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from the Trust at any time, without any further act or notice or
satisfaction of any condition or qualification.
c. Underlying Business
The 1988 Agreement was indemnity reinsurance on a
combination coinsurance, modified coinsurance plan. The business
retroceded to petitioner under the 1988 Agreement consisted of
two blocks of single premium deferred annuity (SPDA) policies.
The first block was insurance written by UPL during 1984,
reinsured by BMA in 1984, retroceded to Guardian in 1984, and
retroceded to petitioner under the 1988 Agreement. The first
block consisted of a 52.6316-percent quota share of the block of
SPDA policies underlying the reinsurance agreement between UPL
and BMA. The second block was insurance written during 1985 by a
subsidiary of UPL, reinsured by UPL in 1985, retroceded to
Guardian in 1985 under an agreement referred to as the New York
Retro, and retroceded to petitioner under the 1989 Agreement.
Petitioner had no right to terminate or in any way shift or
avoid losses that might occur under the 1988 Agreement, and the
1988 Agreement did not limit petitioner’s obligation to pay
losses if they occurred. Petitioner was liable on each contract
underlying the Agreement to pay the amount of the benefit that
corresponded to the portion of the contract reinsured
(95 percent). Petitioner was also liable: (1) To pay a
surrender benefit equal to the surrender and matured endowment
benefits paid by Guardian on the portion of the contracts
reinsured and (2) to pay those benefits in the same manner as
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