Reinsurance Agreements Essay, Research Paper

QUOTA SHARE REINSURANCE AGREEMENT

DWVD NO. 900804

for

BASIC COLLEGE ACCIDENT AND SICKNESS

MEDICAL EXPENSE INSURANCE

(hereinafter referred to as the “Agreement”)

made and entered into by

GERBER LIFE INSURANCE COMPANY

White Plains, NY

(hereinafter referred to as the “Company”)

and

PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY

Enfield, CT

(hereinafter referred to as the “Reinsurer”)

EFFECTIVE: January 1, 1999 – December 31, 1999

Table of Contents

ARTICLE I PARTIES TO AGREEMENT 1

ARTICLE II BASIS OF REINSURANCE 2

ARTICLE III RETENTION AND LIMIT 3

ARTICLE IV INURING REINSURANCE 4

ARTICLE V FACULTATIVE REINSURANCE 5

ARTICLE VI – EXCLUSIONS 6

ARTICLE VII EFFECTIVE DATE AND DURATION OF AGREEMENT 7

ARTICLE VIII REINSURANCE PREMIUMS 8

ARTICLE IX PREMIUM REPORTS 9

ARTICLE X CEDING ALLOWANCE/EXPENSES 10

ARTICLE XI CURRENCY 11

ARTICLE XII CLAIMS NOTIFICATION 12

ARTICLE XIII CLAIMS SETTLEMENT AND AUDIT 14

ARTICLE XIV EXTRA CONTRACTUAL OBLIGATIONS 15

ARTICLE XV SUBROGATION 16

ARTICLE XVI COMMUTATION 17

ARTICLE XVII CLAIMS FUND 18

ARTICLE XVIII OFFSET 19

ARTICLE XIX TERRITORY 20

ARTICLE XX OVERSIGHTS 21

ARTICLE XXI ACCESS TO RECORDS 22

ARTICLE XXII INSOLVENCY 23

ARTICLE XXIII ARBITRATION 24

ARTICLE XXIV – CONTROLLING LAW 25

ARTICLE XXV SEVERABILITY 26

ARTICLE XXVI UNAUTHORIZED REINSURERS 27

ARTICLE XXVII TAXES 29

ARTICLE XXVIII FEDERAL EXCISE TAX 30

ARTICLE XXIX CONFIDENTIALITY 31

ARTICLE XXX ENTIRE AGREEMENT 32

ARTICLE XXXI INTERMEDIARY 33

ARTICLE XXXII EXECUTION 34

ARTICLE I PARTIES TO AGREEMENT

This Agreement is solely between the Company and the Reinsurer and the performance of obligations of each party under this Agreement shall be rendered solely to the other party. In no instances shall anyone other than the Company or the Reinsurer have any rights under this Agreement except recognizing the Company has the sole responsibility for the evaluation and appointment of the Underwriting Manager, Managed Care Concepts of Delaware, Inc. (MCCI). Further, it is agreed that Associated Accident and Health Reinsurance Underwriters (AAHRU), a participating Reinsurer, is deemed to be the Lead Reinsurer. In that capacity, any and all actions of the Lead Reinsurer shall be made in the best interest of this Agreement and binding upon the other reinsurers. Should the Company appoint a new Underwriting Manager, the Reinsurer must approve any change in the Underwriting Manager, otherwise the Reinsurer has the right to cancel at the time of change.

This Agreement shall be binding upon the parties, their heirs, and successors, if any.

ARTICLE II BASIS OF REINSURANCE

On and after the effective date of this Agreement, the Company shall cede and the Reinsurer shall accept as reinsurance, a Quota Share portion, as shown within ARTICLE XXXII EXECUTION, of the liability on policies, binders, contracts or agreements of insurance, hereinafter referred to as policies, issued or renewed by the Company on or after the effective date of this Agreement and underwritten for and on behalf of the Company by the Underwriting Manager and classified as Basic College Accident and Sickness Medical Expense Insurance, as described below:

 Basic College Accident and Sickness Medical Expense Insurance:

Excess of all other valid and collectible insurance issued to the eligible students (various classes including, domestic undergraduate, domestic graduate and foreign students) and their eligible dependents. If the eligible student does not have primary insurance, this plan will be primary. Some plans may be written on a primary basis for which benefits will then be coordinated with any other plan in which the student is covered as a dependent. Premiums must be paid before insurance is in force and valid. The maximum benefit per individual covered insured is $500,000.

ARTICLE III RETENTION AND LIMIT

The Reinsurer agrees to accept a fixed proportion of 85% of the first $500,000 per person per risk for all business subject to this Agreement.

The Company agrees to retain for its own account 15% of the first $500,000 per person per risk for business subject to this Agreement.

ARTICLE IV INURING REINSURANCE

Inuring Reinsurance The Company and the Reinsurer agree to purchase excess of loss reinsurance that insures to the benefit of all basic quota share participants of this treaty for all per person risks that exceed $500,000. The purchase price and reinsurance security to be approved by the Company and Lead Reinsurer. Should acceptable reinsurance not be available, the Company and Lead Reinsurer will revise this Agreement accordingly.

ARTICLE V FACULTATIVE REINSURANCE

For business that does not meet the automatic treaty guidelines, the Underwriting Manager must submit the risk facultatively to the Company and the Lead Reinsurer. The Lead Reinsurer will respond to the Underwriting Manager within 96 hours of receipt of the Facultative Submission.

Criteria for submission shall include but not be limited to the following:

a) Ceding allowance exceeds automatic treaty limit;

b) Benefit period exceeds 52 weeks from date of accident;

c) Benefit maximum exceeds automatic treaty limits;

d) Plans of insurance or classes of insured not covered under automatic treaty guidelines;

e) Any other risk that the Company, the Underwriting Manager, and the Reinsurer deem outside the automatic treaty guidelines;

f) Profit Margin less than 6%;

g) Target Loss Ratio is less than 61% or Combined Ratio is above 100%;

h) Cases above $250,000 of premium.

ARTICLE VI – EXCLUSIONS

This Agreement shall not apply to and no claims will be paid for:

1. Insurrection; war or an act of war;

2. Committing a crime, or attempting to do so;

3. Flight in any type of aircraft, unless as a fare paying passenger on a regularly scheduled commercial airline;

4. Any other Exclusions as per the Company s original policies.

ARTICLE VII EFFECTIVE DATE AND DURATION OF AGREEMENT

The Effective Date of this Agreement shall be at 12:01 a.m. Local standard time January 1, 1999, and shall apply to losses occurring on policies which attach during the term of this agreement and shall remain in force until midnight, December 31, 1999, both days inclusive.

If any policy issued by the Company and covered by this Agreement is terminated, the reinsurance shall also be terminated with respect to such policy, subject, however, to any liability of the Company under the terminated policy not to extend beyond the contractual obligations of the underlying policy.

Notwithstanding the provisions of the previous paragraphs, in a state where the Company is not allowed to cancel a policy or policies unless it withdraws from the small group market in that state, reinsurance for policies inforce in that state, on the effective date of termination of the Agreement, shall remain in full force and effect for as long as the Company is contractually liable for such policies.

ARTICLE VIII REINSURANCE PREMIUMS

The Reinsurer shall receive its proportionate share of the gross premium collected by the Underwriting Manager on behalf of the Company, from its insured, less all return premiums with respect to policies attaching during this Agreement. The gross premium hereon shall be the premium developed by the Underwriting Manager, using rates and factors approved by the Lead Reinsurer and the Company.

The monthly reinsurance premium is due within forty-five (45) days after the close of each calendar month during which the premium was collected by the Underwriting Manager.

In the event of non-payment of reinsurance premiums as provided in the preceding paragraph the Reinsurer shall have the right to terminate reinsurance under this Agreement. If the Reinsurer elects to exercise its right of termination under the conditions of this ARTICLE, i.e., for non-payment of premiums only, the Reinsurer shall give the Company thirty (30) days prior written notice of its intention to terminate such reinsurance and if all reinsurance premiums in arrears, including any which may become due during the thirty (30) day period are not received by the Reinsurer before the expiration of such period, those policies will be considered terminated after the period for which premiums were last paid. For those terminated policies, the Reinsurer shall remain liable for any losses which may occur until the policy anniversary date on or next following the date of termination.

ARTICLE IX PREMIUM REPORTS

The Underwriting Manager on behalf of the Company shall forward within 45 days of the end of each month the premium due, a statement (on forms acceptable to the Lead Reinsurer) indicating the name of each account, the number of insured persons under each account by class of business and any changes to the prior month s figures including paid and outstanding; expenses, claims, loss adjustment expenses, earned and unearned premium and recommended reserves at the end of each quarter. The Underwriting Manager shall, at the same time, remit the balance due the Reinsurer net of any reinsured claims due the Company. Annually, the Reinsurer shall receive a full accounting giving such information that may be required to complete the Reinsurer s annual statement. Such reports shall be prepared within fifteen (15) days of the close of each calendar year.

ARTICLE X CEDING ALLOWANCE/EXPENSES

The Reinsurer shall allow the Company a ceding allowance on all gross premiums ceded to the Reinsurer hereunder. The Company shall allow the Reinsurer return payment on return premiums at the same rate.

It is expressly agreed that the ceding allowance allowed the Company includes provision for all dividends, commissions and taxes, and all board, exchange and bureau assessments, and all other expenses of whatever nature, except loss adjustment expenses.

The Company and Underwriting Manager shall, whenever possible, utilize the retention exhibit outlined as follows:

EXPENSE EXHIBIT

Expense Items

Basic College Accident & Sickness

Producer Commission (includes printing not to exceed 2%) 17.00%

Managing General Underwriter 4.50%

Claims Administration 4.00%

Premium Taxes 2.50%

Issuing Company Fee 4.00%

Total Retention 32.00%

ARTICLE XI CURRENCY

All retentions and limits hereunder are expressed in United States dollars and all premium and loss payments shall be made in United States currency.

ARTICLE XII CLAIMS NOTIFICATION

The Underwriting Manager, on behalf of the Company, shall immediately by facsimile notify the Reinsurer whenever a claim is likely to exceed $5,000 or if any claim meets the following criteria:

1. A covered individual has been continually hospitalized for more than one month; or

2. A covered individual has made a claim for any of the following disabilities:

a. Mental disorders requiring hospital confinement;

b. Brain injuries;

c. Spinal injuries resulting in real or suspected paralysis of the limbs;

d. Serious burns (10% or more of the body with third-degree burns or 30% or more of the body with second-degree burns);

e. Multiple or serious fractures;

f. Crushing or massive internal injuries;

g. Premature births;

h. A.I.D.S. (acquired immune deficiency syndrome);

i. Organ transplant;

j. Cancer;

k. Amputations;

l. Severe stroke;

m. Severe heart disease; or

n. Total loss of vision.

3. The Reinsurer shall be liable for its proportionate share of all losses incurred by the Company under the policies reinsured hereunder. The Reinsurer shall also be liable for its proportionate share of all expenses incurred by the Company in the investigation, settlement or contesting the validity of claims or losses covered hereunder (excluding internal office expenses of the Company or Underwriting Manager and salaries of its regular employees) and shall on the other hand be credited with their proportionate share of any amounts received by the Company as recovery. The Company shall advise the Reinsurer promptly of all losses which, in the opinion of the Company, may result in a claim hereunder and of all subsequent developments thereto which, in the opinion of the Company, may materially affect the position of the Reinsurer. In any case, the Reinsurer shall be notified immediately of any loss that exceeds $5,000.

4. All loss settlements made by the Company, provided they are within the terms of this Agreement and within the terms and conditions of the Company’s original policies involved, shall be binding upon the Reinsurer, who agrees to pay all amounts for which it may be liable immediately upon reasonable evidence of the amount due being furnished by the Company. In no event, however, shall the Reinsurer be liable to the Company for any losses reinsured hereunder if such losses are not reported to the Reinsurer within the later of (a) fifteen (15) months following the date on which such losses occurred, and (b) six (6) months following the date on which such losses were reported to the Company and liability under the original policies could be determined by the Company.

ARTICLE XIII CLAIMS SETTLEMENT AND AUDIT

All claims paid by the Underwriting Manager on behalf of the Company, and otherwise within the terms of this Agreement and within the terms and conditions of the Company s original policies shall be binding upon the Reinsurer, and the Reinsurer agrees to pay its proportionate share of each such claim in accordance with the provisions of ARTICLE III – RETENTION AND LIMIT, and strictly subject to the terms and conditions of this Agreement.

In the event of a claim against a policy reinsured hereunder, the Reinsurer shall be liable for its proportionate share of claims adjustment expenses incurred by the Company in connection therewith (including litigation expenses and interest on judgments, but not including office expenses or salaries of the Company’s or Underwriting Manager s regular employees), provided the Underwriting Manager has approved such expenses through consultation and concurrence with the Lead Reinsurer.

CLAIMS AUDIT

The Underwriting Manager, on behalf of the Company, may at any time elect to appoint its own Independent Auditor. This appointment shall be subject to approval by the Lead Reinsurer. Upon approval, the Reinsurer agrees to pay its proportionate cost of such audit as well as its proportionate part of the final claim.

In the event that a claim may be recoverable hereon and the Underwriting Manager, on behalf of the Company, does not elect to appoint an Independent Auditor, the Reinsurer reserves the right to appoint an Independent Auditor to investigate the potential claim. Should the Reinsurer appoint an Independent Auditor, all costs of this audit shall be borne by the Reinsurer. The Company agrees that the amount of any claim subsequently recovered hereon shall be based entirely on the audited figures irrespective of whether or not the Independent Auditor has reduced the initial claim.

Recoveries from any form of insurance or reinsurance which protect the Company against claims, the subject matter of this Article, shall inure to the benefit of this Agreement.

ARTICLE XIV EXTRA CONTRACTUAL OBLIGATIONS

In no event, except as allowed for in paragraph 2 below, shall the Reinsurer participate in extra contractual damages, including but not limited to punitive, exemplary compensatory or consequential damages which are awarded against the Company as a result of an act, omission, or course of conduct committed by or on behalf of the Company in connection with the insurance reinsured under this Agreement.

The Company shall notify the Reinsurer within fifteen (15) business days after the Company is notified of any impending claim likely to involve extra contractual obligations by registered letter, and such notification shall include a suggested course of action or inaction for the Reinsurer s review. The Reinsurer then has the obligation to notify the Company within fifteen (15) business days , in writing, of its decision to concur or not concur in the Company s suggested actions to be taken, or not taken. If the Reinsurer concurs with the Company s action, payment of such awarded damages will be shared by the Company and the Reinsurer in the proportions which govern this Agreement.

For purposes of this provision, the following definitions shall apply:

“Punitive damages” are those damages awarded as a penalty, the amount of which is not governed nor fixed by statute.

“Statutory penalties” are those amounts which are awarded as a penalty but fixed in amount by statute.

“Compensatory damages” are those amounts awarded to compensate for the actual damages sustained and are not awarded as a penalty nor fixed in amount by statute.

The language of this Article shall be deemed effective only as and to the extent permitted by the law of any applicable jurisdiction.

An extra contractual obligation shall be deemed to have occurred on the same date as the loss covered or alleged to be covered under the policy.

Notwithstanding anything stated herein, this Agreement shall not apply to any extra contractual obligation incurred by the Company or Underwriting Manager as a result of any fraudulent and/or criminal act by any officer or director of the Company or Underwriting Manager acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense, or settlement of any claim covered hereunder.

Recoveries from any form of insurance or reinsurance which protect the Company against claims, the subject matter of this Article, shall inure to the benefit of this Agreement.

ARTICLE XV SUBROGATION

The Reinsurer shall be credited with subrogation; i.e., reimbursement obtained by the Company, less the actual cost of obtaining such reimbursement, including actual amounts paid to attorneys, and excluding salaries of officials and employees of the Company or the Underwriting Manager, on account of claims and settlements involving reinsurance hereunder. The Company hereby agrees to enforce its rights to subrogation relating to any expense, if it is in the Company’s economic best interest, a part of which expense was sustained by the Reinsurer, and to prosecute all claims arising out of such rights.

ARTICLE XVI COMMUTATION

The Company shall notify the Reinsurer of all claims hereunder which have not been finally settled at the end of three (3) years following the end of the Agreement Year in which they occurred. The Reinsurer may then, or at any time thereafter, request that its liability with respect to one or more of such claims be commuted. In such event the Company and the Reinsurer shall appoint a mutually acceptable Actuary or Appraiser to investigate, determine and capitalize such claim or claims. Payment by the Reinsurer of its share of the amount ascertained to be the capitalized value of such claim or claims shall constitute a complete and final release of the Reinsurer with respect to the claim or claims so capitalized. Any expenses incurred in connection with the commutation of claims, as provided herein, shall be paid proportionately by the Reinsurer.

ARTICLE XVII CLAIMS FUND

A Claims Fund shall be established by the Underwriting Manager for paying claims which are subject to this Agreement and shall be accumulated and maintained by withholding 90% of the net premium and funding on a cash-call basis, as necessary. The Company and the Reinsurer shall each receive their proportionate share of the remaining 10% of the net premium.

Net Premium as used herein shall mean the Gross Premium plus additions, less ceding allowance plus return premium for cancellations, reductions.

The Underwriting Manager shall deposit and maintain the Claims Fund in an interest-bearing account. The account shall be set up for the benefit of the Company and the Reinsurer, while not necessarily in the name of the Reinsurer and monthly reports shall be submitted to the participants of the Claims Fund. Interest earned on the claims funds will accrue to the benefit of the Company and the Reinsurer on a proportional basis, as outlined in ARTICLE XXXII EXECUTION.

Eighteen (18) months after the expiration of this agreement, an initial calculation will be done to identify the balance remaining in the Claims Fund for the said underwriting year.

Thereafter, further calculations, distributions and funding calls shall be made showing the results for such period on a monthly basis until all losses which occurred with respect to this Agreement are satisfied, at which time any remaining balance in the Claims Fund will be promptly released to the Reinsurer.

ARTICLE XVIII OFFSET

Except in the case of Insolvency, the Company or the Reinsurer shall have, and may exercise at any time and from time to time, the right to offset any balance or balances, whether on account of premiums or on account of losses or otherwise, due from one party to the other under the terms of this Agreement.

ARTICLE XIX TERRITORY

This Agreement shall only apply to policies issued to insured’s domiciled in the United States of America and the District of Columbia.

ARTICLE XX OVERSIGHTS

If nonpayment of premiums, claims, or any other non-performance of duties is shown to be unintentional and the result of misunderstanding or oversight on the part of either the Company or the Reinsurer, the Agreement shall be not breached thereby. Rather, as soon as practical, there shall be adjustments in premiums payable and claims incurred during any one reinsurance period and both the Company and the Reinsurer shall be restored to the positions which they would have occupied had there been no misunderstanding or oversight during that time.

ARTICLE XXI ACCESS TO RECORDS

The Reinsurer, or its duly appointed representatives, shall have the right at any reasonable time to examine all records in the possession of the Company and/or the Underwriting Manager referring to business effected hereunder.

ARTICLE XXII INSOLVENCY

In the event of the insolvency of the ceding Company, all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement shall be payable by the Reinsurer directly to the ceding Company or to its liquidator, receiver, or statutory successor on the basis of the liability of the ceding Company under the contract or contracts reinsured without diminution because of the insolvency of the ceding Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.

In the event of insolvency of the Company, the liquidator, receiver or statutory successor shall give the Reinsurer written notice of the pendency of a claim on a policy reinsured within a reasonable time after the claim is filed in the solvency proceeding. During the pendency of the claim, the Reinsurer may investigate the claim, and in a proceeding where the claim is to be adjudicated, the Reinsurer may, at the Reinsurer s own expense, interpose in the name of the Company (its liquidator, receiver or statutory successor) any defense or defenses which the Reinsurer may deem available to the Company or its liquidator, receiver or statutory successor.

The expense thus incurred by the Reinsurer shall be chargeable, subject to court approval, against the Company as part of the expense of liquidation to the extent of a proportionate share of the amount of reinsurance which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

ARTICLE XXIII ARBITRATION

If any dispute shall arise between the Reinsurer and the Company either before or after termination of this Agreement, with reference to the interpretation of this Agreement or the rights of either party with respect to any transaction under this Agreement, the dispute shall be referred to three arbitrators, one to be chosen by each party and the third by the two so chosen. If either party refuses or neglects to appoint an arbitrator within 30 days after the receipt of written notice from the other party requesting it to do so, the requesting party may nominate two arbitrators who shall choose the third. In the event the two arbitrators do not agree on the selection of the third arbitrator within 30 days after both arbitrators have been named, then the third arbitrator shall be selected pursuant to the commercial arbitration rules of the American Arbitration Association. If the American Arbitration Association fails to appoint the third arbitrator within 30 days after it has been requested to do so, either party may request a justice of the court of general jurisdiction of the state in which the arbitration is to be held to appoint the third arbitrator.

The arbitrators shall be officials or former officials of other insurance or reinsurance companies which are affiliated with neither the Reinsurer nor the Company. The arbitration shall take place in the State of New York and arbitration proceedings are to be governed by rules of the American Arbitration Association and the New York State Arbitration Law. The arbitrators shall consider this Agreement an honorable engagement rather than merely a legal obligation; they are relieved of all judicial formalities and may abstain from following the strict rules of the law. The decision of a majority of the arbitrators shall be final and binding on both the Reinsurer and the Company and judgment upon the award rendered by the arbitrators may be entered into any court having jurisdiction thereof.

Each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the other party the expenses of the arbitration.

ARTICLE XXIV – CONTROLLING LAW

This Agreement shall be governed by and construed in accordance with the laws of the state of New York.

ARTICLE XXV SEVERABILITY

If any part, term, or provision of this treaty shall be held void, illegal, or unenforceable, the validity of the remaining portion or portions shall not be affected thereby.

ARTICLE XXVI UNAUTHORIZED REINSURERS

A. If the Reinsurer is unauthorized in any state of the United States of America or in the District of Columbia, the Reinsurer agrees to fund its share of the Company s ceded unearned premium and losses outstanding and loss adjustment expense reserves (including IBNR) by:

1. Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

2. Escrow accounts for the benefit of the Company; and/or

3. Cash advances;

if, without such funding, a penalty would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved. The Reinsurer, at its sole option, may fund in other than cash if its method and form of funding are acceptable to the insurance regulatory authorities involved.

B. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to the insurance regulatory authorities involved, will be issued for a term of at least one year, and will include an evergreen clause, which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than 30 days prior to said expiration date. The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Agreement, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse the Company for the Reinsurer s share of unearned premiums, returned to the Company on account of the cancellation of Original Reinsurance Contract(s), unless paid in cash by the Reinsurer.

2. To reimburse the Company for the Reinsurer s share of any other losses and/or loss adjustment expenses paid under the terms of the Original Reinsurance contract(s), unless paid in cash by the Reinsurer.

3. To reimburse the Company for the Reinsurer s share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer.

4. To fund a cash account in an amount equal to the Reinsurer s share of any ceded unearned premium and/or losses outstanding and loss adjustment expenses reserves (including IBNR) funded by means of a letter of credit which is under non-renewal notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date.

5. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer s share of the Company s ceded unearned premium and/or losses outstanding and loss adjustment expense reserves (including IBNR), if so requested by the Reinsurer.

In the event that the amount drawn by the Company on any letter of credit is in excess of the actual amount required for Items (1), (2), or (4) above, or in the case of Item (3), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

ARTICLE XXVII TAXES

In consideration of the terms under which this Agreement is issued, the Company undertakes not to claim any deduction of the premium hereon when making Canadian tax returns or when making tax returns, other than income or profit tax returns, to any state or territory of the United States of America or to the District of Columbia.

ARTICLE XXVIII FEDERAL EXCISE TAX

(Applicable to those Reinsurers, excepting Underwriters at Lloyd s London and other Reinsurers exempt from Federal Excise Tax, who are domiciled outside the United States of America.)

A. The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

ARTICLE XXIX CONFIDENTIALITY

Except as otherwise provided herein, the Company and Reinsurer each agree that all information communicated to it by the other, whether before the effective date or during the term of this Agreement, shall be used only for purposes of this Agreement, shall be received in strict confidence, and that no such information shall be disclosed by the recipient party, its agent or employees without the prior written consent of the other party. Each party agrees to take all reasonable precautions to prevent the disclosure to outside parties of such information, except as may be necessary by reason of legal, accounting or regulatory requirements beyond the reasonable control of the Company or the Reinsurer as the case may be.

ARTICLE XXX ENTIRE AGREEMENT

This Agreement constitutes the entire agreement of the parties with respect to the matters set forth herein and no amendment, alteration or modification of this Agreement shall be valid unless expressed in a written instrument duly executed by each of the parties hereto.

ARTICLE XXXI INTERMEDIARY

D.W. Van Dyke and Company of Connecticut, Inc., 323 Riverside Avenue, Westport, Connecticut 06880, is hereby recognized as the Intermediary negotiating this Agreement for all business hereunder. All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, loss adjustment expense, recoveries and loss settlements) relating thereto shall be transmitted to the Company or Reinsurer through the office of D.W. Van Dyke and Company of Connecticut, Inc. Payment by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payment by the Reinsurer to the Intermediary shall be deemed only to constitute payment to the Company to the extent that such payments are actually received by the Company.

ARTICLE XXXII EXECUTION

IT IS AGREED that the Reinsurer hereon, shall have a 15% share of 85% of the reinsured liabilities as identified within this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives.

Signed for and on behalf of: GERBER LIFE INSURANCE COMPANY

In __________________________ this ______________ day of ______________, 2000.

By:

Title:

Signed for and on behalf of: PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY

In __________________________ this ______________ day of ______________, 2000.

By:

Title:

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