[Federal Register Volume 67, Number 34 (Wednesday, February 20, 2002)]
[Notices]
[Pages 7712-7720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4054]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-25420; File No. 812-12384]
IDS Life Insurance Company, et al., Notice of Application
February 12, 2002.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of Application for an Order Pursuant to section 11(a) of
the Investment Company Act of 1940, as amended (the ``Act'') approving
the terms of an offer of exchange.
-----------------------------------------------------------------------
APPLICANTS: IDS Life Insurance Company (``IDS Life''), IDS Life
Variable Account 10 (``Account 10'') and IDS Life Accounts F, G, H, IZ,
JZ, KZ, LZ, MZ, N, PZ, QZ, RZ, SZ and TZ (the ``Old Accounts,''
collectively with Account 10, the ``Accounts'') (collectively, the
``Applicants'').
SUMMARY OF APPLICATION: Applicants seek an order pursuant to section
11(a) of the Act approving the terms of a proposed offer of exchange of
new American Express Retirement Advisor Advantage Variable Annuity
contracts issued by IDS Life and made available through Account 10
(``RAVA Advantage'') for certain outstanding annuity contracts issued
by IDS Life and made available through the Old Accounts (the ``Old
Contracts,'' collectively with RAVA Advantage, the ``Contracts'').
FILING DATE: The Application was filed on December 28, 2000, and
amended and restated on November 15, 2001, December 6, 2001, and
February 8, 2002.
HEARING OR NOTIFICATION OF HEARING: An order granting the Application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Secretary of the
Commission's and serving Applicants with a copy of the request,
personally or by mail. Hearing requests should be received by the
Commission by 5:30 p.m. on March 11, 2002, and should be accompanied by
proof of service on Applicants, in the form of an affidavit or, for
lawyers, a certificate of service. Hearing requests should state the
nature of the writer's interest, the reason for the request, and the
issues contested. Persons who wish to be notified of a hearing may
request notification by writing to the Secretary of the Commission.
ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth
Street, NW, Washington, DC 20549-0609. Applicants, Mary Ellyn Minenko,
Vice President and Group Counsel, American Express Financial Advisors
Inc., 50607 AXP Financial Center, Minneapolis, MN 55474.
FOR FURTHER INFORMATION CONTACT: Zandra Y. Bailes, Senior Counsel, or
Lorna MacLeod, Branch Chief, Office of Insurance Products, Division of
Investment Management, at (202) 942-0670.
SUPPLEMENTARY INFORMATION: The following is a summary of the
Application. The complete Application may be obtained for a fee from
the Commission's Public Reference Branch, 450 Fifth Street, NW,
Washington, DC 20549-0102 (telephone (202) 942-8090).
Applicants' Representations
1. IDS Life is a stock life insurance company organized in 1957
under the laws of the State of Minnesota. IDS Life is registered with
the Commission as a broker-dealer under the Securities Exchange Act of
1934 and is a member of the National Association of Securities Dealers.
IDS Life is a wholly owned subsidiary of American Express Financial
Corporation. IDS Life is the issuer and principal underwriter of the
Contracts funded through the Accounts.
2. Account 10 is a segregated asset account of IDS Life. Account 10
funds the variable benefits available under RAVA Advantage. Account 10
and its component subaccounts are registered together with the
Commission as a single unit investment trust under the Act (File No.
811-07355).
3. The Old Accounts are segregated asset accounts of IDS Life. The
Old Accounts fund the variable benefits available under the IDS Life
Variable Retirement Annuity (``VRA''), the IDS Life Combination
Retirement Annuity (``CRA''), the IDS Life Flexible Annuity (``Flex'')
and the IDS Life Employee Benefit Annuity (``EBA''). The Old Accounts
are registered together with the Commission as a single unit investment
trust under the Act (File No. 811-3217).
4. Applicants assert that in recent years the variable annuity
marketplace has become increasingly competitive. Many of the purchasers
of variable annuity contracts in the 1980s and early 1990s are at, or
close to, the expiration of their deferred sales charge period, and the
contract values of many contracts are no longer subject to a deferred
sales charge. Holders of such contracts have become prime targets for
[[Page 7713]]
competitors' variable annuity sales efforts. One feature offered to
variable annuity purchasers is a ``bonus'' or ``credit'' funded from
the insurer's general account, generally ranging from 1-4% of contract
value. IDS Life has experienced the effects of these ``bonus offers''
through the loss of a portion of its Old Contracts.
5. Applicants state that IDS Life's competitors are permitted to
make bonus offers to IDS Life's Old Contract owners because offers of
exchange to contract owners of unaffiliated insurance companies are not
prohibited by section 11 of the Act by virtue of a no-action position
granted to Alexander Hamilton Funds (pub. avail. July 20, 1994)
(``Alexander Hamilton''). Applicants state that Alexander Hamilton
stands for the proposition that, except for limited exceptions,
exchange offers between unaffiliated investment companies are not
prohibited under section 11. Consistent with section 11(a), therefore,
a fund may impose a contingent deferred sales charge (``CDSC'') on
shares purchased by investors with proceeds of shares from an
unaffiliated fund.
6. Applicants assert that, but for the existence of the affiliated
nature of the exchange, IDS Life would be able to offer an exchange
program to its existing Old Contract owners that is similar to its
competitors' programs. However, unlike its competitors who may make
bonus offers to Old Contract owners, IDS Life is constrained from
making a similar offer without first obtaining Commission approval of
the terms of the exchange.
7. Applicants state that in response to this competitive situation
IDS Life has developed an exchange offer (``Exchange Offer'') that
would give eligible owners of Old Contracts the opportunity to exchange
their existing Old Contracts for RAVA Advantage, an enhanced Contract
that offers a lower mortality and expense risk (``M&E'') charge than
the Old Contracts, credits on certain Purchase Payments (``Purchase
Payment Credits''), more investment options (including all investment
options available under the Old Contracts) and optional enhanced death
benefits. IDS Life would apply a credit to certain exchanges
(``Exchange Credit'') that would be in addition to any Purchase Payment
Credit for which the Contract owner would otherwise be eligible under
the RAVA Advantage Contract. Applicants state that the terms of the
Exchange Offer are designed to respond to IDS Life's competitive
dilemma and to assure that persisting Contract owners who accept the
Exchange Offer receive an immediate and enduring economic benefit.
The New Contract
8. RAVA Advantage is registered under the Securities Act of 1933
(the ``1933 Act'') (File No. 333-79311). RAVA Advantage may be issued
as a nonqualified annuity for after-tax contributions only, or as a
qualified annuity under the following retirement plans: (i) Individual
Retirement Annuities (``IRAs''); (ii) Simplified Employee Pension
(``SEP'') plans; (iii) Section 401(k) plans; (iv) custodial and
trusteed plans; or (v) Tax-Sheltered Annuities (``TSAs''). RAVA
Advantage may be purchased: (i) with a minimum initial payment of
$1,000 for qualified annuities or $2,000 for nonqualified annuities; or
(ii) in minimum installments of $50 per month or $23.08 biweekly under
a scheduled payment plan. An owner may make additional payments, which
require a $50 minimum (unless payments are made by installments under a
scheduled payment plan), subsequent to the initial payment (initial
payments and subsequent additional payments are individually and
collectively referred to herein as ``Purchase Payments''). Maximum
limitations on Purchase Payments are imposed for the first year and
subsequent years, depending on the age of the owner or annuitant.
9. Owners of RAVA Advantage Contracts may allocate their Purchase
Payments among 56 subaccounts of Account 10. The subaccounts invest in
56 corresponding funds or portfolios (collectively, ``Investment
Funds''). IDS Life, at a later date, may determine to create additional
subaccounts to invest in any additional Investment Funds as may now or
in the future be available. IDS Life, from time to time, also may
combine or eliminate subaccounts, or transfer the assets to and from
subaccounts. IDS Life also may substitute the Investment Funds in which
the subaccounts invest under certain conditions. RAVA Advantage also
offers a fixed account investment option with a guaranteed interest
rate of at least 3% on an annual basis.
10. Owners of RAVA Advantage Contracts may transfer contract values
among the RAVA Advantage subaccounts without charge, although IDS Life
reserves the right to limit the number of transfers in a contract year.
Transfers to and from the fixed account are permitted, subject to
certain restrictions described in the prospectus for the RAVA Advantage
Contracts.
11. Each time IDS Life receives a Purchase Payment from an owner,
it allocates to the owner's RAVA Advantage account a Purchase Payment
Credit equal to: (i) 1% of each Purchase Payment received if the owner
elected the ten-year CDSC period for RAVA Advantage, or if the owner
elected the seven-year CDSC period and the initial Purchase Payment is
at least $100,000; or (ii) 2% of each Purchase Payment received if the
owner elected the ten-year CDSC period and the initial Purchase Payment
is at least $100,000. IDS Life funds Purchase Payment Credits from its
general account assets. IDS Life recaptures certain Purchase Payment
Credits from an owner under the following circumstances: (i) any
Purchase Payment Credit applied if the owner returns the RAVA Advantage
Contract to IDS Life for a refund during the free look period; (ii)
Purchase Payment Credits applied within twelve months preceding the
date of death that results in a lump sum death benefit under the RAVA
Advantage Contract; or (iii) Purchase Payment Credits applied within
twelve months preceding a request for a surrender due to the owner or
annuitant's confinement to a nursing home. The amount the owner
receives in each of these circumstances always will equal and normally
will exceed the surrender value of the RAVA Advantage Contract.
12. The owner of a RAVA Advantage Contract can access contract
values at any time before annuity payouts begin by means of partial
surrenders or a full surrender. In addition, RAVA Advantage permits the
owner to withdraw certain amounts without incurring a CDSC (the ``Free
Withdrawal Amount''). Under RAVA Advantage, this Free Withdrawal Amount
equals earnings or up to 10% of the prior anniversary contract value
per contract year (if not already included in earnings).
A. The RAVA Advantage Contract standard death benefit is available
at no extra charge. This standard death benefit provision states that,
upon the earlier of the owner's or annuitant's death, before annuity
payouts begin and while the Contract is in force, IDS Life will pay the
following death benefits to the designated beneficiary: (i) if both the
owner and annuitant are age 80 or younger on the date of death, the
beneficiary will receive the greatest of (a) the contract value; (b)
Purchase Payments, minus any adjusted partial surrenders; or (c) the
contract value as of the most recent sixth contract anniversary, plus
any Purchase Payments made, and minus any adjusted partial surrenders
since that anniversary; or (ii) if either the owner or annuitant are
age 81 or older on the date of death, the beneficiary receives the
[[Page 7714]]
greater of (a) the contract value; or (b) Purchase Payments, minus any
adjusted partial surrenders.
14. The RAVA Advantage Contract also offers three optional death
benefits. The Maximum Anniversary Value Death Benefit (the ``MAV Death
Benefit'') is an optional death benefit that is available at the
election of the Contract owner for an extra cost of 0.15% deducted from
the contract value on the contract anniversary at the end of each
contract year. This MAV Death Benefit is available (in approved states)
if both the owner and annuitant are age 75 or younger at Contract
issue. The MAV Death Benefit states that, upon the earlier of the
owner's or annuitant's death, before annuity payouts begin and while
the Contract is in force, IDS Life will pay the designated beneficiary
the Maximum Anniversary Value (the ``MAV''). On the first contract
anniversary, IDS Life sets the MAV equal to the highest of the (i)
current contract value; or (ii) total Purchase Payments minus adjusted
partial surrenders. Every contract anniversary after that, through the
earlier of the owner's or annuitant's age 80, IDS Life compares the
previous anniversary's MAV plus subsequent Purchase Payments less
subsequent adjusted partial surrenders to the contract value and resets
the MAV if the current contract value is higher. IDS Life stops
resetting the MAV after the owner or annuitant reaches age 81. However,
IDS Life continues to add subsequent Purchase Payments and subtract
adjusted partial surrenders from the MAV.
15. The Enhanced Earnings Death Benefit (the ``EEB'') is an
optional death benefit that is available at the election of the
Contract owner at an extra cost of 0.30% deducted from the contract
value on the contract anniversary at the end of each contract year.
This benefit is available (in approved states) if both the owner and
annuitant are age 75 or younger at Contract issue. The EEB is only
available under nonqualified annuities. The EEB states that, upon the
earlier of the owner's or annuitant's death, after the first contract
anniversary but before annuity payouts begin and while this Contract is
in force, IDS Life will pay the designated beneficiary the standard
death benefit or the MAV Death Benefit, if applicable plus: (i) 40% of
earnings at death if the owner and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of Purchase Payments
not previously surrendered that are one or more years old; or (ii) 15%
of earnings at death if the owner or the annuitant were age 70 to 75 on
the rider effective date, up to a maximum of 37.5% of Purchase Payments
not previously surrendered that are one or more years old.
16. The Enhanced Earnings Benefit Plus (the ``EEP'') is an optional
death benefit that is available at the election of the Contract owner
at an extra cost of 0.40% deducted from the contract value on the
contract anniversary at the end of each contract year. This benefit is
available (in approved states) if both the owner and annuitant are age
75 or younger at Contract issue. The EEP is only available under
nonqualified annuities purchased through an exchange. The EEP states
that, upon the earlier of the owner's or annuitant's death, after the
first contract anniversary but before annuity payouts begin and while
this Contract is in force, IDS Life will pay the designated
beneficiary: (i) EEP Part I benefits, which equal the benefits payable
under the EEB described above; plus (ii) EEP Part II benefits, which
equal a percentage of exchanged Purchase Payments identified at issue
and not previously surrendered ranging from 0% to 20%, depending on the
contract year and the age of the owner and annuitant.
17. The RAVA Advantage Contract contains five annuity payout
options: (i) Life annuity--no refund; (ii) life annuity with five, ten
or 15 years certain; (iii) life annuity--installment refund; (iv) joint
and last survivor life annuity--no refund; and (v) payouts for a
specified period. IDS Life also may agree to other payout arrangements.
Annuity payouts are available on a fixed or variable basis, or a
combination of both.
18. A RAVA Advantage Contract owner can elect to have the variable
subaccount portion of the contract value automatically rebalanced on
either a quarterly, semi-annual or annual basis, based on the
allocations chosen by the Contract owner. There is no additional cost
for asset rebalancing.
19. Under RAVA Advantage, IDS Life assesses a CDSC against partial
or full surrenders in excess of the Free Withdrawal Amount. IDS Life
applies a CDSC on each Purchase Payment. The length of time from
receipt of a Purchase Payment to the time of surrender determines the
percentage of CDSC. Under the seven-year CDSC period, the CDSC ranges
from 7% in year 1 to 0% in year 8 and after. Under the ten-year CDSC
period, the CDSC ranges from 8% in year 1 to 0% in year 11 and after.
The RAVA Advantage Contract provides for a waiver of the CDSC if the
owner or annuitant is confined to a nursing home, and has been for the
prior 90 days, and confinement began after the contract date.
Additionally, IDS Life does not assess a CDSC on contract earnings;
Free Withdrawal Amounts; required minimum distributions (for those
amounts required to be distributed from the RAVA Advantage Contract);
amounts refunded during the free look period; death benefits; or if
payments are made under any annuity payout option.
20. During the life of the RAVA Advantage Contract, IDS Life
deducts an M&E charge at an annual rate of 0.95% of the average daily
subaccount value for nonqualified annuity Contracts and 0.75% of the
average daily subaccount value for qualified annuity Contracts. IDS
Life deducts a charge for administrative expenses annually from the
contract value of each RAVA Advantage Contract. The annual contract
administrative charge is $30 per contract year. IDS Life waives this
charge when the contract value, or total Purchase Payments made less
any Purchase Payments surrendered, is $50,000 or more on the current
contract anniversary.
21. IDS Life deducts premium taxes of up to 3.5%, if applicable.
Currently, IDS Life deducts any applicable premium tax when annuity
payouts begin. However, IDS Life reserves the right to deduct this tax
at other times such as when the Contract is surrendered.
22. Assets invested in the Investment Funds are charged with the
annual operating expenses of those Funds.
The Old Contracts
23. VRA and CRA are registered together under the 1933 Act (File
No. 2-73114). IDS Life no longer offers VRA Contracts. IDS Life offers
CRA contracts only for limited purposes. VRA and CRA both were issued
as nonqualified annuities for after-tax contributions only, or as
qualified annuities under the following retirement plans: (i) IRAs;
(ii) SEP plans; (iii) Section 401(k) plans; (iv) custodial and trusteed
plans; (v) TSAs, or (vi) Section 457 plans. VRA was purchased with a
single Purchase Payment between $5,000 and $500,000. No additional
Purchase Payments are allowed for VRA. CRA may be purchased (i) with a
minimum initial Purchase Payment of $600; or (ii) in minimum
installments of $50 per month or $23.08 biweekly under a scheduled
payment plan. An owner may make additional Purchase Payments to CRA,
which require a $50 minimum (unless Purchase Payments are made by
installments under a scheduled payment plan), subsequent to the initial
Purchase Payment. Maximum limitations on Purchase Payments are imposed
for the first year and subsequent years, depending on
[[Page 7715]]
whether the annuity is nonqualified or qualified. Participants in the
CRA Select University of Wisconsin TSA Plan (``CRA Select'') may buy
CRA with installment payments of $200 to $25,000 annually.
24. Owners of VRA and CRA Contracts may allocate their Purchase
Payments among 14 Old Accounts that invest in 14 corresponding
Investment Funds (all of which currently are available under RAVA
Advantage). IDS Life, at a later date, may determine to create
additional Accounts to invest in any additional Investment Funds as may
now or in the future be available. CRA also offers a fixed account
investment option with a guaranteed interest rate of 3.5% to 4% on an
annual basis depending on when the CRA Contract was issued. VRA does
not have a fixed account investment option.
25. Owners of VRA and CRA Contracts may transfer contract values
among the Old Accounts without charge. Transfers to and from CRA's
fixed account are permitted, subject to certain restrictions described
in the prospectus for the CRA Contracts.
26. The owner of a VRA or CRA Contract can access contract values
at any time before annuity payouts begin by means of partial surrenders
or a full surrender. In addition, VRA permits the owner a Free
Withdrawal Amount of up to 10% of the initial Purchase Payment amount
each year after the first without incurring a CDSC. CRA Select offers
an annual Free Withdrawal Amount of 10% of the contract value at the
beginning of each contract year. There are no other Free Withdrawal
Amounts under CRA.
27. VRA and CRA Contracts death benefit provisions state that, upon
the earlier of the owner's or annuitant's death before annuity payouts
begin and while the Contract is in force, IDS Life will pay the
following death benefits to the designated beneficiary: (i) if death
occurs before the annuitant's 75th birthday, the beneficiary receives
the greater of (a) the contract value; or (b) Purchase Payments, minus
any surrenders, or (ii) if death occurs on or after the annuitant's
75th birthday, the beneficiary receives the contract value.
28. The VRA and CRA Contracts contain the same annuity payout
options as the RAVA Advantage Contract. Annuity payouts are available
on a fixed or variable basis, or a combination of both.
29. Under VRA, IDS Life assesses a CDSC against partial or full
surrenders in excess of the Free Withdrawal Amount. The CDSC applies to
surrenders in the first seven contract years. IDS Life assesses a CDSC
as a percentage of the amount surrendered. The CDSC ranges from 7% in
the first contract year to 0% after 7 contract years. Under CRA, IDS
Life assesses a CDSC against partial or full surrenders (in excess of
the Free Withdrawal Amount for CRA Select). The CDSC is a percentage of
the amount surrendered. Three separate CDSC periods apply to three
different versions of CRA. For the original CRA, which is no longer
sold, the CDSC applies to surrenders in the first eleven contract years
and ranges from 7% in the first contract year to 0% after 11 contract
years. For CRA Select, which currently is sold to fund the University
of Wisconsin TSA Plan, the CDSC applies to surrenders in the first
eight contract years and ranges from 7% in the first contract year to
0% after 8 contract years. For the CRA version that currently is sold
for conversions from American Express Retirement Services or other IDS
Life retirement annuities under which conversion is available, the CDSC
applies to surrenders in the first seven contract years and ranges from
6% in the first contract year to 0% after 7 contract years. Under all
VRA and CRA Contracts, the CDSC is further limited so that it will
never exceed 8.5% of aggregate Purchase Payments made to the Contract.
IDS Life does not assess a CDSC on Free Withdrawal Amounts under any
VRA or CRA Select Contract; required minimum distributions (for those
amounts required to be distributed from the VRA or CRA Contract);
amounts refunded during the free look period; death benefits; or if
payments are made under any annuity payout option.
30. During the life of each VRA and CRA Contract, IDS Life deducts
an M&E charge at an annual rate of 1% of the average daily variable
account value. IDS Life deducts a charge for administrative expenses
annually from the contract value of each VRA and CRA Contract. The
annual contract administrative charge is $20 per contract year for VRA
and $30 per contract year for CRA.
31. IDS Life deducts premium taxes of up to 3.5%, if applicable.
However, IDS Life reserves the right to deduct this tax at other times
such as when Purchase Payments are made or when the Contract is
surrendered.
32. Assets invested in the Investment Funds are charged with the
annual operating expenses of those Funds.
33. Flex is registered under the 1933 Act (File No. 33-4173). IDS
Life no longer offers Flex Contracts. Flex was issued as a nonqualified
annuity for after-tax contributions only, or as a qualified annuity
under the following retirement plans: (i) IRAs; (ii) SEP plans; (iii)
Section 401(k) plans; (iv) custodial and trusteed plans; (v) TSAs; or
(vi) Section 457 plans. Flex was purchased (i) with a minimum initial
Purchase Payment of $1,000 for qualified annuities or $2,000 for
nonqualified annuities; or (ii) in minimum installments of $50 per
month or $23.08 biweekly under a scheduled payment plan. An owner may
make additional Purchase Payments, which require a $50 minimum (unless
Purchase Payments are made by installments under a scheduled payment
plan), subsequent to the initial Purchase Payment. Maximum limitations
on Purchase Payments are imposed for the first year, depending on the
age of the owner or annuitant, and for each subsequent year.
34. Owners of Flex Contracts may allocate their Purchase Payments
among the 14 Old Accounts that invest in 14 corresponding Investment
Funds (all of which currently are available under RAVA Advantage). IDS
Life, at a later date, may determine to create additional Accounts to
invest in any additional Investment Funds as may now or in the future
be available. Flex also offers a fixed account investment option with
guaranteed interest rates ranging from 3% to 4% on an annual basis,
depending on when the Flex Contract was issued.
35. Owners of Flex Contracts may transfer contract values among the
Old Accounts without charge. Transfers to and from the fixed account
are permitted, subject to certain restrictions described in the
prospectus for the Flex Contracts.
36. The owner of a Flex Contract can access contract values at any
time before annuity payouts begin by means of partial surrenders or a
full surrender. In addition, Flex permits the owner a Free Withdrawal
Amount of contract earnings without incurring a CDSC.
37. The Flex Contract death benefit provision states that, upon the
earlier of the owner's or annuitant's death before annuity payouts
begin and while the Contract is in force, IDS Life will pay the
following death benefits to the designated beneficiary: (i) if death
occurs before the annuitant's 75th birthday, the beneficiary receives
the greatest of (a) the contract value; or (b) the contract value as of
the most recent sixth contract anniversary, minus any surrenders since
that anniversary; or (c) Purchase Payments, minus any surrenders; or
(ii) if death occurs on or after the annuitant's 75th birthday, the
beneficiary receives the greater of (a) the contract value; or (b) the
contract value as of the most recent sixth contract anniversary, minus
any surrenders since that anniversary.
[[Page 7716]]
38. Flex contains the same five annuity payout options as the RAVA
Advantage Contract. Annuity payouts are available on a fixed or
variable basis, or a combination of both.
39. Under Flex, IDS Life assesses a CDSC against partial or full
surrenders in excess of the Free Withdrawal Amount. IDS Life applies a
CDSC of 7% on each Purchase Payment. IDS Life deducts this CDSC if the
Contract owner requests a surrender within six years of making that
Purchase Payment. The Flex Contract provides for a waiver of the CDSC
for amounts surrendered after the later of the annuitant's attaining
age 65 or the tenth contract anniversary. Additionally, IDS Life does
not assess a CDSC on contract earnings; required minimum distributions
(for those amounts required to be distributed from the Flex Contract);
death benefits; or if payments are made under any annuity payout
option.
40. During the life of the Flex Contract, IDS Life deducts an M&E
charge at an annual rate of 1% of the average daily variable account
value. IDS Life deducts a charge for administrative expenses at the end
of each contract quarter from the contract value of the Flex Contract.
The quarterly contract administrative charge is $6 (which equals an
annual charge of $24 per contract year).
41. IDS Life deducts premium taxes of up to 3.5%, if applicable.
Currently, IDS Life deducts any applicable premium tax when annuity
payouts begin. However, IDS Life reserves the right to deduct this tax
at other times such as when Purchase Payments are made or when the
Contract is surrendered.
42. Assets invested in the Investment Funds are charged with the
annual operating expenses of those Funds.
43. EBA is registered under the 1933 Act (File No. 33-52518). IDS
Life no longer offers EBA Contracts. EBA was issued only as a group
TSA. EBA was purchased (i) with a minimum initial Purchase Payment of
$1,000; or (ii) in minimum installments of $25 per month or $300
annually under a scheduled payment plan. An owner may make additional
Purchase Payments, which require a $50 minimum (unless Purchase
Payments are made by installments under a scheduled payment plan),
subsequent to the initial Purchase Payment. Maximum limitations on
Purchase Payments are imposed for the first year, depending on the age
of the Contract owner, and for each subsequent year.
44. Owners of EBA Contracts may allocate their Purchase Payments
among the 14 Old Accounts that invest in 14 corresponding Investment
Funds (all of which currently are available under RAVA Advantage). IDS
Life, at a later date, may determine to create additional Accounts to
invest in any additional Investment Funds as may now or in the future
be available. EBA also offers a fixed account investment option with a
guaranteed interest rate of 4% on an annual basis.
45. Owners of EBA Contracts may transfer contract values among the
Old Accounts without charge. Transfers to and from the fixed account
are permitted, subject to certain restrictions described in the
prospectus for the EBA Contracts.
46. Subject to certain restrictions imposed by the Internal Revenue
Code, the owner of an EBA Contract can access certificate values at any
time before annuity payouts begin by means of partial surrenders or a
full surrender.
47. The EBA Contract death benefit provision states that, upon the
owner/annuitant's death before annuity payouts begin and while the
Contract is in force, IDS Life will pay the following death benefits to
the designated beneficiary: (i) if death occurs before the annuitant's
75th birthday, the beneficiary receives the greatest of (a) the
certificate value; or (b) Purchase Payments, minus any surrenders; or
(ii) if death occurs on or after the annuitant's 75th birthday, the
beneficiary receives the certificate value.
48. EBA contains the same five annuity payout options as the RAVA
Advantage Contract. Annuity payouts are available on a fixed or
variable basis, or a combination of both.
49. Under EBA, IDS Life assess a CDSC against partial or full
surrenders. The CDSC applies to surrenders in the first eleven
certificate years. IDS Life assesses a CDSC as a percentage of the
amount surrendered. The CDSC ranges from 8% in the first certificate
year to 0% after 11 certificate years. The CDSC is further limited so
that it will never exceed 8.5% of aggregate Purchase Payments made to
the Contract. The EBA Contract provides for a waiver of the CDSC for
amounts surrendered due to the owner's retirement under the TSA plan on
or after age 55. Additionally, IDS Life does not assess a CDSC on
required minimum distributions (for those amounts required to be
distributed from the EBA Contract); amounts refunded during the free
look period; death benefits; or if payments are made under any annuity
payout option.
50. During the life of the EBA Contract, IDS Life deducts an M&E
charge at an annual rate of 1% of the average daily variable account
value. IDS Life deducts a charge for administrative expenses at the end
of each certificate year from the certificate value of the EBA
Contract. The annual administrative charge is $30 per certificate year.
51. IDS Life deducts premium taxes of up to 3.5%, if applicable.
Currently, IDS Life deducts any applicable premium tax when annuity
payouts begin. However, IDS Life reserves the right to deduct this tax
at other times such as when Purchase Payments are made or when the
Contract is surrendered.
52. Assets invested in the Investment Funds are charged with the
annual operating expenses of those Funds.
53. Applicants represent that the features and benefits of RAVA
Advantage will be no less favorable than under the Old Contracts, with
some exceptions for differences in the guaranteed interest rate under
the fixed account investment option, lower annuity settlement rates and
lower initial death benefits. Applicants also represent that, with some
exceptions for the CDSC, the charge for administrative expenses and
optional charges for optional death benefits, the fees and charges of
the RAVA Advantage Contract will be no higher than those of the Old
Contracts.
Terms of the Exchange Offer
54. Applicants propose to offer eligible owners of Old Contracts
the opportunity to exchange their Old Contracts for RAVA Advantage by
means of the Exchange Offer. Partial exchanges will not be permitted.
55. Initially, to be eligible for the Exchange Offer, an Old
Contract owner must meet all of the following criteria: (i) Have
completed ten or more contract or certificate years under the Old
Contract; (ii) have not made Purchase Payments greater than $2,000 in
any tax year under the Old Contract in the 36 months prior to accepting
the Exchange Offer (except for installment payments made under a
scheduled payment plan); (iii) have a contract or certificate value
(``Exchange Value'') (plus any additional transfers or rollovers) that
is at least equal to $100,000; (iv) have a remaining CDSC of 2% or less
of the contract or certificate value of the Old Contract; and (v) own a
qualified annuity Contract. IDS Life reserves the right to extend the
Exchange Offer to owners of Contracts who have completed less than ten
contract or certificate years under the Old Contract, to owners of
nonqualified annuity Contracts and to owners of Old Contracts with
Exchange Values of less than $100,000.
56. Due to market volatility, the Exchange Value (plus any
additional transfers or rollovers for qualified
[[Page 7717]]
annuity Contracts, or any additional Purchase Payments or exchanges for
nonqualified annuity Contracts, individually and collectively the
``Additional Amounts'') may drop below the $100,000 eligible value
between the time the internal exchange form and application are
completed and mailed and the time they are received by IDS Life. If the
Exchange Value (plus any Additional Amounts) does not drop more than 5%
below the $100,000 eligible value, the Old Contract owner would still
be eligible to participate in the Exchange Offer. If the Exchange Value
(plus any Additional Amounts) drops more than 5% below the $100,000
eligible value, the Old Contract owner will not be eligible to
participate in the Exchange Offer at that time. However, the internal
exchange form and application can be resubmitted at a later date when
the Exchange Value of the Old Contract (plus any Additional Amounts)
meets the eligibility requirements.
57. Under RAVA Advantage, if the initial Purchase Payment is at
least $100,000, IDS Life will allocate a Purchase Payment Credit equal
to 1% of the initial purchase payment and 1% of each subsequent
Purchase Payment received. Due to market volatility, the Exchange Value
(plus any Additional Amounts) may drop below this $100,000 initial
Purchase Payment amount. To increase the likelihood of remaining
eligible to receive the 1% Purchase Payment Credit, the Old Contract
owner could transfer that contract or certificate value allocated to
the Old Accounts to the Old Account investing in the AXP VP Cash
Management Fund while the exchange is pending to help reduce the risk
of market volatility. The Old Contract owner then would be eligible for
the Purchase Payment Credit of 1% of each Purchase Payment received
based on an initial Purchase Payment of $100,000. IDS Life also would
allocate a Purchase Payment Credit of 1% of each Purchase Payment
received if the owner elects the ten-year CDSC period.
58. If, due to market volatility, the initial Purchase Payment into
RAVA Advantage drops below $100,000, IDS Life will provide, from its
general account assets, a 1% Exchange Credit based on the Purchase
Payment applied to RAVA Advantage on that day the exchange is effected
(``Exchange Date''). This 1% Exchange Credit will not apply to
subsequent Purchase Payments into RAVA Advantage. IDS would still
allocate a Purchase Payment Credit of 1% of each Purchase Payment
received if the owner elects the ten-year CDSC period.
59. IDS Life also reserves the right to extend the Exchange Offer
to owners of Old Contracts with Exchange Values of less than $100,000.
IDS Life will provide, from its general account assets, a 1% Exchange
Credit based on the Exchange Value of the Old Contract. This 1%
Exchange Credit will not apply to subsequent Purchase Payments into
RAVA Advantage. IDS Life would still allocate a Purchase Payment Credit
of 1% of each Purchase Payment received if the owner elects the ten-
year CDSC period.
60. Upon the owner's acceptance of the Exchange Offer, IDS Life
will issue a RAVA Advantage Contract with all applicable Purchase
Payment Credits and Exchange Credits. No CDSC will be deducted upon the
surrender of an Old Contract in connection with the exchange. The
Exchange Value of each Old Contract, together with any applicable
Additional Amounts, Purchase Payment Credits and Exchange Credits, will
be applied to the new RAVA Advantage Contract as of the Exchange Date.
The Exchange Date will be the contract date of the new RAVA Advantage
Contract for purposes of determining contract years and anniversaries
after the Exchange Date.
61. If the owner of the new RAVA Advantage Contract exercises the
free-look option, IDS Life will recapture any Purchase Payment Credits
and Exchange Credits. IDS Life will reverse either the RAVA Advantage
contract value (less any Purchase payment Credits and Exchange Credits)
or the Purchase Payment made to the RAVA Advantage Contract, depending
on applicable law. IDS Life will apply this amount to restore the Old
Contract to the extent possible. IDS Life will allocate this amount to
the selected Old Contract investments in the proportions that existed
just prior to the exchange. Any adjustments made due to investment
experience will be allocated or deducted according to the selected
investment percentage allocations under the Old Contract just prior to
the exchange. Withdrawals made after the free look period under RAVA
Advantage has expired will be governed by the terms of the RAVA
Advantage Contract, including the application of the CDSC. To the
extent a death benefit or surrender payment includes any Purchase
Payment Credit and Exchange Credit amounts: (i) applied within twelve
months preceding the date of death that results in a lump sum death
benefit under RAVA Advantage; or (ii) applied within twelve months
preceding a request for a CDSC waiver due to nursing home confinement,
IDS Life will recapture the Purchase Payment Credits and Exchange
Credits.
62. IDS Life will notify all owners of the Old Contracts of the
Exchange Offer through normal client communications such as updated
prospectuses or prospectus supplements (``Program Announcement''). This
Program Announcement: (i) Will describe the terms and conditions of the
Exchange Offer; (ii) suggest to owners who may qualify that they
contact their registered representatives to learn more about the
Exchange Offer and to discuss their individual situations (including
tax, financial planning and Contract considerations); and (iii) notify
owners that IDS Life reserves the right to cancel the Exchange Offer at
any time. In addition, IDS Life may send the information in the Program
Announcement to some or all Old Contract owners via additional
communications that also may include that owner's specific Contract
information (such as Exchange Value and applicable CDSC).
63. IDS Life, either directly or through its registered
representatives, will provide eligible Old Contract owners who are
interested in learning more about the Exchange Offer with an Offering
Communication that includes information outlined in the Program
Announcement and additional information describing the Exchange Offer.
The Offering Communication will state, in clear and plain English, that
the Exchange Offer is not designed for a Contract owner who: (i)
intends to hold the RAVA Advantage Contract as a short-term investment
vehicle; or (ii) anticipates surrendering all or part (i.e. more than
the 10% Free Withdrawal Amount on an annual basis) of his or her RAVA
Advantage Contract before five to seven years (if the Old Contract
owner would choose the seven-year CDSC period under RAVA Advantage) or
eight to ten years (if the Old Contract owner would choose the ten-year
CDSC period under RAVA Advantage). IDS Life will encourage Old Contract
owners to carefully evaluate their personal financial planning
situation when deciding whether to accept or reject the Exchange Offer.
64. In addition, the Offering Communication will explain how the
owner of an Old Contract contemplating an exchange may avoid the
applicable CDSC on the RAVA Advantage Contract by not surrendering more
than the annual Free Withdrawal Amount and by holding any subsequent
Purchase Payments until expiration of the CDSC period. In this regard,
IDS Life will state, in clear and plain English, that if the owner
surrenders the RAVA
[[Page 7718]]
Advantage Contract during the initial CDSC period: (i) the lower M&E
charges and any applicable Purchase Payment Credits and Exchange
Credits may be more than offset by the CDSC; and (ii) an Old Contract
owner may be worse off than if he or she had rejected the Exchange
Offer.
65. Furthermore, IDS Life will state, in clear and plain English,
that guaranteed annuity settlement rates generally are lower under RAVA
Advantage. Therefore, if the Old Contract owner contemplates
annuitizing the RAVA Advantage Contract during the first few years, the
lower settlement factors may more than offset the lower M&E charges and
any applicable Purchase Payment Credits and Exchange Credits.
66. IDS Life will explain that due to market volatility, the
Exchange Value (plus any Additional Amounts) may drop below $100,000
between the time the internal exchange form and application are
completed and mailed and the time they are received by IDS Life. An Old
Contract owner could transfer that contract or certificate value
allocated to the Old Accounts to the Old Account investing in the AXP
VP Cash Management Fund while the exchange is pending to help reduce
the risk of market volatility and help preserve the $100,000 initial
Purchase Payment into RAVA Advantage. In that case, the Old Contract
owner would be eligible for the Purchase Payment Credit of 1% of each
Purchase Payment received based on an initial Purchase Payment of
$100,000. If, due to market volatility, the initial Purchase Payment
into RAVA is less than $100,000, IDS Life will provide a 1% Exchange
Credit based on the Purchase Payment applied to RAVA Advantage on the
Exchange Date. Similarly, if IDS Life extends the Exchange Offer to
owners of Old Contracts with Exchange Values of less than $100,000, IDS
Life will explain in the Offering Communication that it will provide a
1% Exchange Credit based on the Exchange Value of the Old Contract. The
1% Exchange Credit will not apply to subsequent Purchase Payments. IDS
Life will allocate a Purchase Payment Credit of 1% of each Purchase
Payment received if the owner elects the ten-year CDSC period.
67. In addition, IDS Life will prominently disclose that the
guaranteed interest rate on RAVA Advantage's fixed account investment
option may be less than the guaranteed interest rate on the Old
Contract's fixed account investment option. IDS Life also will disclose
that the current death benefit on the Old Contract may be greater than
the initial death benefit on RAVA Advantage. When applicable, IDS Life
also will explain that owners of Old Contracts may lose some tax
benefits. Finally, the Offering Communication will state that IDS Life
may terminate the Exchange Offer at any time. The Offering
Communication also will include a prospectus for the new RAVA Advantage
Contract.
68. To accept the Exchange Offer, the owner of an Old Contract must
complete an internal exchange form and application for the RAVA
Advantage Contract. Applicants state that those Old Contract owners who
accept the Exchange Offer will incur no current taxes and that the
exchanges will constitute tax-free transfers, rollovers or exchanges
pursuant to section 1035 of the Internal Revenue Code.
69. The Exchange Offer is meant to encourage existing Old Contract
owners to remain with IDS Life rather than surrender their Contracts in
exchange for a competitor's product. If the CDSC under RAVA Advantage
did not apply to the Exchange Value, Applicants assert that IDS Life
would have no assurance that an Old Contract owner who accepted the
Exchange Offer would persist long enough for any applicable Purchase
Payment Credits, Exchange Credits, payments to registered
representatives and other relevant expenses to be recouped through
standard fees from the ongoing operation of the RAVA Advantage
Contract.
70. Applicants state that the commissions that IDS Life will pay
its registered representatives for soliciting exchanges under the
Exchange Offer are less than the normal commissions paid for soliciting
sales of RAVA Advantage Contracts. Applicants assert that compensating
IDS Life's registered representatives for these exchanges is necessary
in order to provide sufficient incentive for them to compete with
competitors' registered representatives.
71. IDS Life reserves the right to terminate the Exchange Offer at
any time. If IDS Life terminates the Exchange Offer, it will send a
notice to currently-eligible Old Contract owners (``Termination
Notice''). The Termination Notice will state that Old Contract owners
who wish to participate in the Exchange Offer must do so within two
months from the date of the Termination Notice. The Termination Notice
will contain all of the caveats described herein.
Applicants' Conditions
Applicants agree to the following conditions:
1. The Offering Communication and Termination Notice will contain
concise, plain English statements that: (i) The Exchange Offer is
suitable only for an Old Contract owner who expects to hold RAVA
Advantage as a long-term investment; (ii) if the RAVA Advantage
Contract is surrendered during the initial CDSC period or annuitized
during the first few years, the lower M&E charges and any applicable
Purchase Payment Credits and Exchange Credits may be more than offset
by the CDSC or lower annuity settlement rates and an Old Contract owner
may be worse off than if he or she had rejected the Exchange Offer;
(iii) IDS Life will allocate an Exchange Credit of 1% on the initial
Purchase Payment applied (but not on subsequent Purchase Payments
received) if the initial Purchase Payment to the RAVA Advantage
Contract is less than $100,000; (iv) the guaranteed interest rate on
RAVA Advantage's fixed account option may be less than the guaranteed
interest rate on the Old Contract's fixed account option; (v) the
current death benefit on the Old Contract may be greater than the
initial death benefit on RAVA Advantage; (vi) an Old Contract owner may
lose some tax benefits (when applicable); and (vii) IDS Life reserves
the right to terminate the Exchange Offer.
2. The Offering Communication will disclose in concise, plain
English each aspect of the RAVA Advantage Contracts that could be less
favorable than the Old Contracts.
3. IDS Life, either directly or through its registered
representatives, will send an Offering Communication to eligible Old
Contract owners who are interested in learning more about the Exchange
Offer. An Old Contract owner choosing to exchange will then complete
and sign an internal exchange form and RAVA Advantage application and
return it to IDS Life. This internal exchange form will prominently
restate in concise, plain English the caveats described above in
Condition (1). If the internal exchange form is more than two pages
long, IDS Life will use a separate document to obtain Contract owner
acknowledgment of the caveats described in Condition (1).
4. IDS Life will maintain the following separately identifiable
records in an easily accessible place for the time periods specified
below in this Condition (4) for review by the Commission upon request:
(i) Records showing the level of exchange activity and how it relates
to the total number of Old Contract owners eligible to exchange
(quarterly as a percentage of the number eligible); (ii) copies of any
form of Program Announcements, Offering Communications, Termination
[[Page 7719]]
Notices and other written materials or scripts for presentations by
registered representatives regarding the Exchange Offer that IDS Life
either prepares or approves, including the dates that such materials
were used; (iii) records containing information about each exchange
transaction that occurs, including the name of the Contract owner, Old
Contract and RAVA Advantage Contract numbers; the amount of CDSC waived
on surrender of the Old Contract; Purchase Payment Credits and Exchange
Credits paid; the name and CRD number of the registered representative
soliciting the exchange, firm affiliation, branch office sales address,
telephone number and the name of the registered representative's
broker-dealer; commission paid; the internal exchange form (and
separate document, if any, used to obtain the Old Contract owner's
acknowledgement of the caveats required in Condition (1)) showing the
name, date of birth, address and telephone number of the Contract owner
and the date the internal exchange form (or separate document) was
signed; amount of contract or certificate value exchanged, and
persistency information relating to the RAVA Advantage Contract,
including the date of any subsequent surrender and the amount of CDSC
paid on the surrender; and (iv) logs showing a record of any Contract
owner complaint about the exchange, state insurance department
inquiries about the exchange, or litigation, arbitration, or other
proceeding regarding any exchange. The logs will include the date of
the complaint or commencement of the proceeding, name and address of
the person making the complaint or commencing the proceeding, nature of
the complaint or proceeding, and the persons named or involved in the
complaint or proceeding. Applicants will retain records specified in
(i) and (iv) for a period of six years after the date the records are
created, records specified in (ii) for a period of six years after the
date of last use, and records specified in (iii) for a period of two
years after the date that the initial CDSC period of the RAVA Advantage
Contract ends.
Applicants' Legal Analysis
1. Section 11(a) of the Act makes it unlawful for any registered
open-end company, or any principal underwriter for such a company, to
make or cause to be made an offer to the holder of a security of such
company, or of any other open-end investment company, to exchange his
or her security for a security in the same or another such company on
any basis other than the relative net asset values of the respective
securities, unless the terms of the offer have first been submitted to
and approved by the Commission or are in accordance with Commission
rules adopted under Section 11.
2. Section 11(c) of the Act, in pertinent part, requires, in
effect, that any offer of exchange of the securities of a registered
unit investment trust for the securities of any other investment
company be approved by the Commission or satisfy applicable rules
adopted under Section 11, regardless of the basis of the exchange.
3. The purpose of section 11 of the Act is to prevent
``switching,'' the practice of inducing security holders of one
investment company to exchange their securities for those of a
different investment company solely for the purpose of exacting
additional selling charges. That type of practice was found by Congress
to be widespread in the 1930s prior to the adoption of the Act.
4. Section 11(c) of the Act requires Commission approval (by order
or by rule) of any exchange, regardless of its basis, involving
securities issued by a unit investment trust, because investors in unit
investment trusts were found by Congress to be particularly vulnerable
to switching operations.
5. Applicants assert that the potential for harm to investors
perceived in switching was its use to extract additional sales charges
from those investors. Applicants further assert that the terms of the
proposed Exchange Offer do not present the abuses against which Section
11 was intended to protect. The Exchange Offer was designed to allow
IDS Life to compete on a level playing field with its competitors who
are making bonus offers to its current Old Contract owners. No
additional sales load or other fee will be imposed at the time of
exercise of the Exchange Offer.
6. Rule 11a-2, by its express terms, provides Commission approval
of certain types of offers of exchange of one variable annuity contract
for another. Applicants assert that other than the relative net asset
value requirement (which is not satisfied because exchanging Old
Contract owners could potentially be given Purchase Payment Credits and
Exchange Credits), the only part of Rule 11a-2 that would not be
satisfied by the proposed Exchange Offer is the requirement that
payments under the Old Contract be treated as if they had been made
under the new RAVA Advantage Contract on the dates actually made. This
provision of Rule 11a-2 is often referred to as a ``tacking''
requirement because it has the effect of ``tacking together'' the CDSC
expiration periods of the exchanged and acquired contracts.
7. Applicants assert that the absence of tacking does not mean that
an exchange offer cannot be attractive and beneficial to investors.
Applicants state that the proposed Exchange Offer would assure an
immediate and enduring economic benefit to investors for the following
reasons: (i) RAVA Advantage has a lower M&E charge than the Old
Contracts; (ii) RAVA Advantage Contract owners receive applicable
Purchase Payment Credits and Exchange Credits; (iii) RAVA Advantage has
more Investment Funds, giving RAVA Advantage owners the opportunity for
greater diversification and asset allocation; and (iv) RAVA Advantage
offers optional Enhanced Death Benefits, for an additional cost, that
may provide substantive value to beneficiaries. Applicants assert that
an owner who expects to hold RAVA Advantage as a long-term investment
will receive the economic benefits of the Exchange Offer. No sales
charge will ever be paid on the amounts exchanged unless the RAVA
Advantage Contract is surrendered before expiration of the CDSC period
that owner has chosen.
8. Applicants assert that tacking should be viewed as a useful way
to avoid the need to scrutinize the terms of an offer of exchange to
make sure that there is no abuse. Tacking is not a requirement of
Section 11. Rather, it is a creation of a rule designed to approve the
terms of offers of exchange ``sight unseen.'' Tacking focuses on the
closest thing to multiple deduction of sales loads that is possible in
a CDSC context--multiple exposure to sales loads upon surrender or
redemption. If tacking and other safeguards of Rule 11a-2 are present,
there is no need for the Commission or its staff to evaluate the terms
of the offer. The absence of tacking in this fully scrutinized Section
11 application will have no impact on offers made pursuant to the rule
on a ``sight unseen'' basis.
9. Applicants assert that the terms of the Exchange Offer are
better than those of IDS Life's competitors. Unlike the Exchange Offer,
when Old Contract owners exchange into competitors' contracts, they
must pay any remaining CDSC on the Old Contracts at the time of the
exchange. No tacking is required when IDS Life's competitors offer
their variable annuity contracts to owners of Old Contracts or when IDS
Life makes such an offer to competitors' contract owners.
10. To the extent there are differences in the Contracts, those
differences relate to enhanced contractual features and charges that
are fully described in the
[[Page 7720]]
prospectus for the RAVA Advantage Contract. Furthermore, the Offering
Communication (and any Termination Notice) will contain concise, plain
English statements that: (i) The Exchange Offer is suitable only for an
Old Contract owner who expects to hold RAVA Advantage as a long-term
investment; (ii) if the RAVA Advantage Contract is surrendered during
the initial CDSC period or annuitized during the first few years, the
lower M&E charges and any applicable Purchase Payment Credits and
Exchange Credits may be more than offset by the CDSC or lower annuity
settlement rates and an Old Contract owner may be worse off than if he
or she had rejected the Exchange Offer; (iii) IDS Life will allocate an
Exchange Credit of 1% on the initial Purchase Payment applied (but not
on subsequent Purchase Payments received) if the initial Purchase
Payment to the RAVA Advantage Contract is less than $100,000; (iv) the
guaranteed interest rate on RAVA Advantage's fixed account option may
be less than the guaranteed interest rate on the Old Contract's fixed
account option; (v) the current death benefit on the Old Contract may
be greater than the initial death benefit on RAVA Advantage; (vi) an
Old Contract owner may lose some tax benefits (when applicable); and
(vii) IDS Life reserves the right to terminate the Exchange Offer.
Applicants assert that Contract owners should have the opportunity to
decide, on the basis of full and fair disclosure, whether the
enhancements of the RAVA Advantage Contract justify accepting the
offer.
Conclusion
Applicants submit, for the reasons stated herein, that the Exchange
Offer is consistent with the protections provided by Section 11 of the
Act, and that approval of the Exchange Offer is necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policies and
provisions of the Act. Applicants submit that the requested order
approving the terms of the proposed Exchange Offer therefore should be
granted.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-4054 Filed 2-19-02; 8:45 am]
BILLING CODE 8010-01-P