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Document Preview Automatic and Facultative Yearly Renewable Term Reinsurance Agreement |
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Title: |
Automatic and Facultative Yearly Renewable Term Reinsurance Agreement |
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Date: |
2005 |
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Preview shows 16KB of 79KB total |
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Price: |
$58 |
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ID: |
#2488049 |
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AUTOMATIC AND FACULTATIVE YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
1. PARTIES TO THE AGREEMENT
This Agreement is solely between AUSA and PRUCO, a life insurance company domiciled in the State of Arizona. There is no
third party beneficiary to this Agreement. Reinsurance under this Agreement will not create any right or legal relationship
between AUSA and any other person, for example, any insured, policyowner, agent, beneficiary, or assignee. PRUCO agrees
that it will not make AUSA a party to any litigation between any such third party and PRUCO. PRUCO will not use or disclose
AUSA's name with regard to PRUCO's agreements or transactions with these third parties unless AUSA gives prior written
approval for the use or disclosure of its name or unless PRUCO is compelled by law to do so.
The terms of this Agreement are binding upon the parties, their representatives, successors, and assigns. The parties to
this Agreement are bound by ongoing and continuing obligations and liabilities until the later of (1) when this Agreement
terminates and (2) when the underlying policies are no longer in force. This Agreement shall not be bifurcated, partially
assigned, or partially assumed.
2. EFFECTIVE DATE OF THE AGREEMENT
This Agreement will be effective as of 12:01 A.M., January 1, 2000, and will cover policies effective on and after that date.
3. SCOPE OF THE AGREEMENT
The text of this Agreement and all Exhibits, Schedules and Amendments are considered to be the entire agreement between the
parties. There are no other understandings or agreements between the parties regarding the policies reinsured other than as
expressed in this Agreement. The parties may make changes or additions to this Agreement, but they will not be considered
to be in effect unless they are made by means of a written amendment that has been signed and dated by both parties.
4. DURATION OF THE AGREEMENT
The duration of this Agreement will be unlimited. However, either party may terminate the Agreement for new business at any
time by giving the other a 90-day prior written notice. AUSA will continue to accept new reinsurance during the 90-day
period.
In addition, this Agreement may be terminated immediately for the acceptance of new reinsurance by either party if one of
the parties materially breaches this Agreement or becomes insolvent.
Existing reinsurance will not be affected by the termination of this Agreement with respect to new reinsurance. Existing
reinsurance will remain in force until the termination or expiry of the underlying policies on which the reinsurance is
based as long as PRUCO continues to pay reinsurance premiums as described in Section 12. However, existing reinsurance may
be terminated in accordance with the recapture provision described in Section 20.
5. BASIS OF REINSURANCE
Reinsurance under this Agreement will be on the Yearly Renewable Term basis for the net amount at risk on the portion of
each policy that is reinsured as described in Schedule A.
6. AUTOMATIC REINSURANCE TERMS
AUSA agrees to automatically accept contractual risks on the life insurance plans shown in Schedule A, subject to the
following requirements:
a. CONVENTIONAL UNDERWRITING. Automatic reinsurance applies only to insurance applications underwritten by PRUCO according to
PRUCO's conventional underwriting and issue practices. Upon request, PRUCO shall provide AUSA with a copy of its
current underwriting and issue practices and guidelines.
In the event of significant changes in underwriting practices in the industry, it may be appropriate for PRUCO or AUSA
to request of the other party changes in the underwriting requirements. The party requesting the change must provide a
120-day advance written notice to the other party before the effective date of such change. Recognition of reinsurance
premium rates related to these changes must be determined within the 120-day period. If the underwriting change or rate
change is unacceptable to either party, this Agreement may be unilaterally terminated for acceptance of new business
with a 90-day written termination notice to the other party.
b. RESIDENCE. To be eligible for automatic reinsurance, each insured must either be a resident of the United States or Canada
at the time of issue or be a resident of another country that meets PRUCO's special underwriting requirements pertaining
to foreign residence.
c. OCCUPATION. To be eligible for automatic reinsurance, the insured must not be employed in an occupation as shown in the
Occupation Exclusion List in Schedule A.
d. AUTOMATIC PORTION REINSURED. For any policy reinsured under automatic reinsurance, the portion reinsured is shown in
Schedule A.
e. RETENTION. PRUCO will retain, and not otherwise reinsure, an amount of insurance on each life equal to its retention shown
in Schedule A.
f. AUTOMATIC ACCEPTANCE LIMIT. For any policy to be reinsured under automatic reinsurance, the face amount shall not exceed
the Automatic Acceptance Limit as shown in Schedule A.
g. JUMBO LIMIT. For any policy to be reinsured under automatic reinsurance, the total amount of insurance in force and applied
for in all companies shall not exceed the Jumbo Limit as shown in Schedule A.
h. MINIMUM CESSION. The minimum amount of reinsurance per cession that AUSA will accept is shown in Schedule A.
i. FACULTATIVE QUOTES. The risk shall not have been submitted on a facultative basis to AUSA or any other reinsurer.
7. AUTOMATIC REINSURANCE NOTICE PROCEDURE
After the policy has been paid for and delivered, PRUCO will submit all relevant individual policy information, as defined
in Schedule C, in its next statement to AUSA.
8. FACULTATIVE OBLIGATORY REINSURANCE
When a policy does not qualify for automatic reinsurance because (1) the Automatic Acceptance Limit is exceeded, (2) the
Jumbo Limit is exceeded or (3) the applicant is employed in an occupation included in the Occupation Exclusion List in
Schedule A, PRUCO may make a request to reserve capacity through facultative obligatory reinsurance by contacting AUSA by
facsimile. The request will include the name of the insured, date of birth, ceding company, amount applied for and amount
inforce. If PRUCO reserves capacity and the policy is issued, PRUCO must submit a form substantially similar to the
"Notification of Reinsurance" form shown in Schedule F.
9. FACULTATIVE REINSURANCE
PRUCO may apply for facultative reinsurance with AUSA on a risk if the automatic reinsurance terms are not met or if the
terms are met and it prefers to apply for facultative reinsurance. To obtain a facultative reinsurance quote, PRUCO must
submit the following:
a. A form substantially similar to the "Application for Reinsurance" form shown in Schedule E.
b. Copies of the original insurance application, medical examiner's reports, financial information, and all other papers and
information obtained by PRUCO regarding the insurability of the risk.
After receipt of PRUCO's application, AUSA will promptly examine the material and notify PRUCO either of the terms and
conditions of AUSA's offer for facultative reinsurance or that no offer will be made. AUSA's offer expires 120 days after
the offer is made unless the written offer specifically states otherwise. If PRUCO accepts AUSA's offer, then PRUCO will
make a dated notation of its acceptance in its underwriting file and mail as soon as possible a formal reinsurance cession
to AUSA using a form substantially similar to the Notification of Reinsurance form shown in Schedule F. If PRUCO does not
accept AUSA's offer, then PRUCO will notify AUSA in writing as soon as possible.
10. COMMENCEMENT OF REINSURANCE COVERAGE
Commencement of AUSA's reinsurance coverage on any policy or pre-issue risk under this Agreement is described below:
a. AUTOMATIC REINSURANCE. AUSA's reinsurance coverage for any policy that is ceded automatically under this Agreement will
begin and end simultaneously with PRUCO's contractual liability for the policy reinsured.
In addition, AUSA will be liable for benefits paid under PRUCO's conditional receipt or temporary insurance agreement if
all of the conditions for automatic reinsurance coverage under Section 6 of this Agreement are met. AUSA's liability
under PRUCO's conditional receipt or temporary insurance agreement is limited to the lesser of (1) AUSA's reinsured
portion of the face amount of the policy and (2) $200,000.
b. FACULTATIVE OBLIGATORY REINSURANCE. AUSA's reinsurance coverage for any policy that is ceded under the terms of facultative
obligatory reinsurance in this Agreement will begin when (1) PRUCO accepts AUSA's offer by making a dated notation of
its acceptance in its underwriting file and mailing the "Notification of Reinsurance" form to AUSA and (2) the policy
has been issued.
In addition, AUSA will be liable for benefits paid under PRUCO's conditional receipt or temporary insurance agreement if
the conditions for automatic reinsurance stated in Section 6a, b, e, h, and i of this Agreement are met. AUSA's
liability under PRUCO's conditional receipt or temporary insurance agreement will be limited to the portion of
$1,000,000 that is derived as the amount of capacity reserved by PRUCO from AUSA divided by the total amount of capacity
reserved by PRUCO from all reinsurers.
c. FACULTATIVE REINSURANCE. AUSA's reinsurance coverage for any policy that is ceded facultatively under this Agreement shall
begin when (1) PRUCO accepts AUSA's offer by making a dated notation of its acceptance in its underwriting file and
mailing the "Notification of Reinsurance" form to AUSA and (2) the policy has been issued.
In addition, AUSA will be liable for benefits paid under PRUCO's conditional receipt or temporary insurance agreement.
AUSA's liability under PRUCO's conditional receipt or temporary insurance agreement will be limited to the portion of
$1,000,000 that is derived as the amount of capacity reserved by PRUCO from AUSA divided by the total amount of capacity
reserved by PRUCO from all reinsurers.
d. PRE-ISSUE COVERAGE. The pre-issue coverage for benefits paid under PRUCO's conditional receipt or temporary insurance
agreement will be effective once all initial medical exams and tests have been completed. The pre-issue liability
applies only once on any given life at one time no matter how many conditional receipts or temporary insurance
agreements are in effect. After a policy has been issued, no reinsurance benefits are payable under this pre-issue
coverage provision.
11. REINSURANCE PREMIUM RATES
a. LIFE REINSURANCE. The reinsurance premiums per $1000 are shown in Schedule B. Reinsurance premiums for renewals are
calculated using (1) the issue ages, (2) the duration since issuance and (3) the current underwriting classification.
b. RATES NOT GUARANTEED. The reinsurance premium rates are not guaranteed. AUSA reserves the right to change the rates at any
time. If AUSA changes the rates, it will give PRUCO a 90-day prior written notice of the change. Any change applies
only to reinsurance premiums due after the expiration of the notice period.
12. PAYMENT OF REINSURANCE PREMIUMS
a. PREMIUM DUE. For each policy reinsured under this Agreement, reinsurance premiums are payable annually in advance. These
premiums are due on the issue date and each subsequent policy anniversary. Within 30 days after the close of each
reporting period, PRUCO will send AUSA a statement of account for that period along with payment of the full balance
due. On any payment date, monies payable between AUSA and PRUCO under this Agreement may be netted to determine the
payment due. This offset will apply regardless of the insolvency of either party as described in Section 23. If the
statement of account shows a balance due PRUCO, AUSA will remit that amount to PRUCO within 30 days of receipt of the
statement of account. All financial transactions under this Agreement will be in United States dollars. If the
reinsurance premium amounts cannot be determined on an exact basis by the dates described below, such payments will be
paid in accordance with a mutually agreed upon formula which will approximate the actual payments. Adjustments will
then be made to reflect actual amounts when such information is available.
b. FAILURE TO PAY PREMIUMS. If reinsurance premiums are 90 days past due, for reasons other than those due to error or
omission as defined below in Section 22, the premiums will be considered in default and AUSA may terminate the
reinsurance by providing a 30-day prior written notice, provided payment is not received within that 30-day period.
AUSA will have no further liability as of the termination date. PRUCO will be liable for the prorated reinsurance
premiums to the termination date. PRUCO agrees that it will not force termination under the provisions of this
paragraph solely to avoid the recapture requirements or to transfer the block of business reinsured to another reinsurer.
c. At the end of this 30-day period, AUSA's liability will automatically terminate for all reinsurance on which balances remain
due and unpaid, including reinsurance on which balances became due and unpaid during and after the 30-day notice period.
Subject to Article 21, PRUCO may reinstate reinsurance terminated for non-payment of balances due at any time within 60
days following the date of termination. However, AUSA will have no liability for claims incurred between the
termination date and the reinstatement date.
d. PREMIUM ADJUSTMENT. If PRUCO overpays a reinsurance premium and AUSA accepts the overpayment, AUSA's acceptance will not
constitute or create a reinsurance liability or increase in any existing reinsurance liability. Instead, AUSA will be
liable to PRUCO for a credit in the amount of the overpayment. If a reinsured policy terminates, AUSA will refund the
excess reinsurance premium. This refund will be on a prorated basis without interest from the date of termination of
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