Looking for an agreement? Search from over 1 million agreements now.
Home > Insurance/Reinsurance Agreements > Agreement Preview

Indemnity Reinsurance Agreement Dated 3/31/97

This is an actual contract by Alden John Financial.
Browse the agreement preview below and buy the entire agreement for $35
Search This Document
INDEMNITY REINSURANCE AGREEMENT


By and Between


JOHN ALDEN LIFE INSURANCE COMPANY


and


SUNAMERICA LIFE INSURANCE COMPANY


Dated as of March 31, 1997 2
TABLE OF CONTENTS


Page


ARTICLE 1 - REINSURANCE COVERAGE....................................................................... 4
Section 1.1. Annuity Contracts........................................................ 4
Section 1.2. Additional Policies...................................................... 4
Section 1.3. Coverage................................................................. 5
Section 1.4. Effectiveness............................................................ 5
Section 1.5. Duration................................................................. 5


ARTICLE 2 - PAYMENTS BY REINSURED...................................................................... 6
Section 2.1. Initial Reinsurance Premium.............................................. 6
Section 2.2. Reinsurance Premiums..................................................... 6
Section 2.3. Policy Loan Payments..................................................... 6


ARTICLE 3 - PAYMENTS BY REINSURER...................................................................... 7
Section 3.1. Initial Policy Expense Allowance
and Other Payments....................................................... 7
Section 3.2. Policy and Administrative Services....................................... 7
Section 3.3. Benefits and Other Payments.............................................. 8
Section 3.4. Premium Taxes............................................................ 8


ARTICLE 4 - SETTLEMENT AND OFFSET...................................................................... 9
Section 4.1. Settlement............................................................... 9
Section 4.2. Offset................................................................... 9


ARTICLE 5 - TERMS OF REINSURANCE....................................................................... 10
Section 5.1. Administration of Policies............................................... 10
Section 5.2. Reports.................................................................. 10
Section 5.3. Tax Treatment............................................................ 11
Section 5.4. DAC Tax Reimbursement.................................................... 11
Section 5.5. Reserves................................................................. 13
Section 5.6. Crediting Rates.......................................................... 14
Section 5.7. Third Party Reinsurance.................................................. 15


ARTICLE 6 - ERRORS..................................................................................... 16


ARTICLE 7 - INSPECTION
Section 7.1. Books and Records........................................................ 16


ARTICLE 8 - INSOLVENCY................................................................................. 18


ARTICLE 9 - TRUST...................................................................................... 20
Section 9.1. Maintenance of Trust..................................................... 20
Section 9.2. Endorsement of Trust Assets.............................................. 23
Section 9.3. Investment of Trust Assets............................................... 23
Section 9.4. Fees..................................................................... 24
Section 9.5. Withdrawal By Reinsured.................................................. 24
Section 9.6. Withdrawal by Reinsurer.................................................. 25


i 3
Page


Section 9.7. Return................................................................... 25
Section 9.8. Interest................................................................. 25
Section 9.9. Termination of Trust Account............................................. 25


ARTICLE 10 - DURATION; TERMINATION..................................................................... 25
Section 10.1. Duration................................................................. 25
Section 10.2. Termination.............................................................. 26


ARTICLE 11 - MISCELLANEOUS............................................................................. 26
Section 11.1. Notices.................................................................. 26
Section 11.2. Integration.............................................................. 28
Section 11.3. Amendments............................................................... 29
Section 11.4. Waivers.................................................................. 30
Section 11.5. Governing Law............................................................ 30
Section 11.6. Arbitration.............................................................. 31
Section 11.7. Binding Effect; Assignment; Third
Party Beneficiaries...................................................... 33
Section 11.8. Severability............................................................. 34
Section 11.9. Headings................................................................. 34
Section 11.10. Counterparts............................................................. 35
Section 11.11. Errors and Omissions..................................................... 35


ii 4
SCHEDULES:


1.2 - Additional Annuity Product Forms
1.3 - Endorsement
5.3 - Section 1.848-2(g)(8) Election
9.1(b) - Method of Calculation


iii 5
INDEMNITY REINSURANCE AGREEMENT


INDEMNITY REINSURANCE AGREEMENT (the "Agreement") dated as of March 31, 1997 by and between John Alden Life Insurance Company, a Minnesota corporation (collectively with its permitted successors and assigns "Reinsured"), and SunAmerica Life Insurance Company, an Arizona corporation ("Reinsurer").


WITNESSETH:


WHEREAS, Reinsured is engaged in, among other businesses, the business of selling, issuing and administering annuity policies and related activities in the United States other than the State of New York (the "Annuity Business");


WHEREAS, Reinsurer is engaged, among other businesses, in the business of selling, issuing and administering annuity policies and related activities in certain states of the United States;


WHEREAS, Reinsured and Reinsurer are parties to an Asset Purchase and Sale Agreement dated as of November 29, 1996, as amended by Amendment No. 1 dated as of March 31, 1997, and as may subsequently be amended from time to time (as amended, the "Asset Purchase Agreement"), which provides for the transfer to Reinsurer of certain assets used or held for use in the Annuity Business (all capitalized terms used herein and not otherwise defined shall have the meanings ascribed 6 thereto in the Asset Purchase Agreement, except that for purposes of the terms "Insurance Liabilities," "Other Liabilities," "Excluded Liabilities," and "Extra Contractual Liabilities," the words "Annuity Contracts" shall be replaced with the term "Policies");


WHEREAS, the Asset Purchase Agreement contemplates that Reinsurer will reinsure the Insurance Liabilities and Other Liabilities arising under the Annuity Contracts and Additional Policies (as defined below) on a coinsurance basis under the terms and conditions set forth herein until the direct assumption by Reinsurer of the Insurance Liabilities and Other Liabilities under the Annuity Contracts and Additional Policies (other than those Annuity Contracts and Additional Policies reinsured under the RSL Agreements, which Annuity Contracts and Additional Policies shall not be assumed by Novation by Reinsurer but shall only by ceded to Reinsurer on a coinsurance basis) (the "Policies") on a novation basis as provided in an Assumption Reinsurance Agreement between Reinsured and Reinsurer dated concurrently herewith (the "Assumption Reinsurance Agreement");


WHEREAS, Reinsured desires that after the termination of the Transition Services Agreement, defined herein, Reinsurer, as agent for Reinsured, perform all administrative functions on behalf of Reinsured with respect to the Policies, and Reinsurer has agreed to provide such


2 7 services pursuant to the terms of an administrative services agreement being entered into concurrently herewith by and between Reinsured and Reinsurer (the "Administrative Services Agreement"). Reinsured shall perform the administrative services for the Initial Policies insured hereunder pursuant to the terms of a Transition Services Agreement being entered into concurrently herewith by and between Reinsured and Reinsurer (the "Transition Services Agreement").


WHEREAS, concurrently herewith Reinsured, Reinsurer and Bankers Trust Company, are entering into a trust agreement (the "Trust Agreement") with respect to certain assets related to the obligations being reinsured hereunder; and


WHEREAS, it is a condition to the obligations of the parties under the Asset Purchase Agreement that Reinsured and Reinsurer enter into this Agreement.


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Asset Purchase Agreement, and other good, valuable and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Reinsurer and Reinsured (collectively, the "Parties" and, sometimes individually a "Party"), intending to be legally bound, hereby agree as follows:


3 8
ARTICLE 1 - REINSURANCE COVERAGE


Section 1.1. Annuity Contracts. The Annuity Contracts are hereby reinsured by Reinsurer on the terms set forth herein.


Section 1.2. Additional Policies. The annuity policies issued by the Reinsured (i) which become effective after the Ledger Cut-Off Date, which shall be defined as the 21st of the month in which the Effective Date (as defined below) occurs or the previous Business Day if the 21st is not a Business Day, but on or prior to the Effective Date, or (ii) through the services of Reinsured under the Transition Services Agreement which become effective after the Effective Date and which, in either case, are written on forms of the Annuity Contracts identified on Schedule 1.2 attached hereto (the "Additional Policies" and, together with the Annuity Contracts, the "Policies") shall be reinsured with the Reinsurer automatically on the terms set forth herein. To the extent permitted by law, each Additional Policy issued after the Effective Date and under the Transition Services Agreement shall be issued together with an endorsement (substantially in the form attached hereto as Schedule 1.3) providing for its automatic assumption by Reinsurer under the Assumption Reinsurance Agreement upon receipt by Reinsurer of policy form approval from the applicable regulatory body or bodies for an annuity contract form substantially similar to the form of


4 9 such Additional Policy. In the event such an endorsement is not permitted by law, or has not been approved prior to the issuance of an Additional Policy, Reinsured shall obtain an acknowledgement by the insured of the intent of Reinsured to cede such Policy, on an assumption basis, to Reinsurer.


Section 1.3. Coverage. The reinsurance under this Agreement shall cover 100% of the Insurance Liabilities and Other Liabilities, but shall not include any other liabilities or obligations of any nature whatsoever, fixed or contingent, known or unknown, and shall be subject to the terms and conditions set forth herein. Without limiting the foregoing, the reinsurance under this Agreement shall not include the Extra Contractual Obligations or the Excluded Liabilities.


Section 1.4. Effectiveness. The effective date of this Agreement shall be 11:59 p.m. on the Closing Date (the "Effective Date").


Section 1.5. Duration. The reinsurance under this Agreement with respect to any Policy shall be maintained in force without reduction so long as the liability of Reinsured under such Policy reinsured hereunder remains in force without reduction; provided, however, that this Agreement shall terminate as to each Policy on the respective effective date of the Novation of such Policy (as contemplated by Section 2.4 of the Assumption Reinsurance Agreement). To the extent Reinsurer is unable for any reason to assume by novation any


5


10 Annuity Contract, Reinsurer shall continue to reinsure such Annuity Contract, on an indemnity basis, in accordance with the terms and conditions of this Agreement.


ARTICLE 2 - PAYMENTS BY REINSURED


Section 2.1. Initial Reinsurance Premium. Concurrently with the delivery of this Agreement, Reinsured shall deliver to Reinsurer as an initial reinsurance premium the assets which comprise the Reinsurance Premium, the book value of which is equal to the Reserve Liabilities. The Reinsurance Premium shall be determined pursuant to Section 1.2(a) of the Asset Purchase Agreement, and as adjusted pursuant to Section 1.6(d) of the Asset Purchase Agreement.


Section 2.2. Reinsurance Premiums. As further consideration for the indemnity reinsurance of the Insurance Liabilities and the assumption of the Other Liabilities, Reinsurer shall be entitled to all premiums and other amounts payable after the Ledger Cut-Off Date with respect to the Policies. Reinsurer shall collect and retain such amounts as agent for Reinsured pursuant to the Administrative Services Agreement. Reinsured shall pay to Reinsurer any such amounts actually received by Reinsured.


Section 2.3. Policy Loan Payments. Reinsurer shall be entitled to the policy loan repayments after the Ledger Cut- Off Date attributable to the Policies, irrespective of whether


6


11 such repayments are made in cash, take the form of a reduction in cash surrender values or death benefits paid, or otherwise. In addition, Reinsurer shall be entitled to the policy loan interest paid after the Ledger Cut-Off Date with respect to the Policies, regardless of whether such policy loan interest is collected in cash or by collateralization. Reinsurer shall collect and retain such amounts as agent for Reinsured pursuant to the Administrative Services Agreement. Reinsured shall pay to Reinsurer any such amounts actually collected by Reinsured.


ARTICLE 3 - PAYMENTS BY REINSURER


Section 3.1. Initial Policy Expense Allowance and Other Payments. Reinsurer shall pay Reinsured an initial policy expense allowance equal to the Closing Date Ceding Commission determined pursuant to Section 1.3(a), of the Asset Purchase Agreement, as adjusted pursuant to Sections 1.3(c) and 1.6(c) of the Asset Purchase Agreement. In addition to the initial policy expense allowance, Reinsurer shall pay Reinsured an amount in cash equal to the Accrued and Unpaid Investment Income determined pursuant to Sections 1.3(a) and 1.3(b) of the Asset Purchase Agreement.


Section 3.2. Policy and Administrative Services. Reinsurer shall provide services under the Administrative Services Agreement.


7


12
Section 3.3. Benefits and Other Payments. The Reinsurer shall reimburse Reinsured for all Insurance Liabilities and Other Liabilities paid by Reinsured after the Ledger Cut-Off Date with respect to the Policies.


Section 3.4. Premium Taxes. Reinsurer shall reimburse Reinsured for the payment by Reinsured of all premium taxes that constitute Other Liabilities paid by Reinsured on account of premiums and other considerations received by Reinsured on the Policies, on the basis specified herein. For each calendar year the Reinsurer shall reimburse such premium tax payments, with respect to each state, on an annual basis, within 30 days after receipt of Reinsured's premium tax return for such year and a billing for Reinsurer's share of such premium taxes paid. Reinsurer's share shall be determined on the basis of each such state's tax rate for Policy premiums multiplied by the premiums received in such state during the annual period. The Reinsurer's share shall be reduced (but not below zero) by any guaranty fund credits relating to guaranty fund contributions paid to Reinsured pursuant to Section 2.2 of the Asset Purchase Agreement in such year or years prior to such year. Any such guaranty credits utilized as a reduction of the premium tax reimbursement will reduce any reimbursement to Reinsurer under Section 2.2(e) of the Asset Purchase Agreement on a dollar-for-dollar basis for credits actually utilized.


8


13
ARTICLE 4 - SETTLEMENT AND OFFSET


Section 4.1. Settlement. All amounts due to be paid to either the Reinsurer or the Reinsured or to be paid into or removed from the Trust Account established pursuant to Article 9 hereof shall be determined on a net basis as of the last day of the calendar month to which such payment is attributable. All such amounts will be due and accrued as of such date. Payment shall be based upon the report delivered by Reinsurer pursuant to Section 5.2 hereof. If, based upon such report, it is determined that Reinsurer owes a payment to Reinsured or the Trustee, such payment shall be made at the time such report is delivered to Reinsured. If based upon such report it is determined that Reinsured owes a payment to Reinsurer, such payment shall be made within 15 days after delivery of such report. All such payments shall be made in cash. If based upon such report it is determined that Reinsurer is entitled to remove Assets from the Trust Account (as those terms are defined in the Trust Agreement), it may do so in accordance with the terms of the Trust Agreement.


Section 4.2. Offset. Any debts or credits, matured or unmatured, liquidated or unliquidated, regardless of when they arose or were incurred, in favor of or against either Reinsured or Reinsurer with respect to this Agreement are deemed mutual debts or credits, as the case may be, and shall be set off, and only the balance shall be allowed or paid.


9 14
ARTICLE 5 - TERMS OF REINSURANCE


Section 5.1. Administration of Policies. Pursuant to the Transition Services Agreement, Reinsured shall be responsible for the administration and service of the Policies reinsured hereunder. The parties acknowledge that Reinsured has concurrently herewith delegated effective on the date of the termination of the Transition Services Agreement such responsibilities to Reinsurer pursuant to the Administrative Services Agreement, and the parties each consent to such delegation.


Section 5.2. Reports. (a) For the duration of this Agreement, the Reinsurer shall provide the Reinsured with a monthly accounting (the "Monthly Accounting") relating to the Policies no later than ten (10) Business Days following the end of each related calendar month. The Monthly Accounting shall contain such information as is set forth in Schedule 1.5 of the Administrative Services Agreement, including a statement of any income received in connection with the Policies. Such Schedule 1.5 shall also include a statement of monthly reserves for GAAP and SAP. The first Monthly Accounting shall be provided to the Reinsured no later than forty-five (45) Business Days after the date hereof and the final Monthly Accounting shall be provided to the Reinsured no later than ten (10) Business Days after the termination of this Agreement.


10


15
(b) For the duration of this Agreement, the Reinsurer shall prepare quarterly statements of cash flow transaction data (within ten (10) Business Days after the end of a calendar quarter) and annual financial statement data (within thirty-five (35) calendar days after the end of the fiscal year), for inclusion in Reinsured's applicable financial statements (except for statements of cash flow testing and actuarial memorandum which shall be delivered on or before March 1 of each calendar year).


Section 5.3. Tax Treatment. If the Policies include for U.S. federal income tax purposes Specified Insurance Contracts pursuant to Section 848 of the Internal Revenue Code of 1986, as amended, the Parties agree, with respect to this Agreement, to make the election provided in Section 1.848- 2(g)(8) of the regulations issued under Section 848. The specifics of this election are set forth on Schedule 5.3 attached hereto.


Section 5.4. DAC Tax Reimbursement. In regards to the Policies reinsured hereunder, Reinsurer shall calculate and pay to Reinsured annually:


[(a)-(b)]x[1+i(.73)]


where: "a" is equal to .95127% of the net consideration
(as defined under Treasury Regulation 1.848-2(f)
and adjusted as herein provided) (the "Net
Consideration") which arises under this Agreement
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |