Exhibit 10.20
COINSURANCE
AGREEMENT
between
UNION FIDELITY LIFE INSURANCE COMPANY
and
FEDERAL HOME LIFE INSURANCE COMPANY
Dated as of April 15, 2004
TABLE OF CONTENTS
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SCHEDULES |
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i
COINSURANCE AGREEMENT
This Coinsurance Agreement, dated as of April 15, 2004 (this “Agreement”), is made and entered into by and between Union Fidelity Life Insurance Company, an insurance company organized under the laws of the State of Illinois (the “Company”), and Federal Home Life Insurance Company, an insurance company organized under the laws of the Commonwealth of Virginia (the “Reinsurer”). Defined terms used herein are defined below.
The Company and the Reinsurer mutually agree to reinsure the risks described in this Agreement under the terms and conditions stated herein. This Agreement is an indemnity coinsurance agreement solely between the Company and the Reinsurer, and the performance of the obligations of each party under this Agreement shall be rendered solely to the other party. In no instance shall anyone other than the Company or the Reinsurer have any rights under this Agreement. The Company shall be and shall remain the only party hereunder that is liable to any insured, contract holder, policyholder, claimant or beneficiary under any insurance policy or contract reinsured hereunder.
This Agreement is entered into in connection with an intercompany reorganization among the Company, the Reinsurer and certain of their Affiliates.
ARTICLE I
DEFINITIONS
“Affiliate” means any other Person that directly or indirectly controls, is controlled by, or is under common control with, the first Person. “Control” (including the terms, “controlled by” and “under common control with”) means the possession, directly or indirectly, 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 or credit arrangement, as trustee or executor, or otherwise.
“Agreement” shall have the meaning specified in the first paragraph of this Agreement.
“Allocated Loss Adjustment Expenses” means all costs, fees and expenses incurred by the Company or its Affiliates in the investigation, adjustment, settlement or defense of all claims or the monitoring, preservation or enforcement of rights, interests or benefits arising out of or relating to the Reinsured Policies (excluding office expenses and salaries of officials of the Company or its Affiliates or any other administrative or overhead expenses of the Company or of its Affiliates), and court costs, and interest on any judgment or award. Allocated Loss Adjustment Expenses shall also include expenses associated with an action by any entity for declaratory judgment filed in connection with the Reinsured Policies.
“Annual Adjustment” shall have the meaning specified in Section 6.2.
“Applicable Law” means any federal, state, local or foreign law (including common law), statute, ordinance, rule, regulation, order, writ, injunction, judgment, permit, governmental agreement or decree applicable to a Person or any of such Person’s subsidiaries, properties, assets, or to such Person’s officers, directors, managing directors, employees or agents in their capacity as such.
“Assets” shall have the meaning specified in Section 4.4(a).
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the States of Illinois or Virginia are required or authorized by law to be closed.
“Ceding Commission” shall have the meaning specified in Section 4.3.
“Closing Date” means April 15, 2004.
“Code” means the Internal Revenue Code of 1986, as amended.
“CPR” shall have the meaning specified in Section 12.3.
“CPR Arbitration Rules” shall have the meaning specified in Section 12.4(a).
“Dispute” shall have the meaning specified in Section 12.1(a).
“Eligible Securities” shall have the meaning specified in Section 10.2(c).
“Extra Contractual Liabilities” means all liabilities for damages (including compensatory, consequential, exemplary, punitive, bad faith or similar or other damages) which relate to the marketing, sale, underwriting, issuance, delivery, cancellation or administration of the Reinsured Policies, including liability arising out of or relating to any alleged or actual acts, errors or omissions by the Company, the Reinsurer or any of their agents, whether intentional or otherwise, with respect to any of the Reinsured Policies, including (A) any alleged or actual reckless conduct or bad faith in connection with the handling of any claim arising out of or under the Reinsured Policies, or (B) the marketing, sale, underwriting, issuance, delivery, cancellation or administration of any of the Reinsured Policies.
“Force Majeure” shall have the meaning specified in Section 3.7(a)(iii).
“Funding Requirement” shall have the meaning specified in Section 10.2(j).
“GAAP” means U.S. generally accepted accounting principles consistently applied.
“Governmental Authority” means any foreign or national government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
2
“Inception Date” shall have the meaning specified in Section 2.1.
“Initial Notice” shall have the meaning specified in Section 12.2.
“Initial Reinsurance Premium” shall have the meaning specified in Section 4.1.
“Insolvency Fund” means any guarantee fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer or reinsurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.
“Insolvency Fund Quarterly Accounting” shall have the meaning specified in Section 5.1.
“Loss” or “Losses” means the amount of liability paid or payable by the Company with respect to claims, losses, liabilities, damages, deficiencies, costs or expenses, including without limitation, any settlements or compromises or disputed claims, arising under the Reinsured Policies.
“Manager” means Wakely and Associates, Incorporated.
“Market Value” shall have the meaning set forth in Section 10.2(j).
“Person” means any natural person, firm, limited liability company, general partnership, limited partnership, joint venture, association, corporation, trust, Governmental Authority or other entity.
“Post-Effective Date Assessments” shall have the meaning specified in Section 5.1.
“Premium Tax Credits” shall have the meaning specified in Section 6.2.
“Quarterly Accountings” shall have the meaning specified in Section 5.1.
“Quarterly Premium Tax Accounting” shall have the meaning specified in Section 5.1.
“Reinsured Policies” means the medicare supplement insurance policies issued by the Company prior to January 1, 2004 and written on the policy forms described in Schedule A or reinsured by the Company under reinsurance agreements in effect prior to January 1, 2004 (excluding reinsurance agreements with Affiliates), including renewals of any such policies.
“Reinsured Risks” shall have the meaning specified in Section 2.1.
“Response” shall have the meaning specified in Section 12.2.
3
“SAP” means statutory accounting practices prescribed or permitted by the Insurance Department of the State of Illinois.
“Subcontractor” shall have the meaning specified in Section 3.1(a).
“Tax DAC” means specified policy acquisition expenses capitalized and amortized under section 848 of the Code.
“Termination Date” means the effective date of any termination of this Agreement as provided in Article VIII.
“Termination Letter Agreement” means the letter agreement among the Company, the Reinsurer and certain affiliates of the Reinsurer relating to the rescission of this Agreement upon the failure of certain events to occur after the date hereof.
“Total SAP Ceded Reserves” means, as of any given date, the gross reserves of the Company calculated in accordance with SAP with respect to the Reinsured Risks, which shall consist of the sum of (A) (i) active life reserves, (ii) claim reserves (both case and incurred but not reported), (iii) unearned premium reserves, and (iv) advance premiums, less (B) due and unpaid premium receivable balances.
“Total GAAP Ceded Reserves” means, as of any given date, the gross reserves of the Company calculated in accordance with GAAP with respect to the Reinsured Risks, which shall consist of the sum of (A) (i) active life reserves (including related maintenance and loss expense reserves), (ii) claim reserves (both case and incurred but not reported), (iii) unearned premium reserves, and (iv) advance premiums, less (B) due and unpaid premium receivable balances.
“Trust Account” shall have the meaning set forth in Section 10.2(a).
“Trust Agreement” shall have the meaning set forth in Section 10.2(a).
“Trustee” shall have the meaning set forth in Section 10.2(a).
“Ultimate Net Loss” shall have the meaning specified in Section 2.3(a).
ARTICLE II
COVERAGE
5
ARTICLE III
ADMINISTRATION; GENERAL PROVISIONS
ARTICLE IV
REINSURANCE ASSET TRANSFER; CEDING COMMISSION
ARTICLE V
QUARTERLY INSOLVENCY FUND AND PREMIUM TAX ACCOUNTING
ARTICLE VI
CERTAIN ACTIONS BY THE COMPANY
ARTICLE VII
REGULATORY MATTERS AND REPORTING
ARTICLE VIII
DURATION AND TERMINATION
ARTICLE IX
INSOLVENCY
ARTICLE X
SECURITY AND REINSURANCE CREDIT
In the event that the Reinsurer seeks the Company’s approval hereunder, the Company shall not unreasonably or arbitrarily withhold its approval.
ARTICLE XI
DEFERRED ACQUISITION COSTS
ARTICLE XII
DISPUTE RESOLUTION
ARTICLE XIII
PRIVACY REQUIREMENTS
ARTICLE XIV
MISCELLANEOUS PROVISIONS
If to the Company:
Union Fidelity Life Insurance Company
200 North Martingale Road
Schaumburg, IL 60173-2096
Facsimile: (847) 330-3404
Attention: Chief Financial Officer
With a copy to:
Union Fidelity Life Insurance
Company
200 North Martingale Road
Schaumburg, IL 60173-2096
Facsimile: (847) 605-3044
Attention: General Counsel
If to the Reinsurer:
Federal Home Life Insurance Company
6620 West Broad Street
Richmond, VA 23230
Facsimile: (804) 662-2414
Attention: Chief Executive Officer
With a copy to:
Federal Home Life Insurance Company
700 Main Street
Lynchburg, VA 24504
Facsimile: (434) 948-5819
Attention: General Counsel
or to such other address or to such other Person as either party may have last designated by notice to the other party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives.
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UNION FIDELITY LIFE INSURANCE COMPANY |
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By |
/s/ Glenn Joppa |
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Name: Glenn Joppa |
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Title: Senior Vice President and Secretary |
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FEDERAL HOME LIFE INSURANCE COMPANY |
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By |
/s/ Victor C. Moses |
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Name: Victor C. Moses |
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Title: Senior Vice President |
25
POLICY FORMS
FTW Block
POLICY FORM
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FORM NUMBER |
TITLE/DESCRIPTION |
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1-0262-SC |
Medicare — Standard Plan A |
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1-0362 |
Medicare — Standard Plan A (excluding policies issued in New York) |
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1-0363 |
Medicare — Standard Plan B (excluding policies issued in New York) |
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1-0364 |
Medicare — Standard Plan E (excluding policies issued in New York) |
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1-0365 |
Medicare Supplement-Standard Plan E |
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1-0373 |
Medicare SELECT — Plan C |
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108350-TX (Rev) |
Medicare Supplement |
|
109 REV. NJ |
Monthly Cash Benefit Rider |
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1-0990 |
Medicare Supplement |
|
1-1041 Cert. |
Medicare Supplement Cert. |
|
1-1042 Cert. |
Medicare Supplement Cert. |
|
1-1051 Cert. |
Medicare Supplement Cert. |
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1-1053-Cert. |
Medicare Supplement Cert. |
|
1-1061 Cert. |
Medicare Supplement Cert. |
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1-1062 Cert. |
Medicare Supplement Cert. |
|
1-107 |
Weekly Cash Benefit Rider |
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1-1081 Cert. |
Medicare Supplement Cert. |
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1-1082 Cert. |
Medicare Supplement Cert. |
|
1-109 REV. |
Monthly Cash Benefit Rider |
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1-110 |
Monthly Cash Benefit Rider |
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1-1101-Cert. Rev. |
Group Medicare Supplement |
|
1-117 REV. |
Weekly Cash & Recuperation Rdr |
|
1-119 Rev. |
Weekly Cash & Recuperation Rdr |
|
1-1251 Cert. |
Medicare Supplement Rider |
|
1-1263 Cert. |
Medicare Part B Rider |
|
1-1300 Cert. |
Medicare Part A Rider |
|
1-1301 Cert. |
Hospital Indemnity Rider |
|
1-1310 Cert. |
Medicare Part B Increase Rider |
|
1-1411 Cert. |
Out of Hospital Expense Rider |
|
1-1481 Cert. |
Nurse At Home Rider |
|
1-1550 Cert. |
Doctor Visit Rider |
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1-1560 Cert. (REV.) |
Skilled Nursing Care Rider |
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1-1571 Cert. |
Skilled Nursing Facility Rider |
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1-1572 Cert. Rev. |
Nursing Facility Rider |
|
1-1580 |
Skilled Nursing Care Rider |
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1-1581 Cert. |
Prescription Drug Rider |
|
1-1582 Cert. |
Prescription Drug Rider |
|
1-1594 Cert. |
Medicare Part B Rider |
|
1-159-47 (Rev. 4/75) |
Accidental D & D Rider |
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1-1602 Cert. |
After Hospital Rider |
|
1-1630 Cert. REV |
Prescription Drug Rider |
|
1-1711 Cert. |
Medicare Supplement Cert. |
|
1-1712 Cert. |
Medicare Supplement Cert. |
|
1-1890-00 |
Lifetime Hospital Indemnity |
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1-1970 Cert. |
Prescription Drug Rider |
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1-2091 Cert. |
Group Long Term Care |
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1-2271-MT |
Medicare Supplement |
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1-2310 |
Elder Care Hospital & SNF Policy |
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1-2310-04 REV 878 |
Elder Care/SNF Med Supp |
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1-2310-09 |
Elder Care Hospital & SNF Policy |
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1-2310-12(Rev. 10/76) |
Elder Care Hospital & SNF Policy |
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1-2310-22 |
Elder Care Hospital & SNF Policy |
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1-2310-49 |
Elder Care Hospital & SNF Policy |
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1-2540-09 |
Hospital Income/Medicare Supp |
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1-2540-17 |
Hospital Income/Medicare Supp |
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1-2550-24 |
Hospital Income/Medicare Supp |
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1-297 |
Surgical Benefit Rider |
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1-297-09 (REV. 2/75) |
Surgical Benefit Rider |
|
13700 |
In Hospital Medicare Supplement |
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1-3700 |
In Hospital Medicare Supplement |
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1-4021 |
Medicare Part A Rider |
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1-4261 |
Medicare Part B Rider |
|
1-4263-MD |
Medicare Part B Rider |
|
1-4281 Rev. |
Skilled Nursing Facility Rider |
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1-4291-CA |
Prescription Drug Rider |
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1-4310 |
Part B Medicare Rider |
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1-4370-09 |
Cash Benefit Rider |
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1-4430-00 |
Intensive Care Unit Benefit Rider |
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1-4440 Cert. |
Medicare Part B Rider |
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1-4450 |
Elder Care SNF Rider |
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1-4470 |
Cancer Increase Rider |
|
1-454-47 (Rev. 4/75) |
Weekly — After Hospital Cash Rdr |
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1-4560 |
Out Of Hospital Expense Rider |
|
1-4690 |
Accidental D & D Rider |
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1-4700 |
Cash Benefit Rider |
|
1-4730-AL/PX |
Medical Surgical Rider |
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1-4810 Cert. |
Accidental D & D Rider |
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1-4840 Cert. (Rev) |
Hospital Indemnity Rider |
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1-4850 Cert. |
Skilled Nursing Rider |
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1-4860 Cert. Rev. |
Nursing Facility Rider |
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1-5081 Cert. |
Nursing Facility Rider |
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1-5101 Cert. |
In Hospital Medicare Part B Rider |
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1-5111 Cert. |
Ambulance & Nursing Service Rdr |
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1-5131-Cert. |
Outpatient Medicare Part B Rider |
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1-5141 Cert. |
Prescription Drug rider |
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1-5151-Cert. |
Nursing Facility Rider |
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1-5161-Cert. |
Hospital Cash Rider |
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1-5171-Cert. |
Ambulance & Nursing Service Rdr |
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1-5181-Cert. |
Prescription Drug Rider |
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1-5191-Cert. |
Nurse At Home Rider |
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1-5201-Cert. |
Medicare Part B Rider |
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1-5501-Cert. |
Accident Outpatient Rider |
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1-5502 Cert. |
Prescription Drug Rider |
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1-5600 Cert. |
Intensive Care Unit Rider |
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1-5640-99 |
Nurse At Home Rider |
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1-5720 Cert. |
Ambulance & Nurse Rider |
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1-5730 Cert. |
Prescription Drug Rider |
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1-5741 Cert. |
Outpatient Rider |
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1-5751 Cert. |
Hospital Benefit Rider |
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1-5771 Cert. |
Medical Surgical Benefit Rider |
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1-5781 Cert. (REV) |
Intensive Care & Ambulance Rdr |
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1-5791 Cert. |
Prescription Drug Rider |
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1-5830-Cert. |
Nurse At Home Rider |
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1-5831 Cert. (REV) |
Nurse At Home Rider |
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1-5841-MD |
Accident Hospital Indemnity Rdr |
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1-5880 Cert. (REV) |
Out of Hospital Rider |
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159 |
Accidental D & D Rider |
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1-614 TX (REV. 1/73) |
Elder Care I |
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1-615 (REV. 1/74) |
Elder Care II |
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1-616 (REV. 1/73 |
Elder Care III |
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1-618 |
In Hospital Medicare Supplement |
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1-619-TX |
Medicare Supplement |
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1-6440 Cert. |
In Hospital Medicare Supplement |
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1-6660-Cert. |
Medicare Supplement Certificate |
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1-6811 CERT. |
Group Medicare Supplement |
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1-6860 CERT |
Medicare Supplement Certificate |
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1-8001-KS |
Medicare Supplement |
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1-8032 |
Medicare Supplement One (1) |
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1-8033 |
Medicare Supplement Two (2) |
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1-8034 |
Medicare Supplement Three (3) |
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1-8101-OR |
Medicare Supplement |
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1-8111 Cert. |
Group Home Health Care |
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1-8260 Cert. |
Group Medicare Supplement |
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1-8340 |
Medicare Supplement |
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1-8350 |
Medicare Supplement |
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1-8360 |
Medicare Supplement |
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1-8370-MI (Rev.) |
Medicare Supplement |
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1-8470 Cert. (REV.)—R |
Medical Surgical Rider |
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1-8480 Cert.—BR |
Medical Surgical Rider |
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1-8541 |
Group Medicare Supplement |
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1-8550 Cert. |
Group Medicare Supplement |
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1-8960-Cert. |
Group Nursing Care |
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1-8991-AR (Rev.) |
Nursing Care Insurance |
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1-9000-Cert |
Group Medicare Supplement |
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1-9001 Cert. |
Comprehensive Long Term Care |
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1-9010 Cert. |
Skilled Nursing Facility |
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1-919 (Clf.) REV. |
Elder Hospital Care |
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1-9260 Cert. |
Medicare Supplement |
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1-9270 Cert. |
Medicare Supplement |
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1-9280 Cert. |
Medicare Supplement |
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1-9290 Cert. |
Medicare Supplement |
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19362 |
Medicare — Standard Plan A |
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19363 |
Medicare — Standard Plan B |
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19364 |
Medicare — Standard Plan E |
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1-9940 Cert. (3/84) |
Group Nursing Home |
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1-9960 Cert. Rev |
Group Nursing Facility |
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3-1130 |
Medicare Supplement |
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3-4630 |
Nursing Home Rider |
|
3-9080 Cert. |
Medicare Supplement |
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3-9980 Cert. |
Medicare Supplement |
|
454-TX (Rev.) |
Weekly — After Hospital Cash Rdr |
|
455-48 |
Medical Surgical Rider |
|
468 |
Comprehensive Health Policy |
|
498 |
Medicare Benefit Endorsement |
|
6-0940 |
Medicare — Standard Plan F |
|
701 Cert. |
Dividend Hospital Accident Cert |
|
CAL-8201 |
Medicare Supplement |
|
CAL-8221 |
Medicare Supplement |
|
CAL-8311 |
Medicare Supplement |
|
CAL-8321 |
Medicare Supplement |
|
DR 1 2118 |
Medicare Supplement |
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DR 1-2162 |
Medicare Supplement |
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DR 1-2166 |
Medicare Supplement |
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DR 1-2970 |
Skilled Nursing Facility |
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DR 1-7920 |
Elder Care Hospital & SNF Policy |
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DR1-2101 |
Elder Care III |
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DR1-2111 |
Elder Care Hospital & SNF Policy |
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DR1-2701-FL |
Medicare Supplement |
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DR1-2711-FL |
Medicare Supplement |
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DR1-2960 |
Elder Care Hospital & SNF |
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DR1-4170 |
Skilled Nursing Facility Rider |
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DR1-4180 |
Hospital Cash Benefit Rider |
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DR1-4190 |
In Hospital Medicare Part B Rider |
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DR1-4195 |
In Hospital Medical Surgical Rider |
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DR1-4200 |
Ambulance & Nursing Service Rdr |
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DR1-4210 |
Nurse At Home Benefit Rider |
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DR1-4230 |
Outpatient Medicare Part B Rider |
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DR1-4235 |
Outpatient Expense Rider |
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DR1-4240 |
Prescription Drugs Rider |
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DR1-4551-MN |
Medicare Part A Deductible Rider |
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DR1-5011 Rev. |
Skilled Nursing Rider |
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DR1-5031-FL |
In Hospital Medicare Part B Rider |
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DR1-5041 |
Outpatient Medicare Part B Rider |
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DR1-5271 |
In Hospital Medical Surgical Rider |
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DR1-7120-04 |
Travel & Pedestrian A D Rider |
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DR1-7150 |
Elder Care Hospital & SNF Policy |
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DR1-7160 |
Elder Care I |
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DR1-7160-04 |
Elder Hospital Care I |
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DR1-7160-22 |
Elder Care I |
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DR1-7160-40 |
Elder Care I |
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DR1-7420 |
Cancer Benefit Rider |
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DR1-7420-04 |
Cancer Benefit Rider |
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DR1-7420-09 |
Cancer Benefit Rider |
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DR1-7420-21 |
Cancer Benefit Rider |
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DR1-7420-30 (REV.1/78) |
Cancer Benefit Rider |
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DR1-7420-39 |
Cancer Benefit Rider |
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DR1-7420-46 |
Cancer Benefit Rider |
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DR1-7440 |
Elder Care III |
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DR1-7760 |
Elder Care Hospital & SNF Policy |
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DR1-7760-04(Rev.878) |
Elder Care Hospital & SNF Policy |
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DR1-7760-09 |
Elder Care Hospital & SNF Policy |
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DR1-7760-10 |
Hospital & SNF Policy |
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DR1-7760-12 |
Elder Care Hospital & SNF Policy |
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DR1-7760-13 |
Hospital & SNF Policy For 65 & Over |
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DR1-7760-14 |
Elder Care Hospital & SNF Policy |
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DR1-7760-15(179) |
Elder Care Hospital & SNF Policy |
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DR1-7760-16 |
Elder Care Hospital & SNF Policy |
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DR1-7760-18 |
Elder Care Hospital & SNF Policy |
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DR1-7760-19 |
Elder Care Hospital & SNF Policy |
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DR1-7760-22 |
Elder Care Hospital & SNF Policy |
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DR1-7760-24 |
Elder Care Hospital & SNF Policy |
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DR1-7760-25 |
Elder Care Hospital & SNF Policy |
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DR1-7760-35 |
Elder Care Hospital & SNF Policy |
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DR1-7760-40 |
Elder Care Hospital & SNF Policy |
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DR1-7760-41 |
Elder Care Hospital & SNF Policy |
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DR1-7760-42 (Rev.) |
Elder Care Hospital & SNF Policy |
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DR1-7760-47 |
Elder Care Hospital & SNF Policy |
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DR1-7760-48 |
Elder Care Hospital & SNF Policy |
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DR1-7760-49 |
Elder Care Hospital & SNF Policy |
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DR1-7790-04 (878) |
Skilled Nursing Facility |
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DR1-7790-09 |
Elder Care Skilled Nursing |
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DR1-7790-14 |
Elder Care Skilled Nursing |
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DR1-7790-15 |
Elder Care Skilled Nursing |
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DR1-7790-18 |
Elder Care Skilled Nursing |
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DR1-7790-19 |
Elder Care Skilled Nursing |
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DR1-7790-22 |
Elder Care Skilled Nursing |
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DR1-7790-24 |
Elder Care Skilled Nursing |
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DR1-7790-25 |
Elder Care Skilled Nursing |
|
DR1-7790-36 |
Elder Care Skilled Nursing |
|
DR1-7790-37 |
Elder Care Skilled Nursing |
|
DR1-7790-39 |
Elder Care Skilled Nursing |
|
DR1-7790-40 |
Elder Care Skilled Nursing |
|
DR1-7790-41 |
Elder Care Skilled Nursing |
|
DR1-7790-42(Rev.) |
Elder Care Skilled Nursing |
|
DR1-7790-47 (Rev) |
Elder Care Skilled Nursing |
|
DR1-7790-47 (Rev.) |
Elder Care Skilled Nursing |
|
DR1-7800 Rev. |
Skilled Nursing Facility |
|
DR1-7810-42 |
Elder Care III |
|
DR1-7980-MN |
Elder Care III |
|
DR1-8000-22 |
Elder Care Hospital & SNF Policy |
|
DR1-8120 |
Medicare Supplement |
|
DR1-8130 |
Medicare Supplement |
|
DR1-8140 |
Medicare Supplement |
|
DR1-8150 |
Medicare Supplement |
|
DR1-8220 |
Skilled Nursing Facility |
|
DR1-8230 |
Medicare Supplement |
|
DR3-7600-13 |
Elder Care Hospital & SNF Policy |
|
DR3-7800-VA |
Skilled Nursing Facility |
|
DR3-8140-FL |
Medicare Supplement |
|
DR5-7800-TN |
Skilled Nursing Facility |
|
GSC-1637C |
Medicare Supplement Certificate |
|
HI-201A |
Medicare Part B Rider |
|
HI-201A |
Medicare Part B Rider |
|
HI-211 2/81 |
Medicare Supplement |
|
HJ-1—04) (DR1-7090-04) |
Franchise Health Policy |
|
HJ-1—10(DR1-7090-10) |
Franchise Health |
|
HJ-1—12 (DR1-7070-12) |
Franchise Health Policy |
|
HJ-2 (DR1-7070-12) |
Comprehensive Health |
|
HJ-2—09(DR1-7090-09)(676) |
Comprehensive Health |
|
HJ-2—21 (DR1-7090-21) |
Health Benefit Policy |
|
HJ-2—22 (DR1-7090-12) |
Comprehensive Health |
|
HJ-2—22 (DR1-7090-29) |
Comprehensive Health |
|
HJ-2—24 (DR1-7090-12) |
Health Protection |
|
HJ-2—32(DR-1—7090-NC(65) |
Comprehensive Health |
|
HJ-2—39(DR1-7090-39) |
Comprehensive Health |
|
HJ-2—42(DR17090-42) |
Comprehensive Health |
|
HJ-2—IL (Rev) DR1-7090-12) |
Comprehensive Health |
|
HJ-2—TN (R) (DR1-7090) |
Comprehensive Health |
|
HT-502 |
In Hospital & Medicare |
|
HT-503 |
In Hospital & Medicare |
|
HT-504 |
In Hospital & Medicare |
|
LOV-8280-REPL |
Medicare Supplement |
|
NA 1085 |
Medicare Supplement |
|
NA 1123 |
Companion 65+ |
|
NA 65C (1/90) |
Medicare Supplement |
|
P-5—1030-00 |
Senior Hospital Care Plan |
|
Q0-53578-A |
Nurse At Home Certificate |
|
Q0-53578-A24 |
Nurse At Home Certificate |
|
Q0-69767-A |
Group Medicare Supplement |
|
Q0-69768-B |
Group Medicare Supplement |
|
X0-53441-A |
Group Nurse At Home Rider |
|
X0-88942-A |
Intensive Care Certificate Rider |
|
X0-89443-A |
Group Out Patient Expense Rider |
|
X0-89997-A24 |
Group After Hospital Indemnity |
|
1-6180 Cert. |
Medicare Supplement Certificate |
|
1-6640 Cert. |
Medicare Supplement Certificate |
|
6-0950 |
Medicare — Standard Plan G |
|
LOV-8290 |
Medicare Supplement |
AGLA Block Reserves
POLICY FORM
|
737 Series |
AGLA 74687 |
MED-1 Series |
|
738 Series |
AGLA 76789 Series |
MED1-REV |
|
740 |
AGLA 76989 |
MED-2 Series |
|
73787 Series |
AGLA 77089 Series |
MED2-REV |
|
74087 Series |
AGLA 77889 |
MED-3 |
|
74687 |
AGLA 77989 |
OTHER |
|
74887 |
AGLA 79090 Series |
SUPP-1 Series |
|
74987 |
AGLA 79190 Series |
SUPP-1—A Series |
|
75087 Series |
AGLA 79390 Series |
SUPP-2 Series |
|
751087 Series |
AGLA 82192 |
SUPP-2—A Series |
|
75587 Series |
AGLA 82292 |
SUPP-R Series |
|
75687 Series |
AGLA 82595 |
|
|
75689 Series |
|
|
|
6001 M-1 |
|
|
|
6001 M-2 |
|
|
|
6002 M-3 |
|
|
|
6001 M-4 |
|
|
Site 17
POLICY FORM
|
110137 |
|
|
|
110370 |
|
|
|
130305 |
|
|
|
130360 |
|
|
|
GSC-1310C |
|
|
|
GSC-1385C |
|
|
CEDING COMMISSION
The Ceding Commission shall be the sum of the following:
1. an amount equal to the excess of Total SAP Ceded Reserves over Total GAAP Ceded Reserves measured as of the close of business on the day immediately preceding the Inception Date (which amount may be negative);
2. an amount equal to the unamortized PVFP intangible asset balance of the Company with respect to the Reinsured Policies as measured as of the close of business on the day immediately preceding the Inception Date, determined in accordance with GAAP;
3. an amount equal to the unamortized deferred acquisition costs of the Company with respect to the Reinsured Policies as measured as of the close of business on the day immediately preceding the Inception Date, determined in accordance with GAAP; and
4. an amount equal to the excess of the GAAP book value of the Assets (excluding any related mark to market adjustments for SFAS 115 requirement) over the SAP book value of the Assets measured as of the close of business on the day immediately preceding the Inception Date (which amount may be negative).
ASSETS
|
|
|
Transfer Document |
|
From |
|
To |
|
|
|
Nature of |
|
Cash Map
Cross- |
|
Schedule |
|
|
|
|
|
|
|
|
|
|
|
|
UFLIC MS |
|
UFLIC |
|
FHL |
|
|
|
Treaty |
|
(83) |
|
Schedule C |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called |
|
Parent Name |
|
Issuer Name |
|
1Q04 Cusip |
|
1Q04 |
|
12/31/03
Local |
|
12/31/03
GAAP |
|
12/31/03
Accrued |
|
12/31/03
GAAP |
|
12/31/03
STAT |
|
12/31/03
Accrued |
|
12/31/03 STAT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
[Individual Asset Details Omitted] |
|
||||||||||||||||||||
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Sub Total |
|
|
|
|
|
|
|
|
|
9,832,601.43 |
|
94,536.36 |
|
9,927,137.79 |
|
9,832,601.43 |
|
94,536.36 |
|
9,927,137.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,617.97 |
|
|
|
114,617.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,947,219.40 |
|
|
|
10,041,755.76 |
|
* These Securities will not be transferred. The “Call Amount” will be settled in cash
INITIAL REPORT
|
1. |
Total SAP Ceded Reserves: |
|
|
|
|
|
||||||
|
|
A. |
Active Life Reserves |
|
$ |
|
|
|
|
||||
|
|
B. |
Claim Reserves |
|
$ |
|
|
|
|
||||
|
|
C. |
Unearned Premium Reserves |
|
$ |
|
|
|
|
||||
|
|
D. |
Advanced Premium |
|
$ |
|
|
|
|
||||
|
|
E. |
Less: Due and Unpaid Premium |
|
$ |
|
|
|
|
||||
|
|
|
Total SAP Ceded Reserves (A+B+C+D-E) |
|
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|||||
|
2. |
Ceding Commission: |
|
|
|
|
|
||||||
|
|
A. |
Excess SAP Ceded Reserves over GAAP Ceded Reserves: |
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
1) |
Total SAP Ceded Reserves |
|
$ |
|
|
|
|
|||
|
|
|
2) |
Total GAAP Ceded Reserves: |
|
|
|
|
|
||||
|
|
|
|
a. |
Active Life Reserves |
|
$ |
|
|
|
|
||
|
|
|
|
b. |
Maintenance Reserves |
|
$ |
|
|
|
|
||
|
|
|
|
c. |
Loss Expense Reserves |
|
$ |
|
|
|
|
||
|
|
|
|
d. |
Claim Reserves |
|
$ |
|
|
|
|
||
|
|
|
|
e. |
Unearned Premium Reserves |
|
$ |
|
|
|
|
||
|
|
|
|
f. |
Advanced Premium |
|
$ |
|
|
|
|
||
|
|
|
|
g. |
Less: Due and Unpaid Premium |
|
$ |
|
|
|
|
||
|
|
|
Total GAAP Ceded Reserves (a+b+c+d+e+f-g) |
|
$ |
|
|
|
|
||||
|
|
|
Excess SAP Reserves over GAAP Reserves (A1-A2) |
|
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
B. |
Present Value of Future Profits (PVFP) |
|
|
|
$ |
|
|
||||
|
|
C. |
Deferred Acquisition Costs (DAC) |
|
|
|
$ |
|
|
||||
|
|
D. |
Asset Book Value Difference - |
|
|
|
|
|
|||||
|
|
|
1) |
Asset Book Value (GAAP basis) |
|
$ |
|
|
|
|
|||
|
|
|
2) |
Asset Book Value (SAP basis) |
|
$ |
|
|
|
|
|||
|
|
|
|
Excess Asset Book Value (D1-D2) |
|
|
|
$ |
|
|
|||
|
|
|
|
Total Ceding Commission (A+B+C+D) |
|
|
|
$ |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
3. |
Accrued Interest on Assets as of the day before Inception Date |
|
|
|
$ |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
4. |
Investment Cash Flows on the Assets from the Inception Date through the Closing Date |
|
|
|
$ |
|
|
|||||
|
|
|
|
Net Due Reinsurer (1-2-3+4) |
|
|
|
$ |
|
|
|||
FORM OF TRUST AGREEMENT
TRUST AGREEMENT
This TRUST AGREEMENT, dated as of , 2004 (this “Trust Agreement”), among Federal Home Life Insurance Company, an insurance company organized under the laws of the Commonwealth of Virginia (the “Grantor”), Union Fidelity Life Insurance Company, an insurance company organized under the laws of the State of Illinois (the “Beneficiary”), and The Bank of New York, a New York corporation (the “Trustee”) (the Grantor, the Beneficiary and the Trustee are hereinafter each sometimes referred to individually as a “Party” and collectively as the “Parties”).
RECITALS:
WHEREAS, the Grantor and the Beneficiary desire to create a trust account (the “Trust Account”) for the benefit of the Beneficiary; and
WHEREAS, the Trustee has agreed to act as Trustee hereunder, and to hold assets in the Trust Account for the sole and exclusive use and benefit of the Beneficiary in accordance with the terms and conditions of this Trust Agreement; and
NOW, THEREFORE, for and in consideration of the premises and the promises and the mutual agreements hereinafter set forth, the Parties, intending to be legally bound, covenant and agree as follows:
Section 1. Deposit of Assets into the Trust Account.
(a) The Grantor hereby establishes the Trust Account with the Trustee for the sole use and benefit of the Beneficiary, under the terms set forth herein. The Trustee shall administer the Trust Account in its name as Trustee for the sole use and benefit of the Beneficiary. The Trust Account shall be subject to withdrawal by the Beneficiary solely as provided herein. The Trustee hereby accepts the Trust Account upon the terms set forth in this Trust Agreement.
(b) The Grantor shall transfer to the Trustee, for deposit into the Trust Account, the assets listed on Exhibit A hereto, and may transfer to the Trustee, for deposit into the Trust Account, such other assets as it may from time to time desire to transfer or be required to transfer (all such assets actually received in the Trust Account are herein referred to individually as an “Asset” and collectively as the “Assets”). The Trustee is authorized and shall have power to receive the Assets from the Grantor and to hold, invest, reinvest and dispose of the same for the uses and purposes of and according to the provisions herein set forth. All Assets shall be maintained by the Trustee in the Trust Account separate and distinct from all other assets on the books of the Trustee and shall be continuously kept in a safe place at the Trustee’s office within the United States of America. The Assets shall be valued according to their current fair market value and shall consist only of cash (United States legal tender) and Eligible Securities (as hereinafter defined). In the event of any payment default as to any Asset in the Trust Account or in the event that any Asset no longer is an Eligible Security, the Grantor shall, within five (5) business days after receiving notice from the Trustee pursuant to Section 17 or the Grantor having knowledge of such default or ineligibility, substitute other Assets which meet the requirements of an Eligible Security and having a current fair market value equal to the current
fair market value of such Asset, which has a payment default or no longer meets the requirements for an Eligible Security, on the last statement provided by the Trustee.
(c) The Grantor hereby represents and warrants (i) that any Assets transferred by the Grantor to the Trustee for deposit to the Trust Account will be in such form that the Beneficiary whenever necessary may, and the Trustee upon direction by the Beneficiary will, negotiate any such Assets without consent or signature from the Grantor or any other person or entity in accordance with the terms of this Trust Agreement, (ii) that all Assets transferred by the Grantor to the Trustee for deposit into the Trust Account consist only of cash and Eligible Securities, and (iii) that Grantor has at the time of transfer into this Trust Account good and marketable title to the Assets to be so transferred and each such Asset shall be at the time of transfer free and clear of all claims, liens, interests and encumbrances (other than those arising under this Trust Agreement).
(d) Prior to depositing the Assets into the Trust Account, and from time to time thereafter as required, the Grantor shall execute assignments, endorsement in blank, or transfer legal title to the Trustee of all shares, obligations or other Assets requiring assignments, so that the Beneficiary, whenever necessary may, and the Trustee upon the direction by the Beneficiary will, negotiate any such Assets without the consent or signature from the Grantor or any other person or entity. Any Assets received by the Trustee which are not in such proper negotiable form shall not be accepted by the Trustee and shall be returned to the Grantor as unacceptable. The Grantor shall give all notices and take all actions as the Trustee deems appropriate in order to cause payments due or that become due on any Asset within the Trust Account to be paid to the Trustee. The Grantor shall not make or consent to any waiver, amendment or restriction on transfer with respect to any Asset in the Trust Account, in each case, without the Beneficiary’s prior written consent. In connection with the deposit of Assets into the Trust Account, the Grantor shall furnish to the Trustee all original documentation evidencing the Grantor’s ownership thereto.
Section 2. Withdrawal of Assets from the Trust Account.
(a) Without notice to the Grantor, the Beneficiary shall have the right, at any time and from time to time, to withdraw from the Trust Account, subject only to written notice from the Beneficiary to the Trustee (the “Withdrawal Notice”), such Assets as are specified in such Withdrawal Notice. The Withdrawal Notice may designate a third party (the “Beneficiary Designee”) to whom Assets specified therein shall be delivered. The Beneficiary shall not be required to present any other statement or document in addition to a Withdrawal Notice in order to withdraw any Assets, except that the Beneficiary shall acknowledge receipt of any such Assets withdrawn upon request by the Trustee; nor is said right of withdrawal or any other provision of this Trust Agreement subject to any conditions or qualifications not contained in this Trust Agreement.
(b) Upon receipt of a Withdrawal Notice, the Trustee shall immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title and interest in the Assets specified in such Withdrawal Notice and shall deliver physical custody (or such other form as is necessary to complete the transfer) of such Assets to or for the account of the Beneficiary or such Beneficiary Designee, as specified in such Withdrawal Notice. The Trustee
shall notify the Grantor and Beneficiary within ten (10) days following each withdrawal from the Trust Account.
(c) Subject to Section 3, in the absence of a Withdrawal Notice, the Trustee shall allow no substitution or withdrawal of any Asset from the Trust Account.
Section 3. Redemption, Investment and Substitution of Assets.
(a) The Trustee shall surrender for payment all maturing Assets and all Assets called for redemption, and deposit the principal amount of the proceeds of any such payment to the Trust Account.
(b) The Grantor, subject to the prior written approval of the Beneficiary, may retain (and pay the service fees of ) a professional asset manager (the “Asset Manager”) to manage and make investment decisions with regard to the Assets held by the Trustee in the Trust Account. From time to time, at the written order and direction of the Grantor or the Asset Manager, the Trustee shall invest Assets in the Trust Account in Eligible Securities.
(c) From time to time, subject to the prior written approval of the Beneficiary, the Grantor or the Asset Manager may direct the Trustee to substitute Assets of equal current fair market value for other Assets presently held in the Trust Account. The Trustee shall have no responsibility whatsoever to determine the value of such substituted Assets or that such substituted Assets constitute Eligible Securities.
(d) All investments and substitutions of securities referred to in Sections 3(b) and 3(c) above shall be in compliance with the definition of “Eligible Securities” in Section 10 of this Trust Agreement. Any instruction or order concerning such investments or substitutions of securities shall be referred to herein as an “Investment Order”. The Trustee shall execute Investment Orders and settle securities transactions by itself or by means of an agent or broker. The Trustee shall not be responsible for any act or omission, or for the solvency, of any such agent or broker, except as set forth in Section 6.
(e) From time to time, upon notice to the Beneficiary, the Trustee may withdraw any Asset in the Trust Account upon the call or maturity of such Asset provided that the proceeds from such call or maturity are deposited into the Trust Account.
(f) When the Trustee is directed to deliver Assets against payment, delivery will be made in accordance with generally accepted market practice.
(g) Any loss incurred from any investment pursuant to the terms of this Section 3 shall be borne exclusively by the Trust Account.
Section 4. The Income Account.
All payments of interest, dividends and other income in respect to Assets in the Trust Account shall be the property of the Grantor and shall be deposited by the Trustee, subject to deduction of the Trustee’s compensation and expenses as provided in Section 7 of this Agreement, in a separate account (the “Income Account”) established and maintained by the
Grantor at an office of the Trustee. Any interest, dividend or other income automatically posted and credited on the payment date to the Income Account which is not subsequently received by the Trustee shall be reimbursed by the Grantor to the Trustee and the Trustee may debit the Income Account for this purpose. The Grantor may withdraw amounts from the Income Account at any time and from time to time.
Section 5. Right to Vote Assets.
The Trustee shall forward all annual and interim stockholder reports and all proxies and proxy materials relating to the Assets in the Trust Account to the Grantor within a reasonable period of time following the Trustee’s receipt thereof. The Grantor shall have the full and unqualified right to vote any shares of stock in the Trust Account.
Section 6. Additional Rights and Duties of the Trustee.
(a) The Trustee shall be a bank which is a member of the Federal Reserve System of the United States of America or a New York State chartered bank or trust company and shall not be a parent, subsidiary or affiliate of the Grantor or the Beneficiary.
(b) Notwithstanding any provision of this Agreement to the contrary, the Trustee shall not be liable except for its own negligence, willful misconduct or lack of good faith arising out of or in connection with the performance of its obligations in accordance with this Trust Agreement.
(c) The Trustee shall have no responsibility whatsoever to determine that any Assets in the Trust Account are or continue to be Eligible Securities.
(d) The Trustee shall notify the Grantor and the Beneficiary in writing within ten (10) days following each deposit into, or withdrawal from, the Trust Account and shall notify the Grantor promptly of the receipt by the Trustee of any Withdrawal Notice.
(e) Before accepting any Asset for deposit to the Trust Account, the Trustee shall determine that such Asset is in such form that the Beneficiary whenever necessary may, or the Trustee upon direction by the Beneficiary will, negotiate such Asset without consent or signature from the Grantor or any person or entity other than the Trustee in accordance with the terms of this Trust Agreement.
(f) The Trustee shall be under no obligation to determine whether or not any instructions given by the Grantor and Beneficiary are contrary to any provision of law. It is understood and agreed that the Trustee’s duties are solely those set forth herein and that the Trustee shall have no duty to take any other action unless specifically agreed to by the Trustee in writing. Without limiting the generality of the foregoing, the Trustee shall not have any duty to advise, manage, supervise or make recommendations with respect to the purchase, retention or sale of Assets with respect to any Assets in the Trust Account as to which a default in the payment of principal or interest has occurred or to be responsible for the consequences of insolvency or the legal inability of any broker, dealer, bank or other agent employed by the Grantor or Trustee with respect to the Assets except to the extent that the Trustee was negligent, engaged in misconduct or acted in bad faith in the selection of any such person or entity.
(g) The Trustee shall accept and open all mail directed to the Grantor or the Beneficiary in care of the Trustee.
(h) The Trustee shall furnish to the Grantor and the Beneficiary a statement of all Assets in the Trust Account upon the inception of the Trust Account and at the end of each quarter thereafter. The statement shall include a description of the Assets in the Trust Account and the then current market value of the Assets and shall be delivered within five (5) business days following the end of such quarter.
(i) The Trustee shall keep full and complete records of the administration of the Trust Account in accordance with all applicable law. Upon the request of the Grantor or the Beneficiary, the Trustee shall promptly permit the Grantor or the Beneficiary, their respective agents, employees, independent auditors and regulatory authorities to examine, audit, excerpt, transcribe and copy, during the Trustee’s normal business hours, any books, documents, papers and records relating to the Trust Account or the Assets.
(j) Unless otherwise provided in this Trust Agreement, the Trustee is authorized to follow and rely upon all instructions given by officers of the Grantor or the Beneficiary and by attorneys-in-fact acting under written authority furnished to the Trustee by the Grantor or the Beneficiary, including, without limitation, instructions given by letter, facsimile transmission or electronic media, if the Trustee believes such instructions to be genuine and to have been signed, sent or presented by the proper party or parties. In the absence of negligence, the Trustee shall not incur any liability to anyone resulting from actions taken by the Trustee in reliance in good faith on such instructions. The Trustee shall not incur any liability in executing instructions (i) from any attorney-in-fact prior to receipt by it of notice of the revocation of the written authority of the attorney-in-fact or (ii) from any officer of the Grantor or the Beneficiary.
(k) The duties and obligations of the Trustee shall only be such as are specifically set forth in this Trust Agreement, as it may from time to time be amended, and no implied duties or obligations shall be read into this Trust Agreement against the Trustee.
(l) No provision of this Trust Agreement shall require the Trustee to take any action which, in the Trustee’s reasonable judgment, would result in any violation of this Trust Agreement or any provision of law.
(m) The Trustee may confer with counsel of its own choice in relation to matters arising under this Trust Agreement and shall have full and complete authorization from the other Parties for any action taken or suffered by it under this Trust Agreement or in respect of any transaction contemplated hereby in good faith and in accordance with the opinion of such counsel.
(n) The Trustee shall notify the Grantor and Beneficiary in writing of any payment default occurring as to any Asset within three (3) business days after Trustee receives notice of such default. In the event of a delinquency of a timely payment in regard to any of the Assets, the Trustee shall inform the Grantor and the Beneficiary immediately upon Trustee’s receipt of notice of such delinquency (which shall be confirmed in writing by the Trustee within two (2) business days thereof).
(o) The Trustee shall be liable for (i) the safekeeping of the Assets and administering the Trust Account in accordance with the provisions of this Trust Agreement and (ii) its own negligence, willful misconduct or lack of good faith in performing its duties under this Trust Agreement. The Trustee shall exercise the standard of care with respect to the Assets that a professional trustee, engaged in the banking or trust company industry, having professional expertise in financial and securities processing transactions and custody would observe in such affairs. The Trustee shall be responsible for physical loss of or damage to Assets under its care, custody, possession or control, including but not limited to loss due to fire, burglary, robbery, theft or mysterious disappearance. In the event of loss or damage to the Assets under the care, custody, possession or control of Trustee, Trustee shall, upon demand of the Grantor or Beneficiary, promptly replace such Assets with like kind and quality together with, all rights and privileges pertaining to the Assets (by among other methods, posting appropriate security or bond with the issuer of the Assets to obtain reissue of such Assets, or, if acceptable to the Grantor, deliver cash equivalent to the market value of the Assets as of the date of the discovery of the loss or damage). Nothing contained in any contract between Trustee and any entity authorized to hold Assets, as defined herein, shall diminish or otherwise alter the liability of Trustee to the Grantor or Beneficiary. The provisions of this paragraph shall not affect the burden of proof under applicable law with respect to the assertions of liability in any claim, action or dispute alleging any breach of or failure to observe such standard of care.
Section 7. The Trustee’s Compensation; Expenses.
(a) The Grantor shall pay the Trustee, as compensation for its services under this Trust Agreement, a fee computed at rates determined by the Trustee from time to time and communicated in writing to the Grantor. The Grantor shall pay or reimburse the Trustee for all of the Trustee’s expenses and disbursements in connection with its duties under this Trust Agreement (including reasonable attorney’s fees and expenses), except any such expense or disbursement as may arise from the Trustee’s negligence, willful misconduct, lack of good faith or failure to administer the Trust Account in accordance with the terms of this Trust Agreement. The Trustee shall be entitled to deduct its compensation and expenses from payments of dividends, interest and other income in respect of the Assets held in the Trust Account prior to the deposit thereof to the Income Account as provided in Section 4 of this Agreement. The Grantor also hereby indemnifies the Trustee for, and holds it harmless against, any loss, liability, costs or expenses (including reasonable attorney’s fees and expenses) incurred or made without negligence, willful misconduct or lack of good faith on the part of the Trustee, arising out of or in connection with the performance of its obligations in accordance with the provisions of this Trust Agreement (which shall be the sole obligation of the Trustee), including any loss, liability, costs or expenses arising out of or in connection with the status of the Trustee and its nominee as the holder of record of the Assets. The Grantor hereby acknowledges that the foregoing indemnities shall survive the resignation of the Trustee or the termination of this Trust Agreement and hereby grants the Trustee a lien, right of set-off and security interest in the funds in the Income Account for the payment of any claim for compensation, reimbursement or indemnity hereunder.
(b) No Assets shall be withdrawn from the Trust Account or used in any manner for paying compensation to, or reimbursement or indemnification of, the Trustee.
Section 8. Resignation or Removal of the Trustee.
(a) The Trustee may resign at any time upon delivery of a written notice thereof to the Beneficiary and to the Grantor effective not less than ninety (90) days after receipt by the Beneficiary and the Grantor of such notice. The Trustee may be removed by the Grantor’s delivery to the Trustee and the Beneficiary of a written notice of removal, effective not less than ninety (90) days after receipt by the Trustee and the Beneficiary of such notice. The Trustee may also be removed by prior written notice executed by the Grantor and the Beneficiary. No such resignation or removal shall become effective until a successor Trustee has been appointed and approved by the Beneficiary and the Grantor and all Assets in the Trust Account have been duly transferred to the successor Trustee in accordance with paragraph (b) of this Section 8.
(b) Upon receipt by the proper Parties of the Trustee’s notice of resignation or the Grantor’s or the Grantor’s and the Beneficiary’s notice of removal, as applicable, the Grantor and the Beneficiary shall appoint a successor Trustee. Any successor Trustee shall be a bank that is a member of the Federal Reserve System of the United States of America or a New York State chartered bank or trust company and must not be a parent, a subsidiary or an affiliate of the Grantor or the Beneficiary. Upon the acceptance of the appointment as Trustee hereunder by a successor Trustee and the transfer to such successor Trustee of all Assets in the Trust Account, the resignation or removal of the Trustee shall become effective. Thereupon, such successor Trustee shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Trustee, and the resigning or removed Trustee shall be discharged from any future duties and obligations under this Trust Agreement, but the resigning or removed Trustee shall continue after such resignation or removal to be entitled to the benefits of the indemnities provided herein for the Trustee.
Section 9. Termination of the Trust Account.
The Trust Account and this Trust Agreement shall be effective until terminated by sixty (60) days’ advance written notice sent to the Trustee by the Grantor. Written notice of termination shall be delivered by the Trustee to the Beneficiary at least thirty (30) but not more than forty-five (45) days prior to termination. Upon the termination of the Trust Account, the Trustee shall, with the Beneficiary’s prior written consent, transfer to the Grantor all of the Assets of the Trust Account and Income Account not previously withdrawn by the Beneficiary.
Section 10. Definitions.
Except as the context shall otherwise require, the following terms shall have the following meanings for purposes of this Trust Agreement (the definitions to be applicable to both the singular and the plural forms of each term defined if both forms of such term are used in this Trust Agreement):
The term “Beneficiary” shall include any successor of the Beneficiary by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator.
The term “Eligible Securities” shall mean and include certificates of deposit (issued by a United States bank and payable in United States legal tender) and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of the New York Insurance
Law; provided, however, that such investments are issued by an institution that is not the parent, a subsidiary or an affiliate of either the Grantor or the Beneficiary.
The terms “Person” shall mean and include an individual, a corporation, a partnership, an association, a trust, an unincorporated organization or a government or political subdivision thereof.
Section 11. Governing Law.
This Trust Agreement shall be subject to and governed by the laws of the State of New York, without regard to its conflict of laws provision and the Trust Account created hereunder shall be administered in accordance with the laws of said state.
Section 12. WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
Section 13. Successors and Assigns.
This Trust Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, permitted assigns and legal representatives. Neither this Trust Agreement, nor any right or obligation hereunder, may be assigned by any Party without the prior written consent of the other Parties hereto. Any assignment in violation of this Section 13 shall be void and shall have no force and effect.
Section 14. Severability.
If any provision of this Trust Agreement is held to be void or unenforceable, in whole or in part, (i) such holding shall not affect the validity and enforceability of the remainder of this Trust Agreement, including any other provision, paragraph or subparagraph, and (ii) the Parties agree to attempt in good faith to reform such void or unenforceable provision to the extent necessary to render such provision enforceable and to carry out its original intent.
Section 15. Entire Agreement.
This Trust Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof, and there are no understandings or agreements, conditions or qualifications relative to this Trust Agreement which are not fully expressed in this Trust Agreement.
Section 16. Amendments.
This Trust Agreement may be modified or otherwise amended, and the observance of any term of this Trust Agreement may be waived, only if such modification, amendment or waiver is in writing and signed by the Parties.
Section 17. Notices.
All notices, requests, demands and other communications under this Trust Agreement must be in writing and will be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (b) if sent by reputable overnight air courier, two business days after mailing; (c) if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in (a) or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if otherwise actually personally delivered, when delivered, and shall be delivered as follows:
If to the Grantor:
Federal Home Life Insurance Company
6620 West Broad Street
Richmond, VA 23230
Facsimile: (804) 662-2414
Attention: Chief Executive Officer
With a copy to:
Federal Home Life Insurance Company
700 Main Street
Lynchburg, VA 24504
Facsimile: (434) 948-5819
Attention: General Counsel
If to the Beneficiary:
Union Fidelity Life Insurance Company
200 North Martingale Road
Schaumburg, IL 60173-2096
Facsimile: (847) 330-3404
Attention: Chief Financial Officer
With a copy to:
Union Fidelity Life Insurance Company
200 North Martingale Road
Schaumburg, IL 60173-2096
Facsimile: (847) 605-3044
Attention: General Counsel
If to the Trustee:
The Bank of New York
101 Barclay Street - 8W
New York, NY 10283
Facsimile: (212) 815-5875
Attention: Insurance Trust and Escrow
Unit
or to such other address or to such other Person as a Party may have last designated by notice to the other Parties.
Section 18. Headings.
The headings of the Sections have been inserted for convenience of reference only and shall not be deemed to constitute a part of this Trust Agreement.
Section 19. Counterparts.
This Trust Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original, but such counterparts together shall constitute but one and the same Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
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FEDERAL HOME LIFE INSURANCE |
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UNION FIDELITY LIFE INSURANCE |
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By: |
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THE BANK OF NEW YORK, as Trustee |
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By: |
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EXHIBIT A
Assets
BUSINESS ASSOCIATE ADDENDUM
I. Purpose.
In order to disclose certain information to the party providing a service under this Agreement (“Provider”) under this Addendum, some of which may constitute Protected Health Information (defined below), the party to whom a service under this Agreement is being provided (“Recipient”) and Provider mutually agree to comply with the terms of this Addendum for the purpose of satisfying the requirements of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing privacy regulations at 45 C.F.R. Parts 160-164 (“HIPAA Privacy Rule”). These provisions shall apply to Provider to the extent that Provider is considered a “Business Associate” under the HIPAA Privacy Rule and all references in this section to Business Associates shall refer to Provider. Capitalized terms not otherwise defined herein shall have the meaning assigned in the Agreement. Notwithstanding anything else to the contrary in the Agreement, in the event of a conflict between this Addendum and the Agreement, the terms of this Addendum shall prevail.
II. Permitted Uses and Disclosures.
A. Business Associate agrees to use or disclose Protected Health Information (“PHI”) that it creates for or receives from Recipient or its Subsidiaries only as follows. The capitalized term “Protected Health Information or PHI” has the meaning set forth in 45 Code of Federal Regulations Section 164.501, as amended from time to time. Generally, this term means individually identifiable health information including, without limitation, all information, data and materials, including without limitation, demographic, medical and financial information, that relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past present, or future payment for the provision of health care to an individual; and that identifies the individual or with respect to which there is a reasonable basis to believe the information can be used to identify the individual. This definition shall include any demographic information concerning members and participants in, and applicants for, Recipient’s or its Subsidiaries’ health benefit plans. All other terms used in this Addendum shall have the meanings set forth in the applicable definitions under the HIPAA Privacy Rule.
B. Functions and Activities on Company’s Behalf. Business Associate is permitted to use and disclose PHI it creates for or receives from Recipient or its Subsidiaries only for the purposes described in this Addendum or the Agreement that are not inconsistent with the provisions of this Addendum, or as required by law, or following receipt of prior written approval from whichever of the Recipient or its Subsidiary for which the relevant PHI was created or from which the relevant PHI was received. In addition to these specific requirements below, Business Associate may use or disclose PHI only in a manner that would not violate the HIPAA Privacy Rule if done by the Recipient or its Subsidiaries.
C. Business Associate’s Operations. Business Associate is permitted by this Agreement to use PHI it creates for or receives from Recipient or its Subsidiaries: (i) if such
use is reasonably necessary for Business Associate’s proper management and administration; and (ii) as reasonably necessary to carry out Business Associate’s legal responsibilities. Business Associate is permitted to disclose PHI it creates for or receives from Recipient or its Subsidiaries for the purposes identified in this Section only if the following conditions are met:
(1) The disclosure is required by law; or
(2) The disclosure is reasonably necessary to Business Associate’s proper management and administration, and Business Associate obtains reasonable assurances in writing from any person or organization to which Business Associate will disclose such PHI that the person or organization will:
a. Hold such PHI as confidential and use or further disclose it only for the purpose for which Business Associate disclosed it to the person or organization or as required by law; and
b. Notify Business Associate (who will in turn promptly notify whichever of the Recipient or its Subsidiary for which the relevant PHI was created or from which the relevant PHI was received) of any instance of which the person or organization becomes aware in which the confidentiality of such PHI was breached.
D. Minimum Necessary Standard. In performing the functions and activities on Recipient’s or its Subsidiaries’ behalf pursuant to the Agreement, Business Associate agrees to use, disclose or request only the minimum necessary PHI to accomplish the purpose of the use, disclosure or request. Business Associate must have in place policies and procedures that limit the PHI disclosed to meet this minimum necessary standard.
E. Prohibition on Unauthorized Use or Disclosure. Business Associate will neither use nor disclose PHI it creates or receives for or from Recipient, its Subsidiaries, or from another business associate of Recipient or its Subsidiaries, except as permitted or required by this Addendum or the Agreement that are not inconsistent with the provisions of this Addendum, or as required by law, or following receipt of prior written approval from whichever of the Recipient or its Subsidiary for which the relevant PHI was created or from which the relevant PHI was received.
F. De-identification of Information. Business Associate agrees neither to de-identify PHI it creates for or receives from Recipient or its Subsidiaries or from another business associate of Recipient or its Subsidiaries, nor use or disclose such de-identified PHI, unless such de-identification is expressly permitted under the terms and conditions of this Addendum or the Agreement and related to Recipient’s or its Subsidiaries’ activities for purposes of “treatment”, “payment” or “health care operations”, as those terms are defined under the HIPAA Privacy Rule. De-identification of PHI, other than as expressly permitted under the terms and conditions of the Addendum for Business Associate to perform services for Recipient or its Subsidiaries, is not a permitted use of PHI under this Addendum. Business Associate further agrees that it will not create a “Limited Data Set” as defined by the HIPAA Privacy Rule using PHI it creates or receives, or receives from another business
associate of Recipient or its Subsidiaries, nor use or disclose such Limited Data Set unless: (i) such creation, use or disclosure is expressly permitted under the terms and conditions of this Addendum or the Agreement that are not inconsistent with the provisions of this Addendum; and such creation, use or disclosure is for services provided by Business Associate that relate to Recipient’s or its Subsidiaries’ activities for purposes of “treatment”, “payment” or “health care operations”, as those terms are defined under the HIPAA Privacy Rule.
G. Information Safeguards. Business Associate will develop, document, implement, maintain and use appropriate administrative, technical and physical safeguards to preserve the integrity and confidentiality of and to prevent non-permitted use or disclosure of PHI created for or received from Recipient or its Subsidiaries. These safeguards must be appropriate to the size and complexity of Business Associate’s operations and the nature and scope of its activities. Business Associate agrees that these safeguards will meet any applicable requirements set forth by the U.S. Department of Health and Human Services, including (as of the effective date or as of the compliance date, whichever is applicable) any requirements set forth in the final HIPAA security regulations. Business Associate agrees to mitigate, to the extent practicable, any harmful effect that is known to Business Associate resulting from a use or disclosure of PHI by Business Associate in violation of the requirements of this Addendum.
III. Conducting Standard Transactions. In the course of performing services for Recipient or its Subsidiaries, to the extent that Business Associate will conduct Standard Transactions for or on behalf of Recipient or its Subsidiaries, Business Associate will comply, and will require any subcontractor or agent involved with the conduct of such Standard Transactions to comply, with each applicable requirement of 45 C.F.R. Part 162. “Standard Transaction(s)” shall mean a transaction that complies with the standards set forth at 45 C.F.R. parts 160 and 162. Further, Business Associate will not enter into, or permit its subcontractors or agents to enter into, any trading partner agreement in connection with the conduct of Standard Transactions for or on behalf of the Recipient or its Subsidiaries that:
a. Changes the definition, data condition, or use of a data element or segment in a Standard Transaction;
b. Adds any data element or segment to the maximum defined data set;
c. Uses any code or data element that is marked “not used” in the Standard Transaction’s implementation specification or is not in the Standard Transaction’s implementation specification; or
d. Changes the meaning or intent of the Standard Transaction’s implementation specification.
IV. Sub-Contractors, Agents or Other Representatives. Business Associate will require any of its subcontractors, agents or other representatives to which Business Associate is permitted by this Addendum or the Agreement (or is otherwise given Recipient’s or the relevant Subsidiary’s prior written approval) to disclose any of the PHI Business Associate creates or receives for or
from Recipient or its Subsidiaries, to provide reasonable assurances in writing that subcontractor or agent will comply with the same restrictions and conditions that apply to the Business Associate under the terms and conditions of this Addendum with respect to such PHI.
V. Protected Health Information Access, Amendment and Disclosure Accounting.
A. Access. Business Associate will promptly upon Recipient’s or its Subsidiary’s request make available to Recipient, its Subsidiary, or, at Recipient’s or such Subsidiary’s direction, to the individual (or the individual’s personal representative) for inspection and obtaining copies any PHI about the individual which Business Associate created for or received from Recipient or its Subsidiary and that is in Business Associate’s custody or control, so that Recipient or its Subsidiary may meet its access obligations under 45 Code of Federal Regulations § 164.524.
B. Amendment. Upon Recipient’s or its Subsidiary’s request Business Associate will promptly amend or permit Recipient or its Subsidiary access to amend any portion of the PHI which Business Associate created for or received from Recipient or its Subsidiary, and incorporate any amendments to such PHI, so that Recipient or its Subsidiary may meet its amendment obligations under 45 Code of Federal Regulations § 164.526.
C. Disclosure Accounting. So that Recipient or its Subsidiaries may meet their disclosure accounting obligations under 45 Code of Federal Regulations § 164.528:
1. Disclosure Tracking. Business Associate will record for each disclosure, not excepted from disclosure accounting under Section V.C.2 below, that Business Associate makes to Recipient or its Subsidiaries of PHI that Business Associate creates for or receives from Recipient or its Subsidiaries, (i) the disclosure date, (ii) the name and member or other policy identification number of the person about whom the disclosure is made, (iii) the name and (if known) address of the person or entity to whom Business Associate made the disclosure, (iv) a brief description of the PHI disclosed, and (v) a brief statement of the purpose of the disclosure (items i-v, collectively, the “disclosure information”). For repetitive disclosures Business Associate makes to the same person or entity (including Recipient or its Subsidiaries) for a single purpose, Business Associate may provide a) the disclosure information for the first of these repetitive disclosures, (b) the frequency, periodicity or number of these repetitive disclosures and (c) the date of the last of these repetitive disclosures. Business Associate will make this disclosure information available to Recipient or its Subsidiaries promptly upon Recipient’s or its Subsidiaries’ request.
2. Exceptions from Disclosure Tracking. Business Associate need not record disclosure information or otherwise account for disclosures of PHI that this Addendum or Recipient or the relevant Subsidiary in writing permits or requires (i) for the purpose of Recipient’s or its Subsidiaries’ treatment activities, payment activities, or health care operations, (ii) to the individual who is the subject of the PHI disclosed or to that individual’s personal representative; (iii) to persons involved in that individual’s health care or payment for health care; (iv) for notification for disaster relief purposes, (v) for national security or intelligence purposes, (vi) to law enforcement officials or correctional
institutions regarding inmates; or (vii) pursuant to an authorization; (viii) for disclosures of certain PHI made as part of a Limited Data Set; (ix) for certain incidental disclosures that may occur where reasonable safeguards have been implemented; and (x) for disclosures prior to April 14, 2003.
3. Disclosure Tracking Time Periods. Business Associate must have available for Recipient and its Subsidiaries the disclosure information required by this section for the 6 years preceding Recipient’s or its Subsidiaries’ request for the disclosure information (except Business Associate need have no disclosure information for disclosures occurring before April 14, 2003).
VI. Additional Business Associate Provisions
A. Reporting of Breach of Privacy Obligations. Business Associate will provide written notice to whichever of the Recipient or its Subsidiary for which the relevant PHI was created or from which the relevant PHI was received of any use or disclosure of PHI that is neither permitted by this Addendum nor given prior written approval by Recipient or the relevant Subsidiary promptly after Business Associate learns of such non-permitted use or disclosure. Business Associate’s report will at least:
(ii) Identify the nature of the non-permitted use or disclosure;
(iii) Identify the PHI used or disclosed;
(iv) Identify who made the non-permitted use or received the non-permitted disclosure;
(v) Identify what corrective action Business Associate took or will take to prevent further non-permitted uses or disclosures;
(vi) Identify what Business Associate did or will do to mitigate any deleterious effect of the non-permitted use or disclosure; and
(vii) Provide such other information, including a written report, as Recipient or the relevant Subsidiary may reasonably request.
B. Amendment. Upon the effective date of any final regulation or amendment to final regulations promulgated by the U.S. Department of Health and Human Services with respect to PHI, including, but not limited to the HIPAA privacy and security regulations, this Addendum and the Agreement will automatically be amended so that the obligations they impose on Business Associate remain in compliance with these regulations.
In addition, to the extent that new state or federal law requires changes to Business Associate’s obligations under this Addendum, this Addendum shall automatically be amended to include such additional obligations, upon notice by Recipient or its Subsidiaries to Business Associate of such obligations. Business Associate’s continued performance of services under the Agreement shall be deemed acceptance of these additional obligations.
C. Audit and Review of Policies and Procedures. Business Associate agrees to provide, upon Recipient request, access to and copies of any policies and procedures developed or utilized by Business Associate regarding the protection of PHI. Business Associate agrees to provide, upon Recipient’s request, access to Business Associate’s internal practices, books, and records, as they relate to Business Associate’s services, duties and obligations set forth in this Addendum and the Agreement(s) under which Business Associate provides services and / or products to or on behalf of Recipient or its Subsidiaries, for purposes of Recipient’s or its Subsidiaries’ review of such internal practices, books, and records.
INITIAL REPORT
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1. |
Total SAP Ceded Reserves: |
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A. |
Active Life Reserves |
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$ |
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B. |
Claim Reserves |
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$ |
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C. |
Unearned Premium Reserves |
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$ |
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D. |
Advanced Premium |
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$ |
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E. |
Less: Due and Unpaid Premium |
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$ |
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Total SAP Ceded Reserves (A+B+C+D-E) |
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$ |
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2. |
Ceding Commission: |
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A. |
Excess SAP Ceded Reserves over GAAP Ceded Reserves: |
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1) |
Total SAP Ceded Reserves |
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$ |
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2) |
Total GAAP Ceded Reserves: |
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a. |
Active Life Reserves |
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$ |
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b. |
Maintenance Reserves |
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$ |
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c. |
Loss Expense Reserves |
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$ |
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d. |
Claim Reserves |
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$ |
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e. |
Unearned Premium Reserves |
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$ |
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f. |
Advanced Premium |
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$ |
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g. |
Less: Due and Unpaid Premium |
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$ |
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Total GAAP Ceded Reserves (a+b+c+d+e+f-g) |
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$ |
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Excess SAP Reserves over GAAP Reserves (A1-A2) |
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$ |
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B. |
Present Value of Future Profits (PVFP) |
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$ |
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C. |
Deferred Acquisition Costs (DAC) |
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$ |
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D. |
Asset Book Value Difference — |
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1) |
Asset Book Value (GAAP basis) |
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$ |
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2) |
Asset Book Value (SAP basis) |
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$ |
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Excess Asset Book Value (D1-D2) |
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$ |
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Total Ceding Commission (A+B+C+D) |
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$ |
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3. |
Accrued Interest on Assets as of the day before Inception Date |
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$ |
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4. |
Investment Cash Flows on the Assets from the Inception Date through the Closing Date |
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$ |
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Net Due Reinsurer (1-2—3+4) |
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$ |
FORM OF TRUST AGREEMENT
TRUST AGREEMENT
This TRUST AGREEMENT, dated as of , 2004 (this “Trust Agreement”), among Federal Home Life Insurance Company, an insurance company organized under the laws of the Commonwealth of Virginia (the “Grantor”), Union Fidelity Life Insurance Company, an insurance company organized under the laws of the State of Illinois (the “Beneficiary”), and The Bank of New York, a New York corporation (the “Trustee”) (the Grantor, the Beneficiary and the Trustee are hereinafter each sometimes referred to individually as a “Party” and collectively as the “Parties”).
RECITALS:
WHEREAS, the Grantor and the Beneficiary desire to create a trust account (the “Trust Account”) for the benefit of the Beneficiary; and
WHEREAS, the Trustee has agreed to act as Trustee hereunder, and to hold assets in the Trust Account for the sole and exclusive use and benefit of the Beneficiary in accordance with the terms and conditions of this Trust Agreement; and
NOW, THEREFORE, for and in consideration of the premises and the promises and the mutual agreements hereinafter set forth, the Parties, intending to be legally bound, covenant and agree as follows:
shall notify the Grantor and Beneficiary within ten (10) days following each withdrawal from the Trust Account.
All payments of interest, dividends and other income in respect to Assets in the Trust Account shall be the property of the Grantor and shall be deposited by the Trustee, subject to deduction of the Trustee’s compensation and expenses as provided in Section 7 of this Agreement, in a separate account (the “Income Account”) established and maintained by the
Grantor at an office of the Trustee. Any interest, dividend or other income automatically posted and credited on the payment date to the Income Account which is not subsequently received by the Trustee shall be reimbursed by the Grantor to the Trustee and the Trustee may debit the Income Account for this purpose. The Grantor may withdraw amounts from the Income Account at any time and from time to time.
The Trustee shall forward all annual and interim stockholder reports and all proxies and proxy materials relating to the Assets in the Trust Account to the Grantor within a reasonable period of time following the Trustee’s receipt thereof. The Grantor shall have the full and unqualified right to vote any shares of stock in the Trust Account.
The Trust Account and this Trust Agreement shall be effective until terminated by sixty (60) days’ advance written notice sent to the Trustee by the Grantor. Written notice of termination shall be delivered by the Trustee to the Beneficiary at least thirty (30) but not more than forty-five (45) days prior to termination. Upon the termination of the Trust Account, the Trustee shall, with the Beneficiary’s prior written consent, transfer to the Grantor all of the Assets of the Trust Account and Income Account not previously withdrawn by the Beneficiary.
Except as the context shall otherwise require, the following terms shall have the following meanings for purposes of this Trust Agreement (the definitions to be applicable to both the singular and the plural forms of each term defined if both forms of such term are used in this Trust Agreement):
The term “Beneficiary” shall include any successor of the Beneficiary by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator.
The term “Eligible Securities” shall mean and include certificates of deposit (issued by a United States bank and payable in United States legal tender) and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of the New York Insurance
Law; provided, however, that such investments are issued by an institution that is not the parent, a subsidiary or an affiliate of either the Grantor or the Beneficiary.
The terms “Person” shall mean and include an individual, a corporation, a partnership, an association, a trust, an unincorporated organization or a government or political subdivision thereof.
This Trust Agreement shall be subject to and governed by the laws of the State of New York, without regard to its conflict of laws provision and the Trust Account created hereunder shall be administered in accordance with the laws of said state.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
This Trust Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, permitted assigns and legal representatives. Neither this Trust Agreement, nor any right or obligation hereunder, may be assigned by any Party without the prior written consent of the other Parties hereto. Any assignment in violation of this Section 13 shall be void and shall have no force and effect.
If any provision of this Trust Agreement is held to be void or unenforceable, in whole or in part, (i) such holding shall not affect the validity and enforceability of the remainder of this Trust Agreement, including any other provision, paragraph or subparagraph, and (ii) the Parties agree to attempt in good faith to reform such void or unenforceable provision to the extent necessary to render such provision enforceable and to carry out its original intent.
This Trust Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof, and there are no understandings or agreements, conditions or qualifications relative to this Trust Agreement which are not fully expressed in this Trust Agreement.
This Trust Agreement may be modified or otherwise amended, and the observance of any term of this Trust Agreement may be waived, only if such modification, amendment or waiver is in writing and signed by the Parties.
All notices, requests, demands and other communications under this Trust Agreement must be in writing and will be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (b) if sent by reputable overnight air courier, two business days after mailing; (c) if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in (a) or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if otherwise actually personally delivered, when delivered, and shall be delivered as follows:
If to the Grantor:
Federal Home
Life Insurance Company
6620 West Broad Street
Richmond, VA
23230
Facsimile: (804) 662-2414
Attention: Chief Executive Officer
With a copy to:
Federal Home Life Insurance Company
700 Main Street
Lynchburg, VA 24504
Facsimile: (434) 948-5819
Attention: General Counsel
If to the Beneficiary:
Union Fidelity Life Insurance Company
200 North Martingale Road
Schaumburg, IL 60173-2096
Facsimile: (847) 330-3404
Attention: Chief Financial Officer
With a copy to:
Union Fidelity Life Insurance Company
200 North Martingale Road
Schaumburg, IL 60173-2096
Facsimile: (847) 605-3044
Attention: General Counsel
If to the Trustee:
The Bank of New York
101 Barclay Street - 8W
New York, NY 10283
Facsimile: (212) 815-5875
Attention: Insurance Trust and Escrow
Unit
or to such other address or to such other Person as a Party may have last designated by notice to the other Parties.
The headings of the Sections have been inserted for convenience of reference only and shall not be deemed to constitute a part of this Trust Agreement.
This Trust Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original, but such counterparts together shall constitute but one and the same Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
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FEDERAL HOME LIFE INSURANCE |
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UNION FIDELITY LIFE INSURANCE |
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THE BANK OF NEW YORK, as Trustee |
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EXHIBIT A
Assets
BUSINESS ASSOCIATE ADDENDUM
I. Purpose.
In order to disclose certain information to the party providing a service under this Agreement (“Provider”) under this Addendum, some of which may constitute Protected Health Information (defined below), the party to whom a service under this Agreement is being provided (“Recipient”) and Provider mutually agree to comply with the terms of this Addendum for the purpose of satisfying the requirements of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing privacy regulations at 45 C.F.R. Parts 160-164 (“HIPAA Privacy Rule”). These provisions shall apply to Provider to the extent that Provider is considered a “Business Associate” under the HIPAA Privacy Rule and all references in this section to Business Associates shall refer to Provider. Capitalized terms not otherwise defined herein shall have the meaning assigned in the Agreement. Notwithstanding anything else to the contrary in the Agreement, in the event of a conflict between this Addendum and the Agreement, the terms of this Addendum shall prevail.
II. Permitted Uses and Disclosures.
A. Business Associate agrees to use or disclose Protected Health Information (“PHI”) that it creates for or receives from Recipient or its Subsidiaries only as follows. The capitalized term “Protected Health Information or PHI” has the meaning set forth in 45 Code of Federal Regulations Section 164.501, as amended from time to time. Generally, this term means individually identifiable health information including, without limitation, all information, data and materials, including without limitation, demographic, medical and financial information, that relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past present, or future payment for the provision of health care to an individual; and that identifies the individual or with respect to which there is a reasonable basis to believe the information can be used to identify the individual. This definition shall include any demographic information concerning members and participants in, and applicants for, Recipient’s or its Subsidiaries’ health benefit plans. All other terms used in this Addendum shall have the meanings set forth in the applicable definitions under the HIPAA Privacy Rule.
B. Functions and Activities on Company’s Behalf. Business Associate is permitted to use and disclose PHI it creates for or receives from Recipient or its Subsidiaries only for the purposes described in this Addendum or the Agreement that are not inconsistent with the provisions of this Addendum, or as required by law, or following receipt of prior written approval from whichever of the Recipient or its Subsidiary for which the relevant PHI was created or from which the relevant PHI was received. In addition to these specific requirements below, Business Associate may use or disclose PHI only in a manner that would not violate the HIPAA Privacy Rule if done by the Recipient or its Subsidiaries.
C. Business Associate’s Operations. Business Associate is permitted by this Agreement to use PHI it creates for or receives from Recipient or its Subsidiaries: (i) if such
use is reasonably necessary for Business Associate’s proper management and administration; and (ii) as reasonably necessary to carry out Business Associate’s legal responsibilities. Business Associate is permitted to disclose PHI it creates for or receives from Recipient or its Subsidiaries for the purposes identified in this Section only if the following conditions are met:
(1) The disclosure is required by law; or
(2) The disclosure is reasonably necessary to Business Associate’s proper management and administration, and Business Associate obtains reasonable assurances in writing from any person or organization to which Business Associate will disclose such PHI that the person or organization will:
a. Hold such PHI as confidential and use or further disclose it only for the purpose for which Business Associate disclosed it to the person or organization or as required by law; and
b. Notify Business Associate (who will
in turn promptly notify whichever of the Recipient or its Subsidiary for which
the relevant PHI was created or from which the relevant PHI was received) of
any instance of which the person or organization becomes aware in which the
confidentiality of such PHI was breached.
D. Minimum Necessary Standard. In performing the functions and activities on Recipient’s or its Subsidiaries’ behalf pursuant to the Agreement, Business Associate agrees to use, disclose or request only the minimum necessary PHI to accomplish the purpose of the use, disclosure or request. Business Associate must have in place policies and procedures that limit the PHI disclosed to meet this minimum necessary standard.
E. Prohibition on Unauthorized Use or Disclosure. Business Associate will neither use nor disclose PHI it creates or receives for or from Recipient, its Subsidiaries, or from another business associate of Recipient or its Subsidiaries, except as permitted or required by this Addendum or the Agreement that are not inconsistent with the provisions of this Addendum, or as required by law, or following receipt of prior written approval from whichever of the Recipient or its Subsidiary for which the relevant PHI was created or from which the relevant PHI was received.
F. De-identification of Information. Business Associate agrees neither to de-identify PHI it creates for or receives from Recipient or its Subsidiaries or from another business associate of Recipient or its Subsidiaries, nor use or disclose such de-identified PHI, unless such de-identification is expressly permitted under the terms and conditions of this Addendum or the Agreement and related to Recipient’s or its Subsidiaries’ activities for purposes of “treatment”, “payment” or “health care operations”, as those terms are defined under the HIPAA Privacy Rule. De-identification of PHI, other than as expressly permitted under the terms and conditions of the Addendum for Business Associate to perform services for Recipient or its Subsidiaries, is not a permitted use of PHI under this Addendum. Business Associate further agrees that it will not create a “Limited Data Set” as defined by the HIPAA Privacy Rule using PHI it creates or receives, or receives from another business
associate of Recipient or its Subsidiaries, nor use or disclose such Limited Data Set unless: (i) such creation, use or disclosure is expressly permitted under the terms and conditions of this Addendum or the Agreement that are not inconsistent with the provisions of this Addendum; and such creation, use or disclosure is for services provided by Business Associate that relate to Recipient’s or its Subsidiaries’ activities for purposes of “treatment”, “payment” or “health care operations”, as those terms are defined under the HIPAA Privacy Rule.
G. Information Safeguards. Business Associate will develop, document, implement, maintain and use appropriate administrative, technical and physical safeguards to preserve the integrity and confidentiality of and to prevent non-permitted use or disclosure of PHI created for or received from Recipient or its Subsidiaries. These safeguards must be appropriate to the size and complexity of Business Associate’s operations and the nature and scope of its activities. Business Associate agrees that these safeguards will meet any applicable requirements set forth by the U.S. Department of Health and Human Services, including (as of the effective date or as of the compliance date, whichever is applicable) any requirements set forth in the final HIPAA security regulations. Business Associate agrees to mitigate, to the extent practicable, any harmful effect that is known to Business Associate resulting from a use or disclosure of PHI by Business Associate in violation of the requirements of this Addendum.
III. Conducting Standard Transactions. In the course of performing services for Recipient or its Subsidiaries, to the extent that Business Associate will conduct Standard Transactions for or on behalf of Recipient or its Subsidiaries, Business Associate will comply, and will require any subcontractor or agent involved with the conduct of such Standard Transactions to comply, with each applicable requirement of 45 C.F.R. Part 162. “Standard Transaction(s)” shall mean a transaction that complies with the standards set forth at 45 C.F.R. parts 160 and 162. Further, Business Associate will not enter into, or permit its subcontractors or agents to enter into, any trading partner agreement in connection with the conduct of Standard Transactions for or on behalf of the Recipient or its Subsidiaries that:
a. Changes the definition, data condition, or use of a data element or segment in a Standard Transaction;
b. Adds any data element or segment to the maximum defined data set;
c. Uses any code or data element that is marked “not used” in the Standard Transaction’s implementation specification or is not in the Standard Transaction’s implementation specification; or
d. Changes the meaning or intent of the Standard Transaction’s implementation specification.
IV. Sub-Contractors, Agents or Other Representatives. Business Associate will require any of its subcontractors, agents or other representatives to which Business Associate is permitted by this Addendum or the Agreement (or is otherwise given Recipient’s or the relevant Subsidiary’s prior written approval) to disclose any of the PHI Business Associate creates or receives for or
from Recipient or its Subsidiaries, to provide reasonable assurances in writing that subcontractor or agent will comply with the same restrictions and conditions that apply to the Business Associate under the terms and conditions of this Addendum with respect to such PHI.
V. Protected Health Information Access, Amendment and Disclosure Accounting.
A. Access. Business Associate will promptly upon Recipient’s or its Subsidiary’s request make available to Recipient, its Subsidiary, or, at Recipient’s or such Subsidiary’s direction, to the individual (or the individual’s personal representative) for inspection and obtaining copies any PHI about the individual which Business Associate created for or received from Recipient or its Subsidiary and that is in Business Associate’s custody or control, so that Recipient or its Subsidiary may meet its access obligations under 45 Code of Federal Regulations § 164.524.
B. Amendment. Upon Recipient’s or its Subsidiary’s request Business Associate will promptly amend or permit Recipient or its Subsidiary access to amend any portion of the PHI which Business Associate created for or received from Recipient or its Subsidiary, and incorporate any amendments to such PHI, so that Recipient or its Subsidiary may meet its amendment obligations under 45 Code of Federal Regulations § 164.526.
C. Disclosure Accounting. So that Recipient or its Subsidiaries may meet their disclosure accounting obligations under 45 Code of Federal Regulations § 164.528:
1. Disclosure Tracking. Business Associate will record for each disclosure, not excepted from disclosure accounting under Section V.C.2 below, that Business Associate makes to Recipient or its Subsidiaries of PHI that Business Associate creates for or receives from Recipient or its Subsidiaries, (i) the disclosure date, (ii) the name and member or other policy identification number of the person about whom the disclosure is made, (iii) the name and (if known) address of the person or entity to whom Business Associate made the disclosure, (iv) a brief description of the PHI disclosed, and (v) a brief statement of the purpose of the disclosure (items i-v, collectively, the “disclosure information”). For repetitive disclosures Business Associate makes to the same person or entity (including Recipient or its Subsidiaries) for a single purpose, Business Associate may provide a) the disclosure information for the first of these repetitive disclosures, (b) the frequency, periodicity or number of these repetitive disclosures and (c) the date of the last of these repetitive disclosures. Business Associate will make this disclosure information available to Recipient or its Subsidiaries promptly upon Recipient’s or its Subsidiaries’ request.
2. Exceptions from Disclosure Tracking. Business Associate need not record disclosure information or otherwise account for disclosures of PHI that this Addendum or Recipient or the relevant Subsidiary in writing permits or requires (i) for the purpose of Recipient’s or its Subsidiaries’ treatment activities, payment activities, or health care operations, (ii) to the individual who is the subject of the PHI disclosed or to that individual’s personal representative; (iii) to persons involved in that individual’s health care or payment for health care; (iv) for notification for disaster relief purposes, (v) for national security or intelligence purposes, (vi) to law enforcement officials or correctional
institutions regarding inmates; or (vii) pursuant to an authorization; (viii) for disclosures of certain PHI made as part of a Limited Data Set; (ix) for certain incidental disclosures that may occur where reasonable safeguards have been implemented; and (x) for disclosures prior to April 14, 2003.
3. Disclosure Tracking Time Periods. Business Associate must have available for Recipient and its Subsidiaries the disclosure information required by this section for the 6 years preceding Recipient’s or its Subsidiaries’ request for the disclosure information (except Business Associate need have no disclosure information for disclosures occurring before April 14, 2003).
VI. Additional Business Associate Provisions
A. Reporting of Breach of Privacy Obligations. Business Associate will provide written notice to whichever of the Recipient or its Subsidiary for which the relevant PHI was created or from which the relevant PHI was received of any use or disclosure of PHI that is neither permitted by this Addendum nor given prior written approval by Recipient or the relevant Subsidiary promptly after Business Associate learns of such non-permitted use or disclosure. Business Associate’s report will at least:
B. Amendment. Upon the effective date of any final regulation or amendment to final regulations promulgated by the U.S. Department of Health and Human Services with respect to PHI, including, but not limited to the HIPAA privacy and security regulations, this Addendum and the Agreement will automatically be amended so that the obligations they impose on Business Associate remain in compliance with these regulations.
In addition, to the extent that new state or federal law requires changes to Business Associate’s obligations under this Addendum, this Addendum shall automatically be amended to include such additional obligations, upon notice by Recipient or its Subsidiaries to Business Associate of such obligations. Business Associate’s continued performance of services under the Agreement shall be deemed acceptance of these additional obligations.
C. Audit and Review of Policies and Procedures. Business Associate agrees to provide, upon Recipient request, access to and copies of any policies and procedures developed or utilized by Business Associate regarding the protection of PHI. Business Associate agrees to provide, upon Recipient’s request, access to Business Associate’s internal practices, books, and records, as they relate to Business Associate’s services, duties and obligations set forth in this Addendum and the Agreement(s) under which Business Associate provides services and / or products to or on behalf of Recipient or its Subsidiaries, for purposes of Recipient’s or its Subsidiaries’ review of such internal practices, books, and records.