1
EXHIBIT 10.24
2987-00-00
ADMINISTRATIVE SERVICES AGREEMENT
BY AND BETWEEN
RGA REINSURANCE COMPANY
(HEREIN CALLED THE CLIENT)
AND
GENERAL AMERICAN LIFE INSURANCE COMPANY
(HEREIN CALLED THE SERVICE CONTRACTOR)
WHEREAS, the Client is an insurance company licensed in various states; and
WHEREAS, the Service Contractor is an insurance company licensed in various
states and capable of providing various administrative services; and
WHEREAS, the Client reinsures certain Bank Owned Life Insurance ("BOLI")
policies (hereinafter called "the Policies"); and
WHEREAS, the Client desires that the Service Contractor provide certain services
in connection with the administration and operation of the Policies; and
WHEREAS, the Service Contractor is willing to provide such services;
NOW, THEREFORE, in consideration of the payments to the Service Contractor as
provided for herein and subject to the terms and conditions contained herein, it
is hereby agreed as follows:
Section 1. Services
The Service Contractor will provide the services listed in Appendix A, subject
to modification as provided herein, for the administration and operation of the
Policies; such services to be coordinated by a representative of the Service
Contractor to assure effective and efficient operation of the Policies. Such
policies shall be as covered under the Automatic Coinsurance Agreement and the
Automatic Yearly Renewable Term Agreement between USAA Life Insurance Company
and RGA Reinsurance Company effective January 1, 1997, attached as Appendix C
and Appendix D.
Section 2. Client Reports Records and Information
1
2
The Service Contractor hereby agrees to furnish the Client with certain
necessary reports, records, and information (see Exhibit F in Appendix C) in
order to carry out its duties hereunder.
It is mutually agreed that the Service Contractor shall not be responsible for
delay in the performance of its duties under this Agreement or for
non-performance hereunder, if such delay or non-performance is caused or
contributed to in whole or in part by the failure of the Client to promptly
furnish any required information.
Section 3. Payments to the Service Contractor
For each month in which the Service Contractor performs duties pursuant to this
Agreement, the Client shall make payment to the Service Contractor of amounts
due within 10 days of the date of notification to the Client by the Service
Contractor. The amount due shall be determined in accordance with the Payment
Schedule in Appendix B.
The Service Contractor shall have the right to adjust its fees as of the date
(a) the Policies are amended to modify benefits, or (b) its cost of operation is
increased solely by virtue of a change in charges to the Service Contractor by a
governmental unit, but such adjustment shall be limited to the amount of the
change. The Service Contractor also shall have the right to adjust its fees on
the annual anniversary of this Agreement and annually thereafter.
Section 4. General Provisions
(a) The Service Contractor in performing its duties under this
Agreement is acting only as agent of the Client, and the
rights and responsibilities of the parties shall be determined
in accordance with the law of agency except as otherwise
herein provided.
(b) The Service Contractor shall use reasonable care and diligence
in the exercise of its powers and the performance of its
duties hereunder, but shall not be liable for any mistake of
judgment or other action taken in good faith, or for any loss
unless resulting from its gross negligence.
(c) The Service Contractor agrees to indemnify the Client and hold
the Client harmless against any and all loss, damage, and
expense, including court costs and attorney's fees, resulting
from or arising out of the dishonest, fraudulent, criminal
acts or acts of gross negligence of the Service Contractor's
employees, either acting alone or in collusion with others.
(d) Except as provided in (c) above, the Client agrees to
indemnify the Service Contractor and hold the Service
Contractor harmless against any and all loss,
2
3
damage, and expense, including court costs and attorney's
fees, resulting from or arising out of claims, demands, or
lawsuits brought against the Service Contractor in
administering the Policies or to recover benefits under the
Policies, including compensatory, punitive, or other damages,
and including but not limited to claims for premium taxes by
any governmental unit or other assessments made against the
Service Contractor by governmental units.
(e) The Service Contractor shall consult with the Client or legal
counsel designated by the Client in claim matters that are
beyond the ordinary. In the defense of any legal action on a
claim for benefits, the Service Contractor will furnish the
Client and its legal counsel all pertinent information
regarding the disputed claim, including the basis for its
denial. The defense of any legal action on a claim for
benefits shall not be the obligation of the Service
Contractor.
(f) The Service Contractor shall be entitled to rely upon any
communication believed by the Service Contractor to be genuine
and to have been signed or presented by the proper party or
parties.
The Service Contractor shall not be bound by any notice,
direction, requisition, or request unless and until it shall
have been received in writing, or by facsimile, by the Service
Contractor at its St. Louis, Missouri address, or at such
other address as the Service Contractor specifies for the
purposes of this Agreement by notice in writing addressed to
the Client. Notices or communications from the Service
Contractor to the Client shall be addressed to the Client and
shall be sent by mail or facsimile to the Client at the same
address designated by the Client.
(g) The Service Contractor shall have no power or authority to
alter, modify, or waive any terms or conditions of the
Policies, or to waive any breach of any such terms or
conditions, or to bind the Client, or to waive any of its
rights, by making any statement or by receiving at any time
any notice; or information.
(h) The Service Contractor shall have no power or authority to act
for or on behalf of the Client other than as herein expressly
granted, and no other or greater power or authority shall be
implied by the grant or denial of power or authority
specifically mentioned herein.
(i) The Service Contractor shall hold as the property of the
Client all papers, books, files, correspondence and records of
all kinds which at any time shall come into its possession or
under its control relating to the transactions performed by
the
3
4
Service Contractor for the Client under this Agreement, and
shall surrender them to the Client upon termination of this
Agreement or upon prior request, except the Service Contractor
may periodically destroy such material as it would usually
destroy in the normal course of business.
(j) The Client shall have the right at all reasonable times and
upon reasonable notice to inspect at the office of the Service
Contractor or office of the Subcontractor all books, records
and documents relating to the administration of the Policies
under this Agreement and which relate to such inspection. Any
costs of such inspections shall be borne by the Client.
(k) Failure by the Client or the Service Contractor to insist upon
compliance with any provision of this Agreement at any given
time or under any given set of circumstances shall not operate
to waive or modify such provision or in any manner render it
unenforceable, as to any other time or as to any other
occurrence, whether the circumstances, are, or are not, the
same and no waiver of any of the terms or conditions of this
Agreement shall be valid or of any force or effect unless
contained in a written instrument specifically expressing such
waiver and signed by a person duly authorized to sign such
waiver.
(l) This Agreement, including any appendices or supplements
thereto, shall constitute the entire contract between the
parties and shall govern the rights, liabilities and
obligations of the parties hereto, except as it may be
modified in accordance with the provisions of Section 4.
(m) Except as otherwise provided herein, any assignment of this
Agreement or of any rights hereunder shall be void and of no
force or effect.
(n) It is understood that the Service Contractor performs purely
ministerial functions for the Client within a framework of
policies, interpretations, rules, practices and procedures
made by the Client.
(o) Under no circumstances shall the Service Contractor be
considered the named fiduciary under the Policies.
Section 5. Controlling Law
This Agreement shall be construed and enforced according to the laws of the
State of Texas.
Section 6. Separability
In the event any provision of this Agreement shall be held illegal or invalid
for any reason by law
4
5
or a court of competent jurisdiction, said illegality or invalidity shall not
affect the remaining parts of this Agreement, but it shall be construed and
enforced as if said illegal or invalid provisions had not been included herein
either initially, or beyond the date it is first held to be illegal or invalid
if after the effective date of this Agreement, provided the basic purposes
hereof can be effectuated through the remaining valid and legal provisions.
Section 7. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and said counterparts shall constitute but one and
the same instrument.
Section 8. Currency and Place of Payments
All sums payable to, or payable by, the Service Contractor pursuant to this
Agreement shall be payable in the lawful currency of the United States of
America at its St. Louis, Missouri office.
Section 9. Termination of Agreement
(a) If any state or other jurisdiction enacts a law which
prohibits the continuance of this Agreement, or the existing
law is interpreted to so prohibit the continuance of this
Agreement, the Agreement shall terminate automatically as to
such time or jurisdiction on the effective date of such law or
interpretation.
(b) The Client reserves the right to terminate this Agreement as
of any anniversary of the effective date of this Agreement by
giving written notice to the Service Contractor at least
ninety (90) days in advance of such date.
(c) The Service Contractor reserves the right to terminate this
Agreement.
(i) As of January 1, 2000, or any anniversary of that
date, after January 1, 2000 by giving written notice
to the Client at least one-hundred and eighty (180)
days in advance of such date, and
(ii) If the Client fails to make payments, pursuant to
Section 3, Termination of this Agreement in
accordance with this Item (ii) will be effective
immediately upon written notice from the Service
Contractor to the Client. Such notice may be by
telegram, facsimile, or delivered in person.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers duly authorized to do so, to be effective as of
January 1, 1997.
Dated at ________________________ RGA REINSURANCE COMPANY
5
6
this ____________ day of ________ By:_____________________________
________________________________
(Official Title)
Dated at ________________________ GENERAL AMERICAN LIFE INSURANCE COMPANY
this _________ day of ___________ By:_____________________________
________________________________
APPENDIX A
SERVICES TO BE PROVIDED BY THE SERVICE CONTRACTOR
6
7
TO BE ATTACHED TO AND MADE A PART OF THE AGREEMENT BY AND BETWEEN
RGA REINSURANCE COMPANY
AND
GENERAL AMERICAN LIFE INSURANCE COMPANY
The services to be performed by the Service Contractor are as set forth as
follows.
Section 1. Administration Services Provided
(a) Pre-Submission Approval. While no individual underwriting of
insureds is required on the Policies, the Service Contractor
will review, approve and/or make recommendations to the census
within defined guarantee issue parameters.
(b) Policy Issue. The Service Contractor will build the policy
administration records and prepare the master policy documents
within 90 days from receipt of monies, providing all necessary
submission requirements, (i.e., consent forms, master
application and census) are received.
(c) Premiums. The Service Contractor will perform the necessary
accounting to record all premium payments.
(d) Inforce Policy Administrator.
(i) The Service Contractor will provide monthly reporting
of values within five days following the ninth
valuation date. The date is the issue day of the
policy.
(ii) The Service Contractor will support policy changes.
These changes include title changes/ownership's,
beneficiary, assignee, name change) and contractual
changes (such as face inverses).
(iii) The Service Contractor will calculate death claim
values in accordance with the terms of the Policies
and provide such values to Client for payment.
APPENDIX A (CONTINUED)
Section 2. Financial Management Services Provided.
7
8
(a) The Service Contractor will provide:
(i) cash flow testing report annually to show that
adequate reserves have been set aside;
(ii) quarterly reports providing general ledger and
policy reserves data;
(iii) annual Statement data for insurance in force
exhibits;
(iv) experience analyses (lapses and mortality) annually,
with recommendations as to modification;
(v) interest Crediting Rate analysis, report and
recommendations, on an annual basis,
(vi) a monthly billing statement for services provided
under this agreement.
8
9
APPENDIX B
PAYMENT SCHEDULE
TO BE ATTACHED TO AND MADE A PART OF THE AGREEMENT BY AND BETWEEN
RGA REINSURANCE COMPANY
AND
GENERAL AMERICAN LIFE INSURANCE COMPANY
The amount due the Service Contractor will be the following amounts:
Acquisition Expenses $5,000 per Case
Inforce Administration $0.40 per policy per month, plus .02%
(annualized rate) times the Fund Value of
the Policies
Product Management .05% (annualized rate) times the Fund
Value of the Policies
The Fee is paid to the Service Contractor for services provided as outlined in
this Agreement. Fees for additional services not outlined in this agreement are
negotiable.
9