FIRST AMENDMENT TO
SERVICE EXPENSE REIMBURSEMENT AGREEMENT
(Louisiana)
This Amendment is entered into as of July 1, 2005 (the "First Amendment
Effective Date") by and among American Bankers Life Assurance Company of
Florida, as successor in interest to Voyager Life Insurance Company, Voyager
Property & Casualty Insurance Company, American Bankers Life Assurance Company
of Florida, American Bankers Insurance Company of Florida, American Reliable
Insurance Company and American Bankers General Agency, Inc. on behalf of
Ranchers & Farmers Mutual Insurance Company (collectively "Company") and CAI
Credit Insurance Agency, Inc. ("Customer") and amends that certain Service
Expense Reimbursement Agreement entered into between Company and Customer
effective July 1, 1998 (the "Agreement").
In consideration of the mutual promises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. The Agreement shall be amended so as to delete Ranchers & Farmers Mutual
Insurance Company and Voyager Life Insurance Company as signatories, and
to add American Bankers Insurance Company of Florida and American Reliable
Insurance Company as signatories.
2. Section 8 of the Agreement shall be amended to read as follows:
8. Company may prospectively change the rates of Expense Reimbursement
for products on Schedule A upon thirty (30) days advance notice if
required by state regulatory authority, or in the event of a premium
rate decrease. Company may decrease the rates of Expense
Reimbursement upon thirty (30) days advance notice in the event of a
projected deficit under the Group Experience Rating/ Contingent
Compensation Addendum, in which event such decrease shall be only in
an amount which Company deems necessary to prevent or cure such
deficit, and such decreased rates shall continue in effect only for
the period of time necessary to prevent or cure such deficit. In all
other respects, this Agreement may be altered or amended only in
writing signed by both of the parties.
3. Section 9 of the Agreement shall be amended to read as follows:
9. (a) Term.
This Agreement shall be for a term of four years from the First
Amendment Effective Date, and shall automatically renew for
successive one (1) year terms (each a "Renewal Term") unless written
notice is given at least ninety (90) days prior to the effective
date of any term. In the event, as of any renewal date, any deficit
exists under the Contingent Compensation Addendum, then Customer
shall not have the right to terminate this Agreement or any group
master policy until such time as the deficit is cured.
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(b) Termination by mutual consent.
This Agreement may be terminated at any time by the mutual consent
of both Customer and Company.
(c) Termination with cause by Company.
Subject to the cure provisions contained herein, Company may
immediately terminate this agreement by written notice to Customer
in the event of (i) Customer's violation of any applicable law
relating to the offer, sale or administration of the insurance or
debt protection programs and the violation continues for fifteen
(15) days after Customer has received notice of the violation; (ii)
material breach of this Agreement by Customer, which material breach
continues for thirty (30) days after Customer has received notice of
the breach; (iii) gross neglect of duty, fraud, misappropriation, or
embezzlement by Customer or its affiliates of funds owed to Company
or any of its affiliates under this Agreement or any other agreement
with Customer or any of its affiliates; (iv) Customer or any of its
affiliates shall become the subject of any order or injunction of
any court or governmental body relating to the offer, sale or
administration of the insurance or debt protection programs and such
order or injunction is not dismissed within thirty (30) days; or (v)
Customer's voluntary bankruptcy, insolvency or assignment for the
benefit of creditors. For purposes of this Agreement, an "affiliate"
of Company is defined as any entity that is a member company of
Assurant Solutions/Assurant Specialty Property or any entity under
common ownership with such entity, and an "affiliate" of Customer
shall mean any subsidiary, parent or successor corporation of
Customer.
(d) Termination with cause by Customer.
Subject to the cure provisions contained herein, Customer may
immediately terminate this Agreement by written notice to Company in
the event of (i) Company's violation of any applicable law relating
to the offer, sale or administration of the insurance or debt
protection programs and the violation continues for fifteen (15)
days after Company has received notice of the violation; (ii)
material breach of this Agreement by Company, which material breach
continues for thirty (30) days after Company has received notice of
the breach; (iii) gross neglect of duty, fraud, misappropriation, or
embezzlement by Company of funds owed Customer under this Agreement
or any other agreement with Company or any of its affiliates; (iv)
Company or its affiliates shall become the subject of any order or
injunction of any court or governmental body relating to the offer,
sale or administration of the insurance or debt protection programs
and such order or injunction is not dismissed within thirty (30)
days; or (v) Company's voluntary bankruptcy, insolvency or
assignment for the benefit of creditors.
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(e) Right to cure.
Both parties shall have the right to cure any event that would
provide either party the right to terminate this Agreement for cause
within thirty (30) days after written notice is received of the
occurrence of such event unless a shorter period of time to cure
such occurrence is provided by this Agreement. Such notice shall
include a specific reference to the provision or provisions of this
Agreement which are alleged to have been breached, a description of
the event giving rise to the alleged violation, and the action to be
taken by the party alleged to have violated the Agreement. During
the cure period, neither party shall terminate the Agreement.
Paragraphs 9(c)(iii) and 9(d)(iii) are hereby expressly excluded
from this right to cure.
4. Section 21 shall be added to the Agreement as follows:
21. As soon as practicable, Company agrees to retain a program
management/training resource who will reside in Texas and who will
have daily interaction with Customer's representatives in an effort
to increase sales volume. One resource shall be hired with respect
to all products underwritten or issued by Company and its affiliates
under this and any other agreement between Company and Customer.
5. Section 22 shall be added to the Agreement as follows:
22. Exclusivity.
During the term of this Agreement, as extended from time to time,
Customer shall utilize Company exclusively for the insurance written
hereunder, or any product which provides similar coverage.
Notwithstanding the foregoing, in the event a product offered by
Company hereunder is discontinued in any state and Company is unable
to offer a substantially similar replacement product immediately,
Customer may obtain such discontinued product for its customers in
the affected state from another carrier. Company will provide
Customer notice of plans to discontinue a product ninety (90) days
prior to discontinuation, unless a regulatory mandate does not allow
for as much as ninety (90) days advance notice.
Further, in the event of a proposed rate decrease in any state which
results in a rate for any product or group of products which would
produce a decrease in annual premium production or debt protection
fees greater than $100,000, then Company shall have sixty (60) days
from and after the scheduled implementation date of the rate
decrease to attempt to obtain approval of a different rate. If
Company is unable within said sixty (60) days to obtain approval of
a rate which is within one percent (1%) of the rate for a similar
product available through another carrier in said state, then at the
end of said sixty (60) day period Customer may offer such product
through another carrier in the affected state until such time as
Company can offer a rate for a substantially similar product that is
within one percent (1%) of the alternative carriers' rate.
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Customer shall not terminate or aid, directly or indirectly, in the
termination of any insurance written hereunder unless such
termination is initiated by an insured, without encouragement by
Customer. Nothing herein shall prohibit individual customer
cancellations handled in the normal course of business.
Further, in the event Customer implements a debt protection program,
Company shall administer said debt protection program at a fee equal
to 9.25% of net fees charged to participants under such program,
which shall decrease to 9% at such time as the cumulative total of
(i) net fees for the debt protection program and (ii) net premiums
written since the First Amendment Effective Date for the business
written under this Agreement and the Texas SERA (as defined in
Section A.(1)(b)(ii) of the Group Experience Rating/Contingent
Compensation Addendum), reaches $125,000,000.
6. The amounts to be used for future inception-to-date calculations under the
Group Experience Rating/Contingent Compensation Addendum as of the First
Amendment Effective Date are set forth on Schedule C attached hereto and
made a part hereof.
7. The first paragraph of Section A and paragraph (1) of Section A of the
Group Experience Rating/Contingent Compensation Addendum shall be amended
to read as follows:
A. Within 10 days after each calendar quarter commencing with the First
Amendment Effective Date and continuing while said Service Expense
Reimbursement Agreement is in force, Company agrees to return Group
Experience Rating/Contingent Compensation Credit on the coverages
written under said Agreement as follows:
(1) Premium amounts will be calculated as follows and added
together.
(a) The cumulative net earned premiums written in the State
of Louisiana prior to the First Amendment Effective
Date, which shall be based upon the agreed-upon
cumulative figures set forth in paragraph 5 of the First
Amendment, for each type of insurance shown in Paragraph
H of this Addendum, multiplied by 90%.
(b) The cumulative net earned premiums in the State of
Louisiana commencing with the First Amendment Effective
Date and continuing for all months (each month being
considered as a full month rather than day-by-day) in
which some time during such month the total combined net
fees and insurance premiums written since the First
Amendment Effective Date under the following agreements
amount to $125,000,000 or less:
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(i) this Agreement, and
(ii) the Service Expense Reimbursement Agreement
effective July 1, 1998 covering Texas business
entered into between Voyager Life Insurance
Company, Voyager Property & Casualty Insurance
Company, American Bankers Life Assurance Company
of Florida, Ranchers & Farmers Mutual Insurance
Company and CAI, L.P., successor in interest to
Affiliates Insurance Agency, Inc., as amended from
time to time (in which American Bankers Insurance
Company of Florida was subsequently added and
Voyager Life Insurance Company and Voyager
Property and Casualty Insurance Company were
subsequently deleted as signatories) (the "Texas
SERA"), and
(iii) net fees for the debt protection program
multiplied by 89.75%; and
(c) The cumulative net earned premiums in the State of
Louisiana commencing with the first full month (each
month being considered as a full month rather than
day-by-day) written since the First Amendment Effective
Date, in which the total combined net fees and insurance
premiums under the agreements set forth in paragraphs
(i) through (iii) immediately above, exceed
$125,000,000, multiplied by 90%
and from the total there shall be deducted the sum of the
following items for each type of insurance:
(d) The cumulative total of all losses and loss expenses,
including all allocated loss adjustment expenses
incurred, and
(e) All reserves, and
(f) The cumulative total of all earned expense
reimbursements, paid or allowed Customer by Company, and
(g) The cumulative total of all amounts previously paid to
Customer in accordance with this Addendum.
8. The last paragraph of Section A of the Group Experience Rating/Contingent
Compensation Addendum, which is set forth below, shall be deleted in its
entirety:
For purposes of this Addendum, any amounts accumulated under that
certain Group Experience Rating/Contingent Compensation Credit
Addendum, made effective December 30, 1994, from the sale of the
above described Insurance in Louisiana shall be included in the
calculations of the Group Experience Rating/Contingent Compensation
Credit under this Paragraph A.
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9. Section G of the Group Experience Rating/Contingent Compensation Addendum
shall be amended to read as follows:
G. In the event of termination of the Service Expense Reimbursement
Agreement, Company shall continue to pay expense reimbursement
payments as outlined in Section A of this Addendum. However, in the
event a "deficit" exists or is projected at any time as a result of
the calculation under Section A of this Addendum, Company may
decrease the rate of Expense Reimbursement as provided in Section 8
of the Agreement.
10. Section H of the Group Experience Rating/Contingent Compensation Addendum
shall be amended to read as follows:
H. It is hereby understood that Paragraph A pertains to only the
following types of insurance, at the indicated percent rates as
shown for each type of insurance:
Type of Insurance Percent Rate
----------------- ------------
Credit Life (*)
Credit Accident & Health (*)
Credit Property (*)
Involuntary Unemployment Ins. (*)
Leased Property (*)
--------
(*)
(i) The Percent Rate shall be 90% prior to the First Amendment Effective
Date.
(ii) After the First Amendment Effective Date, the portion of insurance
under this Agreement to which the Percent Rate applies shall be
89.75% as to any month (each month being considered as a full month
rather than day-by-day) in which the total combined net fees and
insurance premiums written since the First Amendment Effective Date
under the following agreements amount to $125,000,000 or less:
(a) this Agreement, and
(b) the Texas SERA, and
(c) net fees for the debt protection program.
(iii) After the First Amendment Effective Date, the portion of insurance
under this Agreement to which the Percent Rate applies shall be 90%
commencing with any month (each month being considered as a full
month rather than day-by-day) in which the total combined net fees
and insurance premiums written since the First Amendment Effective
Date under the agreements listed in paragraphs (a) through (c)
immediately preceding exceed $125,000,000.
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The attached Schedule B sets forth an illustration of the calculation of
the Group Experience Rating/Contingent Compensation Credit using the above
rates.
11. Section I of the Group Experience Rating/Contingent Compensation Addendum
shall be amended to read as follows:
Until such time as this Agreement is terminated, Company agrees to pay
Customer investment income on the cash held by the Company, at the
interest rate of an 18 month CD, as posted on the Bank One/Chase website.
The cash held by the Company shall be calculated according to the
following formula:
[*]% of the cumulative net written premium
Less: the cumulative losses and loss expenses paid;
the cumulative advance commissions paid or retained; and
the cumulative contingent commissions paid or due.
Equals: cash held by Company.
Each month the average cash held for the month will be calculated based on
current and prior month balances of total cash held. The average cash held
for the month shall be multiplied by the 18 month CD rate posted in the
Bank One/Chase website at the end of the month divided by 12, to determine
the interest accrued for the month. The product of this calculation for
each of the three months in a quarter shall be added to determine the
investment income to be paid on cash withheld for the quarter.
----------
[*] This percentage rate shall be the same as that applied under Section H
of this Addendum, as amended by the First Amendment, based on the blended
rate that results from the sliding scale contained therein.
12. Schedule A of the Agreement shall be deleted in its entirety and restated
as attached to this First Amendment.
13. Section J. shall be added to the Group Experience Rating/Contingent
Compensation Addendum and shall read as follows:
J. In the event Company has exercised its right to change the rate of
Expense Reimbursement as provided in Section 8 of the Service
Expense Reimbursement Agreement, as amended, Company and Customer
shall thereafter conduct a review of the Group Experience
Rating/Contingent Compensation Addendum to determine whether any
adjustments under said Addendum are appropriate in order to avoid a
future deficit or to maintain equity as to the Company and/or
Customer in the calculation under the Group Experience
Rating/Contingent Compensation Addendum. Any adjustment to the Group
Experience Rating/Contingent Compensation Addendum shall be made
only upon mutual written agreement, and any dispute relating thereto
shall be resolved in accordance with the arbitration provisions of
Section 10 of this Agreement.
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14. All other provisions of the Agreement shall remain in full force and
effect, unaffected hereby.
IN WITNESS WHEREOF, this Amendment is executed as of the date set forth above by
the duly authorized representative of each party.
CAI CREDIT INSURANCE AGENCY, INC.
By: /s/ David Atnip
-----------------------------------------
Print Name: David Atnip
---------------------------------
Title: President
---------------------------------------
Date: 7/21/2005
---------------------------------------
AMERICAN BANKERS LIFE ASSURANCE
COMPANY OF FLORIDA, as successor in interest
to VOYAGER LIFE INSURANCE COMPANY
By: /s/ Valerie Seasholtz
-----------------------------------------
Print Name: Valerie Seasholtz
---------------------------------
Title: Senior Vice President
---------------------------------------
Date: 7/21/2005
---------------------------------------
VOYAGER PROPERTY & CASUALTY
INSURANCE COMPANY
By: /s/ Valerie Seasholtz
-----------------------------------------
Print Name: Valerie Seasholtz
---------------------------------
Title: Senior Vice President
---------------------------------------
Date: 7/21/2005
--------------------------------------
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AMERICAN BANKERS LIFE ASSURANCE
COMPANY OF FLORIDA
By: /s/ Valerie Seasholtz
-----------------------------------------
Print Name: Valerie Seasholtz
---------------------------------
Title: Senior Vice President
---------------------------------------
Date: 7/21/2005
--------------------------------------
AMERICAN BANKERS INSURANCE COMPANY
OF FLORIDA
By: /s/ Valerie Seasholtz
-----------------------------------------
Print Name: Valerie Seasholtz
---------------------------------
Title: Senior Vice President
---------------------------------------
Date: 7/21/2005
--------------------------------------
AMERICAN RELIABLE INSURANCE COMPANY
By: /s/ Authur W. Heggen
-----------------------------------------
Print Name: Authur W. Heggen
---------------------------------
Title: Assistant Secretary
---------------------------------------
Date: 7/21/2005
--------------------------------------
AMERICAN BANKERS GENERAL AGENCY, INC.
On behalf of
RANCHERS & FARMERS MUTUAL INSURANCE
COMPANY
By: /s/ Charles D Helton
-----------------------------------------
Print Name: Charles D Helton
---------------------------------
Title: President
---------------------------------------
Date: 7/21/2005
--------------------------------------
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SCHEDULE A
This Schedule A is attached to and by reference made a part of the Service
Expense Reimbursement Agreement indicated above (the "Agreement") between the
insurance companies named below ("Company") and CAI Credit Insurance Agency,
Inc. ("Customer"). This Schedule A is effective June 30, 2005.
Maximums Allowed
- ------------------------------------------------------------------------------------
Expense
Reimbursement
Company* Insurance Type State Rate Coverage Benefits Term
--------- -------------- ----- ---- -------- -------- ----
- ------------------------------------------------------------------------------------
ABLAC Credit Life - SP LA 35% $20,000 N/A 60 mos.
- ------------------------------------------------------------------------------------
ABLAC Credit Life - MOB LA 35% $20,000 N/A 1 mo.
- ------------------------------------------------------------------------------------
ABLAC Credit Accident & LA 35% N/A $800 60 mos.
Health - SP
- ------------------------------------------------------------------------------------
ABLAC Credit Accident & LA 35% N/A $800 1 mo.
Health - MOB
- ------------------------------------------------------------------------------------
ARIC Credit Property - SP LA 35% $20,000 N/A 60 mos.
- ------------------------------------------------------------------------------------
VPCIC Credit Property - MOB LA 35% $20,000 N/A 1 mo.
- ------------------------------------------------------------------------------------
VPCIC Leased Property LA 35% $10,000 N/A 1 mo.
- ------------------------------------------------------------------------------------
ABIC Involuntary LA 35% N/A $500 60 mos.
Unemployment - SP
- ------------------------------------------------------------------------------------
VPCIC Involuntary LA 35% N/A $500 60 mos.
Unemployment - MOB
- ------------------------------------------------------------------------------------
*Initials designate the following companies:
ABIC - American Bankers Insurance Company of Florida
ABLAC - American Bankers Life Assurance Company of Florida
ARIC - American Reliable Insurance Company
VPCIC - Voyager Property and Casualty Insurance Company
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SCHEDULE B
If, as of the end of any month, total combined net fees and insurance premiums
written since the First Amendment Effective Date under the specified agreements
total $125,000,000 or less, the Percent Rate under Section H of the Group
Experience Rating/Contingent Compensation Addendum, based upon which a payment
shall be made at the end of the respective quarter, shall be 89.75% as to each
such month (each month being considered as a full month rather than day-by-day).
If, as of the end of any month, total combined net fees and insurance premiums
written since the First Amendment Effective Date under the specified agreements
exceed $125,000,000, the Percent Rate under Section H of the Group Experience
Rating/Contingent Compensation Addendum, based upon which a payment shall be
made at the end of the respective quarter, shall be 90% for that month (each
month being considered as a full month rather than day-by-day) and thereafter.
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