Document:

usallianceex105.htm

EXHIBIT 10.5

 

BULK REINSURANCE AGREEMENT

 

NUMBER : 2541-13AB15

 

between

 

US ALLIANCE LIFE AND SECURITY COMPANY

 

4123 SW Gage Center Drive, Suite 240

 

Topeka, KS 66604

 

(The Ceding Company)

 

and

 

OPTIMUM RE INSURANCE COMPANY

 

1345 River Bend Drive, Suite 100

Dallas, TX 75247

(The Reinsurer)

 

 

 

 

Respecting individual Accidental Death Benefit Policies and Riders described in SCHEDULE B, issued by US ALLIANCE LIFE AND SECURITY COMPANY and reinsured on an Automatic Bulk basis from April 1, 2013.

  

  

  

 

TABLE OF CONTENTS

 

	
ARTICLE 1

	
BUSINESS COVERED - CAPACITY

 

	
ARTICLE 2

	
EXCLUSIONS FROM COVERAGE

 

	
ARTICLE 3

	
TERM OF AGREEMENT AND TERMINATION REQUIREMENTS

 

	
ARTICLE 4

	
CHANGES IN RETENTION AND RECAPTURE

 

	
ARTICLE 5

	
LOSS SETTLEMENT

 

	
ARTICLE 6

	
PREMIUMS

 

	
ARTICLE 7

	
ACCOUNTING

 

	
ARTICLE 8

	
ERRORS AND OMISSIONS

 

	
ARTICLE 9

	
ACCESS TO RECORDS

 

	
ARTICLE 10

	
REPORTING

 

	
ARTICLE 11

	
CONFIDENTIALITY

 

	
ARTICLE 12

	
INSOLVENCY

 

	
ARTICLE 13

	
ARBITRATION

 

	
ARTICLE 14

	
DEFERRED ACQUISITION COST TAX

 

	
ARTICLE 15

	
EXECUTION

 

 

* * * * * * * * * * * * * *

 

SCHEDULES

 

	
SCHEDULE A

	
RETENTION AND REINSURANCE LIMITS

 

	
SCHEDULE B

	
POLICY FORM #ADB

 

	
SCHEDULE C

	
BULK BILLING FORM

 

  

  

  

By this Agreement, US ALLIANCE LIFE AND SECURITY COMPANY, a corporation organized under the laws of the State of Kansas, hereinafter referred to as "THE COMPANY", and OPTIMUM RE INSURANCE COMPANY, a corporation organized under the laws of the State of Texas, hereinafter referred to as "OPTIMUM RE", mutually agree to reinsure on the following terms and conditions.

 

  

  

  

 

ARTICLE 1 - BUSINESS COVERED - CAPACITY

 

 

This Agreement applies to the reinsurance of individual Accidental Death Benefit (ADB) Policies and Riders specified in SCHEDULE B and issued by THE COMPANY and dated April 1, 2013, or later.

 

OPTIMUM RE will automatically assume all risks above THE COMPANY'S retention as specified in SCHEDULE A, but not to exceed the maximum issue limit of reinsurance per life as specified in SCHEDULE A. No automatic coverage will be accepted if the total ADB coverage in-force and applied for in all companies exceeds the maximum participation limit as specified in SCHEDULE A.

 

ARTICLE 2 - EXCLUSION FROM COVERAGE

 

This Agreement specifically excludes hereunder, losses not covered under the written terms and conditions of THE COMPANY'S policies. Also excluded is coverage over attained age 70. Furthermore, all group coverage and business sold through worksites shall be excluded under this Agreement.

 

ARTICLE 3 - TERM OF AGREEMENT & TERMINATION REQUIREMENTS

 

This Agreement shall take effect on April 1, 2013, and shall apply to business covered hereunder. The first Agreement Year shall be April 1, 2013 through December 31, 2013. Agreement years will run from January 1st through December 31st thereafter.

 

Termination of the Agreement may occur on any December 31st by either party giving the other party sixty (60) days' prior written notice, subject to the conditions of Article 4 being met.

 

  

  

  

 

ARTICLE 4 - CHANGES IN RETENTION AND RECAPTURE

 

At the beginning of each Agreement year, THE COMPANY will have the right to adjust its retention on all business (in force and new business) by giving 60 days prior written notice to OPTIMUM RE. Reductions in retention are subject to OPTIMUM RE's approval.

 

Recapture due to an increase in retention or termination applying to in-force business under this Agreement, is subject to OPTIMUM RE's approval when claims from inception exceed premiums from inception.

 

ARTICLE 5 - LOSS SETTLEMENT

 

5.1. Liability

 

OPTIMUM RE will be liable to THE COMPANY for the benefits reinsured hereunder to the same extent as THE COMPANY is liable to the insured for such benefits, and all reinsurance will be subject to the terms and conditions of the policy under which THE COMPANY is liable. OPTIMUM RE will also be liable for its proportionate share of interest on claim payments at the usual interest rate allowed by THE COMPANY.

 

5.2. Notice

 

In the event of a claim for which reinsurance coverage is provided hereunder, THE COMPANY shall promptly notify OPTIMUM RE upon receipt of information regarding such claim. THE COMPANY shall submit to OPTIMUM RE a written request for claim payment, including the following information:

 

	
1.  

	
Name of the policyholder

 

	
2.  

	
The claimant's name

 

	
3.  

	
Date of claim

 

	
4.  

	
Claim papers relating to the claim including Certificate of Death

 

	
5.  

	
Amount of ADB insurance issued by THE COMPANY and the amount of ADB reinsurance for which the claim is being submitted.

 

  

  

  

 

5.3. Authorization for Payment

 

On all claims involving reinsurance, THE COMPANY must obtain OPTIMUM RE's non-binding opinion regarding the reinsurance liability prior to acknowledgment of its liability to the claimant.

 

5.4. Payment

 

On death claims, OPTIMUM RE will pay its share in a lump sum to THE COMPANY without regard to the form of claim settlement. OPTIMUM RE is not responsible for usual claim expenses that THE COMPANY incurs in claim settlement such as compensation of employees and routine investigative expenses.

 

5.5. Contest

 

THE COMPANY will advise OPTIMUM RE of its intention to contest, compromise or litigate a claim or rescind a contract involving reinsurance. If, after reviewing the complete file, OPTIMUM RE agrees in writing with THE COMPANY's intention, then OPTIMUM RE agrees to pay a share of the expenses incurred by THE COMPANY in contesting or investigating a claim on a reinsured policy or in rescinding a reinsured policy, in proportion to the respective liabilities of OPTIMUM RE and THE COMPANY. Compensation of officers and employees of THE COMPANY is not deemed a claim expense.

 

If OPTIMUM RE declines to be a party to a claim contest, OPTIMUM RE will discharge any and all liability by payment of its full share of the claim to THE COMPANY according to the terms and conditions of this Agreement.

 

5.6. Punitive Damages

 

OPTIMUM RE will not participate in punitive, compensatory, or statutory damages or penalties which are awarded against THE COMPANY as a result of an act, omission or course of conduct committed solely by THE COMPANY in connection with the insurance reinsured under this Agreement.

 

  

  

  

 

ARTICLE 6 - PREMIUMS

 

As premiums for the reinsurance provided hereunder, THE COMPANY shall pay annually to OPTIMUM RE the rate set forth:

 

Coverage                                                               Annual Premiums per $1,000

 

Accidental Death Benefit                                                       $0.68

 

No allowances or premium taxes are payable by OPTIMUM RE to THE COMPANY.

 

These are non-guaranteed annually renewable premiums. They are set for the period between the effective date of the Agreement and the following December 31st. These premiums renew automatically for a period of one year at every January 1st unless a 30-day written notice of a change in the annual premiums has been given to THE COMPANY.

 

It is agreed that the business reinsured hereunder shall be on a non-refunding basis and shall not be subject to an experience refund.

 

  

  

  

 

ARTICLE 7 - ACCOUNTING

 

Within 30 days at the end of the first Agreement year and for each and every successive Agreement year, THE COMPANY will submit to OPTIMUM RE a listing of ADB benefit coverages in-force as of December 31st and will remit annual reinsurance premiums for the coming year based on that in-force.

 

Included with this premium payment will be an adjustment for the previous year's increase or decrease in the amount in-force, as per SCHEDULE C. New issues and amount increases during the previous year will be charged the annual reinsurance rate multiplied by one-half. Lapses and amount decreases will be credited the annual rate multiplied by one-half. The adjustment to the first Agreement year will be prorated based upon the number of days from the effective date until December 31st of that year, divided by 365.

 

The net balance is due to OPTIMUM RE with the bulk listing. If a balance is due THE COMPANY, OPTIMUM RE will remit payment within 30 days of receipt of listing.

 

The payment of premium shall be a condition precedent to the liability of OPTIMUM RE under this Agreement. If any premium remains unpaid for more than 60 days after the due date, OPTIMUM RE may send to THE COMPANY a formal demand for immediate payment. If THE COMPANY does not comply with this demand within 15 days, then OPTIMUM RE may cancel this Agreement for non-payment of premiums; however, any unpaid premium to the termination date would be due with interest.

 

Should this Agreement be terminated, within 30 days of such termination, a final in force listing as of the termination date, reflecting increases and/or decreases for the year just past, shall be submitted by THE COMPANY to OPTIMUM RE so that a pro rata adjustment may be calculated for an accurate final premium settlement.

 

In the event this Agreement is terminated, OPTIMUM RE shall continue to be liable to THE COMPANY for the portion of loss on reinsurance claims for ADB that occurred prior to the termination date, whether or not such claims have been reported to THE COMPANY.

 

  

  

  

 

ARTICLE 8 - ERRORS AND OMISSIONS

 

It is expressly understood and agreed that if failure to comply with any terms of this Agreement is shown to be unintentional and the result of administrative errors or omissions, on the part of either THE COMPANY or OPTIMUM RE, both THE COMPANY and OPTIMUM RE shall be restored to the position they would have occupied had no such error or omission occurred. It is understood, however, that THE COMPANY shall be liable for amounts not reported for reinsurance due to the practice of consciously performing a limited alpha index search on their applications. This article shall not be construed to initiate OPTIMUM RE's liability if any conditions of Article 10 are not met.

 

This provision shall apply only to oversights, misunderstandings or clerical errors relating to the administration of reinsurance covered by this Agreement and not to the administration of the insurance provided by THE COMPANY to its insured. Any negligent or deliberate acts or omissions by THE COMPANY regarding the insurance provided, are the responsibility of THE COMPANY and its liability insurer, if any, but not that of OPTIMUM RE.

 

Furthermore, the deviating party will undertake to identify, through a prudent review of its records, all other errors and omissions of the same or similar category and correct them within a mutually negotiated time frame.

 

If seven (7) years have elapsed since the error or oversight occurred, there will not be rectification as above, unless both OPTIMUM RE and THE COMPANY agree to such rectification.

 

ARTICLE 9 - ACCESS TO RECORDS

 

OPTIMUM RE shall have the right to inspect, make copies of, or reproduce, at any reasonable time, at the office of THE COMPANY, all books and documents relating to reinsurance under this Agreement.

 

  

  

  

 

ARTICLE 10 — REPORTING

 

THE COMPANY shall promptly report all transactions to OPTIMUM RE. In particular, but not limited to, new business and terminations.

 

Should THE COMPANY encounter, or expect to encounter, delays in reporting its business; it shall promptly:

 

	
1.  

	
Notify OPTIMUM RE of the situation; and

 

	
2.  

	
Present OPTIMUM RE with a plan of action to correct the situation, including a time frame to solve the problem.

 

OPTIMUM RE, upon receipt of the above, may request that THE COMPANY:

 

	
1.  

	
Make modifications to the plan;

 

	
2.  

	
Pay estimated premiums for the duration of the reporting problem; and/or

 

	
3.  

	
Report larger individual exposures manually, until the situation is resolved.

 

In any case where the above is not met, or if the plan is not accepted by both OPTIMUM RE and THE COMPANY, or when the plan is not adhered to; OPTIMUM RE reserves the right to deny liability on claims or limit refunds of reinsurance premiums.

 

  

  

  

 

ARTICLE 11 — CONFIDENTIALITY

 

THE COMPANY and OPTIMUM RE agree that Customer and Proprietary Information will be treated as confidential. Customer Information includes, but is not limited to, medical, financial, and other personal information about proposed, current, and former policy owners, insureds, applicants, and beneficiaries of policies issued by THE COMPANY. Proprietary Information includes, but is not limited to, business plans and trade secrets, mortality and lapse studies, underwriting manuals and guidelines, applications and contract forms. Furthermore, the specific terms and conditions of this Agreement, cannot be disclosed to any other party for competitive use, unless prior written approval is obtained.

 

Customer and Proprietary Information will not include information that:

 

	
a.  

	
is or becomes available to the general public through no fault of the party receiving the Customer or Proprietary Information (the "Recipient");

 

	
b.  

	
is independently developed by the Recipient;

	
c.  

	
is acquired by the Recipient from a third party not covered by a confidentiality agreement; or

 

	
d.  

	
is disclosed under a court order, law or regulation.

 

The parties will not disclose such information to any other parties unless agreed to in writing, except as necessary for retrocession purposes, as requested by external auditors, as required by court order, or as required or allowed by law or regulation.

 

THE COMPANY acknowledges that OPTIMUM RE can aggregate data with other companies reinsured with OPTIMUM RE as long as the data cannot be identified as belonging to THE COMPANY.

 

  

  

  

 

ARTICLE 12 - INSOLVENCY

 

12.1. Payment of Claims

 

In the event of insolvency of THE COMPANY, all claims under this Agreement will be paid by OPTIMUM RE directly to THE COMPANY, its liquidator, receiver or statutory successor. OPTIMUM RE's share of claims will be paid without diminution because of the insolvency of THE COMPANY, provided that all reinsurance premiums have been duly paid and subject to Article 12.4.

 

OPTIMUM RE shall be liable only for the claims actually paid by THE COMPANY to the insured or its beneficiary on amounts reinsured and shall not be or become liable for any amounts or reserves to be held by THE COMPANY on policies reinsured under this Agreement.

 

12.2. Notice to OPTIMUM RE

 

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, OPTIMUM 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.

 

12.3. Expenses

 

The expenses incurred by OPTIMUM RE will be charged, subject to court approval, against THE COMPANY as expenses of liquidation to the extent of a proportionate share of the benefit which accrues to THE COMPANY as a result of the defenses undertaken by OPTIMUM RE. Where two or more reinsurers are involved and a majority in interest elects to defend a claim, the expenses will be apportioned in accordance with the terms of the reinsurance agreements as if the expenses had been incurred by THE COMPANY.

 

12.4. Right to Offset

 

In the event of the insolvency of either OPTIMUM RE or THE COMPANY, any amounts owed by OPTIMUM RE to THE COMPANY and by THE COMPANY to OPTIMUM RE with respect to this and all other Agreements between OPTIMUM RE and THE COMPANY, shall be offset against each other with the balance to be paid by the appropriate party.

 

  

  

  

 

ARTICLE 13 - ARBITRATION

 

13.1. Principle

 

The parties express their formal intention to resolve any differences arising from the interpretation or execution of this Agreement in accordance with equity and usage rather than according to strict legal rules. Any difference that cannot be resolved by the parties shall be submitted to arbitration by written notice sent by one party to the other. The location for arbitration shall be in Dallas, Texas.

 

13.2. Arbitrators

 

There shall be three arbitrators who shall be officers or retired officers of life insurance or reinsurance companies other than the parties to the Agreement or their subsidiaries. Ex-officers of either parties or their subsidiaries will also not be candidates. Each of the parties shall appoint one of the arbitrators and these two arbitrators shall select the third. In the event that either party should fail to choose an arbitrator within thirty days after the other party has given notice of its arbitrator appointment, that party may choose two arbitrators who shall in turn choose a third arbitrator before entering arbitration.

 

Any arbitrator who does not perform his or her duties, or resigns, will be replaced by the party who originally selected that arbitrator.

 

13.3. Matters In Dispute

 

The parties will state together or separately the subjects in dispute and submit them in writing to the arbitrators along with the necessary documents.

 

13.4. Procedures

 

The arbitrators must themselves establish the procedure to be followed: they are exempt from any judicial formality or rule. They can adjudicate and are empowered to act as mediators. They shall decide how the arbitration costs are apportioned.

 

  

  

  

 

13.5. Decision

 

The award rendered by the majority, must be in writing, give the reasons for the decision and be signed by each arbitrator. The parties agree to abide by the decision rendered and to consider the award as final and binding.

 

13.6. Applicable Laws

 

Should there be improprieties in the arbitration process or if one of the parties objects to the implementation of the arbitration process, the laws of the State of Texas shall then apply.

 

  

  

  

 

 

ARTICLE 14 - DEFERRED ACQUISITION COST TAX

 

THE COMPANY and OPTIMUM RE mutually agree to the following pursuant to

 

Section 1.848-2(g)(8) of the Income Tax Regulations issued December 29,

 

1992 of the Internal Revenue Code of 1986.

 

	
1.  

	
The Party with net positive consideration for the Agreement(s) for each taxable year shall compute specified policy acquisition expenses without regard to the general deductions limitation of Section 848(c)(1).

 

	
2.  

	
THE COMPANY and OPTIMUM RE agree to exchange information pertaining to the amount of net consideration as determined for all reinsurance agreements in force between them to ensure consistency or as may otherwise be required by the Internal Revenue Service.

 

	
3.  

	
THE COMPANY will submit a schedule to OPTIMUM RE by June 1st of its calculation of the net consideration for the preceding calendar year. This calculation shall be accompanied by a statement signed by an officer of THE COMPANY stating that THE COMPANY will report such net consideration in its tax return for the preceding calendar year.

 

	
4.  

	
OPTIMUM RE shall advise THE COMPANY if it disagrees with the amounts provided and OPTIMUM RE and THE COMPANY agree to amicably resolve any difference. The amounts provided by THE COMPANY shall be presumed correct if it does not receive a response from OPTIMUM RE at the latest 30 days after receipt by OPTIMUM RE of these amounts or by May 30th of the current year.

 

  

  

  

 

ARTICLE 15 - EXECUTION

 

15.1. Duration

 

This Agreement will be effective on April 1, 2013. It may be amended by mutual consent of THE COMPANY and OPTIMUM RE at any year-end or terminated in accordance with Article 3 and Article 4.

 

15.2. Parties to the Agreement

 

This is an agreement solely between THE COMPANY and OPTIMUM RE. There will be no legal relationship between OPTIMUM RE and any person having an interest of any kind in any of THE COMPANY's insurance, or between OPTIMUM RE and any other reinsurer, or between OPTIMUM RE and any other third party.

 

15.3. Written Agreement

 

A.        Entirety

 

This Agreement shall constitute the entire agreement between THE COMPANY and OPTIMUM RE with respect to the business reinsured hereunder. There are no understandings between THE COMPANY and OPTIMUM RE other than as expressed in this Agreement.

 

B.        Amendments

 

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

 

C.        Waiver

 

A waiver of any provision(s) of this Agreement shall constitute a waiver only with respect to the particular circumstance for which it is given and not a waiver for any future circumstances.

 

D.        Severability

 

If any section or provision of this Agreement is determined to be invalid or unenforceable, such determination will not impact or affect the validity or the enforceability of the remaining sections or provisions of this Agreement.

 

  

  

  

 

15.4. Change of Control/Assignment

 

Neither THE COMPANY nor its liquidator, receiver, or statutory successor will, without the prior written consent of OPTIMUM RE, sell, assign, transfer, or otherwise dispose of this Agreement, or any interest in this Agreement, by voluntary or involuntary act.

 

15.5. Compliance

 

THE COMPANY represents that to the best of its knowledge and belief it is, and shall use its best efforts to continue to be, in substantial compliance in all material respects with all laws, regulations, and judicial and administrative orders applicable to the business reinsured under this Agreement, including but not limited to, privacy laws and the maintenance of an effective anti-money laundering policy, (collectively, the "Law"). Neither THE COMPANY nor OPTIMUM RE shall be required to take any action under this Agreement that would result in it being in violation of the Law, which shall include requirements enforced by the U.S. Treasury Department Office of Foreign Assets Control and Terrorist Financing Act. THE COMPANY and OPTIMUM RE acknowledge and agree that a claim under this Agreement is not payable if payment would cause OPTIMUM RE to be in violation of the Law. Should either party discover a reinsurance payment has been made in violation of the Law, it shall notify the other party and the parties shall cooperate in order to take all necessary corrective actions.

 

  

  

  

 

15.6. Signatures

 

In witness of the above, this Amendment is signed in duplicate

 

 

FOR:    US ALLIANCE LIFE AND SECURITY COMPANY

 

 

BY: /s/ Jack H. Brier    DATE: 12/23/2013

 

Name: Jack H. Brier    TITLE: President

 

 

 

BY: /s/ Jeff Brown    DATE: 12/23/2013

 

Name: Jeff Brown    TITLE: EVP & COO

 

 

 

FOR:    OPTIMUM RE INSURANCE COMPANY

 

 

BY: /s/ Sebastien Blondeau    DATE: 9/27/2013

 

Name: Sebastien Blondeau    TITLE: President & CEO

 

 

 

BY: /s/ Serge Goulet    DATE: 9/27/2013

 

Name: Serge Goulet    TITLE: Managing Director

 

  

  

  

 

SCHEDULE A

 

RETENTION AND REINSURANCE LIMITS

 

US ALLIANCE LIFE AND SECURITY COMPANY

 

	  	ADB  
	
THE COMPANY's Retention

	  
	
Per Life

 

	
$0

	
Maximum Issue Limit

	  
	
Per Life

 

	
$300,000

	
Maximum Participation Limit

	  
	
Per Life

 

	
$300,000

	
Maximum Amount Reinsured

	  
	
Per Life

 

	
$300,000

	
Portion of Alphabet

	  
	
Reinsured by OPTIMUM RE

	
A - Z

 

 

  

  

  

 

SCHEDULE B

 

 

POLICY FORM #ADB

 

  

  

  

 

USALLIANCE

 

_________________________________________________________________________________________________________________________________________________

US Alliance Life and Security Company

 

PO Box 4026

Topeka, KS 66604

 

ACCIDENTAL DEATH BENEFITS RIDER

 

US Alliance Life and Security Company has issued this Rider as a part of the Policy to which it is attached, provided the benefit is listed on the Policy Schedule page.

 

This Rider has no cash value. All terms of the Policy which are not inconsistent with this Rider apply to this Rider.

 

ACCIDENTAL DEATH BENEFIT

If the Insured dies of Accidental Injury the Company will pay the Accidental Death Benefit shown on a Policy Schedule page to the Beneficiary. The Company will pay such a benefit in addition to the Death Benefit payable under the Policy, if the Insured's death:

1.     Was caused directly by an Accidental Injury, independent of all other causes;

2.     Occurred within 180 days from the date of the Accidental Injury;

3.     Occurred prior b the Accidental Death Benefit Expiry Date shown on a Policy Schedule page; and

4.     Is not excluded or limited as listed in the Accident Death Benefits Exclusions and Limitations provision.

 

DEFINITIONS

Accidental Death Benefit is the amount the Company pay under the terms of this Rider.

Accidental Injury means an accidental bodily injury sustained by the Insured which is a direct result of an accident, independent of disease, bodily or mental illness, infirmity, or any other cause, which occurs while this Rider is in force.

Act of War means any act particular to military, naval or air operations in time of War.

War means including, but not limited to, declared war and armed aggression by one or more countries resisted on orders of any other country, combination of countries or international organization.

 

ACCIDENTAL DEATH BENEFIT EXCLUSIONS AND LIMITATIONS

 

The Company will not pay an Accidental Death Benefit if the Insured's death results from, or is materially contributed to by, any of the following:

1     Death caused or contributed to by disease or infirmity of mind or body, or medical or surgical treatment for such disease or infirmity;

2.    An infection not occurring as a direct result or consequence of the accidental bodily injury;

3.    Death caused or contributed to by any attempt at suicide, or intentionally self-inflicted injury, while sane or insane;

4.    Death caused or contributed to by travel in or descent from an aircraft, if the insured acted in a capacity other than as a passenger;

5.    Death caused or contributed to by travel in an aircraft or device used for testing or experimental purposes, used by or for any military authority, used for travel beyond the earth's atmosphere;

6.    Death caused or contributed to by "War" or "Act of War;

7.    Death caused or contributed to by active participation in a riot, insurrection or terrorist activity;

8.    Death occurring while the proposed insured is incarcerated;

 

  

  

  

 

ACCIDENTAL DEATH BENEFIT EXCLUSIONS AND LIMITATIONS Continued

9.    Death caused or contributed to by committing or attempting to commit a felony;

10.  Death caused or materially contributed to by voluntary intake or use by any means of:

(a) Any drug, unless prescribed or administered by a physician and taken in accordance with the physician's instructions, or;

11.  Death caused or contributed to by intoxication as defined by the jurisdiction where the accident occurred;

12.  Death caused or contributed to by riding or driving an air, land or water vehicle in a race, speed or endurance contest;

13.  Death occurring before the insured's first birthday;

14.  Death caused or contributed to by bungee jumping;

15.  Death caused or materially contributed to by participation in an illegal occupation or activity;

16.  Death caused or contributed to by rock or mountain climbing; and/or

17.  Death caused or contributed to by aeronautics (hang-gliding, skydiving, parachuting, ultralight, soaring, ballooning and parasailing).

 

TERMINATION OF ACCIDENTAL DEATH BENEFIT

This rider terminates the earlier of :

1.    The Accidental Death Benefit Expiry Date shown on a Policy Schedule page;

2.    The date the Policy is terminated for any reason, or is continued under a nonforfeiture option;

3.    The date of receipt of a written request from You for termination; or

4.    Subject to the Grace Period provisions, the date premiums for this Rider are not paid when due.

 

Termination will not prejudice the payment of benefits for any accident that occurred while this Rider was in force.

 

PAYMENT OF ACCIDENTAL DEATH BENEFIT

The Accidental Death Benefit will be paid as stated in the Payment of Death Benefit Provisions.

 

CONSIDERATION

This benefit is issued in consideration of the Application, a copy of which is attached to the Policy, and the

payment of the premium for this Rider as shown on the Policy Schedule page.

 

EFFECTIVE DATE

The effective date of this Rider will be the Policy Date, unless a later date is shown below.

 

Effective Date:

 

President

 

  

  

  

 

SCHEDULE C

 

 

BULK BILLING FORM

 

  

  

  

 

US ALLIANCE LIFE AND SECURITY COMPANY                                                                                               #2541-13AB15

 

ANNUAL BULK ACCIDENTAL DEATH BENEFIT REPORT

 

	
Optimum Re

Insurance Company

	
ACCIDENTAL DEATH BENEFIT

Rate per $1,000 $ 0.68 / Annual

	
 

	
 

	
I.  

In Force Dec 31, 2013

(Prior Year)

 

In Force April 1, 2013

(Prior Year)

 

Increase (Decrease)

 

Premiums in Arrears

 

	
 

 

	
 

	
 

	
 

 

	
 

 

	
 

$0.34

	
 

	
II.  

In Force Jan 01, 2014

(Current Year)

 

Premiums in Advance

 

	
 

 

	
 

	
 

	
 

$0.68

	
 

	
III.

Premiums in Arrears

 

Premiums in Advance

 

TOTAL BY COVERAGE

 

	
 

 

	
 

	
 

	
 

 

	
 

 

	
 

 

GRAND TOTAL DUE:        ___________________________________

 

OPTIMUM RE           ____________________________________

 

COMPANY             ____________________________________usallianceex106.htm

EXHIBIT 10.6

GROUP MEDICAL

 

REINSURANCE AGREEMENT

 

(hereinafter referred to as the "Agreement")

 

Made and entered into by

 

UNIFIED LIFE INSURANCE COMPANY

 

Dallas, Texas

 

(hereinafter referred to as the "Company")

 

and

 

US ALLIANCE LIFE AND SECURITY COMPANY

 

Topeka, Kansas

 

(hereinafter referred to as the "Reinsurer")

 

EFFECTIVE DATE: January 1, 2013

 

  

  

  

ARTICLE I-PARTIES TO AGREEMENT

 

This Agreement is solely between the Company and the Reinsurer and the performance of obligations of each party under this Agreement shall be rendered solely to the other party. In no instances shall anyone other than the Company or the Reinsures have any rights under this Agreement.

 

This Agreement shall he binding upon the parties, their heirs, and successors, if any. 

 

ARTICLE H- BASIS OF REINSURANCE

 

On and after the effective date of this Agreement, the Company shall cede and the Reinsurer shall accept as reinsurance from the Company, the quota share percentage of the Company's gross liability as stated in Schedule A, under any and all policies, certificates, binders, contracts or agreements of insurance, hereinafter referred to as "Policy(ies)", for issued or renewed business as identified in the attached Schedule A.

 

Unified Life Insurance Company will be responsible for underwriting and administering the business covered by this Agreement. The Company may delegate any and all duties of underwriting and/or administration as it sees fit, without consulting or getting the approval of the Reinsurer.

 

The Reinsurer has agreed to all Policy forms, underwriting guidelines and rates as respects to all Policies reinsured hereunder.

 

The liability of the Reinsurer shall begin simultaneously with that of the Company as stated in the commencement and Termination Article.

 

ARTICLE III- EXCLUSIONS

 

This Agreement does not apply to and specifically excludes:

 

1. Exclusions in the Policy form(s), copies of which will be on file with Reinsurer.

 

ARTICLE IV- COMMENCEMENT AND TERMINATION

 

The Effective Date of this Agreement shall be 12:01 am "Local" Standard Time on January I , 2013 with respect to Losses on Policies and risks attaching as stated in Schedule A. This Agreement shall be unlimited as to duration.

 

The first Agreement Year shall be defined as January I, 2013, to December 31, 2013, both days inclusive. Subsequent Agreement Years shall be defined as January 1 to December 31, both days inclusive.

 

  

  

  

This Agreement may be unilaterally terminated midnight, December 31, 2013, or any midnight December 31, thereafter by either party giving the other at least one hundred Twenty (120) days prior written notice. During any such period of notice, the Reinsurer will remain bound by the terms of this Agreement.

 

Unless otherwise mutually agreed, the Reinsurer shall remain liable for all Losses under all Policies in force at termination of this Agreement, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable until the next annual anniversary, natural expiration or cancellation of each Policy, whichever occurs first on or after the date of termination.

 

Notwithstanding other provisions of this Agreement, in the event the Policies are written in a jurisdiction where cancellation, renewal, or nonrenewal is regulated by the insurance authorities, and the Company is bound to continue coverage by such regulations and statutes of said jurisdiction or by a judicial decision, the Reinsurer will remain liable on any such Policies in force.

 

Without in any way limiting any right or remedy either party may have, upon sixty (60) days prior writer notice at any time, either party may terminate this Agreement for any breach of the terms or conditions of this Agreement. However, termination shall not occur and notice will be withdrawn if, within the notice period the breach has been cured to the complete satisfaction of the party giving such notice as indicated in a subsequent writing by the party giving such notice.

 

Every notice of termination shall be given by the party requesting cancellation via certified letter or nationally recognized overnight delivery service addressed to the other party to this Agreement pursuant to the Notices Article.

 

ARTICLE V-SPECIAL TERMINATION

 

Notwithstanding anything to the contrary in this Agreement, the Company may terminate this Agreement at any time by giving the Reinsurer ten (10) days prior written notice in the event the Reinsurer has:

 

	
1.  

	
ceased underwriting operations; or

 

	
2.  

	
been ordered by a state insurance department or a court of competent jurisdiction to cease writing business or is being placed under regulatory supervision; or

 

	
3.  

	
become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary) by a court of competent jurisdiction, or, pursuant to law, there has been instituted against them proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

 

	
4.  

	
over any period the RBC Ratio drops below 300% where the RBC Ratio is the ratio of(1) the Authorized Control Level Risk-Based Capital as calculated in the Five Year

 

  

  

  

 

	
 

	
 
Historical Data of National Association of Insurance Commissioners' Annual Statement Blank to (2) the Total Adjusted Capital as calculated in the Five Year Historical Data of the National Association of Insurance Commissioners' Annual Statement Blank; or

 

	
5.  

	
been acquired or merged with another entity or individual(s) not controlling the Reinsurer's operation at the inception of this Agreement; or

 

	
6.  

	
reinsures its entire liability under this Agreement without the Company's prior written consent.

 

The Company shall not reinsure any portion of its retained share unless written permission is granted by the Reinsurer.

 

The liability of the Reinsurer for all Policies in force at the termination date hereunder shall continue as provided in the Commencement and Termination Article of this Agreement.

 

ARTICLE VI-DURATION OF REINSURANCE

 

If any Policy issued by the Company and covered by this Agreement is terminated, the reinsurance shall also be terminated with respect to such Policy, subject. however, the Reinsurer shall share in its quota share percentage of the Company's gross liability for all Losses incurred prior to termination.

 

Loss(es) shall include, but not be limited to, Claims, Loss Adjustment Expenses, and Extra Contractual Obligations.

 

ARTICLE VII- REPORTING, ACCOUNTING & PAYMENTS

 

The Company shall render to Reinsurer no later than thirty (30) days after the end of each month, a report or reports showing, at least, the following information for Policies, and the quota share percentage of the net amount due to or from the Reinsurer:

 

	
1.  

	
The month being reported;

 

	
2.  

	
Reinsurer's quota share percentage of Gross Premiums for the month by Policy;

 

	
3.  

	
Less Reinsurer's quota share percentage of Losses paid during the month by Policy;

 

	
4.  

	
Less the Company Fee as defined in attached Schedule A;

 

	
5.  

	
Less any funds withheld, which are equal to the current statutory reserves;

 

	
6.  

	
Less Reinsurer's quota share percentage of Ceding Allowance by Policy pursuant to Schedule A.

 

Any net amounts due to the Reinsurer shall be deposited by the Company in the Claims and Reserve Account. Any amounts clue to the Company from the Reinsurer shall be submitted within five (5) business clays following receipt and verification of the reports.

 

Gross Premium as used in this Agreement for all Policies shall be defined as the gross premium collected by the Company, less any return premiums and cancellations.

 

  

  

  

ARTICLE VIII- CLAIMS AND RESERVE ACCOUNT & CASH CALL

 

The Reinsurer agrees to allow a Claims and Reserve Account to be established and held by the Company for all Agreement Years combined, for its use in paying Losses and holding reserves for the Reinsurer for Policies subject to this Agreement. The Claims and Reserve Account shall be maintained, as specified below, by reducing or increasing the balance due as shown on the monthly reports.

 

The Reinsurer shall allow the Company to deduct from the first and subsequent monthly reports up to 100% of the net cash flow due to the Reinsurer (i.e. ceded Gross Premium, less Ceding Allowances and Company Fee, less paid Losses), up to a cumulative total of an amount equal to current ceded Reserve which is calculated by the Company at the end of each quarter. Reserve includes Claims reserve, Policy reserve, Deficiency reserve, and Loss Adjustment Expenses reserve, incurred but not reported loss reserve and Extra Contractual Obligations reserve. The Company can reassess the minimum required level of the Claims and Reserve Account.

 

At the end of each month, if the current estimated annual Reserve exceeds the balance in the Claims and Reserve Account, the Reinsurer will pay the Company the difference to be added to the Claims and Reserve Account or issue an acceptable Letter of Credit to the Company. Remittance to the Company will be made within five (5) business days from Reinsurer's receipt of written notice by the Company of such deficiency.

 

On February I, of each Agreement Year, if the current Reserve is less than the balance in the Claims and Reserve Account, the Company will pay the Reinsurer the difference, within five (5) business days from the Company's receipt of written notice from the Reinsurer and approval of such calculation.

 

The interest earned on the Claims and Reserve Account will be the allocated proportionately to each Party based on the quota share percentage in Schedule A.

 

The Parties acknowledge and agree that the amounts in the Claims and Reserve Account are vested in the Reinsurer and Company according to their quota share percentage in Schedule A and any balance in the Claims and Reserve Account shall be returned to the Parties within Twenty-Four (24) months after the Agreement terminates.

 

In the event the Claims and Reserve Account [if any] has a negative balance, is below the required amount specified in this Article or is depleted in any one month the Company may make an immediate cash call upon the Reinsurer. The Reinsurer agrees to make payment to the Company within (5) business days after the Reinsurer's receipt of the cash call, or by month end, whichever is sooner.

 

The Company may also make an immediate cash call upon the Reinsurer in the event the Company is presented with any single claim in excess of the then current balance of the Claims and Reserve Account, regardless of when the claim is presented to the Company. The Reinsurer agrees to make payment to the Company within seven (7) business days after the Reinsurer's receipt of the cash call.

 

ARTICLE V IX-CEDING ALLOWANCE AND COMPANY FEE

 

The Reinsurer shall allow a maximum Ceding Allowance and Company Fee as stated in the attached Schedule A.

 

  

  

  

 

The Company shall be entitled to deduct the Ceding Allowance and Company Fee from amounts due to Reinsurer.

 

Reinsurer and the Company shall share in all actual assessments charged by any state in proportion to each party's liability under this Agreement in addition to the stated Ceding Allowance in the attached Schedule A.

 

ARTICLE X-CURRENCY

 

All transactions under this Agreement shall be in United States dollars.

 

ARTICLE XI-CLAIM SETTLEMENTS

 

All Claims adjudicated and paid by the Company, provided they are in good faith and within the terms of this Agreement and within the terms and conditions of the Company's original Policies involved, shall be binding upon the Reinsurer who agrees to pay all amounts for which they may be liable promptly upon receipt of evidence furnished by the Company for the amount due or to be due. The Company is authorized to offset the Reinsurer's quota share percentage of Gross Premium less Ceding Allowances and Company Fee.

 

Claims shall mean the sum or sums (not including Loss Adjustment Expenses) paid or payable by the Company under the terms of the Policies reinsured hereunder. alter deduction of all recoveries.

 

The Reinsurer shall also be liable for its quota share percentage of Loss Adjustment Expenses incurred by the Company under Policies subject hereto. which are in addition to the maximum benefits as stated in the Policies. "Loss Adjustment Expenses" shall mean expenses which have been paid by the Company to assist in the management and mitigation of Claims paid, including expenses arising from the investigation. appraisal, adjustment. settlement or defense of such Claims paid under the policies reinsured hereunder, referral network fees, but not including office, administrative or overhead expenses of the Company, the Manager or any third party administrator of Claims hereunder or the salaries or expenses of their officials or other respective employees.

 

The Reinsurer shall have the right to participate in the adjustment of any Loss at their own expense or, subject to approval of the Company, initiate the adjustment of any Loss, again at their own expense.

 

ARTICLE XII-EXTRA CONTRACTUAL OBLIGATIONS

 

The Reinsurer shall participate in any loss in excess of policy limit, but otherwise within the terms of the Policy (hereinafter referred to as "loss in excess of policy limits") and any punitive or compensatory damages or statutory penalties or declaratory judgments (hereinafter referred to as "Extra Contractual Obligations"), which are awarded av,ainst the Company under the following circumstances:

 

The Company or its designated representative is required to notify the Reinsurer of any potential punitive or compensatory damages or statutory penalties or any impending

 

  

  

  

 

claim likely to involve loss in excess of the policy limit as soon as practicable and such notification shall include a suggested course of action or inaction for the Reinsurer to review.

 

Payment of any loss in excess of policy limits or Extra Contractual Obligations will be shared by the Company and the Reinsurer, without monetary limitation, in proportion to their respective liability under this Agreement.

 

For purposes of this provision, the following definitions shall apply:

 

	
1.  

	
"Punitive damages" are those damages awarded as a penalty, the amount of which is not governed, nor fixed by statute.

 

	
2.  

	
"Statutory penalties" are those amounts which are awarded as a penalty but fixed in amount by statute.

 

	
3.  

	
"Compensatory damages" are those amounts awarded to compensate for the actual damages sustained, and are not awarded as a penalty or fixed in amount by statue.

 

An Extra Contractual Obligation shall be deemed to have occurred on the same date as the Loss covered or alleged to be covered under the Policy.

 

Notwithstanding anything stated herein, this Agreement shall not apply to any loss in excess of policy limits awarded or Extra Contractual Obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer, director, employee, or agent of the Company acting individually or collectively.

 

Recoveries from any form of insurance or reinsurance maintained by the Company against claims which are the subject matter of this Article shall inure to the benefit of the Company.

 

ARTICLE XIII -REINSURER SECURITY

 

If the Reinsurer does not qualify for full credit by the regulatory authorities having jurisdiction over the Company, the Reinsurer shall provide the Company with the following security for obligations under this Agreement:

 

	
1.  

	
Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers ofletters of credit and acceptable to said insurance regulatory authorities; and/or

 

	
2.  

	
Cash advances; and/or

 

	
3.  

	
Funds withheld (to include the amount, ifany, held in the claims fund); and/or

 

	
4.  

	
Any other security acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves.

 

With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause;" which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than sixty (60) days prior to said expiration date.

 

 

  

  

  

 

The Reinsurer and the Company further agree, notwithstanding anything to the contrary in this Agreement, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Reinsurer or the separate Trust agreement:

	
(i)  

	
To reimburse the Company for the Reinsurer's obligations, the payment of which is due under the terms of this Reinsurance Agreement and which had not been otherwise paid; 

	
(ii)  

	
To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

	
(iii)  

	
To fund a cash account in an amount equal to the Reinsurer's obligations if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets and the interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer;

	
(iv)  

	
To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's obligations if so requested by the Reinsurer.

 

In the event the amount drawn by the Company on any letter of credit is in excess of the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

 

The Company will report to the Reinsurer at the end of each quarter and after the end of each calendar year, the balance of credit needed by the Company to secure the Reinsurer's obligation as of the statement date. The Reinsurer shall, within (thirty) 30 days after receipt of such notice, secure delivery to the Company of an amendment to the letter of credit increasing the amount of credit necessary. If Reinsurer does not secure required amendment to the letter of credit, the Company may withhold monies due to the Reinsures until such amount plus the current letter of credit equals the required security by the Company.

 

The Reinsurer shall post a letter of credit for the benefit of the Company in the amount equal to the amount required in the Claims and Reserve Account to cover all reserves, including, but not limited to, claim reserves, deficit reserves, contract reserves, IBNR, and all other reserves required by any governmental entity, regulatory body and/or are required for the financial security of the Company. The Company shall provide documented evidence of the amount of security required.

 

Federal Excise Tax

 

The Reinsurer shall be responsible for payment of all Federal Excise Tax required under the Internal Revenue Code, to the extent premium under this Agreement is subject to Federal Excise Tax.

 

ARTICLE XIV- OFFSET

 

The Company and/or the Reinsurer shall have, and may exercise at its discretion at any time, the right to offset any balance or balances, whether on account of premiums, on account of Losses or any other justified claim for offset, due from one party to the other under the terms of this Agreement. However, in the event of the insolvency of any party to this Agreement, offset shall

 

  

  

  

 

only be allowed in accordance with the statutes and/or regulations of the state having jurisdiction over the insolvency.

 

ARTICLE XV- TERRITORY

 

The territorial limits of the Agreement shall be identical with those of the Company's Policies.

 

ARTICLE XVI-ERRORS AND OMISSIONS

 

Inadvertent delays, errors or omissions made in connection with this Agreement or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such delay, error or omission will be rectified as soon as possible after discovery.

 

ARTICLE XVII-ACCESS TO RECORDS

 

Both parties shall place at the disposal of the other for inspection, through its authorized representatives, at all reasonable times with reasonable notice under circumstances during the term of this Agreement and thereafter any records, books or documents kept by either party relating to or affecting the reinsurance provided hereunder and all Claims made in connection therewith.

 

ARTICLE XVIII- FEDERAL AND STATE MANDATE

 

In the event any provision of this Agreement is deemed by the Company to be in conflict with any federal or state regulations, statute or code, the provision in question will automatically be modified to be in compliance and any such modification will become part of the Agreement. The Company will notify the Reinsurer within ten (10) days of any such modifications.

 

ARTICLE XIX-NOTICES

 

All official notices, requests, and demands required hereunder must be in writing and shall be deemed to have been duly given if delivered by hand or mailed by first class, nationally recognized overnight delivery service, or registered mail, return receipt requested:

 

1.      If to the Company:

 

William M. Buchanan

 

Unified Life Insurance Company

 

7201 W. 129th Street, Suite 300

 

Overland Park, KS 66213

 

  

  

  

2.      If to the Reinsurer:

 

Jack Brier

 

US Alliance Life and Security Company

 

4123 SW Gage Center Drive, Suite 240

 

Topeka, KS 66604

 

This requirement shall not apply to communication made between the parties regarding operational and administrative matters relating to the Policies covered under this Agreement.

 

ARTICLE XX-WAIVER

 

Waiver of a breach of any provision of this Agreement shall not be deemed a waiver of any other breach of the same or different provision.

 

ARTICLE XXI-INSOLVENCY

 

Company Insolvency

 

In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company, its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed. however, that the liquidator. receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurers of the pendency of a claim against the Company indicating the Policy or reinsurance which claim would involve a possible liability on the part of the Reinsurer(s) within a reasonable time after that claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of that claim, the Reinsurer(s) may investigate that claim and interpose, at their own expense, in the proceeding where that claim is to be adjudicated any defense(s) they may deem available to the Company or its liquidator, receiver. conservator or statutory successor. This expense incurred by the Reinsurer(s) shall be chargeable, subject to court approval, against the Company as part of the expense of conservation of liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer(s).

 

When two or more Reinsurers are involved in the same claim and a majority in interest elects to interpose a defense or defenses to that claim, the expense shall be apportioned in accordance with the terms of the Agreement as though that expense had been incurred by the Company.

 

This insolvency clause shall not preclude the Reinsurer(s) from asserting any excuse or defense to payment of reinsurance other than the excuses or defenses on thee insolvency of the Company and the failure of the Company's liquidator, receiver, conservator or statutory successor to pay all or a portion of any claim.

 

  

  

  

 

Reinsurer Insolvency

 

In the event of the insolvency, bankruptcy. receivership, conservation, rehabilitation or dissolution of one or more Reinsurer, the Company may retain all or any portion of any amount then due the Reinsurer(s) or which may become due to the Reinsurer(s) under this Agreement and use such amounts for the purposes of paying any and all liabilities of the Reinsurer(s) incurred under this Agreement. When all such liability hereunder has been discharged, the Company shall pay the Reinsurer. its liquidator, receiver, conservator or statutory successor the balance of such amounts withheld.

 

If the Reinsurer is unauthorized in the State of Kansas, the Reinsurer hereby agrees to voluntarily submit to the jurisdiction of an alternate dispute resolution panel or court of competent jurisdiction within the United States and or the State of Kansas and further agrees to comply with all requirements necessary to give that panel or court jurisdiction. The Reinsurer hereby warrants that it has designated an agent upon whom service of process may be affected and agrees to abide by the final decision of the panel or court.

 

ARTICLE XXII-ARBITRATION

 

In the event of any dispute between the Reinsurer (or its successor in interest) and the Company (or its successors in interest), arising out of or relating to this Agreement, such dispute shall be submitted to arbitration in the manner set forth below.

 

One arbitrator shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two arbitrators before they enter upon arbitration. all of whom shall be active or retired disinterested executive officers of I ife or h ea I t h insurance or reinsurance companies. In the event that either party should fail to choose an arbitrator within thirty (30) days following a written request by the other party to do so, the requesting party may choose two arbitrators who shall in turn choose an Umpire before entering upon arbitration. If the two arbitrators fail to agree upon the selection of an Umpire within thirty (30) days following their appointment, each arbitrator shall nominate three candidates within ten (10) days thereafter. two of whom the other shall decline, and the decision shall be made by drawing lots.

 

The arbitrators shall consider this agreement as an honorable engagement rather than merely a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The panel shall make its decision in light of custom and practice in the insurance and reinsurance business. The majority decision of the arbitrators shall be final and binding on both parties. Judgment upon the final decision of the arbitrators may be entered in any court of competent jurisdiction.

 

If more than one Reinsurer is involved in the same dispute, all such Reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the Reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurer to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurer participating under the terms of this Agreement from several to joint.

 

Any arbitration proceedings shall take place at Overland Park, Kansas, with all proceedings pursuant hereto governed by the law of the State of Texas, unless otherwise agreed upon by the parties.

  

  

  

 

Each party shall pay the fee and expenses of its own arbitrator and equally bear the fee and expenses of the Umpire. All other expenses of the arbitration shall be equally divided between the parties. The panel may, at its discretion, award such other costs and expenses as it considers appropriate, including, but not limited to, attorney's fees, to the extent permitted by law.

 

This Article shall survive the expiration of this Agreement.

 

ARTICLE XXIII-CONTROLLING LAW

 

This Agreement shall be governed by and construed in accordance with the laws of the state of Texas.

 

ARTICLE XXIV-SEVERABLE TERMS

 

The invalidity or unenforceability of any terms or provision in this Agreement shall not affect the validity or enforceability of any other term or provision of the Agreement.

 

ARTICLE XXV-AUDIT

 

Upon written request of the Reinsurer or the Company, the Company shall appoint an Independent Auditor mutually agreed to conduct an audit of the Claims and/or underwriting relative to the policies, which are subject to this Agreement. Reinsurer agrees to pay its quota share percentage of the cost of such audits as well as its quota share percentage of the final Claim, if any. If any recoveries are made on the payment of Claims, such recoveries shall inure to the parties' proportionally.

 

ARTICLE XXVI-RESERVES

 

The Company shall establish the reserves for the Policies reinsured hereunder in accordance with

 

its standard practice. The Reinsurer shall maintain it coinsurance share of the reserves so

 

established and, upon written request from the Company, shall furnish to the Company evidence of such reserves.

 

ARTICLE XXVII -CONFIDENTIALITY

 

The parties acknowledge there may be portions of this Agreement. the Agreement prospectus, Policy forms, underwriting, rates, or the marketing package may contain confidential, proprietary information of the Company, Reinsurer, or other parties to be named. Each party shall maintain the confidentiality of such information concerning the other party or its business and shall not disclose it to any third person without prior approval; provided, however, that the parties may be required and it is permitted under this Agreement to disclose such information in answers to interrogatories, subpoenas or other legal/arbitration processes as well as to either party's Intermediaries, to the Reinsurer's retrocessionaires, and applicable intermediaries, or in response to requests by governmental and regulatory agencies. In addition, either party may disclose such information to its accountants and to its outside legal counsel as may be necessary.

 

The Reinsurer agrees it shall not underwrite a Group Medical Benefit program that is identical to the Policies in plan design, Policy provisions, rates and underwriting guidelines without the written prior approval of the Company.

 

  

  

  

 

ARTICLE XXVIII-ENTIRE AGREEMENT

 

This Agreement contains the entire understanding of the parties with respect to the subject matter hereof. It cannot be modified unless the parties agree in writing to do so. There are no restrictions, promises, warranties, covenants or undertakings with respect to such subject matter, other than those expressly set forth herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

ARTICLE XXIX-PRIVACY POLICY

 

The Company and the Reinsurer are aware of and in compliance with their responsibilities and obligations under the Gramm Leach Bliley Act of 1999 and the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and Privacy Rules (45 CFR, Parts 160-164) and the applicable federal and state laws implementing the Acts. The Company and the Reinsurer will only use non-public personal information as permitted by law.

 

ARTICLE XXX-ORIGINAL CONDITIONS

 

All reinsurance falling under this Agreement shall be subject to the same terms, rates, conditions and waivers, and to the same modifications, alterations and terminations as the respective Policies, contracts and binders of the Company, subject to the limits, terms and conditions of this Agreement.

 

ARTICLE XXXI-INDEMNIFICATION

 

Reinsurer agrees to defend, indemnify, and hold harmless the Company, its predecessors, successors, assigns, directors, officers, employees, and agents from any and all claims, suits, actions, liabilities, losses, damages, attorneys' fees or costs which may be brought at any time in the future against the Company as a result of the Reinsurer's activities, including but not limited to, market conduct activities, the collection and distribution of premiums, the administration of the policies and any claims processing and adjudication. Reinsurer maintains the right to select its own counsel for defense of such matter, and maintains the right to reject counsel selected by the Company.

 

The Company agrees to defend, indemnify, and hold harmless the Reinsurer, its predecessors, successors, assigns, directors, officers, employees, and agents from any and all claims, suits, actions, liabilities, losses, damages, attorneys' fees or costs which may be brought at any time in the future against the Reinsurer as a result of the Company's activities, including but not limited to, market conduct activities, the collection and distribution of premiums, the administration of the policies and any claims processing and adjudication. The Company maintains the right to select its own counsel for defense of such matter, and maintains the right to reject counsel selected by the Reinsurer.

 

ARTICLE XXXII-AMENDMENT

 

This Agreement may be amended only by the mutual written consent of the parties.

 

  

  

  

 

ARTICLE XXXIII-EXECUTION

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives.

 

 

Signed for an on behalf of: UNIFIED LIFE INSURANCE COMPANY

 

In Johnson County, KS on this18th day of June, 2013.

 

 

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

 

 

By: /s/ William M. Buchanan      

 

Title: President and Chairman of the Board   

 

Signed for an on behalf of: US ALLIANCE LIFE AND SECURITY COMPANY

 

In Shawnee County, KS on this 19th day of June, 2013.

 

 

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

 

 

By: /s/ Jack H. Brier         

 

Title: President             

 

  

  

  

SCHEDULE A

 

Policy Form #:GRP BCA 2013 POL ("BeniComp Select") . GRP BCS 2013 POL

 

("Benicomp Advantage Cost Plus"), or any state version of GRP BCA 2013 POL and GRP BCS 2013 POL

 

Effective Date:                                                                           January 1, 2013

 

Reinsurer Quota Share Percentage:                                       20%

 

The Reinsurer shall allow the Company a Ceding Allowance for each Policy issued. Such Ceding Allowance shall equal the sum of all fees specified in the agreement between the Carrier and the Administrator, reduced by 2.1% of the monthly earned Gross Premium. The Ceding Allowance is not to exceed 8% of Gross Premium.

 

In addition to the Ceding Allowances above. the Reinsurer agrees to reimburse the Company a fee, referred to as Company Fee, in the amount of I% of the monthly earned Gross Premium, to be paid monthly. This Company Fee for subsequent Agreement Years is subject to adjustment by written mutual consent by Amendment.

 

The Company shall allow the Reinsurer return payment on return premiums at the same quota share percentage, with the exception of the Company Fee.

 

Reinsurer and the Company shall share in all actual assessments charged by any state in proportion to each party's liability under this Agreement in addition to the stated Ceding Allowance and Company Fee.

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