BY COMPLETING THIS NEW BUSINESS APPLICATION YOU ARE APPLYING FOR COVERAGE WITH FEDERAL INSURANCE COMPANY (THE COMPANY )

Transcription

1 BY COMPLETING THIS NEW BUSINESS APPLICATION YOU ARE APPLYING FOR COVERAGE WITH FEDERAL INSURANCE COMPANY (THE COMPANY ) NOTICE: PLEASE ANSWER ALL OF THE FOLLOWING INQUIRIES. IF THE COMPANY AGREES TO ISSUE A BOND, ALL OF THE INFORMATION WHICH THE APPLICANT PROVIDES WILL BECOME PART OF ANY BOND ISSUED TO THE APPLICANT BY FEDERAL INSURANCE COMPANY. ANY INTENTIONAL MISREPRESENTATION, OMISSION, CONCEALMENT OR INCORRECT STATEMENT OF MATERIAL FACT IN THIS NEW BUSINESS APPLICATION WILL BE GROUNDS FOR RECISION. EXCEPT AS TO THE AMOUNT REQUIRED, THE PROVIDES PROTECTION TO THE ASSURED PLAN AS REQUIRED BY SECTION 412 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 ( ERISA ), BUT ONLY AS RESPECTS ANY EMPLOYEE OF THE FIDUCIARY NAMED HEREIN. READ THE ENTIRE NEW BUSINESS APPLICATION CAREFULLY BEFORE SIGNING. NEW BUSINESS APPLICATION INSTRUCTIONS: 1. Whenever used in this New Business Application, the term "Applicant" shall mean the Fiduciary of the Employee Benefit Plans to be covered (hereinafter Plans ). 2. Please include all requested underwriting information and attachments. Provide a complete response to all questions and attach additional pages if necessary. I. NAME, ADDRESS AND CONTACT INFORMATION: 1. Name of Applicant: 2. Address of Applicant: City: State: Zip Code: Telephone: 3. Web address: 4. Name and Address of Primary Contact: City: State: Zip Code: Telephone: II. GENERAL APPLICANT INFORMATION: 1. Year Applicant established: 2. Nature of Applicant s operations: 3. Please attach a copy of the following: a. Most recent FYE Financial Statement of the Applicant. b. Most recent CPA Letter of Recommendation to Management on Internal Controls regarding your ERISA Plan account activities, and Management s written response thereto. c. A complete schedule of all Plans for which the Applicant acts as a fiduciary and is requesting coverage. Please include the name of each Plan and the respective assets of each Plan. Also identify each Plan that holds employer securities. (The term employer security, within the meaning of section 407(d)(1) of ERISA, means a security issued by an employer of employees covered by the plan, or by an affiliate of such employer.) PR (12/2007) Page 1 of 5

2 4. Summary of Schedule in 3.c. above: a. Number of Plans to be covered: b. Total required aggregate Limit of Liability for all Plans: (The Total required aggregate Limit of Liability equals the sum of the required Bond amounts for all Plans. As per section 412 of ERISA, the required Bond amount of limit of liability for each Plan shall not be less than 10% of the assets of the Plan and in no case shall the limit of liability for a specific Plan be less than $1,000 but no more than $500,000. However, the Pension Protection Act of 2006 requires a maximum amount of $1,000,000 for any Plan that holds employer securities.) 5. Effective date of Bond Period Requested: 6. Current Fiduciary Fidelity Bond Insurer: 7. With respect to External Audits: a. Has the Applicant made provisions for an annual audit program to be conducted by an outside certified public accounting firm (CPA)? b. Does the CPA regularly review your system of internal controls regarding your ERISA Plan account activities? c. Has the Applicant complied with all recommendations made as a result of its most recent audit? If No, provide a schedule explaining any noncompliance with such recommendations. d. Does the CPA report directly to the Audit Committee of the Board of Directors? 8. Do you have an internal audit function or department that oversees Plan accounts? If Yes, how often are Plan accounts audited? III. SPECIFIC PLAN ACCOUNT INFORMATION: 1. Is there a signed agreement or contract between the Applicant and Plan accounts specifying types of fiduciary services to be performed and/or investments to be purchased? 2. Does the signed agreement or contract with the Applicant provide for discretionary trading authority? If Yes, what percentage of account transactions are discretionary? If Yes, how does the applicant monitor such discretionary trading? PR (12/2007) Page 2 of 5

3 3. How is the Applicant remunerated for services to Plans? 4. Does the Applicant ever take custody of Plan assets? If Yes, where are such assets kept? If Yes, describe the circumstances and types of assets: 5. Does the Applicant ever appoint the custodian of Plan assets without client approval? If Yes, attach an explanation. 6. Does the custodian furnish the Plan administrator with a statement of account activity? If Yes, how often? If Yes, does the Applicant receive a copy? 7. Is there a different individual to review a Plan s statement of account activity other than the individual(s) authorized to provide fiduciary services for the Plan? 8. Does the custodian have a list of Applicant employees who are authorized to request Plan account changes? If Yes, how does the custodian verify that an account change request has originated from an authorized person? 9. Is there a written agreement between the Applicant and the custodian that prohibits the custodian from releasing plan assets to the Applicant? 10. Is there a formal process for reconciling Plan account discrepancies? 11. Do employees that handle Plan account reconciliation also sign checks, handle deposits or have access to check signing machines or signature plates? Explain how these duties are segregated: 12. Is countersignature of checks required? 13. Does the custodian for the Plans investment assets charge the Plans directly for their fee? If No, explain: PR (12/2007) Page 3 of 5

4 14. Does the Applicant or an affiliated company execute trades for the Plan accounts? 15. Who oversees the trade reconciliation function? 16. Who has trade confirmation authority? 17. How are Plan account trades communicated? 18. Explain the funds transfer process: 19. Is there segregation of duties between the funds transfer and confirmation process? 20. Has the Applicant ever been cited for a disciplinary action or violation by any state or federal authority? If Yes, attach a description indicating dates, circumstances and corrective actions. IV. LOSS EXPERIENCE: 1. Has the Applicant at any time during the past three (3) years put its insurance carrier on notice of any potential or actual losses under its bond program? If Yes, please attach full details. 2. If the Applicant has not had a bond at any time during the past three (3) years, have there been any losses that would have been submitted under a bond program if the applicant had such bond? N/A If Yes, please attach full details. V. MATERIAL CHANGE: If there is any material change in the answers to the questions in this New Business Application before the policy inception date, the Applicant must immediately notify the Company in writing, and any outstanding quotation may be modified or withdrawn. VI. DECLARATIONS, FRAUD WARNINGS AND SIGNATURES: The Applicant's submission of this New Business Application does not obligate the Company to issue, or the Applicant to purchase, a bond. The Applicant will be advised if the New Business Application for coverage is accepted. The Applicant hereby authorizes the Company to make any inquiry in connection with this New Business Application. The undersigned authorized agent of the person(s) and entity(ies) proposed for this insurance declares, that to the best of his or her knowledge and belief, after reasonable inquiry, the statements made in this Application and in any attachments or other documents submitted with this New Business Application are true and complete. The undersigned agrees that this New Business Application and such attachments and other documents shall be the basis of the insurance should a bond providing the requested coverage be issued; that all such materials shall be deemed to be attached to and shall form a part of any such bond; and that the Company will have relied on all such materials in issuing any such bond. The information requested in this New Business Application is for underwriting purposes only and does not constitute notice to the Company under any policy of a claim or potential claim PR (12/2007) Page 4 of 5

5 Notice to Puerto Rico Applicants: Any person who knowingly and with the intention of defrauding presents false information in an insurance application, or presents, helps, or causes the presentation of a fraudulent claim for the payment of a loss or any other benefit, or presents more than one claim for the same damage or loss, shall incur a felony and, upon conviction, shall be sanctioned for each violation with the penalty of a fine of not less than five thousand (5,000) dollars and not more than ten thousand (10,000) dollars, or a fixed term of imprisonment for three (3) years, or both penalties. Should aggravating circumstances are present, the penalty thus established may be increased to a maximum of five (5) years, if extenuating circumstances are present, it may be reduced to a minimum of two (2) years. *This New Business Application must be signed by the Officer responsible for ERISA accounts, the Compliance Officer or the General Counsel of the Applicant. Date Name (PRINT) Signature* Title Produced By: Agent: Agency Taxpayer ID or SS No.: Agency: Agent License No.: Address (Street, City, State, Zip): Submitted By: Agency: Agency Taxpayer ID or SS No.: Agent License No.: Address (Street, City, State, Zip): PR (12/2007) Page 5 of 5