the Agreement shall be automatically renewed for additional one
        year
        terms. Notwithstanding anything to the contrary, in the event of fraud,
        bankruptcy or insolvency of one party, this Agreement may be terminated
        immediately by the other party upon written notice. Furthermore, in the event
        of
        a breach of any of the conditions or promises contained in this Agreement
        or the
        failure to perform any of the duties by one party, if the breach or failure
        is
        not cured within 30 days after written notice, this Agreement may be terminated
        immediately by the other party upon written notice. 

      7.        
        No rights, interests or obligations arising hereunder shall be subject to
        assignment by either party, except with written consent of the other party.
        Any
        assignment of rights, interests or obligations will be ineffective.

      8.        
        No amendment or modification of, or supplement to, this Agreement shall be
        binding unless in writing and duly executed and delivered by each party hereto
        to the other party.

      9.        
        It is understood and agreed that the Administrator shall be considered an
        independent contractor. Nothing contained herein shall be construed as
        constituting a partnership, employment relationship, or joint venture between
        the Administrator and Insurer. This Agreement shall be binding upon the parties
        hereto and their respective successors and assigns.

      10.      
        Pursuant to the provisions of the Health Insurance Portability and
        Accountability Act of 1996 and federal regulations issued pursuant thereto,
        and/or the Gramm‐Leach‐Bliley Act, the NAIC Insurance Information and Privacy
        Protection Model Act, the NAIC Privacy of Consumer Financial and Health
        Information Model Regulation and/or similar laws and regulations as enacted
        in
        various states, the parties recognize that, in the performance of their
        respective obligations under this Agreement, they each may obtain from the
        other
        nonpublic personal or privileged information about individuals collected
        or
        received in connection with insurance transactions under the policies. Each
        of
        the parties agrees not to disclose such information to third-parties without
        the
        individual’s written authorization unless such disclosure is otherwise permitted
        by law, and each of the parties shall also maintain the confidentiality of
        all
        other information related to the policies and all other information denominated
        as confidential by the other party provided to it in connection with this
        Agreement and shall not disclose such information to any third parties except
        as
        may be required by regulatory authorities, or pursuant to legal process;
        provided however, if any state in which policies have been issued have more
        restrictive confidentiality requirements, the parties will comply with those
        laws to the extent applicable.  

      11.      
        This Agreement shall be construed in accordance with and governed by the
        laws of
        the State of Oklahoma.

      12.      
        This Agreement contains the entire agreement of the parties regarding the
        subject matter hereof and supersedes any prior or contemporaneous oral or
        written agreement.

      13.      
        If any clause(s) of this agreement shall be held invalid by a court of law,
        the
        remaining clauses shall survive and remain enforceable.

      14.      
        Effectiveness of Notice - Notices mailed by registered or certified mail,
        return
        receipt requested are effective three days after mailing. Notices that are
        mailed hereunder shall be given to the parties at the following addresses,
        or at
        such other address for a party as shall be specified by notice:

      If to
        Administrator:

      Reserve National Insurance
        Company

      6100 Northwest Grand
        Blvd.

      Oklahoma City, OK
        73118

      ATTN:  Orin
        Crossley

       

      If to Insurer:

      American Capitol Insurance
        Company

      c/o UTG

      5250 South Sixth
        Street

      Springfield, Illinois 
62703

      ATTN:  Ted
        Miller

      or to such
        other address as hereafter shall be furnished as provided in this Section
        15 by
        any of the parties hereto to the other parties hereto.

      IN
        WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
        as
        of the date and year first above written.

       

      Reserve National Insurance Company
        

      By:  /s/ Kempner Joe
        Cole__________________ 
      
       Kempner Joe Cole, President

       

       

      American Capitol Insurance Company

      By:  /s/ Theodore C.
        Miller__________________ 
      
    Theodore C. Miller, Senior Vice-President

      2618

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