EXHIBIT 10.1
REINSURANCE
AGREEMENT
between
AMERICAN HERITAGE LIFE INSURANCE
COMPANY
and
ALLSTATE LIFE INSURANCE
COMPANY
RECITALS
This Reinsurance Agreement dated October 1,
2008 (hereinafter “Agreement”) is made and entered into
by and between AMERICAN HERITAGE LIFE INSURANCE COMPANY, a life
insurance company domiciled in the State of Florida (hereinafter
“Ceding Company”) and ALLSTATE LIFE INSURANCE COMPANY,
a life insurance company domiciled in the State of Illinois
(hereinafter the “Reinsurer”).
WHEREAS, Ceding Company and Reinsurer desire to
enter this Agreement, whereby Ceding Company will cede on a yearly
renewable term basis 100% of the life insurance and supplemental
benefit liabilities of the Ceding Company arising under the
Policies, except for certain excluded liabilities.
NOW THEREFORE, in consideration of the above
stated premises and the promises and the mutual agreements set
forth below the Ceding Company and the Reinsurer agree as
follows.
ARTICLE I
DEFINITIONS
Unless otherwise defined herein, as used in this
Agreement the following terms shall have the meanings ascribed to
them below:
A.
“Affiliate” shall mean,
with respect to any person, any other person controlling,
controlled by or under common control with such person. For
purposes of the foregoing, “control,” including the
terms “controlling,” “controlled by” and
“under common control with,” shall mean the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, by contract, as trustee or executor
or otherwise.
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B.
“Annual Statement” shall
mean the Ceding Company’s Life and Accident and Health
Companies Annual Statement for the General Account as filed with
the Florida Insurance Department.
C.
“Code” shall mean the
Internal Revenue Code of 1986, as amended.
D.
“Effective Date” shall
mean the effective date of this Agreement, which shall be 12:01 am
on October 1, 2008.
E.
“Excluded Liabilities”
shall mean liabilities ceded by Ceding Company under Third-Party
Reinsurance Agreements.
F.
“Extra-Contractual
Obligations” shall mean all liabilities and obligations for
consequential, extra-contractual, exemplary, punitive, special or
similar damages or any other amounts due or alleged to be due
(other than those arising under the express terms and conditions of
the Policies) which arise from any real or alleged act, error or
omission, whether or not intentional, in bad faith or otherwise,
including without limitation, any act, error or omission relating
to: (i) the marketing, underwriting, production, issuance,
cancellation or administration of the Policies; (ii) the
handling of claims or disputes in connection with the Policies; or
(iii) the failure to pay or the delay in payment of benefits
or claims, under or in connection with the Policies.
G.
“Net Benefits” shall
mean the actual amounts paid or incurred by the Ceding Company with
respect to the Policies for all death benefits and payments on
supplemental benefits, net of Excluded Liabilities.
H.
“Net Ceded Liabilities”
shall mean any and all liabilities of the Ceding Company arising
under the Policies, but shall not include Excluded
Liabilities.
I.
“Policy or Policies”
shall mean the life insurance policies defined in Exhibit A
which are issued or reinsured by the Ceding Company.
J.
“Third-Party Reinsurance
Agreements” shall mean any written reinsurance agreements
under which Ceding Company has ceded liabilities with respect to
the Policies, other than this Agreement.
K.
“Net Amount at Risk”
shall mean the amount calculated by subtracting the account value
from death benefit of the Policy.
ARTICLE II
BASIS OF
REINSURANCE
The Ceding Company agrees to cede and the
Reinsurer agrees to accept Net Ceded Liabilities.
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The reinsurance provided hereunder shall be on a
100% yearly renewable term basis.
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ARTICLE III
LIABILITY OF
REINSURER
A.
All of the Net Ceded Liabilities
shall be reinsured pursuant to the terms of this Agreement as of
the Effective Date.
B.
The liability of the Reinsurer with
respect to Policies in force on the Effective Date will begin on
the Effective Date. The liability of the Reinsurer with
respect to any application received or any contract issued after
the Effective Date and reinsured hereunder will begin
simultaneously with that of the Ceding Company. The
Reinsurer’s liability with respect to any Policy will
terminate on the date the Ceding Company’s liability on such
contract terminates. However, termination of this Agreement
will not terminate the Reinsurer’s liability for Net Benefits
paid or incurred by the Ceding Company on or after the Effective
Date and prior to the date of termination. If any of the Policies
are reduced or terminated by payment of a death benefit, withdrawal
or surrender, the reinsurance will be reduced proportionately or
terminated.
C.
The reinsurance provided under this
Agreement is subject to the same limitations and conditions as set
forth in the Policies.
D.
Ceding Company shall not make any
changes in the terms and conditions of any Policy, including, but
not limited to any changes to comply with any applicable law,
rule or regulation unless it has given Reinsurer written
notice of any proposed change at least thirty (30) days prior to
the proposed effective date. .
E.
Ceding Company shall not make any
changes or modifications to any of its underwriting, claims or
administrative practices, procedures or systems for the Policies,
nor waive or exercise any of its rights under any of the Policies
unless it has given Reinsurer written notice of any proposed change
at least thirty (30) days prior to the proposed effective
date.
F.
Conversions, exchanges, or
replacements of Policies shall continue to be reinsured under this
Agreement so long as it is a covered plan as defined in
Exhibit A.
ARTICLE IV
CLAIMS
A.
Except as provided below, Reinsurer
shall pay its proportionate share of all Extra-Contractual
Obligations.
B.
Reinsurer shall not be liable to pay
Ceding Company for any Extra-Contractual Obligations to the extent
such liabilities or obligations arise directly from and
are
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proximately caused by the gross
negligence or willful acts or omissions of Ceding Company, its
agents, contractors or employees in the performance of Ceding
Company’s duties and obligations under this
Agreement.
In the event of a change in the
amount of the Ceding Company’s liability on a Policy due to a
misstatement of age or sex, the Reinsurer’s liability will be
changed proportionately.
ARTICLE V
REINSURANCE
PREMIUMS
The consideration to be paid to Reinsurer for
life reinsurance shall be the rates shown in Exhibit B
attached hereto. The rates in Exhibit B are guaranteed
for one (1) year. After the initial one year period, the
rates are guaranteed to be less than the 2001 CSO Male Composite
Ultimate mortality rates. Any increase in reinsurance
premiums will be commensurate with the actual experience or
reasonably expected future performance on the underlying
business.
ARTICLE VI
SETTLEMENT AND
REPORTING
A.
Within sixty (60) days after the end
of each calendar month while this Agreement is in effect, Ceding
Company shall pay to Reinsurer, with respect to the Policies, a
monthly reinsurance premium in accordance with
Article V.
B.
Within sixty (60) days after the end
of each calendar month while this Agreement is in effect, Reinsurer
shall pay to Ceding Company Net Benefits paid or incurred during
the settlement period by Ceding Company with respect to the
Policies.
C.
Ceding Company will provide
Reinsurer with accounting reports on a time schedule determined by
Reinsurer, which schedule shall be no less frequently than
quarterly within fifteen (15) days following the end of each
calendar quarter. These reports will contain sufficient
information about the Policies to enable the Reinsurer to prepare
its quarterly and annual financial reports.
D.
Within sixty (60) days following the
end of each calendar month, Ceding Company shall provide Reinsurer
a list of all policies reinsured under this agreement and in force
at the beginning of such calendar month.
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ARTICLE VII
TAX MATTERS
With respect to this Agreement, the Ceding
Company and the Reinsurer hereby make the election as set forth in
Exhibit C and as provided for in section 1.848-2(g)(8) of
the Treasury Regulations. Each of the parties hereto agrees
to take such further actions as may be necessary to ensure the
effectiveness of such election.
ARTICLE VIII
RESERVE CREDIT
To the extent the Reinsurer becomes unadmitted,
unauthorized, or unaccredited in the state of Florida, it shall
take any steps necessary, pursuant to the requirements of Florida
for the Ceding Company to take appropriate statutory credit for
reinsurance ceded.
ARTICLE IX
OVERSIGHTS
Unintentional clerical errors, oversights,
omissions or misunderstandings in the administration of this
Agreement by either the Ceding Company or the Reinsurer shall not
be deemed a breach of this Agreement provided the clerical error,
oversight, omission or misunderstanding is corrected promptly after
discovery. Both the Ceding Company and the Reinsurer shall be
restored to the positions they would have occupied had such error,
oversight, omission, or misunderstanding not occurred.
ARTICLE X
INSPECTION OF
RECORDS
Either party, their respective employees or
authorized representatives, may audit, inspect and examine, during
regular business hours, at the home office of either party, any and
all books, records, statements, correspondence, reports, trust
accounts and their related documents or other documents that relate
to the Policies covered under this Agreement. The audited
party agrees to provide a reasonable workspace for such audit,
inspection or examination and to cooperate fully and to faithfully
disclose the existence of and produce any and all necessary and
reasonable materials requested by such auditors, investigators, or
examiners. The party performing a routine audit shall provide no
less than five (5) working days advance notice to the other
party. The expense of the respective party’s
employee(s) or authorized representative(s) engaged in
such activities will be borne solely by such party.
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ARTICLE XI
INSOLVENCY
A.
The portion of any risk or
obligation reinsured by the Reinsurer under this Agreement, when
such portion is ascertained, shall be payable on demand of the
Ceding Company at the same time as the Ceding Company shall pay its
net retained portion of such risk or obligation, and the
reinsurance shall be payable by the Reinsurer on the basis of the
liability of the Ceding Company under the Policies without
diminution because of the insolvency of the Ceding Company.
In the event of the insolvency of the Ceding Company and the
appointment of a conservator, liquidator or statutory successor of
the Ceding Company, such portion shall be payable to such
conservator, liquidator or statutory successor immediately upon
demand, on the basis of claims allowed against the Ceding Company
by any court of competent jurisdiction or, by any conservator,
liquidator or statutory successor of the Ceding Company having
authority to allow such claims, without diminution because of such
insolvency or because such conservator, liquidator or statutory
successor has failed to pay all or a portion of any claims.
Payments by the Reinsurer as above set forth shall be made directly
to
