Document:

Exhibit 10.16

 Exhibit 10.16 
  
 AGREEMENT 
 FOR DISABILITY ADMINISTRATIVE SERVICES 
  
 THIS AGREEMENT, effective as
of this 1st day of July, 2005 (the “Effective Date”) by and between Educators Mutual Life Insurance Company having offices in Lancaster, Pennsylvania (“Client Company”) and Disability Reinsurance Management Services, Inc.
(“DRMS”), having its principal office and place of business at One Riverfront Plaza, Westbrook, Maine 04092-9700. 
  
 RECITALS: 
  
 WHEREAS, Client Company has entered into a Reinsurance Agreement (“the Treaty”) with Fortis Benefits Insurance Company, as Reinsurer, under
which Fortis Benefits Insurance Company (“Reinsurer”), originally effective January 1, 2003 has agreed to reinsure under the Treaty in Amendment No. 2, as of and effective July 1, 2005, a certain specified percentage of the
risk under the Group Long-Term Disability Insurance Policies issued by the Client Company; 
  
 WHEREAS, DRMS is the Reinsurance Intermediary Manager for the Treaty; 
  
 WHEREAS, Client Company desires to retain DRMS to provide those services described in Exhibit A for Claims, submitted under Group Long Term Disability
Insurance Policies reinsured by the Treaties, and other defined Reinsured Services in Exhibits A (the “Reinsured Services”); and 
  
 WHEREAS, Client Company also desires to retain DRMS to provide certain ASO Services described in Exhibit B (the “ASO Services”) for certain
Claims submitted under certain existing group long term disability insurance policies that are not reinsured under the Treaties; and 
  
 WHEREAS, DRMS desires to provide the Reinsured and ASO Services; 
  

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: 
  
 ARTICLE I: DEFINITION 
  
 Except as explicitly provided to the contrary in these definitions, it is the intent of the
parties that each term used in this Agreement be defined and used in accordance with the definition contained herein. In the event of any ambiguity other than a conflict of the type described below, the parties may look to custom and usage of such
term in the disability insurance and reinsurance industry. In case of any conflict between these definitions and any other provisions of the Agreement, it is agreed that the provisions of the Agreement shall control. 
  

	1.1	Claim - a claim for benefits under a Policy. 

  

	1.2	Consequential Damages - damages proximately caused by a party’s breach, tortious conduct or other wrongful act that are reasonably foreseeable to occur as a result of
such wrongful conduct. 

  

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	1.3	Contractual Benefits - coverages and benefits extended to Insureds as specified in the Policy or Policies. 

  

	1.4	Costs of Litigation or Arbitration - all costs and expenses, including reasonable attorney fees, incurred by a party in connection with the defense of a Claim pursued through
litigation or arbitration. 

  

	1.5	Covered Business - any and all Policies underwritten, issued or renewed, and reinsured in accordance with the provisions of this Agreement. 

  

	1.6	Exemplary Damages - damages awarded usually as a result of a finding of willful misconduct, fraud, malice or oppression, or conduct in reckless disregard of a party’s
rights and interests, intended to punish the wrongdoer or to deter such conduct from occurring in the future, where the amount is not fixed by statute or otherwise. 

  

	1.7	Extra-Contractual Amounts - sums, damages or amounts determined to be payable to an Insured in excess of Contractual Benefits which may include, but are not necessarily
limited to, fines or Statutory Penalties, Punitive, Exemplary, Compensatory or Consequential Damages, or a plaintiff’s or claimant’s reasonable costs and expenses (including attorney fees) in pursuing litigation or arbitration.

  

	1.8	Policy or Policies - the Long Term Disability insurance policy or policies that are (i) underwritten and issued or renewed by the Client Company and reinsured by the
Reinsurer under the Treaties. 

  

	1.9	Policyholder - the owner of the Policy or Policies. 

  

	1.10	Punitive Damages - those damages awarded as a penalty, the amount of which is neither governed nor fixed by statute. 

  

	1.11	Reinsurance Premiums - the amount due to the Reinsurer from the Client Company for reinsurance coverage of the Covered Business ceded to and accepted by the Reinsurer, as set
forth in the Treaties. 

  

	1.12	Reinsurer - Fortis Benefits Insurance Company or any other A, A-, or better rated insurance company chosen by DRMS and Client Company to provide reinsurance coverage in
accordance with the terms and conditions of the Treaties. 

  

	1.13	ASO Claims - those long term disability Claims filed by Claimants seeking benefits under policies, issued by Client Company, that are not reinsured under the Treaties.

  

	1.14	Reinsured and ASO Services - those services provided by DRMS as described in Exhibits A, and B hereof. 

  

	1.15	Statutory Penalties - those amounts which are awarded as a penalty but fixed in amount by statute. 

  

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 ARTICLE II: RESPONSIBILITIES OF THE PARTIES 
  

	2.01	DRMS. DRMS shall perform the Reinsured and ASO Services upon the terms and conditions set forth herein, and as outlined in Exhibits A and B hereto, in accordance with any
applicable DRMS policies and procedures, as may be amended from time to time. DRMS shall also be subject to the claim and other standards, policies and procedures of the Client Company as may be agreed to by the Parties from time to time. In
performing the Reinsured and ASO Services under this Agreement, DRMS shall comply, as applicable, with the ERISA Claims Regulations established by the United States Department of Labor and all other applicable state and federal regulations. All
Reinsured and ASO Services will be performed in accordance with reasonable and applicable industry standards. 

  

	 	a)	Adjudication of Claims. 

  

	 	i.	Client Company authorizes DRMS to, and DRMS shall, make the initial and any administrative appeal determination with respect to each Claim (as defined in Exhibits A and B) whether
such Claim is valid and payable under the terms of the applicable Coverage (as defined in Exhibits A and B). 

  

	 	ii.	DRMS has full authority to determine whether a Claim is payable provided, however, Client Company reserves the right as to any such Claim to disregard and override the determination
of DRMS. If Client Company exercises this right with respect to any Claim, DRMS shall have no liability to Client Company, through indemnification, hold-harmless, or otherwise arising out of or relating to that Claim. 

  

	 	b)	Privacy Standards. 

  

	 	i.	DRMS may not disclose or use any non-public personal information, whether health or financial, received from or on behalf of Client Company pursuant to this Agreement for any reason
other than to carry out DRMS’ duties under this Agreement. Further, DRMS agrees to comply with Client Company’s privacy standards as existing on the date of this Agreement and as may be amended in the future and with all applicable laws
and regulations relating to the privacy and confidentiality of consumer information. 

  
 “Non-public personal financial information” means personally identifiable financial information and any list, description or other grouping of
consumer (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available. 
  
 “Non-public personal health information” means information that identifies an individual who is the subject of
the information, or with respect to which there is a reasonable basis to believe that the information could be used to identify and individual. 
  

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	2.02	Client Company. Client Company shall: 

  

	 	a)	Whenever a claim is submitted to Client Company, transmit promptly such claim, as well as any related proof of loss or other documents, by facsimile to DRMS.

  

	 	b)	Provide DRMS with accurate information and documentation necessary for the timely and proper administration of any disability claims; 

  

	 	c)	Take such actions as necessary to assist DRMS in complying with all applicable laws and regulations, including notifying all insured individuals of the identity of, and relationship
among, DRMS as the administrator, the policyholder and the insurer. 

  

	 	d)	Follow such procedures as reasonably necessary for DRMS, and as required by applicable state laws, if, subsequent to the execution of this Agreement, Client Company authorizes and
DRMS undertakes on terms mutually agreeable to both parties, any claim paying function on behalf of Client Company. 

  
 ARTICLE III: TERM 
  

	3.01	Term. This Agreement shall be in effect from the Effective Date set forth above and shall remain in effect for one (1) year from the Effective Date (“the Initial
Term”). At the end of the Initial Term, this Agreement shall automatically renew on an annual basis, for successive one-year terms unless terminated as herein provided. 

  
 ARTICLE IV: COMPENSATION 
  

	4.01	Fees. In exchange for the Reinsured Services provided by DRMS for policies reinsured under the Treaties, DRMS shall be entitled to the management fees set forth in the
Treaties. 

  

	4.02	Fees. In exchange for the ASO Services provided by DRMS for certain existing group long term disability insurance policies issued by Client Company which are not reinsured
under the Treaties, DRMS shall be entitled to the administrative services fees set forth in Exhibit B. 

  
 ARTICLE V: REPRESENTATIONS AND WARRANTIES OF DRMS 
  
 DRMS represents and warrants to Client Company as follows: 
  

	5.01	Organization: Standing. DRMS is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. DRMS will maintain all required
licenses to provide the services and work contemplated hereby. 

  

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	5.02	Authority. DRMS has the requisite corporate power and authority to execute and deliver this Agreement and to provide the Reinsured and ASO Services contemplated hereunder.

  

	5.03	No Violation. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated herein, conflict with or violate: (a) any
provision of DRMS’ certificate of incorporation or bylaws; or (b) any applicable law or regulation. 

  

	5.04	Limitation. DRMS makes no representations or warranties regarding any cost savings, revenues, earnings or profits which might be realized by Client Company as a result of
this Agreement or the Services provided by DRMS hereunder, and Client Company may not assert any claim or action against DRMS to recover for such alleged damages or losses. 

  

	5.05	Information. All information which it provides to Client Company will be accurate and complete when supplied, and DRMS will promptly update such data and information in
writing to Client Company when it becomes erroneous or misleading. 

  
 ARTICLE VI: REPRESENTATIONS AND WARRANTIES 
 OF CLIENT COMPANY 
  
 Client Company represents and warrants to DRMS as follows: 
  

	6.01	Organization; Standing. Client Company is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania.

  

	6.02	Authority. Client Company has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.

  

	6.03	Correct Information. To the best of the Client Company’s knowledge, information and belief, all data and other information supplied to DRMS by Client Company were and
will be true and correct when supplied and Client Company will promptly update such data and information in writing to DRMS when it becomes erroneous or misleading. 

  

	6.04	No Violation. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated herein, conflict with or violate: (a) any
provision of Client Company’s certificate of incorporation or bylaws; or (b) any applicable law or regulation. 

  

	6.05	Limitation. Client Company makes no representations or warranties regarding any cost savings, revenues, earnings or profits which might be realized by DRMS as a result of
this Agreement or the services provided by DRMS hereunder, and DRMS may not assert any claim or action against Client Company to recover for such alleged damages or losses. 

  

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 ARTICLE VII: INDEMNITY 
  
 In addition to any rights and remedies available under other provisions of this Agreement, the parties shall have the
following rights and obligations. 
  

	7.01	By Client Company. Client Company shall defend, indemnify and hold DRMS, including any affiliates, representatives or related entities of DRMS, harmless from and against any
and all claims of any kind or nature, asserted against Client Company or DRMS by any other individual or entity, except as expressly excluded in or limited by this Agreement, arising out of or attributable to: 

  

	 	(a)	any negligent, intentional, or wrongful acts or omissions of Client Company, including the failure to provide timely and/or accurate information regarding any particular Claim; or

  

	 	(b)	the breach by Client Company of any representation or warranty set forth in this Agreement; or 

  

	 	(c)	an action by a claimant alleging a wrongful denial of a Claim, in which Client Company did not follow the written Claims adjusting recommendation of DRMS; or

  

	 	(d)	an action by a claimant alleging a wrongful denial of and refusal to settle a Claim, in which Client Company did not follow the written settlement recommendation of DRMS.

  
 Such duty to defend and indemnify includes the
obligation to pay all costs of defense including attorney fees and related litigation fees. 
  

	7.02	By DRMS. DRMS shall defend, indemnify and hold Client Company, including any affiliates, representatives or related entities of Client Company, harmless from and against any
and all claims of any kind or nature, asserted against DRMS or Client Company by any other individual or entity, except as expressly excluded in or limited by this Agreement, arising out of or attributable to: 

  

	 	(a)	any negligent, intentional, or wrongful acts or omissions of DRMS, including the failure to provide timely and/or accurate information regarding any particular Claim; or

  

	 	(b)	the breach by DRMS of any representation or warranty set forth in this Agreement; or 

  

	 	(c)	an action by a claimant alleging a wrongful denial of a Claim, in which Client Company followed the written claims adjusting recommendation of DRMS, or 

  

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	 	(d)	an action by a claimant alleging a wrongful denial of and refusal to settle a Claim, in which Client Company followed the written settlement recommendation of DRMS.

  
 Such duty to defend and indemnify includes the
obligation to pay all costs of defense including attorney fees and related litigation fees. 
  

	7.03	Limitations on Liability. Notwithstanding the provisions of Article 7.02 above: 

  

	 	(a)	DRMS shall not indemnify Client Company for contractual benefits if Client Company would have been obligated by contract to pay the claimant if the Claim had not been denied.
Evaluation of such contractual obligation shall be based upon all information known to Client Company regarding the Claim at the time the indemnification issue is addressed. The evaluation shall not be limited to the information relied upon by DRMS
at the time of the adjudication of the Claim. 

  

	 	(b)	The duty to indemnify by DRMS shall not apply in the event the claims adjudication by DRMS resulting in the denial of a Claim was handled consistent with the applicable and
reasonable industry standards, and was based upon reasonable interpretations of medical or mental or nervous conditions and there was reliable medical and legal authority to support the claims adjudication conclusion. 

  

	 	(c)	The amount payable to Client Company by DRMS or its affiliates pursuant to the above indemnification provision shall be reduced by any sums owed to DRMS by Client Company.

  

	7.04	Defense of Litigation. 

  

	 	(a)	If either party is served or receives notice of a lawsuit arising out of a decision on a Claim under a reinsured Policy, regardless of whether or not both parties are named as
defendants, that party shall notify the other party within 5 business days of such new lawsuit. 

  

	 	(b)	The defense of litigation due to or arising from any adverse Claim decision, under a Policy, made by DRMS pursuant to this Agreement, shall be handled by DRMS, with the full
participation of, and cooperation from, the Client Company. DRMS will obtain Client Company’s prior approval before retaining legal counsel to defend such litigation and DRMS will provide Client Company with a written monthly status report of
litigation matters. Any and all offers to settle any litigation will require Client Company’s prior written approval. 

  

	 	(c)	The defense of any litigation due to or arising from any disputed ASO Claim, shall be handled by the Client Company with the full participation by, and cooperation from DRMS.

  

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	7.05	Survival. The provisions of this Article VII shall survive any termination or expiration of this Agreement. 

  
 ARTICLE VIII: CONFIDENTIALITY 
  

	8.01	By DRMS. DRMS acknowledges that all documents, reports, records, books, files and other materials relative to Client Company, its business, or its policyholders, including
any claims or health records (“Information”) whether supplied by Client Company or prepared by DRMS, shall be the sole property of Client Company and that such property shall be held by DRMS as agent during the term of this Agreement.
Except as provided below, all Information furnished by Client Company to DRMS is confidential and neither DRMS nor any of its affiliates, employees, agents or representatives shall disclose any such information, directly or indirectly, to any third
party except to the extent required by law to make such disclosure; and, in the case of DRMS, to the extent-required by DRMS in order to perform its obligations under this Agreement. 

  

	8.02	By Both Parties. Both parties acknowledge that this Agreement and the attached Exhibits and Schedules are confidential and proprietary and that the terms thereof shall not be
shared with any person other than those persons who have a business, judicial, or regulatory need to know. DRMS agrees that Client Company may discuss the existence but not the content of this Agreement and the attached Exhibits and Schedules with
any prospective reinsurer and any reinsurance intermediary or broker. 

  

	8.03	Exceptions. Anything herein to the contrary notwithstanding, the following information shall not be deemed confidential for purposes of this Article:

  

	 	(a)	information which is already public knowledge or becomes generally available to the public other than as a result of a disclosure by the party alleged to have violated this Article;

  

	 	(b)	information which becomes available to a party on a non-confidential basis from a source (other than the party which is the subject of such information) which is not bound by a
confidentiality agreement with the party to whom such information pertains or whom the party alleged to have breached this Article has no reason to know is so bound; or 

  

	 	(c)	information which, prior to disclosure thereof by the non-breaching party, is in possession of the party alleged to have breached this Article. 

  

	8.04	Iniunctive Relief. Both parties acknowledge that the breach of this Article VII by either of them could cause the non-breaching party irreparable harm not compensable by
monetary damages. Accordingly, the parties agree that the breach or threatened breach of this Article by either of them shall entitle the non-breaching party to injunctive relief, in addition to any other available remedies, and any dispute
regarding these confidentiality provisions shall not be governed by the arbitration provisions herein, unless the parties expressly so agree. 

  

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 ARTICLE IX: ACCESS TO RECORDS 
  

	9.01	By Client Company. Upon reasonable notice to DRMS, Client Company shall have access, during normal business hours, to all documents, records, books, files and other materials
gathered and created pursuant to the requirements of this Agreement. 

  

	9.02	By Auditors and Regulators. Client Company and its duly authorized independent auditors as well as any state regulators shall have the right upon reasonable notice to
DRMS and at reasonable frequencies during DRMS’ normal business hours to perform on-site examinations, inspections and audits of records, files and accounts created and maintained pursuant to this Agreement. 

  

	9.03	Maintenance of Records. DRMS shall maintain at its administrative office and at such other location(s) as may be required by any governing bodies or administrative agencies,
the books, files and records generated pursuant to this Agreement. The books, files and records of all such transactions shall be maintained in accordance with prudent standards of insurance record keeping and shall be maintained for the duration of
this Agreement and for a period of not less than seven years after the termination of this Agreement, or as otherwise required by law. The parties agree that all such books, files and records, excluding DRMS’ internal financial statements and
financial records, are the property of Client Company and will be delivered to Client Company upon its request. 

  
 ARTICLE X: TERMINATION 
  

	10.01  	Termination by Either Party Without Cause. This Agreement may be terminated at any time by mutual written agreement of the parties. In addition, after the expiration of the
Initial Term set forth in Article III herein, either party may terminate this Agreement without cause by giving ninety (90) days written notice of such intent to terminate. 

  

	10.02  	Termination by Either Party With Cause. In the event either of the parties (the “Defaulting Party”) materially breaches this Agreement or is in material default in
the performance of any of its duties and obligations hereunder, or fails to meet the performance standards or payment obligations hereunder, the other party hereto may give written notice of such default to the defaulting party. The defaulting party
shall then have thirty (30) days within which to cure the said default to the satisfaction of the non- defaulting party. At the expiration of the thirty (30) day cure period, the non-defaulting party shall determine whether it is satisfied
that the default has been cured. In the event the default is not cured to the non-defaulting party’s satisfaction at the close of the thirty (30) day cure period, the non-defaulting party may terminate this Agreement upon written notice,
which shall be effective upon receipt. 

  

	10.03  	 Automatic Termination. This Agreement shall automatically terminate without prior notice (a) in the event either party files for bankruptcy protection
or is placed under rehabilitation, receivership or involuntary proceeding by any regulator or court of competent jurisdiction or (b) at the option of EML in the event DRMS has become 

  

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merged with, acquired or controlled by any company, corporation or individual(s) not controlling DRMS’ operations previously. If this Agreement is
terminated, DRMS shall cooperate with the Client Company in the orderly transition and transfer of the files and records to the Client Company or the Client Company’s designated new Third Party Administrator. The Client Company agrees to pay
DRMS for its reasonable costs, including but not limited to, costs for work by DRMS’ employees, all at DRMS’ then current rates, and out-of-pocket expenses incurred by DRMS in this transition and transfer process.

  

	10.04	 On-Going Obligations. Upon termination of this Agreement, no parties shall have any further obligation pursuant to the terms of this Agreement except for
(i) obligations occurring prior to the date of termination, and (ii) obligations, promises, or covenants contained herein which are expressly made to extend beyond the term of this Agreement. 

  

	10.05	 Non-Waiver. Termination of this Agreement due to the fault or breach by either party shall not constitute a waiver of any rights, which the other party might have under
this Agreement. 

  

	10.06	 Post Termination Responsibilities. Upon any termination, cancellation or expiration of this Agreement, DRMS will fully cooperate with Client Company and shall continue
to provide, at its sole cost and expense and without any further compensation, the Reinsured Services set forth in Exhibit A in accordance with the terms hereof on all open claims and claims on in force Policies as of the cancellation, termination
or expiration date until such claims are finally terminated or settled. In the event DRMS is unable to perform the Services described in Exhibits A and B for any reason, the Client Company, in its sole discretion, may regain responsibility for
performing such obligations. In such event, DRMS shall reimburse Client Company for all costs incurred by Client Company to perform the Reinsured Services set forth in Exhibit A. 

  
 ARTICLE XI: MISCELLANEOUS 
  

	11.01	 Assignment. Neither this Agreement nor any rights or obligations hereunder may be assigned by either party hereto without the prior written consent of the other, which
consent shall not be unreasonably withheld. The foregoing notwithstanding, DRMS may assign its rights and obligations hereunder without Client Company’s prior written approval but with 60 days prior written notice to affiliated companies. This
Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. 

  

	11.02	 Dispute Resolution. 

  

	 	(a)	The parties to this Agreement understand and agree that the implementation of this Agreement will be enhanced by the timely and open resolution of any disputes or disagreements
between such parties. Each party hereto agrees to use its best efforts to cause any disputes or disagreements between such parties and arising out of this Agreement to be considered, negotiated in good faith and resolved as soon as possible.

  

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	 	(b)	The parties hereto agree to refer any and all claims or disputes between them, within twenty (20) business days after either party has notified the other in writing of the need
to resolve such dispute or disagreement, to the President of DRMS and to the President of Client Company, or their respective designated and authorized representatives, for consideration and negotiation of the claim or dispute.

  

	 	(c)	If such claims or disputes are not settled within twenty (20) business days thereafter, the parties agree that the matter shall be resolved through binding arbitration which
shall be conducted in accordance with the arbitration provisions and procedures set forth in the Treaties. 

  

	 	(c)	No resolution or attempted resolution of any dispute or disagreement pursuant to this Section shall be deemed to be a waiver of any term or provision of this Agreement or consent to
any breach or default unless such waiver or consent shall be in writing and signed by the party claimed to have waived or consented. 

  

	11.03	 Remedies. The remedies recognized by and provided for in this Agreement are the sole and exclusive remedies available to the parties hereto for any claims based upon,
arising out of or otherwise relating to this Agreement and the transactions contemplated hereunder, including any breach or threatened breach of this Agreement. 

  

	11.04	 Independent Contractor. It is understood and agreed that the Services are performed hereunder by DRMS as an independent contractor and not as an employee or partner of
Client Company. 

  

	11.05	 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements with respect to the subject matter
hereof, whether oral or written. 

  

	11.06	 Amendments. Except as otherwise expressly provided in this Agreement, any Amendment or modification shall not be effective unless and until a written instrument is
executed by both of the parties hereto. 

  

	11.07	 Waiver. The waiver by either party hereto of any provisions of this Agreement on any one or more occasions shall not be construed to constitute a waiver of that or any
other provision on any other occasion. 

  

	11.08	 Survival. The representations, warranties, covenants and obligations contained herein shall survive the execution of the Agreement and the performances hereunder.

  

	11.09	 Governing Law. This Agreement shall be governed by the laws of the State of Pennsylvania without regard to principles of conflicts of laws. 

  

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	11.10	 Exhibits. Exhibits A, B, and C hereto, including any agreed upon amendments hereto, shall be deemed a part of the Agreement as fully and effectively as if set forth in
full in the body of this Agreement. 

  

	11.11	 Severability. Any provision of this Agreement which is invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

  
 IN WITNESS WHEREOF, the Parties hereto have
executed this Agreement. 
  

									
	 Educators Mutual Life Insurance Company
	 	 	 	 Disability Reinsurance Management Services, Inc.

					
	By:	 	

	 	 	 	By:	 	

	Title:	 	VP & Actuary	 	 	 	Title:	 	VP & Secretary

  

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 EXHIBIT A 
 TO AGREEMENT WITH EDUCATORS MUTUAL LIFE INSURANCE COMPANY 
 FOR DISABILITY SERVICES 

 

	1.	DRMS shall provide services (the “Reinsured Services”) to Client Company in accordance with applicable claims and other standards agreed to by the Client Company and DRMS,
as follows: 

  

	 	A.	Scope of Reinsured Services. 

  

	 	1.	The Reinsured Services shall be provided in each state in which Client Company provides disability insurance coverage as of and after the Effective Date of this Agreement.

  

	 	2.	The Reinsured Services shall cover all claims asserted under Group LTD Insurance Policies issued by Client Company and reinsured under the Treaties. 

  

	 	B.	Nature of Reinsured Services. 

  

	 	1.	Claims. DRMS shall determine the eligibility of and the benefits, if any, due insureds under the coverages specified above, including but not limited to:

  

	 	(a)	Receipt and review of any and all Claims for disability benefits (“Claims”) submitted by insured claimants of Client Company; 

  

	 	(b)	Liability assessment and determination including telephone and written contact with claimants, employers, physicians and any other party deemed necessary and appropriate in the
course of managing the Claim and in accordance with applicable and reasonable recognized industry standards; 

  

	 	(c)	The gathering of any and all information necessary to the evaluation of the Claim and to the determination of the validity, coverage, payment and other issues related to the Claim;

  

	 	(d)	Medical assessment and referral to Medical Consultant or Nurse Consultant, as necessary in DRMS’ discretion; 

  

	 	(e)	Social Security Assistance vendor referral, as necessary in DRMS’ discretion; 

  

	 	(f)	Vocational Rehabilitation assessment and vendor referral, as necessary in DRMS’ discretion; 

  

	 	(g)	Field Investigation services or vendor referral, as necessary in DRMS’ discretion; 

  

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	 	(h)	Independent medical examination referral, as necessary in DRMS’ discretion; 

  

	 	(i)	Adjudication of each Claim, and notification to Claimant and to Client Company of the approval or denial decision regarding the Claim; 

  

	 	(j)	Shall provide written notification of an adverse decision of a Claim in a manner consistent with applicable law, including but not limited to, if applicable, ERISA claim regulations
from the U.S. Department of Labor and applicable state insurance disability claims management laws; 

  

	 	(k)	Appropriate ongoing management, as necessary; 

  

	 	(l)	Adjudication of each ongoing Claim, and notification to the Client Company and Claimant of such decisions; 

  

	 	(m)	Delivery to Client Company of sufficient information and documentation in the format designated by the Client Company to allow complete financial analysis and reserving of the Claim
by Client Company; 

  

	 	(n)	Notification of all expiration of benefits decisions to Client Company; 

  

	 	(o)	Adjudication of all initial appeals form any adverse benefit determination; 

  

	 	(p)	Forward all re-appeals by a Claimant of an adverse benefit determination to Client Company along with a copy of the file and an appeal summary for review and discussion of appeal
decision by the parties, with the determination of such re-appeal to be made collectively by the parties; 

  

	 	(q)	Responding in a timely manner to all insurance department or regulatory inquiries and complaints relating to DRMS’ Reinsured Services, promptly providing a copy of each such
response to Client Company, and maintaining legally compliant records of all such complaints and inquiries; 

  

	 	(r)	Evaluating and recommending all settlement proposals on any appropriate Claim, and upon Client Company’s written approval, performing the necessary offers, negotiation and
release and settlement agreements with respect to any appropriate Claim; 

  

	 	(s)	Managing, coordinating and conducting all Special Investigations and field investigations with respect to any Claim; and immediately submitting all cases involving suspected
fraudulent activity directly to Client Company; 

  

	 	(t)	Be responsible for reporting, withholding and handling of all taxes; 

  

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	 	(u)	Provide claim payment and claim check-cutting services for the Client Company, as set forth in Exhibit C hereto; 

  

	 	(v)	Shall pursue, where appropriate in DRMS’ discretion, recouping any benefit monies mistakenly issued to Claimants or occurring as a result of a retroactive offset. This may
include agreeing to offset future benefits and participating in collection efforts; 

  

	 	(w)	Notify the Client Company by fax no later than five (5) business days after receipt of any legal proceeding or claimant litigation, and cooperate fully with Client Company in
the defense of any such legal proceeding or claimant litigation. The notification shall be faxed to Client Company’s Corporate Secretary at 717-393-7014; 

  

	 	(x)	Follow all applicable federal, state and local rules, regulations and mandates as required for the performance of this Agreement; 

  

	 	(y)	Shall issue to Client Company the following standard reports monthly: 

  

	 	i)	Appeal Status Report 

  

	 	ii)	Time to Process Report 

  

	 	iii)	Quality Assurance Report 

  

	 	iv)	Social Security Activity Report 

  

	 	v)	LTD Claim Status Detail Report 

  

	 	vi)	Complaint Log 

  

	 	(z)	DRMS shall be responsible for Claimant checks being issued and the EFT’s being deposited on a daily basis as warranted for each Claim; and 

  

	 	(aa)	DRMS shall issue to Policyholders all monthly Claim Payment histories and detailed tax reports. 

  

	 	2.	DRMS shall not use the name or logo or other identification of Client Company in any advertising without the prior written authorization of Client Company. 

 

	 	3.	Client Company will be responsible for and pay the Claim Expenses detailed below which are incurred by DRMS in performing the Reinsured Services. Any expenses charged to the Client
Company will be a proportion of the actual expenses, with the proportion being the proportion of risk retained by the Client Company on the Claimant for which the expenses were incurred. 

  

	 	(a)	Independent Medical Examination(s) (“IME”); 

  

	 	(b)	Surveillance and field and/or investigative case management performed by any third parties; 

  

 15 

	 	(c)	Functional Capacity Examination(s); 

  

	 	(d)	Vocational assessments and/or rehabilitation services by any third parties; 

  

	 	(e)	Labor Market Surveys; 

  

	 	(f)	Job Accommodation Expenses (with prior approval of Client Company); 

  

	 	(g)	Behavioral health assessment(s); 

  

	 	(h)	Peer Reviews; 

  

	 	(i)	Attorneys’ fees from any third party attorneys for necessary legal advice (with prior approval from the Client Company for fees exceeding $500.00), and/or overpayment
collection services; and 

  

	 	(j)	Social Security Services 

  
 The invoices DRMS sends to bill these Claim Expenses to the Client Company will show such Expenses on a per Claim basis. 
  

 16 

 EXHIBIT B 
 TO AGREEMENT WITH EDUCATORS MUTUAL LIFE INSURANCE COMPANY 
 FOR ASO DISABILITY SERVICES

  

	1.	DRMS shall provide services (the “ASO Services”) to Client Company in accordance with applicable claims and other standards agreed to by the Client Company and DRMS, as
follows: 

  

	 	A.	Scope of ASO Services. 

  

	 	1.	The ASO Services shall cover all ASO Claims submitted under certain Group LTD Insurance Policies issued by Client Company that are not reinsured under the Treaties and which the
parties have agreed to transfer and/or are transferred by Client Company to DRMS pursuant to the Agreement. 

  

	 	B.	Nature of ASO Services. 

  

	 	1.	Claims. DRMS shall determine the eligibility of and the benefits, if any, due insureds under the coverages specified above, including but not limited to:

  

	 	(a)	Receipt and review of any and all ASO Claims submitted by insured claimants of Client Company; 

  

	 	(b)	Liability assessment and determination including telephone and written contact with claimants, employers, physicians and any other party deemed necessary and appropriate in the
course of managing the claim and in accordance with applicable and reasonable recognized industry standards; 

  

	 	(c)	The gathering of any and all information necessary to the evaluation of the Claim and to the determination of the validity, coverage, payment and other issues related to the Claim;

  

	 	(d)	Medical assessment and referral to Medical Consultant or Nurse Consultant, as necessary in DRMS’ discretion; 

  

	 	(e)	Social Security Assistance vendor referral, as necessary in DRMS’ discretion with a vendor of Client Company’s choice; 

  

	 	(f)	Vocational Rehabilitation assessment and vendor referral, as necessary in DRMS’ discretion; 

  

	 	(g)	Field Investigation services or vendor referral, as necessary in DRMS’ discretion; 

  

	 	(h)	Independent medical examination referral, as necessary in DRMS’ discretion; 

  

 17 

	 	(i)	Adjudication of each Claim, and notification to Claimant and to Client Company of the approval or denial decision regarding the Claim and notification to Client Company of any
single claim payment exceeding $10,000; 

  

	 	(j)	Shall provide written notification of an adverse decision of a Claim in a manner consistent with applicable law, including but not limited to, if applicable ERISA claim regulations
from the U.S. Department of Labor and state insurance disability claims management laws; 

  

	 	(k)	Appropriate ongoing management, as necessary; 

  

	 	(l)	Adjudication of each ongoing Claim, and notification to the Client Company and Claimant of such decisions; 

  

	 	(m)	Delivery to Client Company of sufficient information and documentation in the format designated by the Client Company to allow complete financial analysis and reserving of the Claim
by Client Company; 

  

	 	(n)	Notification of all expiration of benefits decisions to Client Company; 

  

	 	(o)	Adjudication of all initial appeals from any adverse benefit determination; 

  

	 	(p)	Forward all re-appeals by a Claimant of an adverse benefit determination to Client Company along with a copy of the file and an appeal summary for review and discussion of appeal
decision by the parties, with the determination of such re-appeal to be made collectively by the parties; 

  

	 	(q)	Referring in a timely manner all insurance department or regulatory inquiries and complaints relating to DRMS’ ASO Services, to Client Company’s Corporate Secretary with a
complete case summary and supporting documents, and maintaining legally compliant records of all such complaints and inquiries DRMS shall cooperate fully in providing the necessary claim information needed to provide an appropriate response to the
U.S. Department of Labor and any other regulatory agency; 

  

	 	(r)	Evaluating and recommending all settlement proposals on any appropriate Claim, and, upon Client Company’s written approval, performing the necessary offers, negotiation and
release and settlement agreements with respect to any appropriate Claim; 

  

	 	(s)	Managing and conducting all Special Investigations and field investigations with respect to any Claim and immediately submitting all cases involving suspected fraudulent activity
directly to Client Company; 

  

 18 

	 	(t)	Be responsible for certain reporting, withholding and handling of all taxes, as set forth in Exhibit C hereto; 

  

	 	(u)	Provide claim payment and claim check-cutting services for the Client Company, as set forth in Exhibit C hereto; 

  

	 	(v)	Shall pursue, where appropriate in DRMS’ discretion, recouping any benefit monies mistakenly issued to Claimants or occurring as a result of a retroactive offset. This may
include agreeing to offset future benefits and participating in collection efforts; 

  

	 	(w)	Notify the Client Company by fax no later than five (5) business days after receipt of any legal proceeding or claimant litigation, and cooperate fully with Client Company in
the defense of any such legal proceeding or claimant litigation. The notification shall be faxed to Client Company’s Corporate Secretary at 717-393-7014; 

  

	 	(x)	Follow all applicable federal, state and local rules, regulations and mandates as required for the performance of this Agreement; 

  

	 	(y)	Shall issue to Client Company the following standard reports monthly: 

  

	 	1)	Appeal Status Report 

  

	 	2)	Time to Process Report 

  

	 	3)	Quality Assurance Report 

  

	 	4)	Social Security Activity Report 

  

	 	5)	LTD Claim Status Detail Report 

  

	 	6)	Complaint Log 

  

	 	(z)	Be responsible for Claimant checks being issued by the 20th of each calendar month and EFT’s being deposited by the 20th calendar day of each month, or
the business day immediately preceding the 20th calendar day. Any costs resulting from late payment will be
DRMS’ responsibility; and 

  

	 	(aa)	DRMS shall issue to Policyholders all monthly Claim Payment histories and detailed tax reports. 

  

	 	2.	 The parties agree that the Client Company will be responsible for and shall pay the Claim Expenses detailed below which are incurred by DRMS in performing the ASO
Claims Services. To facilitate the Client Company’s payment of such Claim 

  

 19 

	 	 
Expenses, the following Claim Expenses will be identified, in invoicing to the Client Company, to the appropriate ASO Claim file:

  

	 	(a)	Attorney Fees (Selection of attorney requires prior approval of Client Company); 

  

	 	(b)	Medical Records; 

  

	 	(c)	IME (Independent Medical Exam); 

  

	 	(d)	FCE (Functional Capacity Exam); 

  

	 	(e)	Surveillance; 

  

	 	(f)	Labor Market Surveys; 

  

	 	(g)	Job Accommodation Expenses (with prior approval of Client Company); 

  

	 	(h)	DRMS Field Case Management; 

  

	 	(i)	Non-DRMS Field Case Management; 

  

	 	(j)	DRMS Field Vocational Assessment or Rehabilitation; 

  

	 	(k)	Non-DRMS Vocational Assessment or Rehabilitation; 

  

	 	(l)	Peer reviews; 

  

	 	(m)	Behavioral Health Assessment fees; and 

  

	 	(n)	Social Security Services. 

  
 DRMS’ fees for providing ASO Services as outlined in Exhibit B, Section (B) (4) will not be charged to individual files but will be
invoiced separately. 
  

	 	3.	DRMS shall not use the name or logo or other identification of Client Company in any advertising without the prior written authorization of Client Company. 

 

	 	4.	DRMS shall provide the ASO Services to the Client Company in accordance with Exhibit B in return for the following fees: 

  

	 	•	 	Initial Claims handling: $250.00 per claim per month; 

  

	 	•	 	Active Claims Handling: $120.00 per claim per month; 

  

	 	•	 	Permanent and Total Disability Claims: $20.00 per claim per month. 

  

 20 

 The Client Company will pay these fees to DRMS on a monthly basis, beginning in August 2005. DRMS will provide the Client
Company with a summary of all claims under management and their respective per claim fee as an attachment to the monthly invoice. The invoice will be provided by DRMS to the Client Company by the 5th business day of the following month. 

 

 21 

 EXHIBIT C TO AGREEMENT WITH 
 EDUCATORS MUTUAL LIFE INSURANCE COMPANY 
 CLAIM PAYMENT AND CHECK CUTTING
SERVICES 
  

	1.	Payment of Claims. DRMS agrees to provide claim payment and check-cutting services, to the Client Company, with respect to payable claims (“Claims”) under the
Policies, in accordance with the provisions of this Amendment. The parties agree that DRMS may provide such services through its affiliate, agent or third-party contractor upon written approval of the Client Company. 

  

	 	A.	All claims paid by DRMS from funds collected on behalf of the Client Companies shall be paid only on drafts of and as authorized by the appropriate Client Company.

  

	 	B.	Payment of Claims to a claimant (“Claimant”) under a Policy may be made either through the Fiduciary Claims Administrative Accounts as defined below, or the parties may
agree that DRMS may have check writing authority on accounts of the Client Company. 

  

	2.	Receipt of Payments. Any payments to DRMS of any premiums or charges for insurance by or on behalf of a Claimant shall be deemed to have been received by the Client Company,
and the payment of return premiums or claims by the Client Company to DRMS shall not be deemed payment to the Claimant until such payments have been made by DRMS. Nothing herein shall limit any right of the Client Company against DRMS resulting from
its failure to make payments to that Client Company or any Claimant. 

  

	3.	Interest and Bank Charges. DRMS will be entitled to all interest earned on the Fiduciary Claims Administrative Accounts, DRMS will be responsible for all bank charges and
fees charged by the bank in connection with the Fiduciary Claims Administrative. Any Interest earned will be applied against fees. 

  

	4.	Flow of Funds. Attached to this Amendment as Schedule 1 is a description of the normal and anticipated processes for the Client Company to fund the Fiduciary Claims
Administrative Accounts described herein. The parties recognize that this Schedule may not cover every possible situation requiring additional funding of these Fiduciary Claims Administrative Accounts, and accordingly, agree to take necessary steps
to ensure that there are adequate funds from the Client Company to pay all Covered Claims for those unanticipated situations. 

  

	5.	Collection of Claims Funds. All insurance claim payments collected or received by DRMS on behalf of and from the Client Company shall be held by DRMS in a fiduciary capacity.

  

	6.	 Funds Deposits. Such funds shall be promptly remitted to the person or persons entitled thereto, or shall be deposited promptly in a fiduciary bank account
in an 

	 	 
FDIC financial institution established and maintained by DRMS. This fiduciary bank account shall be located in Portland, Maine, and shall be designated as
“Fiduciary Claims Administrative Account”. 

  

	7.	More Than 1 Policy. Funds received by DRMS from the Client Company with regard to claim payments to be made under more than one policy may be held by DRMS in the same
Fiduciary Claims Administrative Account, so long as DRMS maintains clear records indicating the funds regarding each policy. 

  

	8.	Records Maintenance. DRMS shall promptly obtain and keep copies of such records and upon request of the Client Company shall furnish the Client Company with copies of such
records pertaining to deposit and withdrawals on behalf of or for that Client Company. 

  

	9.	Financial Reconciliation. DRMS shall prepare and maintain, or caused to be prepared and maintained, monthly financial reconciliations for each Fiduciary Claims Administrative
Account established under this Agreement. This reconciliation will be performed not later than thirty (30) days following the end of the month. DRMS shall send the Client Company a copy of this financial reconciliation and a monthly listing of
any and all outstanding checks not later than thirty (30) days following the end of the month. 

  

	11	Unclaimed Property. DRMS will perform due diligence for any outstanding check greater than six (6) months old. A letter, to the last known address of the payee, will be
sent by DRMS indicating the check outstanding. The payee can be the claimant, Policyholder, or taxing agency. The letter will request that the payee examine its records to determine if the outstanding check was actually received. Should the payee
determine the check was not received or the payee has the outstanding check, the payee will be required to submit a statement indicating the status of the check and return to DRMS any stale dated checks and the statement before the check is
reissued. 

  

	 	In December of each calendar year, DRMS will send to the Client Company the funds for any outstanding checks one year old or greater along with a report on any due diligence
performed by DRMS. The Client Company will report to the proper states any amounts as unclaimed property as required by the unclaimed property statue of the appropriate state. 

  

	12.	Tax Reporting. DRMS, or its agents, shall perform any necessary reporting and withholding of employee-related taxes on Claim payments made under this Agreement. DRMS will
also report monthly and annually to each employer the employer’s FICA match that each employer owes. Monthly reporting will occur prior to the 15th of the month following the month in which the payments occurred. Annual reporting will be not later than January 15 of the year following the end of the reporting year. Annual reports are
furnished to employers. 

	13.	Tax Deposits and Data. DRMS shall make all tax deposits of employee (Claimant) withholdings under the DRMS Sick Pay Employer Identification Number (EIN). DRMS shall also
furnish employers with daily withholding data, on a monthly basis, in order to transfer liability to employers. The monthly reports will be provided by the 15th day of the following month. In addition, DRMS shall provide employers annual reports not later than January 15 of the year following the year covered by such reports. DRMS shall not be
responsible for (a) any reporting, withholding or handling of employer-related taxes to the Internal Revenue Service or any other local, state or federal agencies. 

  

	14.	DRMS Indemnification. DRMS shall indemnify and hold the Client Company harmless from and against all loss, damage, cost, expense, and penalties of any nature arising from
DRMS’ failure to comply with any tax withholding and reporting obligations under this Exhibit. 

  

	15.	Withdrawals. Withdrawals from the DRMS Fiduciary Claims Administrative Account(s) established under this Exhibit shall be made for payment of covered Claims under the
applicable Policy to Claimants to whom such payments are due, including any necessary employee-related tax withholding. 

  

	16.	Claims Draft Authority. DRMS, and any check-cutting or tax reporting third party contractor utilized by DRMS, shall have the authority to issue claim payments, and remit any
employee taxes withheld under this Agreement, and draft and check-writing authority for the purpose of DRMS fulfilling its duties under this Agreement so long as it obtains the Client Company’s prior written consent. DRMS shall promptly
disclose to the Client Company the identity of any such check-cutting or tax reporting third party contractor utilized by DRMS. 

  

	17.	Limited FICA Indemnification. Except with respect to the indemnification obligations of DRMS pursuant to item 14 of this Exhibit, the Client Company agrees to defend and
indemnify DRMS from any and all claims, demands, judgments, awards, penalties, fines or causes of action arising out of or related in any way to (a) DRMS’ reporting to the Client Company and/or any employer of any employer FICA match as
part of the claims-paying Services that DRMS is performing as described in this Exhibit, (b) any federal or state unemployment tax liability(ies) for employers insured by the Client Company in connection with DRMS’ Services under this
Exhibit, or (c) any other employer-related or employer-assessed tax liability(ies) for employers insured by the Client Company in connection with DRMS’ Services under this Exhibit, including but not limited to, any such tax reporting or
liability described in (a), (b) or (c) herein that may have accrued or be unpaid prior to the effective date on which DRMS begins to provide the Services. 

 SCHEDULE 1 – FLOW OF FUNDS 
  

	A.	Normal Fiduciary Claims Administrative Account Funding. 

  

	 	1.	The Client Company will initially deposit a sum agreed upon between the Client Company and DRMS sufficient to pay Claims for the coming month. 

  

	 	2.	The first of each month the Insurers, as appropriate, will wire transfer the necessary funds to the Fiduciary Claims Administrative Accounts, to reestablish the agreed upon balance
necessary to pay claims for the coming month. This funding will occur in sufficient time before the agreed-upon date for disbursement of the necessary claim payments to the Claimants for the Covered Claims. 

  

	 	3.	DRMS will provide a summary report monthly to the Insurer listing in detail the claims paid for the stated time period no later than the 5th business day of each month. 

  

	 	4.	DRMS will mail, or caused to mailed, checks for the payment of Claims after verifying that the requested funding from the Client Company has been transferred to the Fiduciary Claims
Administrative Account. DRMS shall not mail, or caused to be mailed, any check(s) for the payment of any Claim(s) if the Client Company has transferred a materially insufficient amount of funds for such payment(s). 

  

	B.	Irregular Fiduciary Claims Administrative Accounts. 

  

	 	1.	Irregular funding often results from settlements of claims or in connection with any claims lawsuit. As much as possible, the parties will try to arrange such funding to coincide
with regular funding cycles. 

  

	 	2.	If irregular funding is needed at a time that does not coincide with the regular funding cycles, the appropriate Client Company will arrange for the necessary funding of this
irregular need following the process as defined in (A) above.Exhibit 10.17

 Exhibit 10.17 
  
 QUOTA SHARE DISABILITY 
 REINSURANCE AGREEMENT 
 DWVD No. 900205/03 
 (hereinafter referred to as the “Agreement”) 
  
 between 
  
 EDUCATORS MUTUAL LIFE INSURANCE COMPANY 
 Lancaster, Pennsylvania

 (hereinafter referred to as the “Reinsured”) 
  
 and 
  
 FORTIS BENEFITS INSURANCE COMPANY 
 Kansas City, Missouri 
 (hereinafter referred to as the “Reinsurer”) 
  
 Effective: January 1, 2003 

 TABLE OF CONTENTS 
  

			
	 ARTICLE I - EFFECTIVE DATE AND COMMENCEMENT OF LIABILITY
	  	1
		
	 ARTICLE II - DEFINITIONS
	  	1
		
	 ARTICLE III - REINSURANCE COVERAGE
	  	3
		
	 ARTICLE IV - TERMS OF REINSURANCE
	  	3
		
	 ARTICLE V - ACCEPTANCE OF REINSURANCE
	  	4
		
	 ARTICLE VI - POLICY FORMS AND RATES
	  	5
		
	 ARTICLE VII - PAYMENTS BY REINSURED
	  	5
		
	 ARTICLE VIII - REPORTS AND RECORDS
	  	6
		
	 ARTICLE IX - ADJUDICATION AND SETTLEMENT OF CLAIMS
	  	6
		
	 ARTICLE X - HANDLING OF DISPUTES
	  	8
		
	 ARTICLE XI - DISPUTES AND PAYMENTS BY REINSURER
	  	8
		
	 ARTICLE XII - ARBITRATION
	  	10
		
	 ARTICLE XIII - REINSTATEMENTS
	  	11
		
	 ARTICLE XIV - RECAPTURE
	  	11
		
	 ARTICLE XV - TERMINATION
	  	12
		
	 ARTICLE XVI - STATUTORY PROVISIONS – INSOLVENCY
	  	13
		
	 ARTICLE XVII - RESERVES
	  	13
		
	 ARTICLE XVIII - STATUTORY RESERVE CREDIT
	  	14
		
	 ARTICLE XIX - COMPLETE AGREEMENT
	  	14
		
	 ARTICLE XX - DELAYS, ERRORS, OR OMISSIONS
	  	14
		
	 ARTICLE XXI - ASSIGNMENT
	  	14
		
	 ARTICLE XXII - GOVERNING LAW
	  	14
		
	 ARTICLE XXIII - PROPRIETARY MATERIAL
	  	15
		
	 ARTICLE XXIV - INTERMEDIARY
	  	15
		
	 ARTICLE XXV - REINSURER
	  	15
		
	 ARTICLE XXVI - ACCESS TO RECORDS
	  	15

  

 i 

			
	 ARTICLE XXVII - SEVERABILITY
	  	15
		
	 ARTICLE XXVIII - CONFIDENTIALITY
	  	16
		
	 ARTICLE XXIX - PRIVACY
	  	17
		
	 ARTICLE XXX - NOTICE
	  	17
		
	 SCHEDULE A
	  	 
		
	 SCHEDULE B
	  	 
		
	 SCHEDULE C
	  	 
		
	 SCHEDULE D
	  	 

  

 ii 

 DISABILITY REINSURANCE AGREEMENT 
  
 This Agreement is between Educators Mutual Life Insurance Company, of, Lancaster,
Pennsylvania (hereinafter referred to as the “Reinsured”) and Fortis Benefits Insurance Company of Kansas City, Missouri (hereinafter referred to as the “Reinsurer”) through Disability Reinsurance Management Services, Inc.,
manager for the Reinsurer (hereinafter referred to as “DRMS”). In consideration of the mutual promises set forth herein, the parties agree as follows: 
  

Article I - Effective Date and Commencement of Liability 
  

	1.01	The effective date of this Agreement is 12:01 A.M. Eastern Standard Time January 1, 2003 (hereinafter the “Effective Date”). 

  

	1.02	This Agreement shall automatically renew for successive one-year terms unless and until terminated in accordance with the termination provisions herein, in Article XV - Termination.

  

	1.03	This Agreement shall apply to losses occurring under new and renewal Policies, as defined herein, issued on or after the Effective Date. 

  

	1.04	The liability of Reinsurer on any Policy covered by this Agreement shall commence on the same day that the Reinsured’s liability commences; however, notwithstanding anything
herein to the contrary, the liability of the Reinsurer shall not attach or begin prior to the Effective Date of this Agreement. 

  
 Article II - Definitions 
  
 As used in this Agreement, the terms set forth below shall be defined and used in accordance with the definitions herein. In case of any conflict between these
definitions and any other provisions of the Agreement, it is agreed that the provisions of the Agreement shall control. In the event of any remaining ambiguity the parties may look to custom and usage of such term in the disability insurance and
reinsurance industry. 
  
 Affiliate – any insurance
company which is wholly-owned either directly or indirectly by the Reinsured. 
  
 Automatic Reinsurance – Reinsurance of Policies which are written by the Reinsured and ceded to Reinsurer in accordance with Article V – Acceptance of Reinsurance, sub-section 5.01. 
  
 Claim – a claim for benefits under a Policy. 
  
 Claim Expenses – the third-party and external expenses and costs
incurred by DRMS, as the Reinsurance Intermediary Manager and/or the Reinsured, in accordance with Article IX – Adjudication and Settlement of Claims, on behalf of the Reinsured and Reinsurer such as but not limited to, costs of obtaining
medical records from health care providers and costs of obtaining independent medical, evaluations in the course of evaluating, investigating and deciding a Claim. 
  

 1 

 Compensatory Damages – those amounts awarded to compensate for actual damages sustained and
not as a penalty or fixed in amount by statute, including but not limited to, any valid pre and post judgment interest. 
  
 Contractual Benefits – coverages and benefits extended to insureds and specified in the Policy or Policies defined herein. 
  
 Costs of Litigation or Arbitration – all costs and expenses,
including attorney fees, incurred by a party in connection with the defense of a Dispute as defined herein. 
  
 Covered Business – The Policies described in Schedule A – Covered Business attached hereto and made a part hereof. 
  
 Dispute – A challenge by a claimant or an insured to
(a) the denial of Contractual Benefits under a Policy; (b) the calculation of the amount or term of payment of such benefits; or (c) to any other matter arising under a Policy, whether through arbitration or litigation; or a challenge
by the Reinsured to the Reinsurer’s decision regarding coverage of a particular Claim. 
  
 Extra-Contractual Amounts – sums, damages or amounts above, beyond and/or outside of Contractual Benefits which may include, but are not necessarily limited to, fines, Statutory penalties, Punitive
Damages, exemplary damages, Compensatory Damages, consequential damages, and an insured’s or claimant’s costs and expenses, including attorneys’ fees in pursuing litigation or arbitration. 
  
 Facultative Reinsurance – Reinsurance of Policies that are
written by the Reinsured and accepted by the Reinsurer in accordance with Article V – Acceptance of Reinsurance, sub-section 5.02. 
  
 Groups – any employer or other group which submits an application for issuance of a Policy by the Reinsured. 
  
 Gross Collected Premium – the total premium collected by the
Reinsured on all Policies.  
  
 Reinsurer –
the Reinsurer under this Agreement. 
  
 Policy/Policies
– the insurance that is written by the Reinsured and reinsured with Reinsurer pursuant to this Agreement. 
  
 Punitive Damages – those damages awarded as a penalty, the amount of which is neither governed nor fixed by statute. 
  
 Quota Share – the percentage of the Underlying Risk which is not
ceded to the Reinsurer, but which is retained by the Reinsured. 
  
 Reinsured – Educators Mutual Life Insurance Company including any agents or representatives acting on behalf of such company, it being understood that DRMS and the Reinsurer stated herein shall not be included in this term.

  
 Reinsured Percentage – the percentage of the risk
premium on each of the Policies set forth in the attached Quota Share Schedule, which is ceded to Reinsurer. 
  

 2 

 Reinsurance Rate – The rate charged to the Reinsured by the Reinsurer for the Reinsurance
Premiums on any reinsured Policy. 
  
 Reinsurance Premiums
– the amount due to the Reinsurer from the Reinsured for reinsurance coverage of the Covered Business ceded to and accepted by the Reinsurer, as set forth in more detail on Schedule D – Remittances to the Reinsurer, attached hereto.

  
 Reinsurer – Fortis Benefits Insurance Company or
any other A or better rated insurance company chosen by DRMS to provide reinsurance benefits in accordance with the terms and conditions of this Agreement. 
  
 Statutory Penalties – those amounts that are awarded as a penalty but fixed in amount by statute. 
  
 Article III - Reinsurance Coverage 
  

	3.1	Nature of Coverage. On and after the Effective Date, the Reinsured’s liability, for the Reinsurer’s Reinsured Percentage, for certain monthly income benefits for the
Policies qualifying as Covered Business under Schedule A – Covered Business hereto, and either Automatically Reinsured, in accordance with Article V- Acceptance of Reinsurance, sub-section 5.01, or accepted as Facultative Reinsurance by the
Reinsurer under Article V- Acceptance of Reinsurance, sub-section 5.02, shall be ceded to and reinsured by the Reinsurer, in accordance with the terms and conditions of this Agreement. 

  

	3.2	Duration of Obligations. Reinsurance for any Covered Business under this Agreement shall be maintained in force until the earlier of (i) the liability of the Reinsured
under such Policy is no longer in force or (ii) the termination of this Agreement in accordance with the provisions herein and the fulfillment of the criteria regarding Recapture pursuant to Article XIV - Recapture. 

  
 Article IV - Terms of Reinsurance 
  

	4.1	Reinsurance under this Agreement shall be subject to, and benefit from, all the terms and conditions of the Policies. Reinsurance is provided only for Policies ceded to and accepted
by the Reinsurer in accordance with the terms and conditions of this Agreement and the attached Schedules. 

  

	4.2	In no event shall reinsurance under this Agreement be in force with respect to a Policy unless the Reinsured is authorized to write and issue the Policy under the laws of all
applicable jurisdictions and the Reinsured’s corporate charter. 

  

	4.3	In no event shall reinsurance under this Agreement include any liability resulting from the participation by the Reinsured in any insurance or reinsurance pool, insolvency fund,
guaranty fund, or similar arrangements which provide for assessment of liabilities against the Reinsured. 

  

	4.4	 Reinsurer shall be bound by any Reinsurance Rate specified by it with respect to a particular Policy or Policies. Reinsurer reserves the right to change the
Reinsurance Rate when the Reinsured has the right to (a) terminate such Policy or Policies; or (b) change the rates charged 

  

 3 

	 	 
for such Policy or Policies. Any such change to the Reinsurance Rate will require at least sixty (60) days advance written notice by Reinsurer, provided
however that the sixty (60) days advance written notice must precede (a) the last day on which the Reinsured may cancel, terminate or renew an in-force Policy, or (b) charge a new insurance premium under the Policy. This advance
notice will be binding upon the Reinsured. 

  
 Article V -
Acceptance of Reinsurance 
  

	5.1	Automatic Reinsurance. The Reinsured shall cede and the Reinsurer shall accept on an automatic basis Policies described in Schedule B – Terms for Acceptance of
Reinsurance, attached hereto, if the following conditions are met: 

  

	 	5.1.1 	The Reinsured shall retain net to its own account its Quota Share participation as set forth in Schedule C- Quota Share Percentage hereto, provided however that nothing herein shall
prohibit the Reinsured from ceding any portion of its net retention to an Affiliate of the Reinsured. 

  

	 	5.1.2 	The Policy is underwritten in accordance with the underwriting rules, rates and practices established or approved by Reinsurer; and 

  

	 	5.1.3 	The Reinsured has not made a facultative application to the Reinsurer with respect to the Policy. 

  

	5.2	The Reinsurer shall have the right to change the underwriting rules, rates, forms and practices to be used by the Reinsured for Policies subject to Automatic Reinsurance, upon
ninety (90) days advance written notice to the Reinsured. 

  

	5.3	Facultative Reinsurance. The Reinsured shall cede and the Reinsurer will have the option of accepting on a facultative basis Policies described in Schedule B – Terms for
Acceptance of Reinsurance as follows: 

  

	 	5.3.1 	The Reinsured shall submit to the Reinsurer the policy form census data, and such other data as may be required by the Reinsurer. The Reinsurer shall then promptly instruct the
Reinsured in writing of its decision (the “Consent Document”) to accept, reject, or limit liability on the Policy within the terms of this Agreement; 

  

	 	5.3.2 	Restrictions or qualifications for providing such reinsurance shall be set forth in the Consent Document; and 

  

	 	5.3.3 	An underwriting analysis prepared by the Reinsurer in making its determination to accept, reject, or limit liability shall, at the request of the Reinsured, be made available to the
Reinsured. 

  

	5.4	Limitations on Acceptance of Reinsurance. Regardless of whether a Policy is Facultatively or Automatically reinsured, the following conditions shall apply before a Policy
will be considered reinsured pursuant to this Agreement. 

  

	 	5.4.1 	 For all Groups applying for a Policy, in response to which the Reinsured issues a quote without advance notice to the Reinsurer, intending the coverage to be
reinsured as Automatic Reinsurance, the Reinsurer will accept the coverage as 

  

 4 

	 	 
Automatic Reinsurance at the Reinsurance Rate quoted, provided the Reinsured has used the rate basis and underwriting guidelines previously approved by the
Reinsurer for determining the acceptability and rate for the Group. 

  

	 	5.4.2 	The Reinsurer reserves the right to limit or reject liability for Groups quoted by the Reinsured without advance notice to the Reinsurer provided the Reinsured has not used the rate
basis and underwriting guidelines previously approved by the Reinsurer. 

  

	5.5	Exclusive Reinsurance. The Reinsured may not pursue other means of reinsurance coverage for the liability other than the Reinsured’s Quota Share from any other Reinsurer
or entity on any Policy, unless the Policy has not been reinsured on an automatic basis hereunder and Reinsurer has rejected the Policy on a facultative basis and then only to the extent of the rejected coverages. 

  

	5.6	Evidence of Insurability. If the Reinsurer requires evidence of insurability on any individual(s) applying for insurance coverage, the Reinsured can accept liability for any
applicant in a Group using forms and procedures agreed to in advance with the Reinsurer. Issuance of a Policy or Policies by the Reinsured in accordance with the terms of this Agreement shall not waive this right of the Reinsurer.

  

	 	5.6.1 	The final Policy approved by the Reinsurer will contain any such requirements for evidence of insurability. 

  

	 	5.6.2 	The Reinsured shall keep and maintain all records of evidence of insurability, including but not limited to applications and medical forms, as the Reinsurer may deem necessary or
appropriate and in accordance with applicable law. These records shall be open for inspection, copying and use by the Reinsurer at its sole discretion. The Reinsured retains full ownership of all such records. 

  
 Article VI - Policy Forms and Rates 
  
 The Reinsured shall utilize only Policy forms and insurance rates, which have been approved
by appropriate state, provincial or other regulatory authorities, and approved by the Reinsurer prior to use. The Reinsured shall be responsible for filing and obtaining approval, where necessary, from state insurance departments, all such Policy
forms and insurance rates. If the forms and rates have been approved by the Reinsurer and issued by the Reinsured in accordance with the provisions of this Agreement, the Reinsurer shall be deemed to have approved of all terms of said forms.

  
 Article VII - Payments by Reinsured 
  

	7.1	Each month the Reinsured shall pay Reinsurer the Reinsurance Premium set forth on and in accordance with the terms of Schedule D – Remittances to the Reinsurer hereto. The
Reinsured shall make these payments by the 15th day of the month following the month in which such Reinsured Premium
became due. The Reinsured shall not be entitled to offset any claim payments under the Policy due, from the Reinsurance Premium payment to the Reinsurer. 

  

	7.2	The Reinsured shall remit the Reinsurance Premiums to Reinsurer together with the premium reports required by the provisions of Article VIII – Reports and Records.

  

 5 

	7.3	In the event of overdue premium under a Policy, the Reinsured shall take appropriate action to terminate all prospective liability in accordance with the provision of the Policy.
The Reinsured shall institute its usual collection procedures for past due premiums on all Policies for which premiums remain unpaid ninety (90) days following their due date to Reinsured. If the Reinsured fails to take appropriate action to
terminate all prospective liability, Reinsurer reserves the right to terminate the reinsurance provided under this Agreement with respect to those Policies for which the premiums remain unpaid ninety (90) days past their due date to Reinsured.
Such termination by the Reinsurer shall be in accordance with Article XV – Termination, sub-section 15.03 herein, notwithstanding any other provision in Article XV – Termination of this Agreement. 

  

	7.4	The payment of Reinsurance Premiums in accordance with the provisions of this article is a condition precedent to the liability of Reinsurer under this Agreement.

  

	7.5	If Reinsurance Premiums are not paid when due, Reinsurer may terminate this Agreement or any particular Policy for which Reinsurance Premiums are not timely paid, in accordance with
the termination provisions of Article XV – Termination herein. Reinsurer shall have the right to reinstate any such Policy or Policies after payment is made in full, subject to an applicable reinstatement date and other conditions as determined
by Reinsurer in writing. 

  

	7.6	Each month, as set forth in Article IX – Adjudication and Settlement of Claims, sub-section 9.08, the Reinsured shall also pay its proportionate Quota Share of Claims Expenses
incurred by DRMS, on behalf of the Reinsured and the Reinsurer, in accordance with the procedures established by DRMS, on behalf of the Reinsurer and Reinsured. 

  
 Article VIII - Reports and Records 
  

	8.1	Within fifteen (15) days after the end of each month, the Reinsured shall send Reinsurer a premium report as mutually agreed upon. Such report shall notify Reinsurer of all
Policies for which premium remains unpaid sixty (60) days following the due date. Reports to be mutually agreed upon by both parties. 

  

	8.2	The Reinsurer may, at any reasonable time and upon reasonable notice, have access to, inspect and copy the books, files, and records of the Reinsured relating in any way to this
Agreement and/or the reinsurance provided hereunder, including but not limited to the Policies, underwriting, reserving, premium billing, collection, and accounting with respect to the Policies, and Claims reinsured under this Agreement. DRMS’
claim files may be turned over to the Reinsured seven (7) years after the final termination of a claim. 

  
 Article IX - Adjudication and Settlement of Claims 
  

	9.1	Promptly upon receipt, and in no event less than three business days from the date of Reinsured’s receipt, the Reinsured shall transmit to the Reinsurer or DRMS, all notices of
claim, written proofs of loss, and supplemental statements of disability with regard to a Claim, as may be reasonably required by the Reinsurer, on forms approved by the Reinsurer. Compliance with this obligation shall be a condition precedent to
recovery under this Agreement. 

  

 6 

	9.2	DRMS on behalf of Reinsurer will evaluate and, to the extent it deems necessary, investigate the existence and amount of liability and make a timely claim recommendation to the
Reinsured. The Reinsured, or its duly authorized representative shall make the final determination concerning the nature and extent of its liability under its policies. In so doing, the Reinsured shall act in accordance with high quality, standard
industry-wide claims practices applicable to all claims, including non-reinsured claims, shall pay claims in accordance with the terms and conditions of the Policies, and shall in all cases act in good faith in light of any advice offered by DRMS,
on behalf of the Reinsurer with respect to a particular claim. The Reinsured’s final determination shall be based upon a reasoned determination regarding (a) whether the Claim is covered under the applicable Policy; (b) whether the
Claim triggers entitlement to any benefit; and (c) the calculation of the amount of any benefit to be paid in accordance with Policy provisions. 

  

	9.3	The Reinsured acknowledges that all claim decisions are the final responsibility of the Reinsured and that any advice or direction sought from Reinsurer does not constitute
discretionary authority to adjudicate claims by either DRMS or Reinsurer in the settlement of claims by the Reinsured. 

  

	9.4	The Reinsured, or DRMS, at the Reinsured’s written direction, shall take prompt and diligent steps to collect any overpayments made on any Claim. The Reinsured shall cooperate
fully with the Reinsurer in all appropriate and lawful overpayment collection steps with respect to such Claim overpayments. 

  

	9.5	Neither Reinsurer nor DRMS will contact any Claimant under a Claim or Policy insured under a Policy or an agent or broker for a Policy without the Reinsured’s prior consent.

  

	9.6	The Reinsurer shall reimburse the Reinsured for its proportionate share of those Claims for which the Reinsurer has recommended approval for payment. In the event of a payment by
the Reinsured for Contractual benefits, claims expenses incurred by the Reinsured in connection therewith shall be shared by the Reinsured and the Reinsurer in the same proportions governing this Agreement. 

  

	9.7	The Reinsured shall be liable for and shall pay its proportionate share of Claims Expenses, in accordance with the Reinsured’s Quota Share, incurred by DRMS in the evaluation,
investigation, and recommendation made on each Claim. 

  

	9.8	If the Reinsurer, in the exercise of its reasonable judgment, determines that the Reinsured’s claims handling practices and/or decisions are not satisfactory to the Reinsurer,
the Reinsurer shall notify the Reinsured in writing of that determination. The Reinsured and Reinsurer shall then negotiate, in good faith, whether (a) there will be no change in the current Agreement and relationship between the parties;
(b) DRMS will assume responsibility for direct management of all or some of the Claims; (c) to change the management fee, Reinsurance Premium, or Reinsurance Rates; (d) to change the Reinsurer’s Quota Share Percentage;
(e) to modify or amend this Agreement; or (f) to adopt any combination of the options described in this provision. In the event the parties are unable to agree on a resolution of this dispute, the Reinsurer may terminate this Agreement as
set forth in Article 15.04, or submit the dispute to arbitration as set forth in Article XII herein. 

  

	9.9	 If the Reinsured does not obtain written agreement from the Reinsurer for the settlement of a claim in addition to or in excess of contractual benefits, unless
determined otherwise under a 

  

 7 

	 	 
dispute resolution process as set forth in Article XII, the Reinsurer shall have no obligation, liability or exposure to reinsure, reimburse Reinsured, or
otherwise participate in the payment of such Extra-Contractual Amounts.” 

  
 Article X - Handling of Disputes 
  
 In the case of a Dispute by a Claimant or a Policy insured concerning Contractual Benefits under Policy, or Extra-Contractual Amounts, as defined herein, the Reinsured and Reinsurer shall have the following responsibilities: 
  

	10.1	Notice. Any party to this Agreement receiving notice that an insured is disputing the denial of benefits under a Policy, or the calculation of the amount or term of payment
of benefits, or that any other matter or issue arising under the Policy is being challenged through arbitration or litigation or that Extra-Contractual Amounts are being sought, shall advise the other in writing within fifteen (15) working days
of the receipt of such notice. Such timely notice is a condition precedent to the indemnification, reimbursement or any other obligations of the Reinsurer with respect to such Disputes. 

  

	10.2	Responsibility. Unless the Reinsured and Reinsurer agree to a different defense approach with respect to a Dispute, the defense shall be handled by the Reinsured.

  

	10.3	Reinsured’s Litigation. During the lawsuit, the Reinsured shall keep the Reinsurer regularly informed and updated on developments in the lawsuit, and shall involve the
Reinsurer in all settlement and mediation preparation, strategy, and discussion, in accordance with the joint defense attorney-client privilege. 

  

	10.4	Cooperation. The parties shall cooperate fully in good faith in the defense of any Disputes, excluding declaratory relief actions against each other, naming either one, and
each may make recommendations to the other regarding the handling of all significant aspects of those Disputes in which it is not named. No settlement of any Dispute which would involve payment by the Reinsured and reimbursement by the Reinsurer can
be entered into without the consent of both the Reinsured and Reinsurer. 

  
 Article XI - Disputes and Payments by Reinsurer 
  

	11.1	Disputes Regarding Contractual Benefits. The Reinsurer shall be liable to the Reinsured for its proportionate share of the Contractual Benefits reinsured under this Agreement
and paid by the Reinsured to the extent the Reinsurer has recommended or agreed in writing to such payment. 

  

	 	11.1.1 	If the Reinsured takes action on a Claim which is contrary to the Reinsurer’s recommendations or to the terms of this Agreement, without first obtaining the Reinsurer’s
express written consent, the Reinsurer’s liability for any Contractual Benefits shall be limited to (i) its proportionate share of the amount which the Reinsurer has recommended be paid, if any, where the Reinsured pays an amount greater
than that which the Reinsurer had recommended; or (ii) the proportionate share of the amount which the Reinsured actually pays, where the Reinsured pays an amount which is less than that which the Reinsurer has recommended.

  

 8 

	 	11.1.2 	In the event the Reinsurer recommends settlement of a Dispute and advances sums to the Reinsured for the settlement of the Claim or Dispute at any time prior to the 30th day following receipt of notice of such Claim or Dispute, the Reinsurer shall not be liable for any Extra-Contractual Amounts
attributable solely to any subsequent failure or refusal of the Reinsured to settle the Claim or Dispute for an amount equal to or less than the amount recommended by the Reinsurer. 

  

	 	11.1.3 	In the event the parties, having negotiated in good faith, cannot agree on the amount to be reimbursed by the Reinsurer for Contractual Benefits, the issue shall be determined by
arbitration in accordance with Article XII - Arbitration. 

  

	11.2	Disputes Regarding Extra-Contractual Amounts. If Extra-Contractual amounts are awarded upon judgment and/or affirmed after appeal, or if the parties otherwise agree to share in the
payment of any Extra-Contractual Amounts, responsibility for the payment of such amounts shall be as follows: 

  

	 	11.2.1 	The parties may pay Extra-Contractual Amounts awarded, in such amounts as they agree, in writing. 

  

	 	11.2.2 	The Reinsurer shall only participate in the payment of Extra-Contractual Amounts awarded, if the Reinsurer elected in writing to join in the conduct resulting in the Claim or
Dispute or if the Reinsurer was an active party and recommended the act, omission or course of conduct which ultimately resulted in the assessment of such Extra-Contractual Amounts. 

  

	 	11.2.3 	In those circumstances when the Reinsurer is obligated to pay Extra-Contractual Amounts, the amount to be paid by each party shall be based upon an equitable apportionment of the
respective fault of the parties, and not upon the parties’ respective proportionate share of the Claim that gave rise to the Extra-Contractual Amount under this Agreement. Fault shall be assigned on a percentage basis to the party or parties
whose acts or omissions were responsible for the imposition of the Extra-Contractual Amounts. Such equitable determination of fault is solely for the purpose of efficient administration of the Agreement and for determining who shall assume liability
for the payment of Extra-Contractual Amounts as well as the Costs of Litigation in the instances described in Article 11.3. 

  

	11.3	In the event the Reinsurer actively participates in the defense of a Disputed Claim, it shall be wholly liable for its own Costs of Litigation. 

  

	11.4	Advances. If the Reinsurer approves a lump sum settlement of a Claim, the Reinsurer shall make advancements to the Reinsured in the following amounts; (a) for the benefit
portion of the settlement, its proportionate share under this Agreement including its proportionate share of any interest; and (b) for any Extra-Contractual Amounts, to be decided on a case-by-case basis. Advances by the Reinsurer for the
benefit portion of a settlement shall not constitute any admission of liability whatsoever for any Contractual Benefits or Extra-Contractual Amounts. 

  

 9 

 Article XII – Arbitration 
  

	12.1	Formal Dispute Resolution. Before initiating formal arbitration proceedings to resolve any Dispute between the Reinsured and the Reinsurer, the Reinsured and Reinsurer shall
make best efforts to resolve all disputes through negotiation. Specifically, in the event of such Dispute, each Party shall designate a representative to confer and attempt to resolve this Dispute within a twenty (20) calendar day period.

  

	12.2	All differences between the Reinsured and the Reinsurer on which agreement cannot be reached, including those arising out of as well as those relating to this Agreement, will be
decided by arbitration in accordance with the rules and procedures set forth herein, except for those matters which are left to the sole discretion of the Reinsurer under the terms of this Agreement. As a condition precedent to any right of action
hereunder, if any dispute arises between the Reinsured and Reinsurer arising out of or relating in any way to this Agreement, whether the dispute arises before or after termination of the Agreement, such dispute, upon written demand of either party,
shall be submitted to three arbitrators. The party demanding arbitration shall designate its arbitrator in the written demand. 

  

	12.3	The arbitrators will interpret this Agreement in accordance with its terms, the terms of the applicable Policy, if any, and, as applicable, federal or state law, without regard to
choice of law principles. 

  

	12.4	Unless the parties mutually agree otherwise, the arbitrators and umpire must be disinterested current or retired executive officers of accident and health, life insurance, or
reinsurance companies assuming disability insurance coverages or attorneys with a recognized expertise in disability insurance and/or disability reinsurance fields. 

  

	12.5	One of the arbitrators is to be appointed by the Reinsured and one by the Reinsurer and these two will select an umpire. If the party not instituting the arbitration refuses or
neglects to appoint an arbitrator within thirty (30) days after the receipt of written notice from the requesting party, the requesting party may appoint the other party’s arbitrator. If the two arbitrators selected by the parties, or by
the one party as set forth herein, fail to agree in the selection of a third arbitrator within thirty (30) days of their appointment, each of them shall name three, of whom the other shall decline two and the decision shall be made by drawing
lots. 

  

	12.6	The arbitrators have the discretion to determine what is relevant evidence to the Dispute. The arbitrators shall issue a reasoned decision in writing, explaining its findings and
the factual and legal bases for its findings. If allowed by the applicable state or federal law the arbitrators shall be entitled to award reasonable attorneys’ fees and Extra-Contractual, but not punitive damages. 

  

	12.7	 The arbitrators’ decision will be by a majority vote and will be final and binding on both parties. Each party will have full appellate rights permitted under
applicable law, including the Federal Arbitration Act, with respect to the arbitrator’s decision. Judgment may be entered upon the final decision of the arbitrators in any court having proper jurisdiction. Each party shall bear the expenses of
its appointed arbitrator and shall share equally in the reasonable expenses of the umpire and the costs of the arbitration proceedings. The 

  

 10 

	 	 
arbitration shall take place in the State of Pennsylvania unless otherwise mutually agreed by the parties. 

  

	12.8	Evidence to be Considered in a Dispute Regarding Contractual Benefits. In the event that an arbitration involves a dispute regarding Contractual Benefits, the arbitrators
shall determine to what extent, if any, the benefits in dispute should have been paid, using the terms of the Policy in question, this Agreement, and the facts particular to the Claim. To the extent the arbitrators determine benefits in dispute are
payable, the Reinsurer shall reimburse to the Reinsured its proportionate share in accordance with this Agreement. 

  

	12.9	Evidence to be Considered in a Dispute Regarding Extra-Contractual Amounts. In the event that an arbitration involves a dispute regarding Extra-Contractual Amounts, the
arbitrators’ decision shall be governed by the equitable allocation requirements of Article XI – Disputes and Payments by the Reinsurer, sub-section 11.2.2. 

  
 Article XIII – Reinstatements 
  

If a Policy lapses for nonpayment of premium and is reinstated in accordance with the terms and the rules of the Reinsured, the Reinsurer may reinstate its reinsurance
of the Policy. The Reinsured shall include such reinsurance of this Policy in the first report submitted to Reinsurer in accordance with Article VIII – Reports and Records herein, the “Reports” following the reinstatement. If the
Reinsured collects premiums in arrears from the Policyholder of the Policy, the Reinsured shall pay Reinsurer its Reinsurance Premium, together with interest at the same rate and in the same manner as received by the Reinsured under the Policy.

  
 Article XIV – Recapture 
  

	14.1	Recapture at the Option of Reinsured. In the event of termination of this Agreement by Reinsured as provided under Article XV - Termination, and at the option of the
Reinsured, the Reinsured may recapture one hundred percent (100%) of the Reinsurer’s liability for Policies reinsured hereunder after the first anniversary of the termination date of this Agreement, and upon ninety (90) days advance
written notice, given by the Reinsured at any time after this first anniversary of the termination date. 

  

	14.2	Recapture Prior to Termination. The Reinsured may, with 90 (ninety) days advance written notice and, at its option, recapture up to 10% of the Reinsurer’s liability for
Policies reinsured hereunder as of January 1st of any year. At no time will the Reinsurer’s liability for
Policies reinsured be allowed to go below forty percent (40%) Quota Share participation without the prior approval of the Reinsurer. 

  

 11 

	14.3	Circumvention. The recapture will begin on the first of the month following expiration of the ninety (90) day notice period. Recapture will not be circumvented or
avoided by: 

  

	 	14.3.1	 termination and reissue by the Reinsured of a Policy or Policies, or 

  

	 	14.3.2	 issuance of all or a portion of the Policy through a subsidiary or affiliate of the Reinsured without the Reinsurer’s written consent. Consent shall not be withheld if
Policy termination was at the policyholder’s request and the Reinsurer is presented with reasonable evidence that the Reinsured did not instigate such request. 

  
 Article XV – Termination 
  

	15.1	Termination by Mutual Agreement. This Agreement may be terminated in whole or in part, with respect to all or any particular Policy or Policies, at any time by mutual written
agreement of the parties. 

  

	15.2	Termination without Cause. On ninety (90) days written notice, this Agreement may be terminated by either party with respect to any Policy or all Policies covered under
this Agreement but not yet ceded to the Reinsurer and accepted by the Reinsurer as Covered Business hereunder. 

  

	15.3	Termination For Non-payment of Premium. If the Reinsured fails to terminate a Policy for non-payment of the premium by the Policyholder to the Reinsured, as set forth in
Article VII – Payments by Reinsured, sub-section 7.3, the Reinsurer shall have the right to terminate its reinsurance for the Policy, effective as of the end of the grace period in the Policy for payment of premium by the Policyholder.

  

	15.4	Termination under Article IX – Adjudication and Settlement of Claims, sub-section 9.9. In the event the parties are unable to resolve a disagreement of the type
described in Article IX – Adjudication and Settlement of Claims, sub-section 9.9, the Reinsurer, at its option, may terminate this Agreement on ninety (90) days prior written notice to the Reinsured. 

  

	15.5	Immediate Termination with Notice. This Agreement may be terminated by either party, immediately upon delivery of written notice in the event the Reinsured or Reinsurer loses
its license and/or authority to conduct insurance business in any state. 

  

	15.6	Automatic Termination without Notice. This Agreement shall automatically terminate upon the earlier of a filing for bankruptcy protection by either party or the adjudication
by a court of competent jurisdiction that either party is bankrupt. 

  

	15.7	Termination with Cause. This Agreement may be terminated at any time in whole or in part with respect to any one Policy or Policies, by either party for cause, including in
the event that the Reinsured or Reinsurer is deemed to be in default of any of the material terms contained in this Agreement. In the event of default, the non-defaulting party must give written notice of such default and there shall be a thirty
(30) day period within which the defaulting party shall have the opportunity to cure the default, before notice of termination can be given. If the default is not cured, then notice of termination must be given to the defaulting party, in
writing and as set forth herein. Termination in the event of default and written notice shall be effective immediately upon receipt of written notice. Default by the Reinsured shall include, but is not limited to, the failure of the Reinsured to
collect premium payments owed by an insured within ninety (90) days from the due date, and/or to timely remit any Reinsurance Premiums to the Reinsurer. 

  

 12 

	15.01	Ongoing Obligations of the Parties. 

  

	 	15.5.1  	Upon termination of this Agreement, no parties shall have any further obligation pursuant to the terms of this Agreement except for (i) obligations occurring prior to the date
of termination, and (ii) obligations, promises or covenants contained herein which are expressly made to extend beyond the term of this Agreement. 

  

	 	15.5.2  	Termination of this Agreement with respect to any Policy or Policies in force as of the date of termination shall not terminate the rights and liabilities either party incurred
prior to such termination. However, Reinsurer shall have no liability on any Policy or Policies that were not issued and in force as of the date of termination. 

  
 Article XVI - Statutory Provisions – Insolvency 
  

	16.1	General Terms. The Reinsurer agrees that all reinsurance under this Agreement shall be payable by the Reinsurer on the basis of the liability for payment, if any, of the
Reinsured under each Policy reinsured under this Agreement without diminution because of the insolvency of the Reinsured, and the Reinsurer assumes liability for such reinsurance as of the effective dates of such Policies. Any such payments by the
Reinsurer shall be made directly to the Reinsured or to its liquidator, receiver, or statutory successor. In the event of the insolvency of the Reinsured, the liquidator or receiver, or statutory successor of the Reinsured shall give written notice
of the pendency of a Claim against the Reinsured with respect to Policies within a reasonable time after such Claim is filed in the insolvency proceedings. 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 which it may deem available to the Reinsured or its liquidator or receiver or statutory successor. The expense thus incurred by the Reinsurer shall be
chargeable, subject to court approval, against the Reinsured as part of the expenses of liquidation to the extent of a proportionate share of the benefit which may accrue to the Reinsured solely as a result of the defense undertaken by the
Reinsurer. 

  

	16.2	Defenses to Payment. This insolvency clause shall not preclude the Reinsurer from asserting any excuse or defense to payment of reinsurance other than the excuses or defenses
on the insolvency of the Company and the failure of the Reinsured’s liquidator, receiver, conservator or statutory successor to pay all or a portion of any Claim. 

  
 Article XVII – Reserves 
  
 The Reinsurer shall maintain legal reserves with respect to unearned premiums and Claims hereunder and, upon request, shall furnish the Insurer evidence of such reserves.
In the event the reserves reported by the Insurer and the Reinsurer for the business reinsured hereunder are materially different, the parties agree to cooperate with each other in reconciling such difference. If the difference cannot be reconciled,
the parties may submit the matter to arbitration. 
  

 13 

 Article XVIII – Statutory Reserve Credit 
  
 The Reinsurer represents it is currently authorized to conduct the business of reinsurance
in the District of Columbia and all states of the United States, except for the State of New York, and is not aware of any fact that would prevent the Insurer from taking a full statutory credit applicable to Policies in all jurisdictions other than
New York. The Reinsurer will confirm, at least annually, at the Insurer’s request, that the above representation continues to be true. 
  
 Article XIX – Complete Agreement 
  
 This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements with respect to the subject matter hereof, whether written
or oral. Nothing contained in this Agreement or in the forms issued by the Reinsured shall create any right or legal relation between the Reinsurer and any person holding or owning such policy form or forms, or the insured or beneficiary under same,
or any sales representative or employee of the Reinsured; the liability of the Reinsurer is limited to the parties to and the terms of this Agreement. This Agreement may only be modified in writing, signed by the authorized officers of DRMS, on
behalf of the Reinsurer, and the Reinsured. 
  
 Article XX – Delays,
Errors, or Omissions 
  
 Inadvertent delays, errors or omissions made by
either party in connection with this Agreement shall not relieve the other party from any liability or duty which would have attached had such delay, error or omission not occurred, provided that such error or omission is rectified as soon as
reasonably possible after discovery. Failure of either party to complain of any act or omission on the part of the other party, no matter how long the act or omission may continue, shall not be deemed to be a waiver by said party of any of its
rights under this Agreement. A waiver by either party at any time, express or implied, of the breach of any term or condition of this Agreement shall not be deemed a waiver or any other terms or conditions of this Agreement, nor a consent to any
subsequent breach of the same or other conditions of this Agreement. 
  
 Article XXI – Assignment 
  
 The Reinsured shall not
without the prior written consent of the Reinsurer, sell, assign, transfer, or otherwise dispose of this Agreement or any interest in or obligation under this Agreement by voluntary or involuntary act, and any such purported action shall be null and
void and of no force and effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective agents, subsidiaries, parent companies, successor entities and permitted assigns. 
  
 Article XXII – Governing Law 
  
 This Agreement shall be governed by the laws of the State of Pennsylvania without regard to
any conflict of law principles. 
  

 14 

 Article XXIII – Proprietary Material 
  
 During the course of this Agreement the Reinsured and the Reinsurer may make technical materials such as underwriting manuals and rating
systems available to each other. Each party acknowledges that all such material is offered on a proprietary basis, for the sole purpose of enhancing this Reinsurance arrangement. Further, each party agrees that the original owner of these materials
is deemed to be the sole owner of these materials and will not give or communicate such materials to any person or persons who is (are) not a direct party (parties) to this Agreement, except as required by the order of any court or arbitration
panel. 
  
 Article XXIV – Intermediary 
  
 D. W. Van Dyke and Company of Connecticut Inc., 323 Riverside Avenue, Westport, Connecticut
06880, is hereby recognized as the Intermediary negotiating this Agreement for all Covered Business hereunder. All communications, (including, but not limited to, notices, statements, premiums, return premiums, allowances, taxes, claims, claim
adjustment expenses recoveries and refunds)) relating thereto shall be transmitted to the Reinsured or to the Reinsurer through the office of D. W. Van Dyke and Company of Connecticut. Payments by the Reinsured to the Intermediary shall be deemed to
constitute payment to Reinsurer. Payment by the Reinsurer to the Intermediary shall be deemed only to constitute payment to Reinsured to the extent that such payments are actually received by the Reinsured. 
  
 Article XXV – Reinsurer 
  
 In the event that DRMS changes the Reinsurer identified herein, it agrees to obtain another
“A rated” carrier, as determined by the most current rating of AM Best. If the new Reinsurer poses a competitive business concern to the Reinsured, DRMS will use its best efforts to find a replacement that is acceptable to the Reinsured.
Acceptance by the Reinsured shall not be unreasonably withheld, and disapproval of the new Reinsurer by the Reinsured shall not be grounds for termination of this Agreement, unless such new Reinsurer would result in violations of or lack of
compliance with any applicable laws or regulations by the Reinsured. 
  
 Article XXVI – Access to Records 
  
 Reinsurer or the
Reinsured may have access, at any reasonable time on reasonable prior written notice, and at its own expense, to inspect, audit and copy all records, files, books and procedures relating to reinsurance under this Agreement. The party subject to
inspection shall fully cooperate, including providing any information requested by the other in advance of the inspection or audit. If, or the result of any inspection or audit, the Reinsurer or Reinsured is dissatisfied with the performance of the
other party under this Agreement, that party shall, in the exercise of its reasonable judgment, be entitled to exercise the option outlined in Article IX – Adjudication and Settlement of Claims, sub-section 9.04 herein. 
  
 Article XXVII – Severability 
  
 Any provision of this Agreement which is invalid or unenforceable in any jurisdiction shall
be ineffective to the extent of such invalidity or unenforceability without invalidating or rendering 

  

 15 

 
unenforceable the remaining provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction. 
  
 Article XXVIII –
Confidentiality 
  

	28.1	Nondisclosure. The Reinsured and the Reinsurer may come into the possession or knowledge of confidential and proprietary information of the other in fulfilling obligations
under this Agreement. The Reinsured and the Reinsurer agree to hold all such Confidential Information in strictest confidence and to take all reasonable steps to ensure that such Confidential Information is not disclosed in any form by any means by
each of them or by any of their employees or agents, employees and representatives to third parties of any kind, except by advance written authorization. 

  

	28.2	Confidential Information Defined. Any information which (1) is not generally available to the public, or (2) has not been lawfully obtained by the disclosing party
prior to the date of disclosure to it by the other, and includes but is not limited to: 

  

	 	28.2.1 	Information or knowledge about each party’s products, processes, services, finances, customers, research, computer programs, marketing and business plans, claims management and
adjudication practices, and reserving methodology; and 

  

	 	28.2.2 	Any medical and other personal, individually identifiable information about people or business entities with whom the parties do business, including customers, prospective
customers, vendors, suppliers, individuals covered by the Policies subject to this Agreement and each party’s producers and employees. 

  

	28.3	Representations. The Reinsured and its agents, employees and representatives will not represent themselves, in writing, as part of the Reinsurer, or refer, in writing, as
part of the Reinsurer, or refer, in writing, to the Reinsurer in any Policy forms or promotional materials, without the prior written consent of the Reinsurer. 

  

	28.4	Exception to Confidentiality. Nothing in this Article shall prevent either party from disclosing any information or knowledge about the other parties’ response to
compulsory process in any regulatory inquiry or other legal proceeding. However, the party being compelled to make such disclosure shall give the other party prompt written notice of the disclosure request to enable that party to take any necessary
steps to preserve the confidentiality of information described herein. 

  

	28.5	Survival. The parties’ obligations under this Article shall survive the termination of this Agreement. 

  

 16 

 Article XXIX – Privacy 
  
 In recognition of the importance of protecting consumer health and financial information and in consideration of the mutual understandings
and undertakings set forth herein, the parties agree to the following: 
  

	29.1	The parties represent that they have and that they are in compliance with federal and state laws and regulations, and with policies, standards and procedures for the protection of
the privacy of consumer health and financial information obtained under the Agreement. 

  

	29.2	The parties agree that all consumer health information and consumer financial information is confidential and to be used only in connection with the services provided under this
Agreement. 

  

	29.3	The parties agree to permit each other access to the policies, standards and procedures each as implemented for the protection of privacy of consumer health and financial
information and further agrees to provide written copies of such policies, standards and procedures upon written request. 

  

	29.4	For purposes of this Amendment: (1) “consumer health information” means any information or data other than age and gender, that relates to the past, present or future
physical, mental or behavioral health or condition of an individual, provision of health care to an individual, or payment for health care. Consumer health information includes any such information whether written, oral or in any other form or
medium; and (2) “consumer financial information” means all information, other than consumer health information, whether written, oral or in any other form or medium. 

  

	29.5	The parties’ obligations under this Article shall survive the termination of this Agreement.  

  
 Article XXX – Notice 
  
 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, registered mail, return receipt requested: 
  

	 	1.	If to the Reinsured: 

 Educators Mutual Life
Insurance Company 
 202 North Prince Street 
 P.O. Box 83149 
 Lancaster, PA 17608-3149 
 Attn: Scott Humpert 
 Facsimile #: (717)
481-7180 
  

	 	2.	If to the Reinsurer: 

 Disability Reinsurance
Management Services, Inc. 
 One Riverfront Plaza 
 Westbrook, ME 04092-9700 
 Attn: Andrew Bernstein, Secretary, VP & General Counsel 
 Facsimile #: (207) 591-3265 
  

 17 

 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers duly
authorized so to do as of the date set forth above. 
  
 Signed for and on behalf
of: EDUCATORS MUTUAL LIFE INSURANCE COMPANY 
  
 In Lancaster, PA
this 2 day of December 2004 
  

			
	By:	 	

	Title	 	VP & Actuary
	Date	 	 12-2-04

	Witness:	 	

  
 DISABILITY REINSURANCE
MANAGEMENT, signed for and on behalf of: FORTIS BENEFITS INSURANCE COMPANY 
  
 In Westbrook, ME this
17th day of Nov. 2004 
  

			
	By:	 	

	Title	 	VP, General Counsel
	Date	 	 11-17-04

	Witness:	 	

  

 18 

 SCHEDULE A 
  
 COVERED BUSINESS 
  

	A.	Except as expressly excluded herein, the Policies subject to this Agreement and known as Covered Business shall be limited to Accident and Health Policies for Employer Group LTD
Plans. 

  

	B.	Exclusions. In addition to any exclusions contained in the Policy(ies) reinsured under this Agreement, the Reinsurer shall have no liability for the following:

  

	 	1.	Any disability insurance policies, and coverage thereunder, governed by a pre-existing reinsurance agreement between the Reinsured and the Reinsurer. 

  

 19 

 SCHEDULE B 
  
 TERMS FOR ACCEPTANCE OF REINSURANCE 
  

	A.	Employer Group Plans: 

  
 Employer Group Plans for long-term disability benefits shall be accepted by the Reinsurer for reinsurance at the Reinsured Percentage as Automatic
Reinsurance, if the proposed group plan applies to less than three hundred (300) Eligible Lives. Employer Group Plans for long-term benefits shall be accepted at the Reinsured Percentage as Facultative Reinsurance, if the proposed group plan
applies to three hundred (300) Eligible Lives or more. The Key Series plans and successor products shall be accepted at the Reinsured Percentage as Automatic Reinsurance. 
  
 The maximum Benefit reinsured under this Agreement shall not exceed thirty thousand dollars ($30,000) per month per insured.

  

	B.	Definitions: “Eligible Lives” shall mean the number of employees of any given employer Group with access to the disability benefits coverage under the Policy, as
determined by the employer. 

  

 20 

 SCHEDULE C 
  
 QUOTA SHARE PERCENTAGE 
  

For Groups with a Monthly Maximum Benefit of six thousand dollars ($6,000) or less: 
  
 The Reinsurer’s Quota Share of reinsured benefits provided pursuant to each Claim under the Policy shall equal 50% of
each Claim. 
  
 The Reinsured’s Quota Share of reinsured
benefits provided pursuant to each Claim under the Policy shall equal 50% of each Claim. 
  
 For Groups with a Monthly Maximum Benefit in excess of six thousand dollars ($6,000): 
  
 The Reinsurer’s Quota Share of reinsured benefits provided pursuant to each Claim under the Policy shall equal 50% of amounts up to six thousand
dollars ($6,000) per month for each claimant and 100% of amounts in excess of six thousand dollars ($6,000) per month for each claimant. This excess coverage shall only apply to any claimant with an original gross monthly benefit in excess of six
thousand dollars ($6,000). For Claims with a COLA benefit, the Reinsurer shall only pay the portion of the COLA benefit that is attributable to the COLA percentage applied to the benefit amount that the Reinsurer is responsible for in the absence of
such COLA benefit. 
  
 The Reinsured’s Quota Share of
reinsured benefits provided pursuant to each Claim under the Policy shall equal 50% of amounts up to six thousand dollars ($6,000) per month for each claimant and 0% of amounts in excess of six thousand dollars ($6,000) per month for each claimant.
For Claims with a COLA benefit, the Reinsured shall pay the portion of the COLA benefit that is attributable to the COLA percentage applied to the benefit amount that the Reinsured is responsible for in the absence of such COLA benefit. 

 

 21 

 SCHEDULE D 
  
 REMITTANCES to the REINSURER 
  

	1.	True Group Disability Insurance. The Reinsurer’s Share of Gross Collected Premium for True Group Disability Policies shall be determined by the Reinsurer on a
case-by-case (employer group) basis, based upon an expense schedule issued by the Reinsured and upon other factors as may be agreed by the parties. The Reinsurer shall issue a “Sold Case Confirmation” form, establishing the Reinsured
Percentage for such Policy. Each Sold Case Confirmation form shall refer to this Agreement, and shall contain an Effective Date, and each such document is hereby incorporated herein by reference. 

  

	2.	Furthermore, there shall be a 9% Management Fee on each Group. This fee is calculated based on a ratio of 9/100ths of the premium that would be paid if the Group were 100% reinsured; such rate is labeled on the Sold Case Confirmation form as the “100% Reinsurance
Rate”. The “Coinsurance Rate” that is specified on the Sold Case Confirmation form will include both the Management Fee and the premium necessary to cover the Reinsurer’s share of the insured risk. 

  

 22

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