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HomeMy WebLinkAboutExhibit 3AGREEMENT OF REINSURANCE AND ASSUMPTION AND NOV TION _ t BY FINANCIAL DIVISION between APPROVED AS TO FORM 1 4 2005 CONNECTICUT GENERAL LIFE INSURANCE COMPANY c�►tl.„I i,aM NOV 2 7 2006 Il�ts INANC%LblVISIou .i. and INSURANCE COMMISSIONER OKIp,FiOMA T MEGA LIFE AND HEALTH INSURANCE COMPANY WHEREAS, Connecticut General Life Insurance Company, a Connecticut corporation ("Reinsurer"), desires to reinsure and assume by novation certain group health insurance policies issued by The MEGA Life Er Health Insurance Company ("MEGA"), an Oklahoma corporation; and WHEREAS, MEGA is willing to allowiReinsurer to reinsure and assume by novation certain of its group health insurance policies; NOW, THEREFORE, in consideration of the foregoing premises and the covenants and agreements hereinafterset forth, MEGA and the Reinsurer hereby agree, effective as of January 1, 2007 (the "Effective Date") as follows: ARTICLE I BUSINESS REINSURED. 1. MEGA hereby cedes to and reinsures with the Reinsurer, and the Reinsurer hereby accepts as assumption • reinsurance by novation' from MEGA, all of MEGA's gross risks, liabilities and obligations under all insurance policies issued by MEGA and identified on Exhibit A hereto (hereinafter referred to collectively as the. "Reinsured Policies"). The Reinsurer hereby a.ssurnes and undertakes to pay and discharge and .indemnify MEGA for all of MEGA's liabilities under the Reinsured Policiesarising after the Effectivepate of Reinsurance with the same force and effect, and to the same extent, as if the, Reinsure! had originally issued the Reinsured Policies as of the Effective Date, including but not limited to the payment of all benefits, claims, policy dividends, surrender benefits and premium returns. The Reinsurer's liability under this Agreement shall follow the interest of MEGA in ail respects and be subject to the terms and conditions of the Reinsured Policiesand any amendments thereto. 2. Liability for benefits, claims and expenses assumed and reinsured by the Reinsurer in connection with the Reinsured Policies shall include anyamount awarded third parties for punitive, exemplary or any other form of extra contractual damages arising out of the investigation, defense, trial or settlement of claims or benefits or the failure of or delay in payment of benefits or amounts due under Reinsured Policies which is the result of actions taken by Reinsurer on and after July 11, 2006, the date on which Reinsurer assumed responsibility for the administration of the Reinsured Policies pursuant to the Administrative Services Agreement between the parties dated July 11, 2006 , ARTICLE II. CERTIFICATES OF ASSUMPTION, NOVATION AND COOPERATION As soon as practicable prior to the effective date of the Reinsurance with respect to any particular Reinsured Policy, the Reinsurer shall, at its sole expense, issue and deliver (by registered or certified mail, return receipt requested) to the policyholder of any Reinsured Policy a certificate of assumption substantially in the form attached hereto as Exhibit 13. The Reinsurer shall take all other necessary actions to assume by novation the direct obligations of MEGA under the Reinsured Policies. MEGA agrees to cooperate fully with the Reinsurer in effecting such novations including, without limitation, executing any documents reasonably deemed necessary or advisable by the Reinsurer in order to evidence the completion of the transactions contemplated by this Agreement. ARTICLE III ADMINISTRATION, CLAIMS AND DEFENSE IN MEGA'S NAME 1. :From and after the. Effective Date, the Reinsurer shall be solely responsible for the administration of all aspects of the Reinsured Policies includingthe defense, adjustment, settlement and payment of all claims, benefits and obligations arising under Reinsured Policies on and after the Effective Date and claims filed against MEGA in connection with Reinsured Policies with respect to claims arising on and after the Effective Date. MEGA hereby grants and assigns to the Reinsurer full authority to administer such claims, benefits, settlements, payments and, adjustments and such matters shall be under the Reinsurer's control and within its discretion. The Reinsurer shall bear 100% of the expenses and costs incurred by it in connection with the handling and disposing of such claims, benefitsand obligations. 2. MEGA shall cause all information, claims and notices regarding the Reinsured Policies actually recewveed by it to be promptly reported to. the Reinsurer or its designated r€presentative(s). MEGA shall also undertake any reasonable arrangements deemed advisable by the Reinsurer to ensure that all claims and notices received by MEGA In connection with Reinsured Policies are .promptly delivered to the Reinsurer or its designated representative(s). 3. MEGA shall permit persons designated by the Reinsurer to appear and defend in MEGA's name In any proceedings to enforce claims .under Reinsured Policies arising on or after the Effective Date, and MEGA shall sign all documents and render all reasonable assistance, except financial assistance, in such appearance or defense. ARTICLE IV FILES AND RECORDS Upon request, MEGA shall deliver to the Reinsurer or its representative(s) all eligibility, billing, underwriting, policy and claim files regarding the Reinsured Policies and all other files and records incidental to the liabilities reinsured and assumed hereunder by the Reinsurer as necessary for the Reinsurer to perform its obligations under this Agreement. However, MEGA shall have the right to obtain originals or comes of records, books and data, if reasonably necessary to administer liabilities not relating to the Reinsured Policies or if required in court proceedings or by a governmental agency. ARTICLE V REINSUREWS REMUNERATION As of the Effective Date relating to the Reinsured Policies MEGA hereby absolutely and irrevocably grants a security interest in and assigns, grants, transfers, sells and sets over to the Reinsure!, and its successors and assigns, all of MEGA's right, titleand interest in certain assets, accounts and property interests, as follows: (a) All of the gross premiums, premium adjustments, reinsurance recoverables and other consideration of any kind which become due under or in connection with the Reinsured Policies on and after the Effective Date. (b) MEGA hereby authorizes the Reinsures, at the cost of the Reinsurer, in the name of MEGA or otherwise, to ask, demand, collect, receive, and furnish receipts for such consideration or any part thereof that becomes clue on or in connection with the Reinsured Policies on and after the Effective Date. MEGA further agrees that if any payment is received by MEGA to which Reinsurer is entitled, MEGA will: immediately endorse and deliver to the Reinsurer such checks, drafts, or money •intended as such payment, and that until delivery of suchitems to the Reinsurer, MEGA shall treat any such checks, drafts or Money as the property of the Reinsurer held in trust for the Reinsurer. (c) MEGA agreesto execute and deliver to the Reinsurer any further. instruments or assurances that the Reinsurer may reasonably request for the more effectual perfecting of the Reinsurer's interests in any of the foregoing property rights or interests herein assigned. ARTICLE VI INSOLVENCY In the event of the insolvency of MEGA, any amounts payable under this Agreement shall be payable by the Reinsurer, without diminution because of MEGA's insolvency, directly to the claimants or beneficiaries under the Reinsured Policies subject to the terms, conditions, and limitations of such Reinsured Policies. ARTICLE VII ERRORS AND OMISSIONS inadvertent delays, errors or omissions made in connection with this agreement or any transaction hereunder shall not relieve either party fromany liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery. ARTICLE VIII PXTY OF COOPERATION (a) The Reinsurer and MEGA shall each use their best efforts to cause the transfer and assignment to the Reinsurer of all of MEGA's right to reinsurance recoverables and of all other rights, interests and obligations under reinsurances covering MEGA's liabilities under the Reinsured Policies including, without limitation, obtaining any necessary consents or approvals to such transfer and assignment by the reinsurers under such re.insurances effective as of the Effective Date of Reinsurance. Any failure to receive the consents referred to herein shall •not relieve or diminish in any manner Reinsure:r's obligations under this Agreement. (b) Each party shall reasonably cooperate with the other to facilitate the performance of the respectiveobligations under this Agreement. (c) If the reinsurance, assumption and novation contemplated by this Agreement is subject to any required prior regulatory approval by the Insurance Commissioner of any state or states, as determined by the :Reinsures, the reinsurance assumption and novation hereunder shall not take effect in any such state unless so approved by the insurance Commissioner. ARTICLE IX SUCCESSORS AND ASSIGNS Whenever reference is made in this Agreement to MEGA or the Reinsurer, such reference shall be deemed to include their respective successors or assigns whether by acquisition, merger or otherwise. ARTICLE X INDEMNITY The Reinsurer agrees to indemnify and hold MEGA harmless from and against any and all losses, liabilities, fees, costs, expenses or damages, including but not limited to reasonable attorney's fees, arising on and after the Effective Date from (1) the Reinsured Policies, (II) any breach by Reinsurer of its obligations hereunder and (iii) any act, error or omission of the Reinsurer or its agents in administering or servicing the Reinsured Policies. ARTICLE XI TERMINATION Neither party hereto shall have the right to terminate this Agreement except by ,the written agreement of the other party hereto. This Agreement will automatically terminate when there are no Reinsured Policies any longer in effect unless the parties otherwise agree in writing provided, however, that Reinsurer will remainresponsible for all run out claims and other liabilities sunder the Reinsured Policies that were incurred after the Effective Date. ARTICLE XII PREMIUM TAXES Reinsure' shall be solely liable for payment of any and all premium taxes payable on account of premiums received with respect to the Reinsured Policies for periods after the Effective Date of Reinsurance ARTICLE XIII GOVERNING LAW This Agreement shall be construed under and governed by the laws of the State of Oklahoma without regard to principles of conflicts' of laws. ARTICLE XIV READINGS The headings used herein are for convenience only and shah not be used in .construing this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. MEGA LIFE AND HEALTH INSURANCE COMPANY By: Name: CONNECTICQt GENERAL LIFE INS ix1NCZ COMPANY By: aprs1.01 Name: - f�.4PD P, fdnogideP r iirr fie77 Date: 11110/43 (4 Date: JWit