Exhibit (g)(7)
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ADDENDUM NO. 2 to the Reinsurance Agreement referred to as NO. 7125-1 effective
June 29, 2001 made between IDS LIFE INSURANCE COMPANY (hereinafter referred to
as "the Ceding Company") and [NAME OF REINSURANCE COMPANY] (hereinafter referred
to as "the Reinsurer").
1. It is hereby declared and agreed that Article 6.5 of the above Agreement
will be replaced by the following Article 6.5, with respect to any New
Policy (as defined below). The original Article 6.5 of the Agreement
remains applicable to any Existing Policy (as defined below):
6.5 PREMIUM RATE GUARANTEE
The Ceding Company agrees to provide Reinsurer with sixty (60) days
advance notice of its intent to increase cost of insurance rates
charged for new or existing business. Nothing herein shall be
construed to limit the Ceding Company's ability to change cost of
insurance rates in its own discretion.
For reinsurance of new business, Reinsurer reserves the right to
change reinsurance premium rates after ninety (90) days written
notice is provided to the Ceding Company.
For reinsurance on existing business, Reinsurer agrees that its
right to increase reinsurance premium rates as shown in Exhibit D,
or any amendment thereto, is subject to the following conditions.
Reinsurer represents that the reinsurance premium rates charged for
existing business under this treaty are intended to remain in force
for an indefinite period and that Reinsurer has no current plans to
raise such rates. Reinsurer will use commercially reasonable efforts
to maintain the existing reinsurance premium rates but reserves the
right to change rates if necessary to maintain the financial
stability of the company or the block of reinsured business.
Reinsurer may raise reinsurance premium rates for existing business
only if the rate action is part of and consistent with a general
re-pricing of the Reinsurer's portfolio of reinsurance plans for all
Comparable Reinsurance Commitments. In this regard, Reinsurer
warrants that any increase in reinsurance premium rates for existing
business shall be no greater in percentage than the increase in
rates for other policies reinsured by Reinsurer pursuant to
contracts or treaties with other insurance companies subject to the
Comparable Reinsurance Commitment.
Comparable Reinsurance Commitment means any other YRT reinsurance
contract or treaty under which Reinsurer provides reinsurance for
permanent insurance policies that are generally subject to medical
underwriting. Reinsurer agrees it will not raise reinsurance premium
rates pursuant to the immediately foregoing paragraph in the event
the total Reinsured Net Amount at Risk ceded under this Agreement
constitutes more than [percentage] of total net amounts at risk
ceded to the Reinsurer for all Comparable Reinsurance Commitments.
2
[terms of rate guarantee redacted]
In any event, the maximum reinsurance premium rates which may be
charged by the Reinsurer shall be the statutory valuation premiums
for yearly renewable term insurance at the maximum interest rates
and minimum mortality rates applicable to the reinsured policies for
each year of issue as prescribed by law.
2. It is further agreed that Exhibit B and Exhibit D of the above Agreement
will be replaced by the attached Exhibit B and Exhibit D (both Revised
January 1, 2005) in order to revise the Reinsurer's share, provision B.8
(International Clients) and allowances, with respect to any New Policy (as
defined below). The original Exhibit B and Exhibit D remain applicable to
any Existing Policy (as defined below).
With respect to any insurance policy identified in Exhibit B of the
Agreement issued by the Ceding Company on or after January 1, 2005, or any
covered rider on such policy (hereinafter referred to as a "New Policy"),
the Reinsurer's share is [percentage] of the total automatic pool. For
purposes of this Agreement, a New Policy will be deemed to include any
insurance policy identified in Exhibit B that either (i) has an issue date
or is applied for on or after January 1, 2005, or (ii) goes into effect on
or after January 1, 2005 even if backdated to reflect an issue date prior
to January 1, 2005, including any covered rider on such policy. Any policy
issued by the Ceding Company and originally covered by the Agreement prior
to January 1, 2005 is considered an Existing Policy, including any covered
rider on such policy issued prior to January 1, 2005 (any covered rider
added on or after
3
January 1, 2005 shall be treated in the same manner as a New Policy).
Existing Policy also includes any conditional receipt or temporary
insurance provision if the policy is applied for prior to January 1, 2005
until such time as the policy is issued or declined, but only to the
extent coverage for such risks is provided for under the terms of the
Agreement.
3. It is further agreed that any change, reinstatement, increase, replacement
or conversion of an Existing Policy following January 1, 2005 will be
treated and covered in the manner provided for in the Agreement without
regard to the change in Reinsurer's share or allowances as noted above.
Single life policies resulting from the exercise of the Split Option Rider
on an Existing Policy will be considered Existing Policies.
Except as expressly amended above, all other terms of the Agreement, together
with all exhibit and attachments thereto, remain in full force and effect. This
Addendum No. 2 takes effect January 1, 2005 and supersedes both the notice of
termination sent by the Reinsurer to the Ceding Company dated September 22, 2004
and Addendum No. 1 previously executed by the parties.
Made in duplicate and executed by both parties.
Signed for and on behalf of IDS LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------- ----------------------------------
Title: President Title: Reinsurance Officer
Date: 7/21/05 Date: 7/21/05
Signed for and on behalf of [NAME OF REINSURANCE COMPANY]
By: [signature] By: [signature]
Title: [title] Title: [title]
Date: April 8, 2005 Date: 4-13-05
EXHIBIT B
(Revised January 1, 2005)
PLANS COVERED AND BINDING LIMITS
The business reinsured under this Agreement is defined as follows:
B.1 PLANS, RIDERS AND BENEFITS
Policies issued on plans with effective dates within the applicable period
shown below may qualify for reinsurance under the terms of this Agreement.
It is understood that policies may be backdated by up to six months from
the date shown below.
COMMENCEMENT TERMINATION
PLAN IDENTIFICATION DATE DATE
------------------------------- --------------- -------------
Succession Select June 29, 2001
(Variable JLLS UL)
BENEFIT & RIDERS:
-Survivor Term Rider June 29, 2001
-Policy Split Option Rider June 29, 2001
-Four-Year Term Rider June 29, 2001
B.2 BASIS
The Ceding Company will reinsure 100% of the excess over its retention
stated in Exhibit A. Only mortality risk will be reinsured. Cessions may
be automatic, capacity facultative or non-capacity facultative.
B.3 AUTOMATIC BINDING LIMITS
Life
--------------------------------------------
Oldest Issue Age Maximum Pool Autobind
--------------------------------------------
[ages] [dollar amount]
--------------------------------------------
[ages] [dollar amount]
--------------------------------------------
[ages] [dollar amount]
--------------------------------------------
[ages] [dollar amount]
--------------------------------------------
EXHIBIT B
Page 2
(Revised January 1, 2005)
The Ceding Company may not cede reinsurance automatically if the sum of
all amounts in force and applied for on the joint lives with the Ceding
Company, excluding amounts being internally replaced, exceed the above
Automatic Binding Limits.
The above automatic binding limits are also subject to the Ceding
Company's age and insurability procedures for the Succession Select
product, as outlined in subsection B.7 of this Exhibit.
B.4 JUMBO LIMITS
The Ceding Company will not cede any risk automatically if, according to
information available to the Ceding Company, the total amount in force and
applied for on the joint lives with all insurance companies, including any
amount to be replaced, exceeds the applicable amounts shown below.
Life
---------------------------------------
Oldest Issue Age Jumbo Limit
---------------------------------------
[ages] [dollar amount]
---------------------------------------
[ages] [dollar amount]
---------------------------------------
[ages] [dollar amount]
---------------------------------------
[ages] [dollar amount]
---------------------------------------
B.5 CONDITIONAL RECEIPT OR TEMPORARY INSURANCE AGREEMENT
The Reinsurer's liability will not exceed its proportionate share of
a) [dollar amount] or
b) [dollar amount] collection amount if the Ceding Company is ordered
to pay such higher amount by a court of competent jurisdiction.
B.6 CESSION LIMITS
Minimum Initial Cession: None. The Ceding Company will retain up to an
additional [percentage] over its maximum retention in order to avoid
trivial amounts of reinsurance.
EXHIBIT B
Page 4
(Revised January 1, 2005)
If an international client does not meet the Ceding Company's financial or
medical criteria, requires a flat extra or individual consideration under
the Ceding Company's International Risk Guidelines, or if the country of
origin or citizenship is not an agreed `A' or `B' location, then
reinsurance will not be ceded automatically.
The Ceding Company will promptly notify the Reinsurer of any proposed
material changes in its international client guidelines. This Agreement
will not extend to policies issued pursuant to such changes unless the
Reinsurer has consented in writing to accept policies subject to such
changes.
EXHIBIT D
(Revised January 1, 2005)
REINSURANCE PREMIUMS
D.1 LIFE
a) Plans covered under this Agreement will be reinsured on a YRT basis.
YRT reinsurance premiums for the Base Plan, Survivor Term Rider, and
Four-Year Term Rider will be frasierized joint premiums based on the
individual ALB Annual Cost of Insurance (COI) rates, attached to
this Exhibit D, less allowances. After allowances are applied, YRT
reinsurance premiums are subject to a minimum rate of $0.12 per
$1,000 of reinsured risk amount in years 2 + .
SUCCESSION SELECT REINSURANCE ALLOWANCES FOR BASE PLAN AND SURVIVOR TERM RIDER
(YEAR 1 ALLOWANCE IS ALWAYS 100%)
--------------------------------------------------------------------
Years 2 - 15 Years 16 +
--------------------------------------------------------------------
2 Preferred [percentage] [percentage]
--------------------------------------------------------------------
Preferred, Standard Non-Tobacco [percentage] [percentage]
--------------------------------------------------------------------
Preferred, Tobacco [percentage] [percentage]
--------------------------------------------------------------------
2 Standard Non-Tobacco [percentage] [percentage]
--------------------------------------------------------------------
Standard Non-Tobacco, Tobacco [percentage] [percentage]
--------------------------------------------------------------------
2 Tobacco [percentage] [percentage]
--------------------------------------------------------------------
SUCCESSION REINSURANCE ALLOWANCES FOR FOUR-YEAR TERM RIDER
(YEAR 1 ALLOWANCE IS ALWAYS 100%)
Year 2
--------------------------------------------------------
2 Preferred [percentage]
--------------------------------------------------------
Preferred, Standard Non-Tobacco [percentage]
--------------------------------------------------------
Preferred, Tobacco [percentage]
--------------------------------------------------------
2 Standard Non-Tobacco [percentage]
--------------------------------------------------------
Standard Non-Tobacco, Tobacco [percentage]
--------------------------------------------------------
2 Tobacco [percentage]
--------------------------------------------------------
D.2 AGE BASIS
Age Last Birthday
D.3 POLICY FEES
The Reinsurer will not participate in any policy fees.
EXHIBIT D
Page 2
(Revised January 1, 2005)
D.4 SUBSTANDARD PREMIUMS
Where a substandard table rating is applied, or on an uninsurable life,
the underlying COI rates will be multiplied by the amount shown in the
following table, and then reinsurance allowances applied after
frasierizing.
-------------------------------------------------
RATING MULTIPLIER RATING MULTIPLIER
-------------------------------------------------
A [percentage] N [percentage]
-------------------------------------------------
B [percentage] O [percentage]
-------------------------------------------------
C [percentage] P [percentage]
-------------------------------------------------
D [percentage] Q [percentage]
-------------------------------------------------
E [percentage] R [percentage]
-------------------------------------------------
F [percentage] T [percentage]
-------------------------------------------------
G [percentage] U [percentage]
-------------------------------------------------
H [percentage] V [percentage]
-------------------------------------------------
I [percentage] W [percentage]
-------------------------------------------------
J [percentage] X [percentage]
-------------------------------------------------
K [percentage] Y [percentage]
-------------------------------------------------
L [percentage] Z [percentage]
-------------------------------------------------
M [percentage]
-------------------------------------------------
Premium rates for facultative cessions will be the same as for automatic
cessions.
D.5 FLAT EXTRAS
Temporary and permanent flat extras are not used directly for joint
coverages; rather, they are converted using an internal table to a
substandard table rating.
D.6 RIDERS AND BENEFITS
Premium for the Policy Split Option Rider is [dollar amount] per [dollar
amount] of the sum of the ceded specified amount of the Base Plan and
Survivor Term Rider. Allowances for the Policy Split Option Rider are 100%
in the first year and 0% in subsequent years.
Succession Select current Individual COI--for frasierized joint coi calculation
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
------------ ------------- ------------- ------------ ------------- ------------- ------------
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
IDS Succession Select Treaty
Succession Select current Individual COI--for frasierized joint coi calculation
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
------------ ------------- ------------- ------------ ------------- ------------- ------------
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
IDS Succession Select Treaty
Succession Select current Individual COI--for frasierized joint coi calculation
Male Male Male Female Female Female
Attained Preferred Standard Standard Preferred Standard Standard
age Nonsmoker Nonsmoker Smoker Nonsmoker Nonsmoker Smoker
------------ ------------- ------------- ------------ ------------- ------------- ------------
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
