AUTOMATIC
REINSURANCE AGREEMENT
Between
GOLDEN AMERICAN LIFE INSURANCE COMPANY
a
Delaware Corporation
(referred to as the Reinsured)
and
SECURITY LIFE OF DENVER INTERNATIONAL LIMITED
of
Hamilton, Bermuda
(referred to as the Reinsurer)
EFFECTIVE JANUARY 1, 2000.
TABLE OF CONTENTS
ARTICLE PAGE No.
1. Definitions .............................................................1
2. Parties to Agreement ....................................................2
3. Indemnification and Terms of Reinsurance ................................2
4. Reinsurance Premiums ....................................................2
5. Accounting and Reporting ................................................2
6. Claims ..................................................................3
7. Term of this Agreement and Recapture ....................................3
8. Policy Changes, Reductions, Terminations and Reinstatements .............4
9. No Liability for Damages ................................................4
10. General Terms ...........................................................5
11. Insolvency ..............................................................7
12. Arbitration .............................................................8
13. DAC Tax - Section 1.848-2(g)(8) Election ................................8
14. Basis of Interpretation .................................................9
15. Assessments .............................................................9
16. Credit for Reinsurance ..................................................9
17. Execution ..............................................................11
SCHEDULE A - Business Reinsured..............................................12
SCHEDULE B - Monthly Reporting...............................................14
SCHEDULE C - Quarterly Reporting.............................................15
SCHEDULE D - Annual Reporting................................................16
SCHEDULE E - Letter of Credit................................................17
This Automatic Reinsurance Agreement, effective January 1, 2000, is between
Golden American Life Insurance Company, a Delaware Corporation and Security Life
of Denver International Limited of Hamilton Bermuda.
1 DEFINITIONS
a. The ACCOUNTING PERIOD is a calendar month.
b. The ACCUMULATION VALUE is the sum of the amounts in each of the Divisions
of the Variable Separate and General Accounts and allocations to the Fixed
Account adjusted to reflect any Market Value Adjustments.
c. This AGREEMENT is between the Ceding Company and the Reinsurer whereby the
Reinsurer agrees to provide Automatic Yearly Renewable Term Reinsurance on
the Covered Policies as described in the terms and conditions hereto.
d. The AGREEMENT EFFECTIVE DATE is January 1, 2000.
e. APPLICABLE FUNDS are defined as all separate account variable funds and all
fixed accounts offered for investment in the Policy Forms of the Covered
Policies, excluding Non-applicable funds.
f. The CEDING COMPANY is Golden American Life Insurance Company (1475 Dunwoody
Drive, West Chester, Pennsylvania 19380).
g. A CLAIM for the MGDB is defined as the contractual liability under the
Ceding Company's in-force Policy arising from the actual death of the owner
(or upon the death of the first owner in the case where there are joint
owners) or upon the death of the annuitant if the owner is a non-natural
person.
h. A CLAIM for a Living Benefit is defined as the contractual liability under
the Ceding Company's in-force Policy arising from a Living Benefit rider
listed in Schedule A.
i. A COVERED POLICY is defined as a Minimum Guaranteed Death Benefit ("MGDB")
and/or Living Benefit Rider under variable and fixed annuity Policies
specified in Schedule A that are directly written by the Ceding Company and
reinsured under this Agreement.
j. A BENEFIT is defined as the benefit provision associated with the Covered
Policy. A Covered Policy may provide for one or more Benefits as listed in
Exhibit A and Exhibit B.
k. The BENEFIT AMOUNT is described in the applicable contracts listed in
Schedule A and is determined based on the Benefit provided under the
Covered Policy.
l. The NET AMOUNT AT RISK for each Benefit is defined pursuant to Exhibits
A(I) and B(I), depending on the Benefit.
m. The PARTIES to the Agreement are the Ceding Company and the Reinsurer.
n. The POLICY is the underlying policy directly written by the Ceding Company
to which the Covered Policy relates, including any riders.
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o. REINSURANCE BENEFITS are defined as the reinsurance benefits paid by
the Reinsurer to the Ceding Company related to Claims on Covered
Policies. The maximum Reinsurance Benefit payable to the Ceding
Company under each Covered Policy is the Reinsured Net Amount at Risk
for each Benefit.
p. The REINSURANCE RESERVE is the reserve held by the Reinsurer for which
the Ceding Company is eligible to take reserve credit on a US
Statutory basis.
q. The REINSURED NET AMOUNT AT RISK is equal to 100% times the Net Amount
at Risk, less the amount of such risk reinsured by other reinsurance
agreements.
r. The REINSURER is Security Life of Denver International, Limited
(Continental building, 25 Church Street, P.O. Box HM 1978, Hamilton HM
HX, Bermuda).
2. PARTIES TO AGREEMENT
This Agreement is solely between the Reinsurer and the Ceding Company.
There is no third party beneficiary to this Agreement. Reinsurance under
this Agreement will not create any right nor legal relationship between
the Reinsurer and any third party, including, without limitation,
annuitants, insureds, certificate or contract holders, employees,
dependents, beneficiaries, policy owners, agents, or assignees.
3. INDEMNIFICATION AND TERMS OF REINSURANCE
Subject to the terms and conditions of this Agreement, the Reinsurer
indemnifies the Reinsured Net Amount at Risk associated with the Covered
Policies specified in Schedule A. The Reinsurer's liability under this
Agreement follows the contractual liability of the Ceding Company under
the Covered Policy.
4. REINSURANCE PREMIUMS
The Base Reinsurance Premium for each Benefit is determined for each
Accounting Period and is equal to the current monthly MGDB charge for the
Accounting Period, as defined in Exhibit A, times the corresponding
nominal MGDB charge base, as defined in Exhibit C, plus the current
monthly Living Benefit charge for the Accounting Period, as defined in
Exhibit B, times the corresponding nominal living benefit charge base, as
defined in Exhibit C. Current charges may be changed by the Reinsurer upon
90 days notice but may not exceed the guaranteed charges specified in
Exhibits A and B.
The Total Base Reinsurance Premium for an Accounting Period is the sum of
the Base Reinsurance Premium for each Benefit provided under the Covered
Policy.
5. ACCOUNTING AND REPORTING
a. Total Base Reinsurance Premiums are due on the last day of the
Accounting Period.
b. The Net Settlement shall be determined for each Accounting Period as
the Total Base Reinsurance Premiums less the Reinsurance Benefits paid
during the Accounting Period. If the Net Settlement is greater than
zero, the Ceding Company shall pay that amount to the Reinsurer. If
the Net Settlement is less than zero, the Reinsurer shall pay the
absolute value of that amount to the Ceding Company. The Net
Settlement shall be paid within forty-five (45) days after the close
of the Accounting Period.
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c. Not later than twenty-one (21) days after the end of each calendar
month, the Ceding Company will submit a report substantially in accord
with Schedule B. The Ceding Company agrees to provide or make
available to the Reinsurer such documentation as may be necessary to
support the items reported.
d. Not later than twenty-one (21) days after the end of each calendar
quarter, the Ceding Company will submit a report substantially in
accord with Schedule C.
e. Not later than twenty-one (21) days after the end of each calendar
year, the Ceding Company will submit a report substantially in accord
with Schedule D.
f. The Ceding Company will provide liability valuation information as
mutually agreed upon.
g. Any debts or credits, matured or unmatured, liquidated or
unliquidated, regardless of when they arose or were incurred, in favor
of or against either the Ceding Company, or its liquidator, receiver
or statutory successor, or the Reinsurer with respect to this
Agreement and any other agreements between the Ceding Company, or its
liquidator, receiver or statutory successor and the Reinsurer are
deemed to be mutual debts and credits and shall be set off and only
the net balance shall be paid.
6. CLAIMS
a. Notice Of Claim. Ceding Company will notify Reinsurer, as soon as
reasonably possible, after it receives a Claim or when a living
benefit claim is due. The amount payable by the Reinsurer will be the
Reinsured Net Amount at Risk as of the date determined pursuant to the
underlying contract. For the MGIB rider, the Reinsured Net Amount at
Risk shall be payable as of the date the rider is exercised. For the
MGAB and MGWB riders, amounts payable under this agreement shall be
calculated and payable at the same time as the benefit under the
contract.
b. Proofs. The Ceding Company will provide, at the Reinsurer's request,
proper Claim proofs (including, for example, proofs required under the
policy), all relevant information respecting the existence and
validity of the Claim, and an itemized statement of the Claim benefits
paid by Ceding Company under the policy.
c. Amount and Payment of Claims. The Reinsurer will pay the amount of the
Reinsurance Benefits due and owing to Ceding Company as provided in
Section 5. The Ceding Company's contractual liability for Claims is
binding on the Reinsurer. The maximum Reinsurance Benefit payable to
the Ceding Company under each Covered Policy is the Reinsured Net
Amount at Risk for each Benefit.
7. TERM OF THIS AGREEMENT AND RECAPTURE
The reinsurance provided under this Agreement for each Covered Policy will
be maintained and continued as long as the Policy is in force.
This Agreement may be terminated with respect to new business by either
party upon 90 days written notice to the other party.
Reinsurance under this Agreement may be terminated for inforce business by
mutual agreement of the parties.
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The Reinsurer has the right to terminate this Agreement for all Covered
Policies in the event that the Ceding Company fails to pay Reinsurance
Premiums within 60 days after the Due Date for Covered Policies previously
ceded under this Agreement. Such termination is subject to 30 days advance
written notice from the Reinsurer to the Ceding Company. Said notice will
be delivered by certified or registered mail. The effective date of
termination is the 31st day after the date of the advance written notice
from the Reinsurer to the Ceding Company of its intention of termination.
8. POLICY CHANGES, REDUCTIONS, TERMINATIONS AND REINSTATEMENTS
a. If a change is made to the terms and conditions of a Policy that
increases or reduces the contractual liability of the Ceding Company,
such change shall be reflected accordingly in the reinsurance of the
Covered Policy. The Reinsurer shall share in such change in proportion
to its respective contractual liability under this Agreement.
b. Any reduction or termination to the reinsurance of a Covered Policy is
permitted only when the underlying policyholder directs such a
reduction or termination of the Policy that is in force at the time
that the reduction or termination takes place. If a Policy becomes
annuitized (goes into pay-out status under an immediate annuity option
offered in the contract) or the MGIB Rider is exercised and is
therefore deemed terminated by the Ceding Company, the Covered Policy
shall be terminated for reinsurance as of the date of annuitization.
The Reinsurer shall have no further liability for the annuitized
Policy. Full surrender will result in termination of the reinsurance
of the Covered Policy. Payment of Claims under the MGAB or MGWB rider
will not terminate the reinsurance coverage of other Benefits.
c. Reinsurance coverage shall continue after Reinsurance Benefits are
paid with respect to continuing coverage included in Schedule A.
d. If a Policy of the Ceding Company is reduced, terminated or lapsed and
is subsequently reinstated by the Ceding Company under its regular
rules, the Covered Policy will be reinstated automatically and the
Benefit Amount shall equal the Benefit Amount that would have been
inforce if the Policy had not been reduced, terminated, or lapsed. The
Ceding Company will pay to the Reinsurer its proper share of all
amounts collected from or charged to the insured.
e. Reinsurance terminated due to the Ceding Company's failure to pay
Reinsurance Premiums within 60 days after the Due Date may be
reinstated by the Ceding Company. The Ceding Company may reinstate
such terminated reinsurance if, within sixty days after the effective
date of its termination, the Ceding Company pays in full all of the
unpaid Reinsurance Premiums to the Reinsurer. The Reinsurer is not
liable for any Reinsurance Benefits related to Claims occurring
subsequent to the termination date and prior to reinstatement.
9. NO LIABILITY FOR DAMAGES
The Reinsurer will not participate in and shall not be liable to pay the
Ceding Company or others for any amounts in excess of the Reinsured Net
Amount at Risk on the Covered Policies for which a Claim occurs, for
example, no Extracontractual Damages or liabilities and related expenses
and fees. Extracontractual Damages are any damages for acts or omissions
awarded against the Ceding Company, including, for example, those
resulting from negligent, reckless or intentional conduct, fraud,
oppression, or bad faith committed by the Ceding Company. The Ceding
Company agrees that it will not make the Reinsurer a party to any
litigation between any such third party and the Ceding Company.
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The excluded Extracontractual Damages shall include, by way of example:
a. actual and consequential damages;
b. damages for emotional distress or oppression;
c. punitive, exemplary or compensatory damages;
d. statutory damages, regulatory fines, or penalties;
e. amounts in excess of the risk reinsured hereunder that the Ceding
Company pays to settle a dispute or Claim;
f. third-party attorney fees, costs and expenses.
10. GENERAL TERMS
a. Errors and Omissions. If there is an unintentional oversight or
misunderstanding in the administration of this Agreement by either
company, it can be corrected provided the correction takes place
promptly after the oversight or misunderstanding is first discovered.
Both companies will be restored to the position they would have
occupied had the oversight or misunderstanding not occurred.
b. Inspection. The Reinsurer will have the right at any reasonable time
to inspect all books, records, papers, files, policies, procedures and
other matters respecting this Agreement on not less than one day's
notice. The Ceding Company agrees to provide a reasonable work space
for such inspection, to cooperate fully and to disclose the existence
of and to produce any and all necessary and reasonable materials
requested by the Reinsurer. The Reinsurer may copy or otherwise
reproduce at its cost any of the materials that are the subject of
inspection.
c. Binding Terms. 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 the date: this Agreement terminates, or
the underlying policies are no longer in force. This Agreement shall
not be bifurcated, partially assigned, or partially assumed.
d. This Agreement is entered into in reliance on the utmost good faith of
the parties including, for example, their representations and
disclosures. It requires the continuing utmost good faith of the
Parties; their representatives, successors, and assigns. For example,
the Ceding Company has a duty of full fair disclosure of all
information respecting the formation and continuation of this
contract, the business reinsured, underwriting and policy issues
(rules, practices, and staff), the financial condition, studies and
reports on the business reinsured, and the solvency of the Ceding
Company, etc.
e. Assignment and Acquisitions. This Agreement is applicable only to
reinsurance of Covered Policies directly written by the Ceding
Company. Any Covered Policies acquired through merger or acquisition
of another company, reinsurance, or purchase of another company's
policies are not included under the terms of this Agreement without
the prior written consent of the Reinsurer. This contract cannot by
partially assigned, partially assumed nor bifurcated in any way.
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f. Survival. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
g. No Non-Forfeiture or Cash Values in YRT Treaties. This Agreement
provides Reinsurance Benefits only, and does not contain reinsurance
non-forfeiture or cash values of any kind. For example, there are no
surrender or termination values, and the Reinsurer does not
participate in policy loans or other forms of indebtedness on the
business reinsured under this Agreement.
h. Notices. All notices and other communications by one Party must be in
writing and will be deemed effective upon delivery to the other Party
at the address set forth below:
If to the Ceding Company:
David L. Jacobson
Senior Vice President
Golden American Life Insurance Company
1475 Dunwoody Drive
West Chester, Pennsylvania 19380
If to the Reinsurer:
Nicholas E. J. Wheeler
Vice President
Security Life of Denver International
Continental Building
25 Church Street, P.O. Box HM 1978
Hamilton HM HX, Bermuda
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11. INSOLVENCY
In the event of the declared insolvency of the Reinsured, and the
appointment of a domiciliary liquidator, receiver, conservator or statutory
successor for the Reinsured, this reinsurance shall be payable immediately
upon demand, with reasonable provision for verification, directly to the
Reinsured or its domiciliary liquidator, receiver, conservator or statutory
successor, on the basis of the liability of the Reinsured as a result of
claims allowed against the Reinsured by any court of competent jurisdiction
or any liquidator, receiver, conservator or statutory successor having
authority to allow such claims without diminution because of the insolvency
of the Reinsured or because the liquidator, receiver, conservator or
statutory successor of the Reinsured has failed to pay all or a portion of
any claim.
Every liquidator, receiver, conservator or statutory successor of the
Reinsured shall give written notice to the Reinsurer of the pendency of a
claim involving the Reinsured indicating which of the policies would
involve possible liability on the part of the Reinsurer to the Reinsured or
its domiciliary liquidator, receiver, conservator or statutory successor,
within a reasonable amount of time after the claim is filed in the
conservation, liquidation, receivership or other proceeding.
During the pendency of any claim, the Reinsurer may investigate the same
and interpose, at its own expense, in the proceeding where that claim is to
be adjudicated, any defense or defenses that it may deem available to the
Reinsured, to its policyholder, or to any liquidator, receiver or statutory
successor of the Reinsured. The expenses thus incurred by the Reinsurer
will be chargeable, subject to approval of the applicable court, against
the Reinsured as part of the expense on conservation or liquidation to the
extent of a pro rata share of the benefit which may accrue to the Reinsured
as a result of the defense undertaken by the Reinsurer.
This reinsurance shall be payable directly by the Reinsurer to the
Reinsured or to its domiciliary liquidator, receiver, conservator or
statutory successor, except as expressly required otherwise by applicable
insurance law.
Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favor of or against
either the Ceding Company, or its liquidator, receiver or statutory
successor, or the Reinsurer with respect to this Agreement and any other
agreements between the Ceding Company, or its liquidator, receiver or
statutory successor and the Reinsurer are deemed to be mutual debts and
credits and shall be set off and only the net balance shall be paid.
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12. ARBITRATION
a. General. Notwithstanding any other provision, all disputes and other
matters in question between the parties, arising out of, or relating
to this Agreement, shall be submitted exclusively to arbitration upon
the written request of either Party; except a Party shall not be
prevented from filing and prosecuting a suit in a court of competent
jurisdiction solely for the purpose of obtaining equitable relief,
including, for example, injunction or enforcement of subpoenas. The
disputes and matters subject to arbitration include, but are not
limited to disputes upon or after termination of this Agreement, and
issues respecting the existence, scope, and validity of this
Agreement. The arbitrators are to seek efficiencies in time and
expense. The arbitrators are not bound to comply strictly with the
rules of evidence. The arbitration panel also has, for example, the
authority to issue subpoenas to third parties compelling prehearing
depositions, and for document production.
b. Notice. To initiate arbitration, one of the parties will notify the
other, in writing, of its desire to arbitrate. The notice will state
the nature of the dispute and the desired remedies. The Party to which
the notice is sent will respond to the notification in writing within
10 days of receipt of the notice. At that time, the responding Party
will state any additional dispute it may have regarding the subject of
arbitration.
c. Procedure. Arbitration will be heard before a panel of three
arbitrators. The arbitrators will be executive officers of life
insurance or reinsurance companies; however, these companies will not
be either Party nor their affiliates. Each Party will appoint one
arbitrator. Notice of the appointment of these arbitrators will be
given by each Party to the other Party within 30 days of the date of
mailing of the notification initiating the arbitration. These two
arbitrators will, as soon as possible, but no longer than 45 days
after the day of the mailing of the notification initiating the
arbitration, then select the third arbitrator. Should either Party
fail to appoint an arbitrator or should the two initial arbitrators be
unable to agree on the choice of a third arbitrator, each arbitrator
will nominate three candidates, two of whom the other will decline,
and the decision will be made by drawing lots on the final selection.
Once chosen, the three arbitrators will have the authority to decide
all substantive and procedural issues by a majority vote. The
arbitration hearing will be held on the date fixed by the arbitrators
at a location agreed upon by the parties. The arbitrators will issue a
written decision from which there will be no appeal. Either Party may
reduce this decision to a judgment before any court which has
jurisdiction of the subject of the arbitration.
d. Costs. The arbitration panel may, in its discretion, award attorneys'
fees, costs, expert witness fees, expenses and interest, all as it
deems appropriate to the prevailing Party.
13. DAC TAX - SECTION 1.848-2(g)(8)ELECTION
The Reinsured and the Reinsurer hereby agree to the following pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulations issued December 1992,
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under Section 848 of the Internal Revenue Code of 1986, as amended. This
election shall be effective for all subsequent taxable years for which this
Agreement remains in effect.
a. The term "Party" will refer to either the Reinsured or the
Reinsurer as appropriate.
b. The terms used in this Article are defined by reference to
Regulation Section 1.848-2 in effect December 1992.
c. The Party with the net positive consideration for this Agreement
for each taxable year will capitalize specified policy
acquisition expenses with respect to this Agreement without
regard to the general deductions limitation of Section 848(c)(1).
d. Both parties agree to exchange information pertaining to the
amount of net consideration under this Agreement each year to
ensure consistency or is otherwise required by the Internal
Revenue Service.
e. The Reinsured will submit a schedule to the Reinsurer by May 1 of
each year of its calculation of the net consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an officer of the Reinsured
stating that the Reinsured will report such net consideration in
its tax return for the preceding calendar year.
f. The Reinsurer may contest such calculation by providing an
alternative calculation to the Reinsured in writing within thirty
days of the Reinsurer's receipt of the Reinsured's calculation.
If the Reinsurer does not so notify the Reinsured, the Reinsurer
will report the net consideration as determined by the Reinsured
in the Reinsurer's tax return for the previous calendar year.
g. If the Reinsurer contests the Reinsured's calculation of the net
consideration, the parties will act in good faith to reach an
agreement as to the correct amount within thirty (30) days of the
date the Reinsurer submits its alternative calculation. If the
Reinsured and the Reinsurer reach agreement on an amount of net
consideration, each Party shall report such amount in their
respective tax returns for the previous calendar year.
14. BASIS OF INTERPRETATION
All computations and payments will be made in U.S. dollars. This Agreement
is governed by and construed in accordance with the laws of Delaware and
any applicable federal law. In the event of the need for a judicial
determination respecting this Agreement, the Reinsurer will consent to the
jurisdiction of any court of general jurisdiction within the State of
Delaware. The Reinsurer agrees to comply with all requirements necessary to
give such court jurisdiction and agrees to abide by the final decision of
such court or any appellate court in the event of an appeal.
15. ASSESSMENTS
The Ceding Company is solely responsible for all excise taxes, premium
taxes, and any other assessments.
16. CREDIT FOR REINSURANCE
1. The Reinsurer shall provide to the Ceding Company a letter of credit
substantially in the form of Schedule E for an amount equal to the
Reinsurance Reserve (including the Reinsurance benefits in course of
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settlement and unreported Reinsurance Benefits). Such letter of credit
shall be issued by a United States financial institution that complies
with the standards required from time to time by the Securities
Valuation Office of the National Association of Insurance
Commissioners. The letter of credit shall be effective no later than
and in the possession of the Ceding Company on or before the effective
date of its annual statement or, if required by state law or
regulation, on or before the effective date of its quarterly
statements.
2. The Ceding Company will provide, from time to time, to the financial
institution issuing the letter of credit evidence of corporate
authority for signatories to draw under the letter of credit and shall
specify to the issuing bank that at least two of such signatories are
required for each drawing. Such authorized signatories shall be
designated by corporate authority of the Ceding Company.
3. The Ceding Company and the Reinsurer agree that the letter of credit
may be drawn upon at any time, notwithstanding any other provisions in
this Agreement, for the following purposes;
(a) to reimburse the Ceding Company for the Reinsurer's share of
premiums returned to the owners of the Policies on account of
cancellations;
(b) to reimburse the Ceding Company for the Reinsurer's share of
surrenders and benefits or losses paid by the Ceding Company
under the terms and provisions of the Policies;
(c) to fund an account (Funded Account) with the Ceding Company in an
amount at least equal to the deduction for reinsurance ceded,
from the Ceding Company's liabilities for Covered Policies. Such
amount shall include, but not be limited to, amounts for policy
reserves, reserves for claims and losses incurred (including
losses incurred but not reported), loss adjustment expenses and
unearned premiums (For the avoidance of doubt, the amounts to be
funded by the Reinsurer under this Paragraph 16 (3c) shall relate
solely to policies which are Covered Policies.); and
(d) to pay any other amounts that the Ceding Company claims are due
hereunder with respect to the Covered Policies.
The Ceding Company shall return to the Reinsurer any amount withdrawn
in excess of the actual amounts required in paragraphs (a) through (b)
immediately above, or, in the case of paragraph (d) immediately above,
any amounts that are subsequently determined not to be due.
4. For withdrawals by the Ceding Company for any purpose other than
pursuant to paragraphs 3 (a), (b), or (d) immediately above, interest
payments on the amounts withheld shall be paid in cash to the
Reinsurer to the extent that the balance of the Funded Account and
letter of credit exceed the Reinsurance Reserve. The interest rate
respecting the balance in the Funded Account is determined as the
prime rate of interest. Upon termination of this Agreement the Ceding
Company shall remit any remaining balance of the Funded Account. Not
withstanding the foregoing, this Agreement permits the award, by any
arbitration panel or court of competent jurisdiction, of:
i. interest at a rate different from that provided in this paragraph,
ii. court or arbitration costs,
iii.attorney's fees, and
iv. any other reasonable expenses.
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All of the foregoing provisions are to be applied without diminution
because of insolvency on the part of either Party. The Ceding Company
warrants that any drawings under the Letter of Credit shall conform to
the foregoing requirements of Article 16, Paragraph 3 hereto.
5. The Ceding Company will provide in writing to the Reinsurer the
estimated amount of the Reinsurance Reserve by no later than 30 days
prior to the date of the Ceding Company's statutory statement in its
State of Domicile. Such written estimate shall include supporting
information regarding the calculation of the Reinsurance Reserve. If
the Reinsurer disagrees with the estimated Reinsurance Reserve, it
will within 5 days notify the Ceding Company. The Parties agree to be
expeditious and reasonable in resolving such dispute. The Ceding
Company understands, that if no estimated Reinsurance Reserve or
supporting information pursuant to Schedule C is provided to the
Reinsurer as above, insufficiency of the amount of the Letter of
Credit is no fault of the Reinsurer. In the event that i) the Parties
agree to the use of another financial institution or ii) the Letter of
Credit is no longer required under the terms and conditions of this
Agreement, the Ceding Company agrees to cooperate and provide its
approval of the cancellation of the Letter of Credit to the financial
institution issuing the Letter of Credit.
17. EXECUTION
In witness of the above, this Agreement is signed in duplicate
Date Signed 12/28/2000
-------------------
Golden American Life Security Life of Denver
Insurance Company International, Limited
Signed by /s/ Antonio M. Muniz Signed by /s/ Angus Hyslop
------------------- -------------------
Title Vice President Title Vice President
------------------- -------------------
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SCHEDULE A
BUSINESS REINSURED
1. Covered Policies. All policies sold on the policy forms listed below,
including endorsements, issued on or after January 1, 2000.
2. Form Name and Type Form Number
DVA Plus
--------
Deferred Combination Variable & Fixed Annuity Contract (Ind. MVA) GA-IA-1007-04/95
Deferred Combination Variable & Fixed Annuity Certificate (Group) GA-CA-1007-04/95
Deferred Combination Variable & Fixed Annuity Master Contract (Group) GA-MA-1007-04/95
Deferred Variable Annuity Contract (Individual GID) GA-IA-1008-04/95
Access
------
Deferred Combination Variable & Fixed Annuity Certificate (Group) GA-CA-1034-02/97
Deferred Combination Variable & Fixed Annuity Contract (Ind. MVA) GA-IA-1034-02/97
Deferred Variable Annuity Contract (Individual GID) GA-IA-1035-02/97
Deferred Combination Variable & Fixed Annuity Master Contract (Group) GA-MA-1034-02/97
Premium Plus
------------
Deferred Combination Variable & Fixed Annuity Certificate (Group) GA-CA-1036-02/97
Deferred Combination Variable & Fixed Annuity Contract (Ind. MVA) GA-IA-1036-02/97
Deferred Variable Annuity Contract (Individual GID) GA-IA-1037-02/97
Deferred Combination Variable & Fixed Annuity Master Contract (Group) GA-MA-1036-02/97
Value
-----
Deferred Combination Variable & Fixed Annuity Certificate (Group) GA-CA-1042-01/98
Deferred Combination Variable & Fixed Annuity Contract (Ind. MVA) GA-IA-1042-01/98
Deferred Variable Annuity Contract (Individual GID) GA-IA-1043-01/98
Deferred Combination Variable & Fixed Annuity Master Contract (Group) GA-MA-1042-01/98
ESII
----
Deferred Combination Variable & Fixed Annuity Contract (Ind. MVA) GA-IA-1032-02/97
Deferred Combination Variable & Fixed Annuity Certificate (Group) GA-CA-1032-02/97
Deferred Variable Annuity Contract (Ind. GID) GA-IA-1033-02/97
Deferred Combination Variable & Fixed Annuity Master Contract (Group) GA-MA-1032-02/97
Deferred Combination Variable & Fixed Annuity Contract (Ind. MVA) GA-IA-1074
Deferred Combination Variable & Fixed Annuity Certificate (Group) GA-CA-1074
Deferred Variable Annuity Contract (Ind. GID) GA-IA-1075
Deferred Combination Variable & Fixed Annuity Master Contract (Group) GA-MA-1074
12 of 26
Other Form Number
-----
Deferred Variable Annuity Contract (Individual) WC-GAL-DVA-11/88
Deferred Variable Annuity Certificate (Group) WC-GAL-DGC-9/88
Deferred Variable Annuity Master Contract (Group) WC-GAL-GDA-9/88
Minimum Guaranteed Income Benefit Rider GA-RA-1047
Minimum Guaranteed Accumulation Benefit Rider GA-RA-1045
Minimum Guaranteed Withdrawal Benefit Rider GA-RA-1048
3. Additional Forms
Additional forms are variable annuities with identical mechanism and
substantially similar funds. The contract and the prospective fund descriptions
will be submitted to the Reinsurer for review prior to inclusion in this
Agreement.
4. Non-applicable Funds
STANDARD DEATH BENEFIT: Non-applicable funds are all general account fixed
interest rate funds and all separate account fixed interest rate funds.
ANNUAL RATCHET AND DEFERRED ANNUAL RATCHET ENHANCED DEATH BENEFITS:
Non-applicable funds are all general account fixed interest rate funds and
all separate account fixed interest rate funds.
MAX 5.5% AND 5.5% SOLUTION ENHANCED DEATH BENEFITS: Non-applicable funds
are all general account fixed interest rate funds, all separate account
fixed interest rate funds, and all separate account variable funds in which
the applicable enhanced death benefit rate, as defined in the contract, is
the net return or net rate of return of the fund, if it is less than 5.5%.
MAX 7%, AND 7% SOLUTION ENHANCED DEATH BENEFITS: Non-applicable funds are
all general account fixed interest rate funds and all separate account
fixed interest rate funds, all separate account fixed interest rate funds,
and all separate account variable funds in which the applicable enhanced
death benefit rate, as defined in the contract, is the net return or net
rate of return of the fund, if it is less than 7%.
ALL DEATH BENEFITS: Non-applicable Funds also includes any specially
designated separate account variable fund for which the corresponding
portion of the contract's guaranteed death benefit equals the portion of
the contract's accumulation value allocated to that fund.
5. Statutory Reserving Standards
The Reinsurer shall establish adequate net reinsurance reserves pursuant to
the requirement of any regulatory authority having jurisdiction over the
Ceding Company and comply with any other statutory requirements necessary
for the Ceding Company to take full statutory credit for reinsurance ceded
up to the full amount that the Ceding Company would have established for
the risks reinsured under the agreement.
13 of 26
SCHEDULE B
MONTHLY REPORTING
1. Reinsurance Premiums payable by the Ceding Company and due the
Reinsurer as of the close of the reported Accounting Period.
2. Reinsurance Benefits payable by the Reinsurer and due the Ceding
Company as of the close of the reported Accounting Period.
3. Current Accumulation Value split by fund and Benefit.
4. Annualized unit return on each fund.
14 of 26
SCHEDULE C
QUARTERLY REPORTING
Due twenty-one days after quarter end:
1. Current Accumulation Value split by Benefit, fund, sex, quinquennial
attained age group and policy duration.
2. Cash surrender value and Net Amount at Risk split by Benefit, sex and
quinquennial attained age group, and policy duration.
3 Reinsurance Reserve
15 of 26
SCHEDULE D
ANNUAL REPORTING
NOTIFICATION OF ANY CHANGE IN FUND STRUCTURE, E.G., ADDITION OR DELETION OF
FUND, CHANGE IN INVESTMENT POLICY OR FUND MANAGER, ETC.
16 of 26
SCHEDULE E
LETTER OF CREDIT
LETTER OF CREDIT
(Name of Bank)
(Address)
FOR INTERNAL IDENTIFICATION PURPOSES ONLY
Our No.______________________________________________________________________
Other________________________________________________________________________
Accountholder/Applicant______________________________________________________
(Reinsurer)__________________________________________________________________
Beneficiary's State of Domicile______________________________________________
Irrevocable Clean Letter of Credit No.____________Issue Date______________
To Beneficiary: (Name) + (Address)
We have established this clean, irrevocable, and unconditional Letter of
Credit in your favor as beneficiary for drawings up to U.S. $___________
effective immediately. This Letter of Credit is issued, presentable and
payable at our office at (issuing bank address) and expires with our close of
business on ______________. Except when the amount of this Letter of Credit
is increased, this Credit cannot be modified or revoked without your consent.
The term "Beneficiary" includes any successor by operation of law of the
named Beneficiary including without limitation any liquidator, rehabilitator,
receiver or conservator. Drawings by any liquidator, rehabilitator, receiver
or conservator shall be for the benefit of all of the Beneficiary's
policyholders.
We hereby undertake to promptly honor your sight draft(s) drawn on us,
indicating our Credit No.__________, for all or any part of this Credit upon
presentation of your draft drawn on us at our office specified in paragraph
one on or before the expiration date hereof or any automatically extended
expiry date.
Except as expressly stated herein, this undertaking is not subject to any
agreement, requirement or qualification. The obligation of (issuing bank)
under this Credit is the individual obligation of (issuing bank) and is in no
way contingent upon reimbursement with respect thereto, or upon our ability
to perfect any lien, security interest or any other reimbursement.
This Letter of Credit is deemed to be automatically extended without
amendment for one year from the expiration date or any future expiration
date, unless thirty days prior to such expiration date, we notify Golden
American Life Insurance Company and Security Life of Denver International,
Limited by Registered Mail that this Letter of Credit will not be renewed for
any such additional period.
This Letter of Credit is subject to and governed by the laws of the State of
New York and the 1993 Revision of the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce (Publication No.
500) and in the event of any conflict the Laws of New York will control. If
this credit expires during an interruption of business as described in
Article 17 of said Publication 500, the bank hereby specifically agrees to
effect payment if this Credit is drawn against within 30 days after the
resumption of business.
17 of 26
EXHIBIT A
MGDB BENEFITS
Terminology applicable to this Exhibit.
Max 7% - Max 7 Enhanced Death Benefit
Max 5.5% - Max 5.5 Enhanced Death Benefit
7% Solution - 7% Solution Enhanced Death Benefit
5.5% Solution - 5.5% Solution Enhanced Death Benefit
Deferred Ratchet - Deferred Ratchet Death Benefit (ESII Product)
Annual Ratchet - Annual Ratchet Enhanced Death Benefit
Standard - Standard Death Benefit
10 Year MGAB - Minimum Guaranteed Accumulation Benefit (10 year benefit)
20 Year MGAB - Minimum Guaranteed Accumulation Benefit (20 year benefit)
MGIB - Minimum Guaranteed Income Benefit
MGWB - Minimum Guaranteed Withdrawal Benefit
bp - basis points
I. NET AMOUNT AT RISK FOR MGDB BENEFIT
The NET AMOUNT AT RISK for the MGDB Benefit is defined as i) minus ii), if
positive; otherwise zero:
i) the Death Benefit payable under the policy terms.
ii) the Accumulation Value.
In the case where a death benefit "step-up" is credited to the Accumulation
Value under:
a.) spousal continuation, the Net Amount at Risk shall be the
"step-up" amount. Reinsurance coverage shall continue after such
reimbursement, with the Net Amount at Risk calculated as above.
b.) non-spousal continuation, the Net Amount at Risk shall be the
"step-up" amount. Reinsurance coverage will terminate after such
reimbursement.
18 of 26
EXHIBIT A
MGDB BENEFIT
II. CURRENT AND GUARANTEED ANNUAL MGDB CHARGES
Monthly charge is 1/12 of the annual charge factor.
1. Premium Plus Product
================================= ===================== ==================== =============================
Death Benefit Issue Age Current (bp) Guaranteed (bp)
================================= ===================== ==================== =============================
Max 7%, < 40 5 100
On Applicable Funds 40-49 12 100
50-59 28 100
60-69 46 112
> 70 83 157
--------------------------------- --------------------- -------------------- -----------------------------
Max 5.5%, < 40 4 100
On Applicable Funds 40-49 10 100
50-59 23 100
60-69 38 100
> 70 74 130
--------------------------------- --------------------- -------------------- -----------------------------
7% Solution, < 40 4 100
On Applicable Funds 40-49 10 100
50-59 25 100
60-69 41 100
> 70 77 138
--------------------------------- --------------------- -------------------- -----------------------------
5.5% Solution, < 40 4 100
On Applicable Funds 40-49 8 100
50-59 20 100
60-69 31 100
> 70 67 107
--------------------------------- --------------------- -------------------- -----------------------------
Annual Ratchet, < 40 3 100
On Applicable Funds 40-49 7 100
50-59 14 100
60-69 21 100
> 70 38 100
--------------------------------- --------------------- -------------------- -----------------------------
Standard, < 40 1 100
On Applicable Funds 40-49 2 100
50-59 5 100
60-69 8 100
70-79 19 100
> 79 38 100
--------------------------------- --------------------- -------------------- -----------------------------
All Death Benefits, All 0 0
On Non-Applicable Funds
================================= ===================== ==================== =============================
19 of 26
EXHIBIT A
CURRENT AND GUARANTEED ANNUAL MGDB CHARGES
------------------------------------------
Monthly charge is 1/12 of the annual charge factor.
2. DVA Plus, ES II and Value Products
================================= ===================== ==================== =============================
Death Benefit Issue Age Current (bp) Guaranteed (bp)
================================= ===================== ==================== =============================
Max 7%, < 40 5 100
On Applicable Funds 40-49 11 100
50-59 26 100
60-69 44 105
> 70 80 150
--------------------------------- --------------------- -------------------- -----------------------------
Max 5.5%, < 40 4 100
On Applicable Funds 40-49 9 100
50-59 22 100
60-69 36 100
> 70 72 127
--------------------------------- --------------------- -------------------- -----------------------------
7% Solution, < 40 4 100
On Applicable Funds 40-49 10 100
50-59 23 100
60-69 39 100
> 70 73 129
--------------------------------- --------------------- -------------------- -----------------------------
5.5% Solution, < 40 3 100
On Applicable Funds 40-49 8 100
50-59 18 100
60-69 30 100
> 70 64 102
--------------------------------- --------------------- -------------------- -----------------------------
Annual Ratchet, < 40 3 100
On Applicable Funds 40-49 7 100
50-59 14 100
60-69 21 100
> 70 38 100
--------------------------------- --------------------- -------------------- -----------------------------
Deferred Ratchet, < 40 3 100
On Applicable Funds 40-49 7 100
50-59 14 100
60-65 21 100
66-75 38 100
> 75 NA NA
--------------------------------- --------------------- -------------------- -----------------------------
Standard, < 40 1 100
On Applicable Funds 40-49 2 100
50-59 5 100
60-69 8 100
70-79 19 100
> 79 50 100
--------------------------------- --------------------- -------------------- -----------------------------
All Death Benefits, All 0 0
On Non-Applicable Funds
================================= ===================== ==================== =============================
20 of 26
EXHIBIT A
CURRENT AND GUARANTEED ANNUAL MGDB CHARGES
------------------------------------------
Monthly charge is 1/12 of the annual charge factor.
3. Access Product
================================= ===================== ==================== =============================
Death Benefit Issue Age Current (bp) Guaranteed (bp)
================================= ===================== ==================== =============================
Max 7%, < 40 5 100
On Applicable Funds 40-49 10 100
50-59 25 100
60-69 42 101
> 70 76 143
--------------------------------- --------------------- -------------------- -----------------------------
Max 5.5%, < 40 4 100
On Applicable Funds 40-49 9 100
50-59 21 100
60-69 34 100
> 70 68 119
--------------------------------- --------------------- -------------------- -----------------------------
7% Solution, < 40 4 100
On Applicable Funds 40-49 9 100
50-59 22 100
60-69 37 100
> 70 69 124
--------------------------------- --------------------- -------------------- -----------------------------
5.5% Solution, < 40 3 100
On Applicable Funds 40-49 7 100
50-59 17 100
60-69 28 100
> 70 59 100
--------------------------------- --------------------- -------------------- -----------------------------
Annual Ratchet, < 40 3 100
On Applicable Funds 40-49 7 100
50-59 14 100
60-69 21 100
> 70 38 100
--------------------------------- --------------------- -------------------- -----------------------------
Standard, < 40 1 100
On Applicable Funds 40-49 2 100
50-59 5 100
60-69 7 100
70-79 18 100
> 79 43 100
--------------------------------- --------------------- -------------------- -----------------------------
All Death Benefits, All 0 0
On Non-Applicable Funds
================================= ===================== ==================== =============================
21 of 26
EXHIBIT B
LIVING BENEFITS
---------------
Terminology applicable to this Exhibit.
--------------------------------------
10 Year MGAB - Minimum Guaranteed Accumulation Benefit (10 year benefit)
20 Year MGAB - Minimum Guaranteed Accumulation Benefit (20 year benefit)
MGIB - Minimum Guaranteed Income Benefit
MGWB - Minimum Guaranteed Withdrawal Benefit
bp - basis points
I. NET AMOUNT AT RISK
a. The NET AMOUNT AT RISK for the Minimum Guaranteed Accumulation
Benefit at the end of the Waiting Period is equal to i) minus
ii), but not less than zero, where:
i) is Minimum Guaranteed Accumulation Benefit Base (as defined
in attached rider form);
ii) is Accumulation Value, excluding any Market Value
Adjustments.
During the Waiting Period, the Net Amount at Risk is equal to
zero.
b. The NET AMOUNT AT RISK for the Minimum Guaranteed Income Benefit
at the date of rider exercise (at or after the end of the Waiting
Period) is equal to:
J times (L/K - 1), but not less than zero, where
J is the Accumulation Value.
K is the periodic income if the Accumulation Value were
annuitized at the guaranteed policy rate for the same type of
payout as the MGIB and on the same date.
L is the periodic income paid under the MGIB.
During the Waiting Period, the Net Amount at Risk is equal to
zero.
c. The NET AMOUNT AT RISK for the Minimum Guaranteed Withdrawal
Benefit is equal to any Minimum Guaranteed Withdrawal Benefit
payment made by the Ceding Company while the contract is in
Automatic Withdrawal Status (as defined in the attached rider
form).
22 of 26
EXHIBIT B
CURRENT AND GUARANTEED ANNUAL LIVING BENEFIT CHARGES
----------------------------------------------------
Monthly charge is 1/12 of the annual charge factor
1. Premium Plus Product
================================= ===================== ==================== =============================
Living Benefit Issue Age Current (bp) Guaranteed (bp)
================================= ===================== ==================== =============================
10 Year MGAB < 40 24 50
40-49 24 50
50-59 24 50
60-69 24 50
> 70 24 50
--------------------------------- --------------------- -------------------- -----------------------------
20 Year MGAB < 40 27 50
40-49 27 50
50-59 27 50
60-69 27 50
> 70 N/A N/A
--------------------------------- --------------------- -------------------- -----------------------------
MGIB < 40 26 50
40-49 27 59
50-59 33 79
60-69 38 92
> 70 26 51
--------------------------------- --------------------- -------------------- -----------------------------
MGWB < 40 16 50
40-49 16 50
50-59 16 50
60-69 16 50
> 70 16 50
================================= ===================== ==================== =============================
23 of 26
EXHIBIT B
CURRENT AND GUARANTEED ANNUAL LIVING BENEFIT CHARGES
----------------------------------------------------
Monthly charge is 1/12 of the annual charge factor
2. DVA Plus, ES II and Value Products
================================= ===================== ==================== =============================
Living Benefit Issue Age Current (bp) Guaranteed (bp)
================================= ===================== ==================== =============================
10 Year MGAB < 40 24 50
40-49 24 50
50-59 24 50
60-69 24 50
> 70 24 50
--------------------------------- --------------------- -------------------- -----------------------------
20 Year MGAB < 40 27 50
40-49 27 50
50-59 27 50
60-69 27 50
> 70 N/A N/A
--------------------------------- --------------------- -------------------- -----------------------------
MGIB < 40 26 50
40-49 26 56
50-59 32 76
60-69 32 75
> 70 29 67
--------------------------------- --------------------- -------------------- -----------------------------
MGWB < 40 16 50
40-49 16 50
50-59 16 50
60-69 16 50
> 70 16 50
================================= ===================== ==================== =============================
24 of 26
EXHIBIT B
CURRENT AND GUARANTEED ANNUAL LIVING BENEFIT CHARGES
----------------------------------------------------
Monthly charge is 1/12 of the annual charge factor
3. Access Product
================================= ===================== ==================== =============================
Living Benefit Issue Age Current (bp) Guaranteed (bp)
================================= ===================== ==================== =============================
10 Year MGAB < 40 24 50
40-49 24 50
50-59 24 50
60-69 24 50
> 70 24 50
--------------------------------- --------------------- -------------------- -----------------------------
20 Year MGAB < 40 27 50
40-49 27 50
50-59 27 50
60-69 27 50
> 70 N/A N/A
--------------------------------- --------------------- -------------------- -----------------------------
MGIB < 40 26 50
40-49 27 52
50-59 30 69
60-69 33 79
> 70 28 63
--------------------------------- --------------------- -------------------- -----------------------------
MGWB < 40 16 50
40-49 16 50
50-59 16 50
60-69 16 50
> 70 16 50
================================= ===================== ==================== =============================
25 of 26
EXHIBIT C
MGDB AND LIVING BENEFIT CHARGE BASE
-----------------------------------
The charge base to be applied in order to determine the reinsurance premium is
as shown below. The charge base for any such risks reinsured under other
reinsurance agreements is excluded.
Max 5.5 and Max 7 Enhanced Death Benefits
Average of the beginning of period Minimum Guaranteed Death Benefit
associated with Applicable Funds and the end of period Minimum Guaranteed
Death Benefit associated with Applicable Funds.
5.5% Solution and 7% Solution Enhanced Death Benefits
Average of the beginning of period Minimum Guaranteed Death Benefit
associated with Applicable Funds and the end of period Minimum Guaranteed
Death Benefit associated with Applicable Funds.
Deferred Ratchet Death Benefit (ESII Product)
Average of the beginning of period Minimum Guaranteed Death Benefit
associated with Applicable Funds and the end of period Minimum Guaranteed
Death Benefit associated with Applicable Funds.
Annual Ratchet Enhanced Death Benefit
Average of the beginning of period Minimum Guaranteed Death Benefit
associated with Applicable Funds and the end of period Minimum Guaranteed
Death Benefit associated with Applicable Funds.
Standard Death Benefit
Average of the beginning of period Minimum Guaranteed Death Benefit
associated with Applicable Funds and the end of period Minimum Guaranteed
Death Benefit associated with Applicable Funds.
Minimum Guaranteed Accumulation Benefit (10 year benefit)
Average of the beginning period MGAB Charge Base and the end of period MGAB
Charge Base, as defined in the attached rider form.
Minimum Guaranteed Accumulation Benefit (20 year benefit)
Average of the beginning period MGAB Charge Base and the end of period MGAB
Charge Base, as defined in the attached rider form.
Minimum Guaranteed Income Benefit
Average of the beginning period MGIB Base and the end of period MGIB Base,
as defined in the attached rider form.
Minimum Guaranteed Withdrawal Benefit
Average of the beginning period eligible premiums and credits and the end
of period eligible premiums and credits, as defined in the attached rider
form.
26 of 26